The Harrisburg Mayor & City Controller Reach a Resolution

In March 2010, three months after each took office, the Harrisburg Mayor Linda Thompson and the City Controller Dan Miller had their first public strife over the question does the City Controller have the authority to validate who gets paid?

When Dan Miller came into his office, he attempted to exercise this power. He wanted to review the list of employees to be paid before that list was submitted to ADP Payroll Services for direct deposit.

However upon this request to review the “batch” before it was sent off for direct deposit, the Mayor refused to allow such Controller oversight citing an overstep of the Controller’s authority. So, Controller Dan Miller and then-Treasurer Paul Wambach withdrew their electronic signatures, which resulted in the need for them to hand sign each paycheck, thereby interrupting the system of direct deposit employees were used to.

Of course, most inconvenienced were the City’s employees, who now had to wait the time it took for the Controller and the Treasurer to sign all those paychecks in order to review and investigate any payment they found questionable in accordance with the Budget as passed by City Council.

Aside from the Mayor, most vocal in their protest were the unions who claimed that not having direct deposit was a violation to union contracts.

In response, the Controller’s office set up a direct deposit system, which was offered to all City employees. Apparently, this was a great source of contention inside City Hall as the Mayor was agitated by what she considered Miller’s circumvention of her demand for him to comply with the previous system. In fact, it’s reported that in his internal complaint filed against the Mayor, former City Public Works Director Ernie Hoch referred to strain the Mayor put on employees who chose to utilize the Controller’s direct deposit. It was her adamant preference that City employees not use the Controller’s system.

In May of 2011, Linda Thompson hired the law firm of Tucker Arensberg to represent her as the Mayor and the City of Harrisburg against the City Controller and the Treasurer.  In June 2011, she filed a lawsuit in Dauphin County Court of Common Pleas against Dan Miller and Paul Wambach in order to make them comply with the City’s direct deposit system. A month later, the parties agreed to a temporarily reinstate the City’s system of direct deposit for all union employees until Dauphin County Judge Lawrence Clark, Jr. made a ruling.

In 2011 alone, Tucker Arensberg charged the City of Harrisburg $34,543.56 for its representation of the Mayor. During the 2012 Budget testimonies in the Fall of 2011, the Office of the Controller had requested $60,000 in legal expenditures (up $44,000 from what was actually spent in 2010). When asked why the excessive request, the Controller referred to the suits his office was engaged in against the Mayor. He testified that ultimately, he felt his office would prevail in its position.

The hearing on this matter was scheduled for May 3, 2012, almost a year later. The scene on the 5th floor of the Dauphin County Courthouse was a strained one. Sitting in wait in a small lobby area sat Harrisburg Mayor Linda Thompson mostly occupied with her phone flanked by Human Resource Director Deb Felker and new City Chief Operating Officer Ricardo Mendez-Saldivia. Also, on that side of the room sat the Acting City Solicitor Jason Hess, Finance Director Bob Kroboth, and Budget Manager Joe Bream. On the other side of the room convened City Controller Dan Miller with a pile of work, both former and current City Treasurers Paul Wambach and John Campbell, respectively. Deputy City Controller William Leinberger and Deputy City Treasurer Celia Spicher were present as well. That’s ten City employees in Court for an afternoon.

Scheduled to begin at 1:00pm, it wasn’t until 2:40pm that everyone filed into Judge Clark’s Courtroom. The delay was a result of negotiations between the parties’ attorneys. At 1:55pm, the attorneys came out of the Judge’s Chambers. Ken Lee, the Mayor’s attorney, beckoned her and Mendez-Saldivia back to speak with the Judge while the City Controller and Treasurer’s attorneys said, “Let’s go downstairs and wait.” Seemingly, the Judge wanted to chat with the Mayor.

It was about 50 minutes later, we all sat in the Courtroom for what we understood was not a hearing, but rather a summary of the Judge’s conclusion. A resolution to the issue had been had.

The Judge opened the proceedings by saying, “Without a doubt, this has been an interesting journey.”

He thanked all parties for their cooperation in seeking “a mutually agreeable solution,” and he proclaimed, “There is good news this afternoon.”

Judge Clark then proceeded to outline the resolution. Declaring the Controller “a good steward, the gatekeeper of funds,” and the Mayor “the CEO, charged with managing the affairs of the executive branch,” he said the two offices are “not necessarily diametrically opposed.”

As he explained it, the executive branch presents a warrant for payment, that is a request to the Controller’s office to make a payment of a specific nature. Under law, the Judge said, the Controller has the authority of pre-approval or pre-audit of those payments. “In order to fulfill the request of the warrant, he needs certain info.”

