Posted on 11/21/2008 6:13:49 AM PST by Born Conservative
Gov. Ed Rendell also secures $35 million to aid family regain Boscov’s chain.
WILKES-BARRE – Seeking to retain a major downtown draw, the city of Wilkes-Barre will loan $3 million to a family group attempting to regain control of the Boscov’s Department Store chain and its South Main Street store.
Scranton, where the Mall at Steamtown is anchored by a newer Boscov’s, has committed the same amount to the $300 million offer to purchase the 39-store chain, and Gov. Ed Rendell said Thursday the state has secured $35 million for the effort.
Rendell and Wilkes-Barre Mayor Leighton said the loans would be financed through a U.S. Department of Housing and Urban Development program that allows governments to guarantee loans for economic development with federal Community Development Block Grants.
“I have been discussing this with Mr. (Albert) Boscov for the last several months,” Leighton said. “Our loan to him is separate from what Gov. Rendell is doing.”
John Blake, acting secretary of the state Department of Community and Economic Development, said Boscov approached the department about a month ago requesting support for the bid and together they worked out the plan. Blake said Pennsylvania has never taken full advantage of the federal program.
“This has been completely undersubscribed,” he said, noting that Pennsylvania applies for only a small fraction of the $88 million in funds it is eligible for each year. Wilkes-Barre has not loaned any money from the CDBG fund during his administration, Leighton said.
The city and state bear little risk for two reasons. First, the HUD money is pledged against present and future grant allotments; second, any Boscov’s real estate and inventory that is free of liens will serve as collateral.
“This will have no impact on city taxpayers,” Leighton said. “This money does not come out of our general fund.”
“It’s good that we can assist Mr. Boscov this way,” Leighton said. “This is good not just for the city, but for Wyoming Valley as well. Mr. Boscov has been a tremendous friend to the city and he is committed to helping revitalize the downtown.”
Among other civic efforts, Boscov led the campaign that created the F.M. Kirby Center for the Performing Arts in the former Paramount Theater on Public Square.
Todd Vonderheid, chief executive officer of the Greater Wilkes-Barre Chamber of Business and Industry, applauded the city and state moves to secure the chain’s future.
“It’s a good loan,” he said. “The opposite is the value lost of having three stores in these two counties shut down.”
Boscov’s also operates a store in the Laurel Mall, West Hazleton.
Vonderheid said he does not believe anyone other than the Boscov family, descendants of founder Solomon Boscov, would buy the stores to operate them.
In addition to empty storefronts, liquidation would mean the loss of hundreds of local jobs, and real estate, mercantile and other taxes, he said.
The group led by Boscov, 79, and Edwin Lakin, his brother-in-law, also has lined up bank financing and similar support in other communities where it does business. Atlantic County, N.J., has committed $3 million and Vineland, N.J., is considering extending a $2.72 million loan. Blake said as many as seven other Pennsylvania municipalities may join the lending plan.
The family has made its own commitments.
“Mr. Boscov is putting up over $50 million of his own cash,” Blake said. “There is a lot at stake; without these Boscov’s stores there are some serious consequences … in many of our downtowns throughout the state.”
A hearing is scheduled for 11 a.m. today in a Delaware bankruptcy court, where it is expected Boscov will seek approval of the deal in time for the group to take control before Thanksgiving and the important holiday shopping season.
A Tuesday hearing was postponed to allow them time to complete financing for the takeover.
The Reading-based Boscov’s filed for Chapter 11 protection in August and has since closed 10 underperforming stores.
Have you Boscov’d today?
This same family that the state is bailing out ran the store into the ground to begin with. Their merchandise is second rate, their stores are stuck in the 1970s as is their retail philosophy. All Fast Ed Rendell is doing is throwing more state funds down a hole.
Actually, these are federal funds that Fast Eddie "procured". As for the throwing away of funds down a hole, that seems to be the latest trend amongst politicians....
Great, just placed an online order from Boscov’s..
It will be fine, I’m not saying everything is bad. It’s just the clothes for women that I’m complaining about. They have improved on some other items.
Oh good, this was for some toys I couldn’t find elsewhere
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