PA Department of Community & Economic Development’s press release

On filing a petition in Commonwealth Court for a Receiver for the City of Harrisburg.  Followed by Harrisburg City Council Majority’s response.

Nov. 18, 2011

Corbett Administration Files Petition to Appoint Receiver for Harrisburg

Harrisburg – Department of Community and Economic Development (DCED) Secretary C. Alan Walker, under the direction of Governor Tom Corbett, filed a petition today with the Commonwealth Court to appoint David Unkovic as the receiver for the distressed City of Harrisburg.

“The city’s failure to come to an agreement on an acceptable recovery plan has forced the commonwealth to take this action,” Corbett said. “As more time goes by without action, the city’s financial situation continues to get worse. With his more than 30 years of experience in public finance, I have the utmost confidence in David Unkovic’s ability to develop and implement solutions that will address the city’s fiscal difficulties and mounting debt.”

Mr. Unkovic has more than 30 years of experience in public finance, primarily as bond counsel on tax-exempt financings for Pennsylvania local governments, authorities, school districts and nonprofit corporations. Unkovic earned his law degree from Harvard Law School and his undergraduate degree in political science, summa cum laude, from the University of Pennsylvania. He has been named a Pennsylvania Super Lawyer by Law & Politics in the area of Bonds and Government Finance.

The commonwealth will also retain the services of McKenna Long & Aldridge LLP, a firm based in Washington, D.C., which was selected because of the expertise and experience of its Municipal Recovery & Restructuring group. The group specializes in the areas of public finance, insolvency, tax, public policy, public-private partnerships, employee benefits and labor, government contracting, government affairs and governance – all important areas that will be addressed in the recovery plan. The firm will also work with the forensic consultants hired by the Harrisburg Authority, to review the incinerator financings.

The governor is authorized by the provisions of Act 47, as amended by Senate Bill 1151, to direct the DCED Secretary to file a petition in Commonwealth Court to appoint a receiver following the declaration of fiscal emergency in a distressed third-class city. Governor Corbett, on Nov. 16, directed Secretary Walker to file a petition with the Commonwealth Court.

The Commonwealth Court is required to hold a hearing within 15 days of the filing and will have 60 days from the date the petition was filed to make a determination. The determination will be based on three main criteria: 30 days have passed since the declaration of fiscal emergency; the governing body of the distressed city has failed to adopt an ordinance to enact an acceptable fiscal recovery plan; and a fiscal emergency continues to exist.

Once appointed, the receiver is tasked with developing and submitting a fiscal recovery plan to the Commonwealth Court, DCED Secretary, city council and the mayor within 30 days of being appointed. The court must conduct a hearing on the recovery plan within 30 days of receipt of the receiver’s plan and confirm a plan within 60 days of receipt.

When a plan is confirmed by the court, a four-member advisory committee will be established that will include the mayor and city council president of Harrisburg, an appointee of the Dauphin County commissioners and an appointee of the governor. The advisory committee will meet with the receiver at least twice a month and will be consulted by the receiver before exercising certain powers and duties.

During receivership, the city’s governing body and authorities will continue to carry out the duties of their respective offices as long as no decision or action conflicts with the receiver’s fiscal recovery plan. The receiver may petition the Commonwealth Court to issue a writ of mandamus if the authorities and elected officials of Harrisburg fail to undertake the actions of the recovery plan.

For more information about McKenna Long & Aldridge LLP, visit mckennalong.com.

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Statement of Majority of Harrisburg City Council on the Appointment of the State Receiver

The following statement has been issued by Councilpersons Eugenia Smith, Wanda Williams, Susan Brown Wilson and Brad Koplinski:

The majority of Council still believes that the Act 47 plans would not have worked and the receiver process is even worse for the taxpayers of our city. Bankruptcy is the only option that will allow for a global solution with shared pain by all stakeholders – that was made clear when AGM stopped attending negotiation sessions for the consent agreement last week. They won’t negotiate in good faith with anyone – the city or the receiver. The Mayor should drop her objections to bankruptcy and join the majority of Council in support of this action.

The receiver must still be approved by the Commonwealth Court, which can take up to 60 days and then, we believe, properly approved by the Federal bankruptcy judge. The next hearing on the status of the bankruptcy filing is on November 23rd. We ask that the state have respect for the Federal bankruptcy process, instead of again putting the heaviest of hands on the Capital City. This is simply the latest instance in which the state has not taken steps to help Harrisburg, but hinder it. Everyone that has followed the process knows that the solution will be a combination of new revenue and debt forgiveness – the option of taxing our way out of this is not viable. The state should come to its senses and start to become part of the solution and not part of the continuing problem.