Luzerne County Council is set to vote Tuesday on funding requests for two downtown Wilkes-Barre hotel projects, and it has added caveats to help protect the county funding if the earmarks are approved by a council majority, the agenda said.
County officials say developers of both projects have agreed to the conditions.
One is an indemnification clause in which the developers must agree to repay their county awards 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 projects.
The proposed resolution also keeps funding at $3 million for a project at the former Hotel Sterling site instead of the increase to $5 million that had been requested by that developer.
If approved, $3 million would be earmarked toward a $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.
In the other project, Bloxton Investment Group is seeking $2 million to acquire and convert the former First National Bank building on Public Square into an upscale restaurant linked to a 105-room “Tribute by Marriott brand” boutique hotel it is creating inside the adjacent Luzerne Bank Building already owned by a Bloxton entity, BIG Public Square LLC. That project is estimated at $23.8 million.
Both developers are seeking earmarks 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.
The county has $6.675 million available in this reserve account.
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 has occurred there.
Bloxton principal Michael Bloxton already told council during his presentation earlier this month he was willing to indemnify the county and repay the $2 million if HUD eventually takes action forcing the county to repay that funding.
H&N representative Stephen Barrouk had said an indemnity likely would jeopardize H&N’s ability to secure a loan because the lender would not consider the receipt of county funding as a guaranteed commitment.
Contacted Friday, Barrouk said H&N understands council’s reasoning in adding indemnification and said the company hopes to work with the county and legislators to convince HUD that the planned project warrants termination of the threatened penalty.
Barrouk also stressed H&N would be thankful for $3 million and will figure out how to proceed without the additional $2 million.
“We’re grateful for the consideration,” he said. “I thank everyone for their patience.”
Among the other council conditions for each developer: proof of a minimum $500,000 match from another public or private grant and an agreement they won’t be applying for a real estate tax break.
Barrouk said he already had proposed the remaining conditions specified in the resolution, which 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.
For the Sterling project, 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.
In the Public Square project award, construction must start within 12 months. Portions of the funds would be released in three phases: at the agreement execution; upon proof that at least 25% of planned improvements have been completed; and at the signing of a restauranteur or completion of the project.
Council’s Tuesday meeting is at 6 p.m. in the county courthouse on River Street in Wilkes-Barre, with instructions for remote attendance posted under council’s online meetings link at luzernecounty.org.