Over WB’s objections, redevelopment authority OKs disbursement of tax diversion funds

By Jennifer Learn-Andes - jandes@timesleader.com
Vinsko -

WILKES-BARRE — Against objections from Wilkes-Barre officials, the Luzerne County Redevelopment Authority voted Tuesday to return $2.9 million left from a tax diversion program to the county, Wilkes-Barre Area School District and Wilkes-Barre Township.

The county, school district and township had collectively sacrificed $9.756 million in real estate tax revenue to fund infrastructure improvements on Highland Park Boulevard and Mundy and Coal streets.

The three presented an agreement to the authority, which managed the diversion program, to split the unused funds based on the percentages they gave up — $1.2 million for the county, $1.6 million for the school district and $87,000 for the township.

Their agreement also contains an indemnification clause indicating all three will defend the authority if any legal action arises over the disbursement.

Attorney William Vinsko, who is handling the matter for the city, warned authority members Tuesday the city will likely pursue legal action if the money is returned to the three taxing bodies.

City officials argued the remaining funds should stay in the bank to finish extending Coal Street another 280 feet so it connects with Pennsylvania Avenue at East Union Street.

Vinsko maintains documents associated with the diversion program prohibit a closeout without the city’s clearance. Critics have repeatedly pointed out the city never gave up tax revenue from new development to fund the infrastructure, but city officials said Wilkes-Barre provided professional services and lighting and utilities for the Coal Street extension project.

Authority Solicitor Garry Taroli said the tax diversion documents allow the county, district and township to terminate the program. He asserted the city’s involvement was as construction manager of the Coal Street project — not as a party with power to hold up the program closeout.

Coal Street advocate

Attorney Richard Huffsmith urged the authority Tuesday to keep the $2.9 million in the bank, saying his clients — Jewelcor president and chief executive officer Seymour Holtzman and his wife, Evelyn — already spent $450,000 to $500,000 on part of the Coal Street extension to access the new Turkey Hill Minit Market on Wilkes-Barre Boulevard.

The Holtzmans constructed the road in compliance with state specifications based on assurances from the city and PennDOT they would be reimbursed for the cost of the road project when the rest of the extension is completed, Huffsmith said.

City officials have estimated this completed stretch was about 300 feet. The couple also donated land to the city as part of the project, Huffsmith said.

Other entities are interested in development in the area of the Turkey Hill if the Coal Street extension is completed, which would increase the tax base, Huffsmith said. County officials noted the Turkey Hill property is receiving a Keystone Opportunity Zone, or KOZ, tax break through 2024.

If the Coal Street extension does not proceed, the Holtzmans should be reimbursed for the road construction and reclaim ownership of land they donated to the city, Huffsmith said.

Authority Chairwoman Carol Keup and Taroli said the authority had no involvement in any promises or arrangement between the Holtzmans and the city and state.

Jewelcor representative Joseph Lakowski said officials in office when the tax diversion was set up 20 years ago intended the Coal Street extension to proceed into the downtown. PennDOT will be more likely to place the project on a four-year funding plan if officials stop disagreeing and keep the $2.9 million intact, he said.

As it stands, preliminary engineering work for the Coal Street extension is on the state’s transportation plan for 2024, but it would be up to the city to come up with the local match to proceed.

Last estimated to cost $12 million with a 20 percent local match, the Coal Street extension would include the lowering of a railroad embankment between Market and Butler streets to eliminate a railroad bridge over Scott Street, officials have said. Scott Street also would be elevated and widened in the area of the railroad bridge to prevent flooding during heavy rain.

Support for closeout

Funding aside, Wilkes-Barre Area School District Solicitor Ray Wendolowski said it’s still unclear if the Coal Street extension can proceed because the roadway would pass through a parking lot for the county-owned building on Pennsylvania Avenue that houses Children and Youth and other departments.

The city could not seize the parking lot through eminent domain because it is owned by another government entity, Wendolowski said.

Approximately 300 human service building workers would have nowhere to park if the lot size is drastically reduced, and a lot downsizing also would devalue the building, said county Manager C. David Pedri.

Pedri told the authority county council had voted to terminate the tax diversion program in 2015 with confidence the required infrastructure has been completed.  

Wendolowski concurred, and both men praised the program for its success sparking new development along Highland Park Boulevard and at the Arena Hub Plaza. Under the Tax Incremental Financing plan, or TIF, property owners paid real estate taxes on new development, but the money had been temporarily diverted for the infrastructure.

Tax revenue now generated by the new stores, eateries and other businesses likely “saved the finances of the school district,” Wendolowski said.

“Without this TIF, I don’t know where we’d be,” he said.

Wendolowski said he would consider “reasonable discussion” about a new tax diversion to finish Coal Street. Pedri said he’s open to discussions with any municipalities about programs to fund infrastructure, although the approval of elected officials is ultimately required.

All four redevelopment authority members attending the meeting — Keup, Judith Barr, Scott Linde and John Pekarovsky — voted to accept the cooperation agreement disbursing the funds. Wilkes-Barre Township officials are scheduled to vote on the agreement next month, with the township solicitor recommending adoption, Pedri said.


By Jennifer Learn-Andes


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

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