At this point, Judge Clark cited 3rd Class City Optional Charter A established in 1957. As he said, this Charter was ratified in the days of paper and pencil, not computers and electronic systems. He stressed it was integral for everyone to “historically remember where we came from.” Presumably, the Judge felt the need to set this foundation of his remarks because he was trying to make the point that no, the 3rd Class City Optional Charter A does not explicitly refer to the Controller’s authority to oversee electronic submission of direct deposit payroll payments because, well, as he pointed out, that issue didn’t exist at the time.

The resolution as he stated it was this—-the payroll run will occur electronically in a “batch process” to be sent to the Controller to review. The Controller will determine whether or not everything is in order then send it to the Treasurer. The Controller can pull any payment, “with a reasonable basis in hand,” and ask the Administration for clarification, which “should be done expeditiously.”

“There will be cooperation extraordinaire,” Judge Clark proclaimed as he stared to a spot on the wall above everyone’s heads. A spot he maintained throughout his speech.

That is until he said this next bit about the Court retaining oversight of this resolution. He glanced out at the parties and let them know he’ll step in again if he has to. “This is not to say  the Court will get into the business of the City. Absolutely not. Unless absolutely, positively it is compelled to do it.”

He defined the Court’s position as a “significantly stepped back manner.” The Judge went onto say that the Court would be there to intervene so there would be no new motions, no new suits. “We intend to be a fair broker here. We intend to help the parties to get over these issues and to move on.”

Pointing out the obvious, Judge Clark stated, “The City of Harrisburg has extreme challenges. The Mayor and the Controller should be spending energies on other things.”

And with that he wished the City and its officials and its citizens well. Court adjourned.

So, who won?

Dan Miller gets to do what he asserted the Controller should have the right to do two years ago. The Mayor must concede and send the list of proposed payments to the Controller Office before payments are issued. He in turn must abide by the City Council-approved Budget.

But really, is there a win here? All that money spent, all that time wasted, all that City work not done (let’s not forget we still don’t have a 2009 or 2010 audit) in order to have a Judge say, yes, the definition of Mayor is this and the definition of Controller is that. There are no winners here. There are only losers. The taxpayers of Harrisburg lose because each and every dollar spent in this fight was charged to the citizens of the City of Harrisburg, and for what purpose? So everyone can do the job they should have already realized was theirs to do when they took the offices they took on behalf of the people who elected them there. No one should have needed a Court to remind them of that.

David Unkovic Makes a Move

There’s been sign of David Unkovic. And it’s a pretty darned meaningful one.

It’s been awhile since we’ve had a sign of Harrisburg’s departed benevolent ruler. He has been spotted a couple of times in these few weeks after he resigned in handwritten letter from the first- ever Pennsylvania Office of the Receiver. However, he gave us no indication of what his next steps were to be.

His silence hasn’t waned the public’s wonder, though. In fact, quite the opposite has happened. Reporters have yearned to catch him, to be the one that records his first words since he left the City so abruptly that Friday morning, March 30th. As we remember, his resignation came just two days after he personally called media to his office for the notable press conference where he referred to “the parties who are pushing.” The press conference where he named names of companies, lobbyists, and politicians who he asserted were unfairly influencing the process of Harrisburg’s financial recovery. Any one who attended that day walked away from David Unkovic’s Office of the Receiver solemnly understanding that what Unkovic had just done was serious.

After that day, he has not spoken specifically about his departure on any record.

When we hadn’t heard from Unkovic afterward, reporters thought of ways to be persistent and the public thought of ways he was threatened. Some reporters were venturesome enough to travel to his home out in Western PA to see him on his lawn and to Philadelphia to attempt to catch him giving any reason why he left with nothing but a note behind. Since he’s been gone, the air has been abuzz with questions—What happened? Was he in danger? Why did he handwrite his resignation? How far did the parties push?

No one knows the actual answers, because he won’t pick up the phone, respond to emails, or give an interview. It took more than a week to track him down and approach him.

As always, the careful David Unkovic was careful.

Not only that, but he was well, in good form. It’s reported he seemed at ease. Apparently, he showed none of the angst and agitation of the last time the public saw him. He whispered no scandal of a horse head in his bed.

At the same time, he displayed none of the forthrightness he expressed before when we saw him last. He wouldn’t talk beyond polite chatter.

He can’t. That’s the part the public and the press alike have been missing. David Unkovic can’t talk, can’t give an interview, and can’t discuss why he left or elaborate on what he said at that press conference.

Why?

Because he no longer has immunity.

See, when Unkovic was the officer of the Office of the Receiver, he had “sovereign and official immunity” by decree of the Governor.

