Area Hotel Developers Owe Back Taxes On Properties

January 1, 2019
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Area Hotel Developers Owe Back Taxes On Properties

WILKES-BARRE — Developers working on three slow-moving hotel projects in Luzerne and Lackawanna counties owe more than a half-million dollars in back taxes on the properties.

Sphere International LLC, based in Flemington, New Jersey, announced plans in October 2015 to build a high-rise hotel and convention center, with luxury apartments, condominiums and retail shops at East Northampton and South Main streets in downtown Wilkes-Barre.

Then mayor Tom Leighton, flanked by city officials and the developers, announced plans for the $28 million project on the site that is now comprised of seven parcels at 55-63 and 69-75 S. Main St.

Suresh Patel, a Sphere International executive, had described the project as “a win-win for us and the city.” He and Hitesh Patel are the company principles.

But more than three years later, the only obvious physical work at the site has been the erection of fencing this past June. And a review of property tax records for the parcels shows $181,397 in taxes plus another $34,684 in penalties, interest and fees are owed for 2017 and 2018.

Attorney Jack Dean, who represents the limited liability company, said Sphere appealed the assessed values of those properties to the city tax appeal board in the fall and is waiting to hear back on the results of the appeal.

Behind schedule

The development remains significantly behind schedule, given that Leighton initially estimated that project construction would begin in early 2016 and that the facility would be open by fall 2017.

City officials said in November 2017 that the development had been lagging because of the various deeds the developer had to acquire for all the parcels needed to break ground.

Dean said his clients informed him about two weeks ago that they are in the process of securing demolition permits for dilapidated buildings at 63 and 69 S. Main St. He said he was told the same thing in June when The Citizens’ Voice last inquired about the project.

Both Dean and city attorney Tim Henry said Sphere representatives indicated that construction would begin sometime in 2019 after the two structures, which flank the former location of Place One at The Hollywood dress and gown shop at 67 S. Main St., are demolished.

Michaelene Coffee, whose mother, Barbara Coffee, owns that building, moved her shop to Scranton after the city condemned the surrounding buildings in 2013.

Michaelene Coffee said last week that negotiations with Sphere to buy her mother’s building fell apart months ago, and she was told the developer would “build around” her mother’s building.

Henry said someone who lives across the street from the site told him they saw officials surveying the buildings on either side of Coffee’s over the Thanksgiving holiday weekend.

Sphere purchased five of the seven parcels of land from the city for $500,000, and the sale closed in November 2016.

According to the sales agreement, the city has the option of buying the land back at fair market value if construction doesn’t commence within three years of the closing date or if six floors of the hotel aren’t complete by the fourth anniversary of the closing date.

The sales agreement also required Sphere to pay the city $250,000 by the time of closing, plus another $50,000 each year for five years.

City Finance Director Brett Kittrick said last week Sphere made its $50,000 payments to the city for 2017 and 2018.

More taxes owed

Dean confirmed that the same developers are pursuing hotel projects in Dunmore and Wilkes-Barre Twp., although under different corporate names.

He said the developers are refurbishing the former Holiday Inn Scranton East in Dunmore and also plan to build a boutique hotel on Mundy Street in Wilkes-Barre Twp.

Dean said they are moving ahead on the Holiday Inn project first, followed by the Wilkes-Barre hotel, and then the Wilkes-Barre Twp. hotel.

Proceeding as Dunmore Recreation LLC, the developers completed landscaping work and are laying blacktop at the former Holiday Inn site at 200 Tigue St., according to a planning commission official. No work is apparent at the Mundy Street site.

Lackawanna County records show that Dunmore Recreation LLC owes $304,661 in delinquent property taxes on the Dunmore site. The company is on a four-installment payment plan for those taxes and so far has made its first payment, according to the tax claims office.

Luzerne County records show that Colors Hospitality LLC owes $43,348 in back taxes, interest, penalties and fees for 2016 and 2017 on the Mundy Street property.

The company is on a payment plan for those taxes and made an installment payment of $10,650.00 that was due on Dec. 26, according to Northeast Revenue, the county’s tax claim collector.

Dean said he believes the assessed value of the two parcels on Mundy Street are also under appeal, but Allentown attorney Richard Somach is handling that matter.

Somach said he didn’t have information on the parcels available at his fingertips on Monday.

JON O’CONNELL, staff writer, contributed to this story.

Contact the writer:


570-821-2110, @MocarskyCV

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