Draft Luzerne County rail litigation settlement agreement under review

Luzerne County’s Redevelopment Authority met in closed-door executive session Tuesday to review a draft settlement agreement in litigation County Council filed over the authority’s rail line.

Authority Board Chairman Scott Linde said the settlement details are still under discussion, which is why the board did not vote on the matter Tuesday.

After Tuesday’s executive session, Linde said the authority and its related, nonprofit Rail Corp. reviewed the “complex, 15-page draft settlement agreement” and provided input to their legal counsel on “areas required to be clarified and/or negotiated.”

County Council initiated the litigation in July against the authority, which owns the line, and the Rail Corp., which maintains a lease agreement with a rail operator.

Scheduled for trial in the county Court of Common Pleas in August, the litigation sought a declaration that the $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.

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 recover its costs and the amount required to satisfy the mortgage, approximately $3.3 million, officials said.

The agreement is also expected to delineate how any remaining funds would be disbursed.

Both sides were scheduled to appear in court on May 12 for a hearing before County Judge Lesa S. Gelb, who is presiding over the matter, for arguments related to the county’s April filing seeking a court-appointed third-party receiver to manage the rail line. The authority also filed a motion asking the judge to order the county to furnish information it sought in discovery.

Due to the tentative settlement agreement, that hearing was not held. Gelb issued an order indicating that “any and all matters” in the litigation are rescheduled to Aug. 12.