‘Good faith effort’
Commissioners approve $450,000 loan for acquisition of PNC Building
Warren County will be loaning the Warren County Development Authority, Inc. $450,000 to acquire the PNC Bank Building.
The commissioners voted 2-1 at their Feb. 7 meeting to authorize the negotiation of an agreement to fulfill the WCDA request for financing, which also includes a $100,000 grant for interior renovations of the building, with Commissioners Ben Kafferlin and Jeff Eggleston voting in favor and Commissioner Cindy Morrison opposed. After a brief presentation on the intended use of the building by WCDA — which includes providing space for the administrative offices of the Northern Pennsylvania Regional College on the building’s fifth floor — by Commissioner Eggleston, Kafferlin moved to approve the financing agreement, at which point Eggleston stated that there were two options for providing the financing — one with interest and one without.
The option to finance the purchase of the building with interest, which Eggleston said Morrison requested, was added as an option as a result of that request, Eggleston said. Commissioner Kafferlin moved to approve the financing agreement without interest, and Eggleston seconded.
“I would like to counter that motion,” said Morrison, who moved that the motion be tabled until she’d had an opportunity to review the financing agreement with interest, which did not pass.
Eggleston stated that he did not support requiring interest on the $450,000 loan because so doing, he argued, would mean that the WCDA would be essentially paying back a portion of their $100,000 grant in the form of interest. “I believe that this is a good faith effort to provide stability to the project,” said Eggleston.
“I don’t believe that we should be loaning money as a government entity,” said Morrison. “We’re not a bank, we’re not a lending institution. I understand that there are issues with timing, but that’s not really our concern.”
The WCDA is required, as part of the building’s purchase, to provide proof of financing to the building’s current owner, Westminster Develolpment LLC, prior to March 1 in order to close on the property by the proposed date of March 31.
The Northern Pennsylvania Regional College has obtained a commitment that the site for administrative offices would be ready for move in by Dec. 1 of this year.
“I also don’t believe that we should be purchasing a building to compete with the private sector,” said Morrison. While she remained opposed to the financing agreement, Morrison said, she added that she was “very pleased and honored that Warren County has been selected for the NPRC. I want it here. I just think this is the wrong approach. I don’t believe we should be purchasing a building in downtown Warren, or loaning money. I believe we should be doing anything in our power to help the NPRC find a home.”
Morrison added that she had “extended an offer of $50,000 as a grant to the project when the location would have been the South Street School.”
But that proposed location, said Morrison “somehow changed.”
Other objections Morrison had to the agreement included that she understood the original request for the grant to be for $50,000 rather than $100,000; that she was unclear whether the space used by the NPRC would be actual class space or only administrative office space; and that she was unclear whether Long and Nyquist were used in the lobbying for state funding for the project.
She also expressed concern over whether the entire building would be ready by Dec. 1 for occupancy by tenants other than the NPRC administration.
Commissioner Eggleston answered those concerns, stating that “the county is not purchasing the building, the WCDA is buying the building and we’re providing a bridge loan;” the approval to negotiate an agreement voted on during the Feb. 7 meeting had reflected what the WCDA knew it needed for renovations — $50,000 — but that the request was for $100,000 in order to ensure that incidental needs would be covered; that Long and Nyquist helped Jim Decker (for WCDA) and Commissioner Kafferlin to do the lobbying on behalf of the county for the state’s help in the project; and that the work needed on floors other than the fifth, where the NPRC would be housed, were cosmetic.
“The major cost of heavy renovations will all be completed as part of the project,” said Eggleston.
“The WCDA is a government entity,” said Morrison.
“We’re 501c3 corporate entity,” said Decker, who added that the WCIDA would be a governmental entity but that it was not the same as the WCDA.
On the issue of risk, and whether or not the county would be stuck with the building in the event that the WCDA defaulted on the county’s loan, Decker answered that he would consider the risk low. The proposed steps for redevelopment of the building would be for the WCDA to secure the loan from the county, use foundation grant and state RCAP money to do the renovations before securing a 15-year traditional mortgage to pay back the bridge loan to the county, which the agreement states must be repaid within 10 days of March 1, 2019.
Several representatives from the city were on hand to speak in favor of the agreement, including Mayor Maurice Cashman, City Manager Nancy Freenock, and City Councilman Paul Giannini.
Several members of the community also expressed concerns over the county’s obligation to the building should a default occur, among other things.
“The agreement is available for anyone to review,” said Eggleston. “It indemnifies the county across the board of all liability of liens… This is going to be the responsibility of the WCDA, and if anything happens the county will get a clean title.”
The agreement to finance the WCDA’s purchase of the PNC Bank Building was ultimately passed at a vote of 2-1 with Commissioners Kafferlin and Eggleston in favor and Commissioner Morrison opposed.