Luzerne County Council OKs rail sale to Reading and Northern

Luzerne County’s rail line will be sold to Reading and Northern Railroad, a County Council majority decided at a special meeting Wednesday.

The council affirmed a Tuesday decision by the county Redevelopment Authority Board and its affiliated Rail Corp. to sell the line to the Port Clinton-based rail company in a package promising increased freight business and the addition of recreational passenger-train excursions from a depot in Wilkes-Barre.

In addition to the excursions, Reading and Northern offered a $10 million package — $7 million cash at closing plus $3 million for specific track-related rehabilitation services to be spent during the first three years.

The council also adopted a resolution Wednesday authorizing the county manager to negotiate a sale agreement and related documents between the county, authority, and Rail Corp.

All three parties agreed to sell the authority-owned line in a settlement agreement tied to litigation the county filed over $3.28 million it is owed by the authority.

This settlement agreement gave the council power over which entity acquires the line.

The council had unanimously vetoed the original authority/Rail Corp. decision to sell the line to R.J. Corman Railroad Group for $8.2 million, which prompted the second choice of Reading and Northern.

Reading and Northern Chairman and CEO Andy M. Muller Jr. has announced the county can keep the entire $10 million. However, county and authority officials said they cannot lock in that verbal revision because it came after the deadline to submit purchase offers.

Tuesday’s authority/Rail Corp. approval emphasized the Reading and Northern sale must reserve easements for existing and planned trail extensions. Trail advocates have made public comments identifying easements as a priority.

The council’s resolution said the selection of Reading and Northern’s proposal is “expressly conditioned upon Luzerne County’s further review and approval of the terms and conditions of any definitive agreements for the sale of the rail.”

Nine of 10 council members in attendance Wednesday voted in support of the sale to Reading and Northern.

Councilman Harry Haas voted no, saying he views the rail line as an asset that should be retained by the county. He said it was a difficult decision, and he hopes the county manager strongly negotiates to obtain the most “fruitful deal for the county.”

Councilwoman Joanna Bryn Smith was not in attendance.

Those voting for the sale: Chairman Jimmy Sabatino, Vice Chairwoman Brittany Stephenson, Chris Belles, Steve Coslett, Dawn Simmons, Denise Williams, John Lombardo, Patty Krushnowski, and LeeAnn McDermott.

Following the vote, Lombardo said county officials have been talking about expanding the rail for years, and he is “so happy to see it coming to fruition.”

Lombardo said he lives near Reading and Northern’s Pittston depot and is “amazed” to see the number of people participating in the company’s passenger excursions to Jim Thorpe. It goes both ways, he said, noting thousands of people ride the excursions from Jim Thorpe to Pittston to attend the Pittston Tomato Festival.

Muller said he would link Wilkes-Barre to the Pittston depot, allowing trips from Wilkes-Barre to Jim Thorpe and, eventually, from other areas to Wilkes-Barre if the city has events or attractions that will draw visitors here.

Lombardo said he also has confidence Reading and Northern will build freight to attract more businesses and reduce local truck traffic.

He also stressed the agreement preserves trail rights-of-way that will eventually link together and make the county a recreation destination.

Lombardo described the vote as “one of the proudest moments I’ve personally had on Luzerne County Council.”

Sabatino echoed those comments.

“This is a really pivotal moment for the future of Luzerne County,” Sabatino said. “We are proud to have been a part of it.”

Others expressed disapproval of the decision.

R.J. Corman’s legal counsel, attorney Joseph Miller, spoke remotely from Kentucky and said the company is formally objecting to the county’s request-for-proposals process.

Miller said some basic due diligence was not completed prior to issuance of the request for purchase offers. He said that includes R.J. Corman’s notification to the authority that R.J. Corman — not the authority — owns track in the Grimes Industrial Park in Pittston Township that was part of the property listed as being sold.

“We object and want our objection noted for the record,” Miller told the council.

Authority Board Chairman Scott Linde has said he expects R.J. Corman will be filing litigation.

In response to the Grimes Industrial Park matter, county officials have said the request for purchase offers made it clear that only property owned by the authority is being sold, which would leave it up to any buyer to perform their due diligence.

Ashley Borough Councilman Donald Bly also asked the council to hold off on selling the property until the county can meet with borough officials to discuss the borough’s request to carve out property so it can be sold separately for borough businesses.

Ashley business owner John Halliday has said he wants to buy the 70-acre Ashley Rail Yards parcel so it could house his business — John P. Halliday Trucking Inc. — and two other businesses that will be displaced due to an Interstate 81 widening and reconfiguration in the borough.

Bly said the borough is losing the majority of its tax base due to the I-81 project, which will impact real estate tax bills for property owners.

“This sale is going to kill us,” Bly told the council.

County Manager Romilda Crocamo said she will meet with borough officials as part of the upcoming negotiations with Reading and Northern.

Under the settlement agreement, sale proceeds must first be used to pay off the authority’s outstanding loans to the county and cover county legal fees and costs associated with preparing the request for proposals and carrying out the sale. Any proceeds remaining after those payments would be split between the county and authority/Rail Corp. based on a percentage formula, it said.

The county is set to immediately take possession of all rail property if a sale doesn’t close by Oct. 9, the settlement agreement said.

Local journalism matters, and your support makes it possible. You can help sustain this work by making a donation or choosing one of our subscription options. Subscribers enjoy valuable benefits, including full access to our e-edition, a reduced ad experience on timesleader.com, and more.

Your support helps ensure independent, high-quality local news remains available today and for future generations. Thank you for standing with local journalism.

Click for subscription offers.