At least $410,000 in taxpayer funds will be lost with Luzerne County’s sale of a downtown Hazleton bank building to the city.
That loss doesn’t include $116,000 in community development funding spent to knock down a deteriorating portion of the building to create parking.
“It was a piece of property the county never should have bought, a big mistake,” said county Councilman Stephen A. Urban, who opposed the county purchase by former commissioners Todd Vonderheid and Greg Skrepenak.
“I call this Greg and Todd’s folly,” he said.
The property’s proposed sale to Hazleton soon will come before County Council, which must approve the selling of all county-owned real estate, officials say.
The situation dates back to September 2005, when former commissioners evacuated a rented southern county annex on Broad Street on a suspicion of toxic mold that was later deemed unfounded. They announced their search for a new Hazleton annex.
In December 2005, a company named Val-Mar Holdings bought the former Security Savings bank building a few blocks away on Broad Street for $330,000. Val-Mar was owned in part by Frank DeGaetano, a former county planning commission member who had donated $850 to Skrepenak’s election campaign and also did business with the county through his Valley Testing and Balancing Inc.
That July, Skrepenak and Vonderheid publicly announced their selection of the Val-Mar building for the new annex, voting to lease the place for $2.58 million over 10 years, or $21,487 per month, with utilities and some initial renovation included.
Skrepenak had denied any inside track or political involvement in the decision, but commissioners switched to plans to buy the building after public outcry over the lease amount. They voted in May 2007 to purchase the property for $605,000 through eminent domain, but a court panel later ordered the county to pay $700,000.
The property was never converted into an annex because the next administration didn’t want to spend an estimated $1 million on renovation. It was listed for sale for an appraised $625,000, but there were no takers.
Hazleton agreed to take the property for $290,000 after the county completes demolition of an attached structure to create parking.
Money won’t change hands because the city is forgiving a $290,000 lien against the nearby Broad Street Exchange, which was acquired by the county to keep it out of a back-tax auction that would have caused the county to lose a $1.8 million community-development loan on the property.
County officials were enthusiastic about the swap because the city had planned to use the former bank for a more visible police station, but city Mayor Joseph Yannuzzi said those plans have fizzled due to finances.
Instead, the city plans to seek proposals from private developers interested in acquiring the bank.
County Chief Engineer Joe Gibbons said he will soon present an overview of the building and other county-owned properties to council.
Gibbons, who was not involved in past commissioners’ decision to buy the Val-Mar property, said a sale to the city will clear up the lien on the Broad Street Exchange and allow city officials to control future plans for the former bank.
The remaining original stone bank structure is solid, but the demolished portion was in “poor” condition, with leaks and a wood-frame construction that included rafters charred from past fire damage, he said.
Urban said the condition of the attached structure reinforces his past complaints about the “insane” county purchase price more than double the amount Val-Mar paid when the company had completed little, if any, improvements to the structure.
He supports the city sale because the property will return to the tax rolls if it is not used for a police station.
However, the county also would forego the chance to recoup additional revenue if the city sells the property for more than $290,000.
Council Chairman Tim McGinley said council members must complete “due diligence” before a conveyance to the city is finalized.
The county has no dedicated southern annex. Satellite services in Hazleton were reduced because of budget cuts, and the remaining offices are housed in rented space.
The county’s original annex that was evacuated after the mold scare was later cleared for occupancy and now houses Lackawanna College.