Sterling site garage funding request put to Luzerne County

One of the pending eligible American Rescue Plan funding requests before Luzerne County Council would help construct a 250-car public garage at the former Hotel Sterling site.

Submitted through the Wilkes-Barre Industrial Development Authority, the application seeks $3 million. But under allocation caps approved by a council majority on March 14, the project would receive $2 million, which was the maximum council set for municipalities and municipal authorities.

Stephen Barrouk recently sent county council members an email about the request, urging them to provide the full $3 million.

Barrouk wrote on behalf of Gateway Associates, described as a public-private partnership involving the city industrial development authority and H&N Investments LLC, which proposes construction of a 110-room Hyatt Place Hotel with a conference center and parking garage on the site at North River and West Market streets.

“The garage is an integral part of the development because without it, the hotel/conference center will not have enough parking to sustain itself, causing serious financial problems affecting its economic viability,” his communication said.

The $3 million is half of what is needed to construct the parking facility, and other funding sources would be procured to cover the balance, his letter said.

“Any reduction in the American Rescue Plan grant award causes a serious problem assembling the necessary funds to complete this project. Without the garage, this $40 million project is in serious jeopardy,” the communication said.

It said there is no public parking in that city quadrant fronting the county-owned River Common recreational area along the Susquehanna River.

“Tens of millions of public dollars have been spent to create a world-class riverfront that has limited access to parking,” it said.

A minority investor in the project, Barrouk said Thursday the parking would be underground or a parkade —whichever is more cost effective. If it is a parkade, the structure would be on the Franklin Street side of the property and extend toward the center of the site.

As evidence of the demand, Barrouk said more than 100 vehicles routinely park at the vacant Sterling site, even though it is not operating as a parking lot. Many are from nearby apartments, he said.

A parkade also would be designed for potential upward expansion based on future public need, he said.

“We think the demand is going to be really high,” Barrouk said.

To date, the state has committed $7 million in grants toward the hotel project.

County support for the parking garage will create direct and indirect jobs in the downtown, add to the city’s declining tax base and “fulfill the representations the county made” to the U.S. Department of Housing and Urban Development, or HUD, during its “initial effort to save the Sterling,” Barrouk’s letter said.

The landmark Hotel Sterling was condemned and demolished in 2013. The public had learned in 2011 that CityVest, the property’s nonprofit owner at the time, was out of funds and couldn’t fulfill its mission of attracting a developer to renovate the former hotel into a premier residential and retail complex.

CityVest was unable to repay a $6 million county community development loan largely used to make the parcel larger, pay a consultant, tear down an attached hotel structure and remove hazardous material. Critics had questioned that approach, saying the funds should have been invested on roof repairs and mothballing to stop leaks and prevent further deterioration.

The county has been forced to set aside more than $6 million in community development funds in case HUD follows through with a penalty threatened in 2014 to withhold $6 million in funding.

HUD had issued a determination the former Sterling project should not have received $6 million because it did not create jobs or result in a revitalization project.

County officials have contested this determination, arguing planned development at the site eventually should create jobs and that HUD regulations don’t specify a time limit for the job creation.

In his recent letter to the county, Barrouk said the county has been the “leader in attempts to revitalize” the former hotel, which was unfortunately demolished after the county spent substantial community development funding.

“The attempt was noble, but the effort is not finished. If the county could affirm its support for the public garage project, H&N Investments LLC can proceed with completing the privately owned hotel/conference center,” it said.

Council’s support for the $3 million would be appreciated, it said.

“The county and city have tried over the last 30 years to improve this most visible and iconic corner in the city without success. This is our best chance to build a landmark that will support all our institutions, both public and private, and have an enduring economic impact,” it said.

Council action

County council is slated to vote Tuesday on the first batch of outside awards to 77 entities that would receive full funding because their requests meet or fall below caps set by a council majority.

In addition to the $2 million municipality/municipal authority cap, council set maximums of $200,000 for businesses and $500,000 for nonprofits.

Council approval of the remaining 36 requests — including the Wilkes-Barre Industrial Development Authority’s — would be scheduled for a future meeting because these projects are set to receive less than requested due to the caps.

The 36 entities would have to submit revised budgets demonstrating how they would scale back their projects or provide additional funding through other means to complete them as originally proposed, council members said.

If approved as is, the combined allocation to 113 entities would be $55 million.