Here’s how the proclamation reads:

Limitation of Personal Liability. In accordance with Section 705(g) of the Act, the Receiver’s personal liability is limited as follows:

a. The Receiver shall not be liable personally for any obligations of the City of Harrisburg or any of its component units or authorities.

b. The Receiver possesses sovereign and official immunity, as provided in 1 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed; specific waiver), and is immune from suit except as provided by and subject to the provisions of 42 Pa.C.S. Chapter 85, Subchapter A (relating to general provisions), and Subchapter B (relating to actions against commonwealth parties).

c. The Receiver shall not be liable personally for any contractual or other financial obligations that he enters into in the course of exercising his official duties.

Sovereign immunity is indeed a very powerful thing to have. It means the person granted it is considered an extension of the government. Thus, the Receiver is not personally liable for generally anything the Receiver says or does as the Receiver. As the decree reads, the Receiver is “immune from suit.” Actions filed against the Receiver are actually actions filed against the State. Therefore, the State will provide counsel and defense and will pay the bills.

As always, the careful David Unkovic was careful.

No more immunity means David Unkovic no longer has those resources. It means he could be personally liable for anything he does or says.

Without a doubt the things Unkovic said the day of his last press conference outraged the companies, lobbyists, and politicians he pointed to including the bond insurer Assured Guaranty (AGM), the lobbying firm Greenlee Partners, and Dauphin County Commissioner Jeff Haste. Surely they were furious that he touched upon disclosing behind the scenes pacts, demands, and terms. Surely they bellowed and roared on the other side of those same closed doors they bargain behind, but they have not said a word in public nor filed slander in court.

However, should Unkovic step into the public light and utter one word now about what he experienced during his tenure as the City of Harrisburg’s Receiver, without hesitation, the lawsuits will come barreling at him. Lawsuits against him as a person. Lawsuits backed by a lot of corporate and public monies ready to be spent with ruthless intent until Unkovic would either give in, give up, or become destitute in the fight.

Prevailing in that particular battle would be too challenging, consuming, and costly for Unkovic to unwisely start by recording one misplaced word.

Unless it’s in the right forum.

If there’s anything we gleaned from David Unkovic while he was here in Harrisburg, it’s that he is a smart man.

His approach to the City’s recovery was adept, his timing measured, and his strategy shrewd. It was this combination that was the City’s greatest benefit of having a Receiver for the four months we had one. It was also this combination that frustrated the cogs of what seems has already been in the works.

Of course, Unkovic must have been given a talking to about “the works.” The Governor may act coy about his awareness and role in Harrisburg’s Receivership, but it could not have escaped Tom Corbett’s attention that not only for the first time ever  did the City skip a general obligation bond payment by order of the Receiver, but also that Unkovic declared in Commonwealth Court he has perceived corruption in the City of Harrisburg.

The Office of the Governor had to have an eye on the Office of the Receiver with growing consternation. At one point someone must have told the Office of the Receiver that it needed to either readjust its attitude or there would be changes. No, it doesn’t seem “changes” had double meaning winking while smacking a baseball bat in the hand . More likely “changes” meant a relief of Unkovic’s duties to the State.

Clearly, Unkovic was antagonized when Dauphin County Judge Todd Hoover ruled in favor of the Incinerator bond trustees granting them a receiver of their choice to oversee the budget and operations of the notorious waste burner. The concept of two receivers undeniably complicates an already complex situation at a time when progress was finally being made. Progress, though, is the operative word here since progress to some is not progress to others especially when there is pre-determined progress in place.

This Dauphin County ruling was the last straw for Unkovic, so it seems. He implied it could be politically contrived, and he couldn’t stomach “the political and ethical crosswinds” anymore. As Receiver, he could do no more to help the City of Harrisburg. So he planned his exit. Made deliberate choices. Realized the significance of what he was doing.  Then did it.

To the surprise of everyone, to be sure. Everyone.

Why did he resign in handwritten letter? Not because there was a gun to his head but because it was the perfect thing to do at the time. Frustrated, agitated, incredulous, disrespected, and full of knowledge, Unkovic did what he needed to do to end his tenure on his terms, and it’s decisively on his terms that he left. Signed David Unkovic.

Now, almost a month later, he’s back.

And he’s not alone.

On April 24, 2012, Howard Bruce Klein, Esquire entered an Entry of Appearance in Commonwealth Court representing David Unkovic.

This means that Mr. Klein is David Unkovic’s attorney in any matters of the Court concerning David Unkovic.

At this moment, there are no matters that we know of, nor are there necessarily any particular matters foreseeable.

That being said, this is not a move to shrug off. After all, strategy is everything.

On Unkovic’s part, this move could be a precautionary one in case he’s called to the stand. It could also be a signal to certain parties that Unkovic has hired private counsel and is prepared.

