WILKES-BARRE — The city has backtracked on its demand to hold the prospective buyer of University Corners responsible for repaying $500,000 loaned to the developer of the retail space in the downtown complex.
The administration will seek council’s approval next week to return the loan to its original state as a grant, Drew McLaughlin, administrative coordinator for the city, said Thursday.
Doing so will free businessman Joe Amato from the debt and move along plans for his investment company, TLC One Holdings LLC, to buy the property along South Main and East Northampton streets.
McLaughlin on Thursday said Amato was never a signatory to the loan.
Amato of Moosic, a former champion drag racer, could not be reached for comment Thursday.
The complex, anchored by R/C Wilkes-Barre Movies 14, is nearly full, except for a large section along East Northampton Street eyed for an Irish Pub.
“That tenant space has been vacant long enough,” McLaughlin said.
The loft condominiums that make up the residential component of the complex are not part of the deal and have fared much better.
The city had to consult with the state and the Greater Wilkes-Barre Chamber of Business and Industry about the loan and could not simply “wipe it away,” McLaughlin said.
The loan is half of the $1 million in local share state gambling account grant that the city applied for and received from the state Department of Economic and Community Development in 2009 to complete construction of the street-level retail space interiors.
With DCED’s permission, the city split the money into a grant and a no-interest loan for William Geary Jr., whose Los Angeles, Calif.-based Carlsberg Properties Inc. manages University Corners LLC.
Geary, who filed for personal bankruptcy in California, has struggled to fill the retail space and had tried to sell the still-vacant space for $1.2 million.
The loan portion was to be repaid in full in 2014, or 63 months after University Corners purchased the $8.4 million note on the mortgage issued by a consortium of banks in 2008 to a company set up by the Greater Wilkes-Barre Chamber of Business and Industry. The chamber built the nearly $31 million complex and its South Main Street Redevelopment LLC holds a minority interest in the property.
The city planned to create a revolving loan fund with the loan portion of the grant for other economic development projects.