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WILKES-BARRE — Luzerne County’s Community Development director said at this point he’s more interested in new jobs than payback of a $6 million loan with the city’s proposed sale of the former Hotel Sterling site for less than the assessed value.
Job creation is the ultimate goal of the U.S. Department of Housing and Urban Development money funding the county’s loan program that directed $6 million to a past attempt to develop the site, said Andy Reilly, director of the county’s Office of Community Development.
Wilkes-Barre Mayor Tony George is proposing selling the three parcels that have a combined county assessment of approximately $2.6 million to a new developer for the construction of a mixed-use project with a hotel, condominiums and retail space.
“I do not think that the county would oppose it,” Reilly said Monday.
While it’s assessed at a certain amount, that does not necessarily reflect the sale price, especially when development costs are factored in, Reilly said. “I don’t think the market would bear that price,” he added.
HUD wants jobs to be created as a result of the loans and Reilly said it appears that the proposed development would do so, maintaining a position the county made years ago. In 2014, HUD issued a directive to put $10 million in the county’s loan program for a number of projects, including the Hotel Sterling development by CityVest, that failed to produce jobs.
Back then the county challenged the order, arguing HUD regulations contained no specific deadline for the job creation. The county maintained that the jobs would come eventually and the loan program would be replenished.
Reilly said he reached out to city officials last week to remind them that the county could contribute language to the sales agreement stating “we have the right to monitor” the project with regards to the number of full-time jobs created.
“We’re fine with that,” said city Administrator Ted Wampole, confirming Reilly had contacted the city about monitoring the jobs.
Assessment and price
Wampole added that the city’s appraised value is lower than $2.6 million assessment. The city is the only municipality in the county that does not use the county’s assessed values. He provided a May 7, 2013 appraisal from Alan P. Rosen that assigned a net fair market value of $1.39 million. It was done before the demolition, but deducted the demolition cost of $600,000 from the market value of $1.99 million.
Wampole also defended the sale price.
“This thing has sat without a whole lot of interest,” Wampole said.
The new developer, Gateway Center Associates, led by Hysni Syla, plans to make a presentation on the project during city council’s work session Tuesday night. The sale of the property at the intersection of West Market and North River streets is expected to be voted on Thursday during city council’s public meeting at City Hall.
Syla, a native of Kosovo, has transformed the nearby Wyoming National Bank building on West Market Street into the Vault Grill & Bar and apartments. In addition to himself, the other partners in the Hotel Sterling project include Azem Tahiraj, the owner of Diamanti Co., a construction company based in Pristina, Kosovo and ARAMARK.
The mayor said he chose Gateway Center Associates based on the recommendation of a committee created to review the two proposals submitted in response to a request issued by the city to develop the property that’s located in a Keystone Opportunity Zone offering tax breaks through 2024. The other proposal came from McClure Company Inc. of St. Petersburg, Fla.
As a result of the lien it placed on the property to recover the $570,000 it spent to secure and demolish the structure, the city took ownership from the county. The lien put the city at the top of the list to be paid if the property was sold, with any excess proceeds to go back to the county for the loan program.