Quite prepared he is, too. Howard Bruce Klein’s experience reads like a precision weapon. A graduate of Georgetown University Law Center, he has a sharp history of working in the U.S. Attorney’s Office as Chief of the Criminal Division and Chief of the Corruption/Labor Section. He was then the Assistant U.S. Attorney, Eastern District of Pennsylvania for six years before working at the mega firm Blank Rome, LLC, where he was employed for 9 years, two of which he was the Chairman of the Litigation Department. In 1996, Klein went into private practice and specializes in white collar criminal defense, civil litigation, and perhaps most interestingly, False Claims Act representations. The False Claims Act goes after people and companies that defraud the government. Basically, it’s the act that protects whistleblowers.

As if that wasn’t enough, Klein is also an instructor with the National Institute for Trial Advocacy. He teaches other lawyers how to be skillful advocates seeking justice.

This is who David Unkovic’s attorney is. For all the stomach Unkovic didn’t have for this mess he became so entangled in, Klein has it threefold.

Sometimes it’s difficult not to ponder this whole thing in terms of the movie it could someday be. It’s hard not to think of the books that will one day come out of Harrisburg, PA. The tell-alls and admittances. Forensic interpretations and cautionary tales. It’s hard not to imagine all the people, places, dates, times, names, transactions, relationships, meetings, deals, steals, and moments encapsulated in players on the screen.

City of Harrisburg, we just got our latest character. Howard Bruce Klein, courtesy of our former Receiver David Unkovic. Who will speak again on the record. On the stand. In Court. With his attorney at his side.

Should the situation head there, Unkovic’s ready.

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Access the website of the Law Offices of Howard Bruce Klein: here

Read: Entry of Appearance of Howard Bruce Klein for David Unkovic

***please do not re-produce or publish this document without proper source citation (today’s the day Harrisburg)

See also the following articles:

• 3/28/12–“Parties Pushing”
• 3/30/12–“Harrisburg Receiver David Unkovic Submits His Resignation”
• 4/2/12–“Harrisburg Receiver David Unkovic’s Letter of Resignation”

Vote

It’s election day.

What should you do? You should go out and vote.

Besides that, I can’t tell you for who. I could go on and on about campaign finance reports, about PACs, players, and past performances. I can tell you who I like and who I don’t like, but really, it’s just about everyone of us voting. Whether you’re a Democrat or a Republican. Vote.

It’s our right. It’s one of the most sacred rights we have as Americans–to vote. Majority rules.

It’s the essence of being a democracy. Democracy is a strange word yet at the same time so seemingly familiar. We hear the word democracy, and as Americans we nod and say, yes, we are a democracy. We have choice. We vote. We choose. We the People.

But what’s it mean…We the People?

Considering the situation the City of Harrisburg is in,  it’s a curious term and one which carries both implied and explicit meanings. Who is We? And what is meant by the People?

Important things for people of a distressed place to ponder.

Today when you vote, citizens of Harrisburg, keep these questions in your mind. Think about “democracy” and majority rules. Think about who We is and who the People are. Think about what our options are. The City (and the region for that matter) needs strong advocates, the City needs as many choices as it can get considering several choices have been taken away. Some we’re more aware of missing than others.

And that’s the point—too often citizens of the City have tended to do the same things and allowed the same things to happen. We the People. Numbed by expensively glossy campaign mailers stuffed in our mail slots and laid on stoops and porches left to blow around our streets.  Faces frozen grinning imploringly for power.

Exercise your right today, People, and think carefully, thoughtfully, and purposefully about the We being established. Use your options.

Vote.

Polling locations in the City of Harrisburg: here

The City’s Public Works Director Resigns

One of the longest chief members of the Thompson Administration, Ernie Hoch, Director of Public Works submitted his resignation this morning.

Originally hired in the summer of 2010, Hoch has continually been applauded as one of Harrisburg’s hardest working and most steadfast servants. As director of a facet of City operations that includes trash collection, sinkholes, street sweeping, snow removal, street lights, water and sewer, and maintenance of the vehicle fleet, he juggled multiple duties under grave circumstances, not the least of which was incredible fiscal constraints on an aging infrastructure. Over the past year, Harrisburg has been plagued by a variety of problems from burnt out street lamps to massive sinkholes, and as Hoch pointed out, ”The sewer and water systems haven’t been maintained in 30 years.”

But in the end, it wasn’t the perpetual workload or the daunting list of things to address that made him quit.

It was his boss. Mayor Linda Thompson.

In a letter to the citizens of Harrisburg, Hoch explains his departure, “I can no longer help bring about positive change under the current administration. I will not just sit by idly if I cannot make a difference.” With that, the City loses its head of Public Works

the Mayor’s inability to establish a work environment that fosters competency and success

Unfortunately today, the City takes one step backwards, especially considering the signficance of a smoothly functioning Public Works Department. As the saying goes, if it’s not Public Safety, it’s Public Works. The range of issues under Hoch’s jurisdiction was vast. With his leaving, City residents are thrown into yet another state of flux. When there was a problem, they knew who to call and depended on the attention they were growing to rely on. A new leader will have a tall order to fill.

