Sterling Annex drowning in debt

i Mar 28th 2016

By Jennifer Learn-Andes, Wilkes-Barre Times Leader

WILKES-BARRE — First the landmark Hotel Sterling was torn down. Now the adjacent Sterling Annex is mired in legal problems and back taxes.

G2A-B Realty LLC, owned by Bear Creek Village resident George Asimakopoulos, bought the four-story annex on River Street in 2012 for a planned mixed commercial/residential project with views of the Susquehanna River that never materialized.

The structure’s boarded-up windows and neglected facade became more noticeable when the condemned Hotel Sterling was demolished in 2013.

A review of county court and tax claim records reveals mounting problems for the annex:

• It is listed by the sheriff for the June 3 mortgage foreclosure sale due to $176,000 in debts owed to the Greater Wilkes-Barre Development Corp., an arm of the Greater Wilkes-Barre Chamber of Business and Industry that both sold the property and provided a mortgage to G2A-B in 2012.

• G2A-B has racked up an additional $71,694 in unpaid back real estate taxes owed for 2012 through 2015.

• The city’s Downtown Wilkes-Barre Business Improvement District filed a lien against the property last month, saying G2A-B owes $3,800 for unpaid assessment fees from the 2012-13 fiscal year.

Mortgage default

The Greater Wilkes-Barre Development Corp. initiated the mortgage foreclosure in August 2014, saying G2A-B had ignored repeated demands to repay its loans with interest.

The chamber had loaned G2A-B $135,000 toward the $215,000 purchase.

The loan agreement also prohibited G2A-B from defaulting on real estate taxes, the chamber said.

In its response, G2A-B maintained its obligation to repay the loans was tied to verbal promises from chamber representatives to secure adequate parking for the annex project.

Chamber representatives indicated they would coordinate with the owners of adjacent parking lot facilities to obtain the parking, G2A-B maintained.

“Upon securing the required parking, G2A-B will promptly pay principal and interest,” its filing said.

On the issue of back taxes, the property owner maintained it was contesting its property assessment and had entered into a payment plan with the county tax claim bureau.

The chamber scoffed at the defense, saying the parking allegation was untrue, “insufficiently vague” and not a condition in any borrowing or purchase documents.

“Plaintiff made no promise, either before or after defendant purchased the mortgaged premises, that plaintiff would arrange for or in any way supply defendant with additional parking for the mortgaged premises,” it said.

Following a bench trial last November, the court issued a judgment in favor of the plaintiff.

G2A-B filed notice in January of its plans to appeal the ruling to Superior Court.

Earlier this month, the Greater Wilkes-Barre Development Corp. filed court paperwork adding the property to the June sheriff sale for $176,032 to cover the unpaid mortgage, interest, court fees and legal expenses.

Back taxes

If the sheriff’s sale proceeds, back taxes also must be paid for the property to revert back to the chamber arm or be sold to another outside entity, the sheriff’s office said.

The annex property was pulled from two back-tax auctions — which are handled by tax claim, not the sheriff’s office — in recent years.

The first auction was in 2014.

G2A-B entered into a repayment plan to obtain removal from that auction. It paid $13,137 toward the debt at that time but failed to make required additional payments, tax claim records show.

Tax claim again listed the property in last September’s auction due to the defaulted repayment agreement, but G2A-B successfully convinced the county court to grant temporary reprieve from that sale.

G2A-B argued in its court filing that the county assessor’s office never sent a change-of-assessment notice informing the entity the property was returning to taxable status around the time it was purchased from the Greater Wilkes-Barre Development Corp.

“Had the change of notice been received, the petitioner would have promptly filed an interim tax appeal to reduce the assessment,” its filing said.

Nearly $25,000 of the back taxes owed are for 2012.

County Assessment Director Anthony Alu contested the allegation about the mailing Monday. He said office records show a change-of-assessment notice was sent to G2A-B on June 4, a month after its purchase deed was recorded, indicating the property was switching to taxable status and stating the deadline to appeal.

G2A-B filed an appeal for 2013 and the county assessment appeals board reduced the property’s value from $1.622 million to $250,000 from that year forward.

As part of its argument for removal from last fall’s tax auction, G2A-B told the court it planned to promptly pursue a court action seeking permission to file a special assessment appeal covering only 2012. This type of action may be granted when a filer shows there were “extraordinary circumstances involving fraud,” it said.

The county’s alleged failure to mail a change-of-assessment notice may be “deemed the equivalent of fraud,” its filing said.

However, there were no subsequent filings showing G2A-B pursued this action seeking a special assessment appeal for 2012.

Property history

The 29,522-square foot Classical Revival-style annex was built in 1912 as an Elks Lodge and acquired by the Hotel Sterling’s owners around World War II, when it took on its annex name, a chamber representative has said.

The building was used as an ancillary ballroom and meeting space for the hotel before serving as a Luzerne County Community College campus in the late 1960s and 70s. Offices later were housed there. The annex has been vacant since plans to turn it into a college art museum or art gallery died in the early 1990s.

The chamber purchased the annex for $125,000 in 2004 using a county community development loan. The chamber mothballed and secured the structure so it wouldn’t continue to deteriorate while options were explored.

The city owns the vacant Hotel Sterling lot next door and is trying to seek interested private developers.