Dallas City News

A Luzerne County Council majority voted Tuesday to approve a $3 million earmark for a hotel/convention center project at the former Hotel Sterling site in Wilkes-Barre, but no council members made a motion to provide funding for another project on Public Square in the city.

Council members had lengthy discussion before voting on the earmark toward H&N Investment’s $37 million, 112-room Gateway Hyatt Place Hotel and Conference Center on a 2.1-acre lot at River and Market streets where the landmark Hotel Sterling once stood.

Several council members said they were willing to move forward with the Sterling site earmark due to added conditions that help protect the county funding if problems surface.

Tuesday’s vote authorized county Manager Romilda Crocamo to negotiate a final agreement with H&N.

The following council members voted for the Sterling project earmark: Harry Haas, Chris Perry, Joanna Bryn Smith, Vice Chairman Brian Thornton, Kevin Lescavage and Chairman John Lombardo.

Voting no were: Patty Krushnowski, Jimmy Sabatino, Brittany Stephenson, LeeAnn McDermott and Gregory S. Wolovich Jr.

Perry said he came to the meeting “thinking one way” but was convinced to support the project, in part due to points and questions from Thornton and Haas.

Smith said she wants to see progress at the site.

Lombardo said he also appreciates the many comments and questions answered Tuesday and wants to see development at the site, noting he was upset when the Hotel Sterling was demolished.

In voting no, McDermott said she wants to see “something there” but was sorry that she had to vote no because she still considers the proposal “iffy.”

In the Public Square project that had no vote Tuesday, Bloxton Investment Group’s entity — BIG Public Square LLC —sought $2 million to acquire and convert the former First National Bank building into an upscale restaurant linked to a 105-room “Tribute by Marriott brand” boutique hotel it is creating inside its adjacent Luzerne Bank Building. That project is estimated at $23.8 million.

One added condition for the Gateway Hyatt project is an indemnification clause in which H&N must agree to repay the award if the county is sued or otherwise requested by the U.S. Department of Housing and Urban Development, or HUD, to return funds the county is using as a grant for the project.

The county earmark will come from community development funds that had been set aside in case HUD, follows through with a $6 million penalty threatened a decade ago over a lack of development at the Sterling site when it was owned by the nonprofit CityVest.

Some argue the county should keep $6 million intact unless HUD drops the threatened penalty, but the federal agency has not communicated any willingness to do so to date, officials have said. Others maintain using the set-aside funds on a project at the Sterling site would be the best way to clear up the disagreement with HUD because that project would address HUD’s original complaint that no development or job creation has occurred there.

H&N representative Stephen Barrouk told council the indemnification will create challenges for the developer but would not jeopardize the project. A council majority rejected a motion to eliminate the indemnification clause.

Among the other council conditions for the developer: proof of a minimum $500,000 match from another public or private grant and an agreement it won’t be applying for a real estate tax break.

The other caveats include:

• Providing proof of adequate funding for the project prior to the release of county funds.

• Publicly bidding construction using prevailing wages and keeping certified payrolls, with copies of bids and payrolls furnished to the county.

• Completion of a job creation and economic impact report during construction and three years after completion.

• Submission of construction plans and contract documents to the county prior to the release of grant funds or upon request.

• Furnishing of environmental reports, including plans to remediate and resolve any issues.

The county grant would be rescinded if construction does not start within 36 months. County funds would be released in two phases — the first after the structure shell is completed and the second after the remainder of the work is finished.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.