Once again, the City suffers because of the Mayor’s inability to establish a healthy work environment that fosters competency and success. Once again, the City has lost a valuable employee because the Mayor of Harrisburg is just too difficult to work for and with.

His parting words to us, “Don’t give up on Harrisburg. Her best days are ahead!”

We can only hope so.

Read: Ernie Hoch’s letter to Harrisburg

do not use the document in this article without permission from today’s the day Harrisburg

Harrisburg Receiver David Unkovic’s Letter of Resignation

His resignation in his own handwriting.

As submitted to the Commonwealth Court on March 30, 2012.

Judge Leadbetter, 

Please accept my resignation as Receiver for the City of Harrisburg. I have done the best to use my powers as Receiver to bring fiscal stability to the City of Harrisburg. However, I find myself in an untenable position in the political and ethical crosswinds and am no longer in a position to effectuate a solution.

I wish the citizens of the City of Harrisburg well in the ongoing quest for fiscal stability and good government, both of which they truly deserve.

I also thank the Commonwealth Court for its very fair treatment of me during my tenure as Receiver.

Sincerely, 

David Unkovic

Harrisburg Receiver David Unkovic Submits His Resignation

This morning Pennsylvania’s first-ever municipal Receiver submitted his resignation to the Commonwealth Court.

Any semblance of righteousness and stability citizens were beginning to perceive has quite swiftly been swept away.

Appointed to the position on December 2, 2011 after being nominated by Governor Corbett, Unkovic has only been in the Office of the Receiver for just shy of four months.

It seems another one of the City’s potential champions just got devoured by the monster mess of Harrisburg.

Why did he submit his resignation? We don’t know that yet. However, we can assume after his pronouncements two days ago that the force to relieve him of his duties was immense. There had been rumblings for weeks that certain parties wanted Unkovic gone. Certain parties wanted someone else to do the job of fixing the devitalized City’s finances.

What will the Commonwealth Court do now? We don’t know that yet. Remember, just as David Unkovic was the first person to ever be confirmed Receiver, he’s the first person to ever resign from the job.

What will happen to his Recovery Plan? We don’t know that yet. While too many have denounced his Plan as incomplete and not expedient enough, now such impatience and unsophisticated pressure seems to have defeated its own purpose.

This is a sad day for the City of Harrisburg. Any semblance of righteousness and stability citizens were beginning to perceive has quite swiftly been swept away.

It is imperative more than ever, Federal presence makes its jurisdiction be made known in the matters of this misused capital city along the river.

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For a context of David Unkovic’s Resignation: Parties Pushing

For the Dauphin County Order on creditors right to a Receiver for the Incinerator: Another Receiver

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Drawing by Ammon Perry: Doodletillomega: Illustrations and Drawings by Ammon Perry

Parties Pushing

It was a whirlwind. From start to finish.

Notice of press conference at the Office of the Receiver. Soon. Be there, right? Yes, I’ll be there.

Hurriedly getting to the Capitol Complex, to the Finance Building, to a back corner on the 4th floor, the significance of what Receiver David Unkovic was about to do was gripping.

The message was clear–Unkovic was calling this press conference to discuss the March 22nd Order issued by Dauphin County Judge Todd Hoover. The Order declared that creditors TD Bank, M&T, Bank of New York Mellon, and bond insurer Assured Guaranty (AGM) were entitled to a receiver for the Incinerator in order to control the machine’s operations and budget. They had been asking for one since September 2010 and now they won. With that, the City of Harrisburg was about to host two receivers—one for the City and one for its infamous Incinerator.

Since he was appointed in December, Receiver Unkovic had asked the creditors to hold off on their litigation, to give him a chance to develop a Recovery Plan for the City then begin to implement it. They refused and pushed full steam ahead.

And this “full steam ahead” approach was the focus of the Harrisburg Receiver’s presser today.

As I watched, tweeted, and noted David Unkovic give his statement to a small number of reporters in his office, I knew this was historic. Unkovic delivered blows. He named names. He was frank about his concerns. He talked of “joint venture” and “parties” and referenced a timeline of people, places, and things that have happened to put the City of Harrisburg where it’s at—in trouble.

He declared it is all “extremely upsetting as I’m trying to do a fair process.”

Naturally, Unkovic was careful since he clearly is a careful man, but the veil is lifting and his intentions are becoming evident. Anyone who has ever touted conspiracy theories about who this man is aligned with, well, let it be known those theories were blown out of the water today. In fact, he hinted at the politics that impose themselves on anything and everything the City does, including trying to recover from years of abuse. First saying that Harrisburg’s problems are both fiscal and political and that sometimes the intertwine of the two complicates matters, later he affirmed, “It’s very important that the process moves forward without influence of the creditors.”

