Luzerne County Council asked to guarantee state grant for Wilkes-Barre project

The company that purchased and revamped the former Berkshire Hathaway GUARD property on South River Street in Wilkes-Barre is asking Luzerne County Council to approve an agreement it needs to receive $1 million in state funding for the project.

KBJ Real Estate Investment LLC, which purchased the properties at 16 and 24 S. River St. for $1.8 million last year, has state approval for a $1 million Commonwealth Redevelopment Assistance Capital Program grant.

Before turning over the money, the state Office of the Budget requires a host municipality — in this case, the county — to provide a commitment that it will reimburse the state for any project expenditures found to be ineligible under the grant program.

The risk to the county is negligible because several steps already have been taken to ensure expenditures meet eligibility requirements and approval, KBJ’s consultant, Chris Cawley, told council during its virtual work session this week.

Cawley, of Ashburn Advisors LLC, said there are three levels of compliance that provide assurance, starting with a review by his office.

Next, an engineering firm engaged by the state’s Office of the Budget examined the project plans and expenditures. The Office of the Budget also signed off on the expenditures, he said.

Cawley noted county council previously approved two similar guarantees in 2018 for state Redevelopment Assistance grants for the Misericordia University science hall expansion project and the Citi Tower redevelopment project on West Market Street in Wilkes-Barre. Both guarantees were unanimously approved by all 10 council members in attendance, records show.

Due to the extensive advance Redevelopment Assistance Capital Program compliance review, Cawley said he has never had a situation where a sponsoring taxing body was placed in jeopardy.

Under the proposed indemnity agreement, KBJ must immediately pay the county any amount deemed ineligible by the state.

Council Chairman Tim McGinley asked what costs could possibly be deemed ineligible.

Cawley said there are none because everything already has been approved. To receive the $1 million grant, KBJ must spend $1 million as a match, he said. That match already has been satisfied through the property purchase and completed renovations, he said.

KBJ owner Kris Jones told council the grant and match total $2 million, and he has more than met that with the $1.8 million purchase and more than $300,000 in renovations.

Councilman Walter Griffith said during the work session he won’t support the guarantee when council votes Sept. 8 because he does not want to agree to anything that may put the county “on the hook.”

McGinley said Friday the explanation provided in the session convinced him to support this latest guarantee.

“We’ve done this in the past, and Kristopher Jones is very reputable and has done an outstanding job with economic development in the Wilkes-Barre area,” McGinley said. “I fully support the proposal because there is no risk from the information presented.”

Jones said the River Street property houses the state’s second business accelerator and already has created dozens of new jobs by fostering innovative new companies, including Studio 16 South and Mobiniti. He invited council members to tour the facility, saying he added a state-of-the-art podcasting and live video streaming studio.

Annual real estate taxes total more than $80,000 for the property, which contains a five-story building near the Market Street Bridge and an adjacent three-story structure, Jones said.

“I would consider it so far to be a resounding success, even considering the very difficult economy we’re in,” Jones told council.