The Butler County commissioners refused to second a motion on a vote that would have pledged $5.8 million in future Community Development Block Grant funds as collateral for Boscov’s $35 million loan from the U.S. Department of Housing and Urban Development, the Butler Eagle reported yesterday. The money is part of $300 million financial package arranged by owner Al Boscov and other investors to remove the retailer from bankruptcy.
The deal required no money from the counties, but HUD is requiring the local pledge before it will release the loan.
Snyder County has also refused to approve the loan. Butler’s approval would have been enough to release the loan because Lebanon, Blair, Cambria, Lackawanna and Schuylkill counties have each pledged $5.8 million in future CDBG money.
Gov. Ed Rendell and the Department of Community and Economic Development have promised the counties in writing that state funds would be used to cover the loan in the event of a default. Boscov’s land holdings would also ensure against a loss, according to state officials.
DCED officials said they would continue to work on the proposal.
Boscov’s has 39 stores and employs more than 9,000 people, including 5,000 in Pennsylvania. Nearly 200 people work for Boscov’s at the Lebanon Valley Mall.