Not only did he identify the principle creditor AGM to support his statement, but he also ventured into the land of the elected. He named names.

First up was Dauphin County Commissioner Jeff Haste. As many of you know, Haste has not been kind to the City of Harrisburg. It is widely notioned that he thinks of the City as that place with its problems, not necessarily as a cohesive, favorable part of Dauphin County. Yet, what Unkovic highlighted today was what many of us have been saying for a long time—Haste is part of Harrisburg’s problems.

Haste has been in office for a long time after first being appointed a Commissioner in 2002. Deeply entrenched in a network of Central PA politics, Haste seemingly values himself as one of the right people who knows what’s best with little tolerance for those outside of that realm.

In Dauphin County, he’s the man that calls the shots.

Indeed this was emphasized today. Unkovic pointed out that Haste signed multiple financial certificates for the Incinerator retrofit bonds which were presented to PA Department of Community and Economic Development (DCED) assuring that the new debt would be self-liquidating. What this means is that in order to get the bonds through the State’s approval, the new debt had to pay itself off via an operating Incinerator. At the time of issuance, the Incinerator wasn’t working. No revenue equals no means to make debt payments equals no “self-liquidating debt.” Yet, Haste apparently used his signature as Dauphin County Commissioner to make the deal happen.

Which leads us to another player in the true Harrisburg debt story–Senator Jeff Piccola. During Unkovic’s press conference, he referred to the closing of the Dauphin Meadows landfill and Piccola’s position on that. Now, this is another history lesson but an important one. In 1990, Senator Piccola fought against the Incinerator and fought for use of the landfill for Dauphin County trash. The State agreed and all County trash went away from the Incinerator and to the landfill. When that happened, the Incinerator lost immense value over night.

Ten years later in 2000, Piccola switched sides, dramatically and flamboyantly. He decried the landfill a nuisance and joined in a community-based lawsuit to shut it down. Piccola announced the Incinerator should be used for all Dauphin County trash.

And it was. Dauphin County entered into a municipal waste agreement with the City and The Harrisburg Authority. It is because of this agreement—and only because of this agreement—that the broken, deprived Incinerator was able to get financed to get fixed, since Dauphin County would guarantee the bonds. Piccola helped make it happen.

But Unkovic didn’t stop his list of naming names there. He called out the lobbyist Stan Rapp of Greenlee Partners, who is the lobbyist for both Dauphin County and for the bond insurer AGM. As we discovered last Fall, Stan Rapp was part of numerous meetings with the Governor and the Governor’s representatives about Harrisburg’s Act 47 process, which eventually became the City’s takeover by the State pushed by Dauphin County officials and Senator Piccola.

The Receiver was sure to say that he in no way criticized Judge Hoover for his recent ruling in the creditors’ favor, but Unkovic said, “I have great concerns about the parties who are pushing this litigation.”

“extremely upsetting as I’m trying to do a fair process.”

Those parties are AGM and Dauphin County who are both represented by the lobbyist Stan Rapp. This bears repeating.

Then there are the financiers–the Royal Bank of Canada’s James Losty, whom Unkovic referred to as “close to Reed.”

Of course, there’s the former Mayor himself, Stephen Reed. What’s remarkable lately is listening to Dave Unkovic—in courtrooms, in press conferences, in interviews–refer to Reed. Last week when Unkovic used the word “corruption” on the stand, it instantly struck me that this was the man that takes Steve Reed down. This bespectacled gent with his bow tie and measured, deliberate ways is the one to tear down the facade of idolatry that is Steve Reed.

Today was no different. Unkovic commented on Reed’s circle which included the above named as well as Representative Ron Buxton.

While Unkovic himself didn’t say this publicly, at this point in the story, the question is begged—Isn’t it ironic that both of the City of Harrisburg’s long-time legislators are retiring this year, Senator Piccola and Representative Buxton?

The most curious phrase Receiver David Unkovic used today was “joint venture.” He said as he sees it, there are three major parties who entered into a “joint venture” to finance the Incinerator. Steve Reed, Dauphin County, and AGM. Not only was there a “joint venture” of the parties, asserted Unkovic, but it was a “risky joint venture.” Using the hiring of Barlow as an example, he said, “Basically they were rolling dice and it came up snake eyes. Eventually.”

“Eventually” has been a slow grow to now. At this moment and with this historic action by Pennsylvania’s first ever municipal receiver, David Unkovic, the realization of years and years of cronyism, arrogance, and  public ignorance is reaching its peak and is becoming a metaphor not just for irresponsible public management in Harrisburg, but for the proposition of democracy everywhere.

Unkovic seeks to tackle this by calling on U.S. Attorney Peter Smith and State Attorney General Linda Kelly to investigate possible criminal activity found within the Incinerator’s Forensic Audit Report. While the Receiver maintains that he and his attorneys are still in the midst of a complex analysis of the Report, he’s apparently seen enough to take the next step. At his press conference, he read aloud a short and sweet letter calling on the attorneys to look into what’s going on. It’s dated today, March 28, 2012.

