The county-owned rail line that intersects Market Street in Wilkes-Barre.
Times Leader file photo
A tentative agreement has been reached in litigation filed over Luzerne County’s rail line, and a solicitation seeking purchase offers for the line is expected to be issued within 30 days, according to information sent to County Council Friday evening.
County Council initiated the litigation in July against the county Redevelopment Authority, which owns the line, and the authority-related, nonprofit Rail Corp., which maintains a lease agreement with a rail operator.
The litigation, scheduled for trial in the county Court of Common Pleas in August, sought a declaration that $3.28 million the county loaned to the authority is immediately due. Although the litigation centers on the delinquent loan, it appears part of a broader county effort to privatize the track, with the hope of adding recreational passenger rail excursions while expanding commercial use.
In response, the authority and Rail Corp. had argued that there is no breach of contract to litigate, as it has until October 2026 to repay the county.
Reading & Northern Railroad Chairman and CEO Andy M. Muller Jr. made an unsolicited $10 million offer to purchase the county line in October, stating he would increase freight service and introduce passenger train excursions from Wilkes-Barre to Pittston, with the option to continue to Jim Thorpe.
Authority board members had reluctantly decided that purchase offers should be considered, but only through a public process open to all interested entities.
However, authority members have said plans to solicit offers were delayed due to unanticipated hurdles in documenting rail line holdings.
According to officials familiar with the proposed settlement terms, the agreement would ensure the property is sold through a public request-for-proposals and that the county will be involved in preparing that solicitation and have the right to accept and reject bids.
When the rail is sold, the county would receive its costs and the amount required to satisfy the mortgage of approximately $3.3 million, officials said.
The agreement is also expected to delineate how remaining funds, if any, would be disbursed.
Specific details would be publicly released when the agreement is finalized by all parties involved in the litigation.
Redevelopment Authority Chairman Scott Linde said Friday night the authority had authorized its legal counsel to negotiate under certain terms, and he was still awaiting a final written settlement agreement.
County Council Chairman Jimmy Sabatino said Friday evening he is “pleased that the parties have reached an amicable resolution and can’t wait to get it down in writing.”
“Hopefully, the sale of the railroad will begin a new chapter of cooperation between the county and redevelopment authority,” Sabatino said.
Both sides are scheduled to appear in court on Tuesday for a hearing before County Judge Lesa S. Gelb, who is presiding over the matter, although it’s unclear if that hearing will still proceed.
The hearing partly stemmed from the county’s legal motion filed last month seeking a court-appointed third-party receiver to manage the rail line. The county argued that outside oversight is needed to protect the asset until the pending litigation is resolved.
In addition to paperwork presenting arguments against the appointment of a receiver, the authority filed a motion asking the judge to order the county to furnish information the authority sought through discovery that the county has refused to supply, Authority Solicitor Peter P. O’Donnell had said.
Tuesday’s hearing was set to address both matters, O’Donnell had said.
As a precursor to seeking purchase offers, the authority board approved a $20,000 contract in December with Trenton, N.J.-based Strauss & Associates/Planners to document the rail assets. That contract was raised to $40,000 in February due to the scope of work, and the authority discussed the potential for another payment increase to the consultant last month.
Company consultant Andy Strauss told the authority last month he is “making slow but steady progress,” logging the property titles and boundary lines dating back decades through previous owners, including some acquisitions involving bankruptcy and tax claims.
Because this level of documentation had not been completed before, Strauss said he has been “starting from scratch” using technical files, railroad surveys, and maps.
Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.
