WILKES-BARRE — A $6.5 million judgment obtained by Luzerne County over the failed Hotel Sterling development allows it to garnish income owner CityVest receives for parking on the property, the county solicitor said.
The county on Tuesday filed a complaint to obtain the judgment against CityVest for defaulting on a loan and position itself to recoup funds it’s owed.
CityVest, a nonprofit corporation, took on the project of preparing the building that was vacant since 1998 for development. It received a $4 million loan in 2002 from the county that was modified and increased to a maximum of $6 million in 2007, but exhausted the funds without securing a developer. The city condemned the building in 2011 and demolished it in July 2013.
County solicitor David Pedri on Wednesday said the filing is procedural and in the long run “formalizes the county’s rights with regard to the mortgage” held by CityVest that was put up to secure a $6 million loan from the county’s Redevelopment Office.
More importantly, the county can benefit in the short term, Pedri said, because the filing allows it to “garnish any kind of income that CityVest is gaining particularly with regards to LAZ parking.”
The company operates parking lots on CityVest property located next to and on the site of the former landmark structure, which was demolished last year due to its deteriorated condition.
In June the county ordered LAZ to stop making payments to CityVest, Pedri said, adding that he had made numerous attempts to get access to the nonprofit corporation’s books through its attorney, George Reihner of Scranton.
Reihner did not return a call Wednesday.
The county’s judgment followed one obtained by Wilkes-Barre in June for $569,112 to cover expenses it incurred for securing the site, for traffic detours around the structure that was located on the corner of West Market and North River streets and for demolition.
Rather than proceed with collecting payment from CityVest, the city said it would attempt to acquire the property, made up of three parcels, through a sheriff’s sale and sell it for development.
Pedri acknowledged the city was in a better position than the county to obtain the property.
“Wilkes-Barre has first lien position,” Pedri said.
Although Wilkes-Barre’s judgment was smaller than the county’s, the city filed its liens first and bumped the county to second in line, he explained.