Corruption. It was the word David Unkovic used on the stand last week in Federal Court. Today he explained his use of that word. Prefacing his explanation with the fact that he used that term not as a lawyer, he said, “I meant corrupt in the sense of a body being corrupted. Deteriorated.” He went onto say, “It’s just a bad situation.”

It is a bad situation and there have been many people inside and outside of the City of Harrisburg who have said so. It’s bad and it’s been bad. But what’s really bad is that there are elected officials in office helping to make it bad either through incompetence or self-preservation. They are parties pushing, not just to potentially cover up whatever they did or didn’t do, but to seemingly still get more out of this place. As Unkovic said today, everything was arranged and signed in such a way that the burden fell on the City’s shoulders. There’s no relief of that burden if Dauphin County or even some of our State officials have it their ways.

Towards the end of the presser, when the press was asking questions, one reporter said to Unkovic that in a recent interview with Senator Piccola, Piccola said the Receiver needed to stop engaging with the people of Harrisburg and sit down and get his plan done. Calm at first saying he wouldn’t speak to a claim of what may have been said, Unkovic then showed his frustration by saying that there was no way recovery was going to be successful in Harrisburg without such engagement. Time and time again, he said, “I’m trying to do what’s best for the residents of the City of Harrisburg.”

What he doesn’t know, perhaps, is that we’ve not ever been engaged like this before. We’ve never been asked for our thoughts, opinions, or ideas…..except in practices of placation. We’ve never had access to the truth like we do now.

And people like Haste and Piccola know it and like it that way.

The idea of engaging the Harrisburg community like Unkovic is, this is novel and there is absolutely, without doubt, those who would like to keep the status quo in place. There are those in power who like the power of the People shrouded in ambiguity, ignorance, and apathy.

“I’m very concerned about the environment with which I’m trying to get this recovery done,” Unkovic revealed.

Yes, sir, it’s the same environment the City’s been suffering in for awhile. At least now, though, there are more of us together seeing the same things and saying so, trying to combat the suffocating morass of failed leadership that Harrisburg has barely endured. Welcome to the ranks, Mr. Unkovic. It’s good company.

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Drawing by Ammon Perry: Doodletillomega: Illustrations and Drawings by Ammon Perry

Another Receiver

The creditors TD Bank, M&T Bank, Bank of New York Mellon and the bond insurer Assured Guaranty (AGM) said, “Give us our receiver!”

And Dauphin County Court Judge Todd Hoover has finally replied, “Yes, let them have their receiver.”

This case has been going on for a long while. Originally filed in September of 2010 against the Harrisburg Authority (THA) and the City of Harrisburg, it came at the end of a long summer of strife between the Mayor and City Council over who should sit on THA’s board and over the hiring of Scott Balice Strategies (remember when they were in town?). At that time, Mayor Linda Thompson was in the 9th month of her reign and by that point in time, she had failed to produce a promised plan to tackle the City’s debt which included guaranteed obligations to the Incinerator. Despite never having anything to show for it, the Mayor proclaimed negotiations with creditors, a Forbearance Agreement she was working on, and of all the troubles she inherited. On September 12, 2010, then-Governor Rendell held a Sunday press conference with a smiling Harrisburg Mayor at his side to announce a $4.3 million aid package to the City so it could a) make its general obligation bond payments and b) hire Scott Balice.

A day following that peculiar presser, the bond trustees and the bond insurer filed a lawsuit asking for a receiver for the Incinerator and a writ of mandamus for the City’s “first dollar.”

This is why this suit is called “the big one” amongst those of us who talk about such things as lawsuits, problems, and pressures the City of Harrisburg is faced with. The plaintiffs want the Court to make the City give the creditors every dollar of revenue it collects until the debts owed are paid back. They want their money first, before the money goes anywhere else including to City employees and services.

Since the complaint was filed, this case has a long chronicle (seehere). At one point the local fire union asked to intervene in this case, claiming they had a right to fight the complaint since not paying fire fighters would be a breach of contract (and public safety). The Judge dismissed that request in May 2011. That’s when it became apparent that things weren’t looking so good for THA and the City in this case.

Things started to move swiftly towards a hearing on the matter, and then City Council filed a Chapter 9 Municipal Bankruptcy Petition in October 2011 just as the State raced towards taking over Harrisburg. As supporters of the Council majority argued, one of the most necessary reasons for filing for bankruptcy was to stop the lawsuits, this “big one” in particular.

Of course, as is well known, the City of Harrisburg was denied Chapter 9 and got the first ever Pennsylvania municipal receiver.

