Last updated: February 19. 2013 7:15PM - 567 Views

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The company interested in developing the Hotel Sterling site in downtown Wilkes-Barre after the structure is demolished has been identified as J.G. Petrucci Company Inc., according to documents Luzerne County Manager Robert Lawton submitted to county council Monday.

J.G. Petrucci has owned and developed industrial, office, health care, retail and residential properties since 1987, primarily in central New Jersey and eastern Pennsylvania, according to the company's website.

The company proposes a five-story, 75,000-square-foot development with commercial/retail space on the first two floors and condominiums, apartments and/or a boutique hotel on the upper floors, the documents show.

The project, estimated between $26 million and $30 million, would generate 40 to 60 jobs, the documents say. J.G. Petrucci was the only developer that responded to a public solicitation seeking proposals for the 4-acre Sterling lot at the corner of River and Market streets.

J.G. Petrucci's proposal would hinge on a cleared parcel. The status of demolition is still up in the air.

The Sterling's nonprofit owner, CityVest, won't sign a demolition agreement with Wilkes-Barre and the county without another document releasing the nonprofit board from liability, Lawton told council in the documents.

Lawton has advised county council to vote to reject this unusual request at tonight's meeting because CityVest can't identify and quantify the liability concerns, Lawton's documents say.

The release would cover any claims, past or future, involving the acquisition, ownership, evaluation, rehabilitation, demolition or supervision of the Hotel Sterling, according to a copy of the document.

Four people serve on the CityVest Board of Directors: Judd Shoval, the Rev. Thomas O'Hara, attorney Richard Goldberg and Dr. Brian O'Donnell. Three seats on the board are vacant.

It's unclear what will happen if CityVest refuses to sign the agreement.

The city and county are involved because CityVest is out of funds and the property was condemned by the city. Motorists and downtown merchants have complained about congestion caused by traffic barriers around the site.

Without county assistance, the cash-strapped city would be forced to locate other funds to complete demolition.

Meanwhile, county Community Development Director Andrew Reilly told county council during Monday's budget hearing that he's confident the federal government won't require the county to repay $6 million loaned to CityVest for the Sterling project.

The U.S. Department of Housing and Urban Development, or HUD, was recently advised by its Office of Inspector General to force the county to put $6 million in county funds back into the community development business loan fund.

The inspector's office said the fund replenishment was warranted because the county did not properly evaluate, underwrite, and monitor its loan to CityVest, according to the office's highly critical audit.

Reilly said he believes the audit is totally incorrect because the regulations it cites are not applicable, nonexistent, distorted or mistaken.

Replenishment also is unwarranted, he said, because no federal funds were involved in the loans to CityVest, the nonprofit that owns the downtown Wilkes-Barre property.

The federal government provided seed money to start the loan fund in 1982, but the last federal funding was spent before the Sterling loan in 2000, with projects after that year funded by investment earnings, interest repayments and other sources, Reilly maintained.

HUD will soon send the county written notice of the audit and allow the county 30 days to come up with a plan of action, said Lisa Wolfe, public affairs officer for HUD's region 3 based in Philadelphia.

It will move into a due process. The county will have the opportunity to explain how they plan to refute the claim or remedy the situation, Wolfe said.

After the county response is submitted, HUD will meet with county representatives and try to resolve the issues, she said.

Several council members criticized the administration for failing to notify council about the audit. Reilly said he is still awaiting the formal notification from HUD.

Reilly told council the loan fund has $5 million in non-federal funds that could be counted as reimbursement if necessary.

Lawton said he also will ask council to vote tonight on the final demolition agreement providing $232,729 toward the $492,729 Sterling teardown and site clearance.

City officials have approved the agreement and agreed to kick in $260,000 from state gaming funds.

If county council and CityVest approve the agreement, the county would acquire the property title after demolition, control site development and receive proceeds from the sale -- money that would return to the business loan fund.

Council also has the option to walk away, which means the city would oversee development and be first in line to recoup its expenses from sale proceeds, Lawton said.

What's next

Luzerne County Council will hold a public meeting at 6 p.m. today in the county's Emergency Management Agency building, Water Street, Wilkes-Barre. Documents about the Hotel Sterling and other agenda items have been posted on the council section of the county website, www.luzernecounty.org.

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