The Daily Item, Sunbury, PA

News

December 11, 2008

Snyder County Boscov’s: Leaders weigh $5M risk

Commissioners fear using block grant money as bailout collateral

MIDDLEBURG — Will yet another government bailout now save Boscov’s Department Store in Hummels Wharf? The decision lies in Snyder County commissioners’ hands.

And the answer just might be “no.”

In order for the Susquehanna Valley Mall store to secure $5 million in federal funds, the commissioners have to approve putting up Community Development Block Grant money as collateral in case the store would default on the loan.

Six other Pennsylvania counties that are home to Boscov’s stores have been asked to do the same. The Boscov’s chain needs more than $100 million to escape bankruptcy.

“All the other counties have signed off on this,” Commissioner Malcolm Derk said. “We’re the only ones that seem to have any concerns. But we have valid concerns, and unanswered questions.”

“I’m skeptical,” Commissioner Joe Kantz said. “If they (Boscov’s) would default on their loan payments, what would happen to our CDBG money?”

Commissioners’ questions will be answered today in a meeting with a consultant from an architectural firm near Pittsburgh.

According to Glenda Ruch, program analyst for community development at SEDA-Council of Governments, the federal money will be coming through additional funds from the Section 108 Housing and Urban Development program — money that never enters commissioners’ hands.

“One of the requirements is, to get the loan money, the county must guarantee that loan through the CDBG entitlement fund. That’s in case of default. With this particular program, the governor and the state have provided letters and documentation that the county’s money will not be at risk.”

But without a risk, there would be no need for this collateral of county money, Ruch said Wednesday. “That’s what we will be talking about tomorrow.”

“If the loan should be delinquent and default, the state can use CDBG money — up to five years of their allocation of these funds,” Ruch said. “We’re 99 percent sure that it won’t, but there’s still that 1 percent that’s there. That’s a major concern for county commissioners.”

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