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Leighton

Vinsko

WILKES-BARRE —The City of Wilkes-Barre put a 15-year dispute to bed Thursday, conceding a $200,000 settlement on what was a lingering $6.3 million judgment over a failed city construction project.

Agreed to Thursday by city council, the settlement frees the city and its redevelopment authority from any liens, judgments or outstanding litigation in the supply of pre-cast concrete beams for a stalled theater/parking garage project on South Washington Street in 2001.

Proposed under former Mayor Thomas McGroarty, the project in 2003 fizzled three months into the construction due to technical problems and the Wilkes-Barre Redevelopment Authority’s inability to secure the funds.

Left on the hook for the project’s cost, materials supplier Newcrete Products — a division of New Enterprise Stone & Lime Co. — took the redevelopment authority to court in 2006, according to Times Leader archives.

Hamstrung by a lack of property to sell off, the redevelopment authority was unable to pay the $4.3 million cost —which by this year ballooned to $6.3 million with interest.

Coincidentally, the redevelopment authority was also in debt to the city since 2005 for the same amount — $4.3 million.

A Luzerne County judge in 2011 denied Newcrete’s claim that the city should be liable for the cost, ruling that the city and the authority were two separate entities.

Last-minute resolution

Moments before Wilkes-Barre City Council met on Thursday, Assistant City Attorney Bill Vinsko received word that the settlement had been reached. A last-minute resolution was added to the agenda so the city could purchase several parcels of the redevelopment authority’s land at a sheriff sale Friday at Luzerne County Courthouse.

The resolution notes that the settlement must be paid within 30 days. It was approved 4-0, with Councilman Tony George excused from the meeting.

Vinsko explained that the settlement will allow the city to pay a fraction of a multi-million dollar obligation while freeing up parcels of land which the city can develop or sell to recoup the cost.

The settlement also allows the redevelopment authority — in stasis for years due to the liens filed by Newcrete — to again seek grant funding.

“If (the redevelopment authority) did anything or got any grants, sold or transferred property, they had to pay up,” Vinsko said.

“Now not only do we have the parcels but we have a functional redevelopment authority where we can move ahead and get grants again.”

Of the authority’s remaining debt owed to the city, Vinsko said the sheriff’s sale “essentially extinguished” it.

However, Vinsko said the city has the option to file a deficiency judgment against the redevelopment authority. The filing would attempt to recoup some of the debt because the properties “aren’t worth anywhere near $4.3 million.”

‘Headache’ inherited

Despite the judge’s ruling in 2011 that spared the city liability in the case, Mayor Tom Leighton said Friday one reason the city agreed to the settlement was to prevent Newcrete from continuing to file objections and “drag it out” further.

“This was a headache I inherited in 2004 and it took this long through the legal system to hammer it out,” Leighton said.

Moreover, Leighton said the city couldn’t risk a future proceeding holding them responsible for the $6.3 million debt.

“It would have absolutely destroyed us,” he said.

Newcrete attorney John H. Doran of Wilkes-Barre did not immediately return a request for comment Friday.

‘Unlimited opportunity’

The exact number of parcels obtained in the sale by the city Friday was unclear, but Leighton said there were “a lot of slivers. Some are very valuable.”

As part of the sale, Vinsko identified a lot on South Main Street next to Bart & Urby’s and another across from R/C Movies 14 on East Northampton Street as two of the parcels acquired Friday. Another lot, he said, was near Exit 2 on the North Cross Valley Expressway.

The settlement and addition of the parcels coupled the city’s acquisition of the Hotel Sterling — all within the last 24 hours — had major implications for the city’s future development, Vinsko said.

“It’s an unlimited opportunity for the city of Wilkes-Barre going forward,” he said.

While some of the parcels may not be valuable in and of themselves, he said, adding them together with other city properties allows the city to “do a lot of great things in the neighborhoods and the downtown.”

Preventing the parcels from remaining vacant and unkempt also preserves the property value of areas around them, he added.

“Add in all these things the redevelopment authority can do and now that we have it again, we could really start moving,” he said.