Pennsylvania judge may approve Harrisburg recovery plan

Reuters News
Posted: Mar 01, 2012 8:03 PM
Pennsylvania judge may approve Harrisburg recovery plan

By Mark Shade

HARRISBURG (Reuters) - Following a day-long hearing filled with unexpected emotion and court theatrics, a Pennsylvania judge said she is "inclined" to approve the first part of a recovery plan for the financially hobbled City of Harrisburg.

Pennsylvania's capital, with a population of about 50,000, is mired in $326 million in debt due to the expensive retrofits and repairs of its troubled trash incinerator.

After an attempt to file municipal bankruptcy was rejected last year in federal court, a state-appointed receiver, David Unkovic, was tasked with developing a turnaround plan for the city. Unkovic submitted part one of his proposal in February.

"This is a start. It's an optimistic plan, no question about that. But, if it weren't, we'd have no hope (for a recovery)," Commonwealth Court President Judge Bonnie Leadbetter said.

Leadbetter on Thursday listened to Unkovic's explanation of why the plan was not finished, while attorneys representing clients opposed to the recovery plan tried to persuade her to reject it on constitutional grounds and claiming it was developed using bad estimates.

Unkovic said he did not submit a full plan because he needed more time to determine the value of the city's incinerator, parking garages, and water and sewer system. And, to have more time to study Harrisburg's problems.

"If you don't ever look at it in the face ? you're never going to develop a solution," Unkovic said.

Unkovic said he has received between five and 10 signed confidentiality agreements from companies interested in the sale or lease of each of the city's major assets. The deadline for that request for qualifications is March 5. Unkovic said he hopes to name winning bidders by June.

That two-month window for selling or leasing multi-million dollar properties stirred charges of a fire sale by Philadelphia attorney Mark Schwartz, who was representing the city council president and Harrisburg's treasurer and controller.

"Deals like this don't take two months," Schwartz said.

But Unkovic disagreed: "The important thing is to have a deliberative process. I don't intend to do a fire sale."

Unkovic said his work to develop a recovery plan for the city has often felt like two full-time jobs, and he became emotional and choked back tears as he explained he is "trying to do what's in the best interest of Harrisburg and the commonwealth."

"More governments would be willing to work with Harrisburg if they can just get the sense that the city has its act together," he said.

Leadbetter said she is leery about Schwartz's warning that the city could end up in bankruptcy court after it sells its assets. But she couched her remark by adding, "We are nowhere near there."

(Editing by Tiziana Barghini and Bob Burgdorfer)