On the day the Receiver David Unkovic was officially appointed by the Commonwealth Court, THA filed a request to the Court to issue a partial judgment dismissing the plaintiffs’ call for a receiver for the Incinerator. THA asserted that since the City of Harrisburg had just been taken over by a receiver, then the State takeover legislation trumped the complaint and any Incinerator receiver would complicate and confuse the City Receiver’s job.

Judge Hoover said no it won’t.

In his Order dated March 22nd, the Judge declares the way he reads it, the rights of the creditors per the Municipal Authorities Act trump the the takeover legislation, not the other way around. The Municipal Authorities Act decrees a receiver can be appointed to an authority that doesn’t pay its debts. Per the Judge, the Amended Act 47 plan doesn’t prevent this, never mind what the defendants claim.

THA and the City aren’t the only defendants. The Receiver joined in the case to fight against TD Bank et al’s pursuit of a writ of mandamus and a receiver for the Incinerator. He said he intervened to “help protect the City’s position.”

Unkovic has touched upon this matter several times. He has indicated he had asked the plaintiffs to stay the case until he could write, present, and implement his plan, but they’ve declined. While on the stand during the Commonwealth Court hearing on his Recovery Plan, Unkovic said he had asked creditors to “stand down voluntarily,” but thus far, they hadn’t. “If they get what they want–first dollar–there’s no recovery plan that will work.”

This latest Order, though, doesn’t address the seek of mandamus. This Order is only in reference to a receiver for the Incinerator. On the question of—can a receiver be appointed to oversee operations of the Incinerator? The Judge ruled yes. Plain and simple.

Have politics influenced this outcome?

In a separate yet-to-come Order, the Judge will set a procedure for the Plaintiffs to select an Incinerator receiver as well as define how the plaintiffs will get paid for their expenses associated with the receiver. Once the receiver is in place, she/he will control the Incinerator’s operating budget. That person can decide how to spend the Incinerator’s revenue. The obvious priority is debt service so that the creditors will get paid. To make this happen, the City could see increased trash fees. Not Dauphin County, mind you, just the City. The County is protected by its municipal waste agreement and the receiver can’t break contracts, obviously.

Nor can an Incinerator receiver sell the trash factory. THA Board still retains that power. So then the question becomes, how will this twist and turn of Harrisburg’s debt saga affect the process of selling the Incinerator? Just last week, Unkovic revealed the four finalists of potential buyers. He’s announced several times that he wants to close on an Incinerator sale by the end of June. Will anyone enter into a contract (after Covanta get its right to first refusal) with Harrisburg’s Receiver with this court ruling in place? That we don’t know. How and if this will effect the potential bidding process is a shoulder shrug.

One process it’s surely to affect is Unkovic’s negotiations. AGM is one of the City’s principle creditors. They now have control of one of the City’s assets, an asset Unkovic was intending to use as leverage in his talks with creditors such as AGM. This ruling comes before Unkovic had acquired a real value for the Incinerator. It’s not clear if that real value will be influenced by this ruling for receivership.

Not to be overlooked in this situation is another very significant City creditor—Dauphin County, who isn’t a party in this case, but none the less has interests at play here. That can’t be denied. The County has not at all been sympathetic to the City’s situation. In fact, the County has, too, sued the City and is one of the parties that won’t back down, causing the accumulation of legal fees for taxpayers from multiple directions. The County and its officials have been clear about their impatience for the City Receiver’s approach. What the County or its officials have not been public about is any relationships or discussions they may have with the bond insurer AGM. It has been whispered and said aloud that there are certain parties in this debacle striving to have Unkovic removed. Some people aren’t happy with him. There’s talk of lobbyists lobbying. And as we do know, AGM and Dauphin County do happen to share a lobbyist.

This leads to a critical question–should a Dauphin County Judge be the one hearing such an important case? Have politics influenced this outcome?

The Order expresses it itself–the issue before the Dauphin County Court is an issue of interpretation of what the Amended Act 47 means. It’s a question of how the new Act 47 and the Municipal Authorities Act work together. It’s never been a question before, and Judge Hoover is the first one to issue an opinion on it. A judgment of opinion, not veracity. There are no facts being disputed in this case, all parties agree on that. The Incinerator has massive debt and The Harrisburg Authority has been unable to pay it. The City of Harrisburg has been unable to pay it.  Everyone nods.

No doubt THA and the Harrisburg Receiver will appeal this ruling. Even so, it would be weeks before an Incinerator receiver is put in place. In the meantime, Unkovic, has to figure out how to handle this latest blow to the craft. Word is he’s out of town meeting with his high-powered law firm McKenna, Long, & Aldridge.

Perhaps for his return we should post a sign at the City’s entranceway–Welcome to Harrisburg, Pennsylvania, the most receiver’d place in the State.

Read Judge Hoover’s Order:  The Order.

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