05.17.12

Harrisburg’s Municipal Financial Advisory Committee

Meeting of Wednesday, May 16th. 8:30am, City Council Chambers, Harrisburg City Hall.

Board members:

  • Fred Reddig, Administrator of the Office of the Receiver (Dept of Community & Economic Development employee designated to oversee the Office of the Receiver of the City of Harrisburg until a Receiver is appointed to replace David Unkovic who resigned March 30th).
  • Governor’s Office representative: David Black, President of the Harrisburg Chamber of Commerce & CREDC
  • Dauphin County representative (in place of primary appointee Commissioner Jeff Haste): Fred Lighty, Assistant Solicitor
  • Harrisburg Mayor Linda Thompson
  • Harrisburg City Council President Wanda Williams

See Roxbury News written summaries & videos:

Read the Status Report filed with the Commonwealth Court on Friday, May 11th. Fred Reddig refers to the report multiple times during the meeting: Status Report 05-11-12

On Thursday, May 24th at 10:30am, the Commonwealth Court has scheduled the hearing on William Lynch’s nomination as the next Receiver of the City of Harrisburg: The PA Governor Nominates a New Receiver for the City of Harrisburg. For a variety of news headlines on Lynch’s nomination, see also: May 6th through May 12th

For more information on David Unkovic’s March 30th resignation, read: David Unkovic Makes a Move

01.15.12

The Trial: THA vs CIT (Part 2)

It’s over. This phase at least. Six days in the Courtroom, and now the attorneys on both sides have a scheduling order to give to the Court a number of submissions, the first due a week from now, 45 days from now, then another 30 days after that with the possibility one attorney or the other may request an extension.

City of Harrisburg Incinerator The Harrisburg Authority versus CIT trial Judge Jones Mayor Reed Andy Giorgione Dan Lispi testimonyThe point is, there won’t be a verdict for months. And months.

This case isn’t like the City of Harrisburg’s Federal Municipal Bankruptcy hearing, which was one sitting of about 5 hours with a verdict at the end of the day.

Also, unlike the City’s bankruptcy hearings, hardly anyone attended this trial. The room wasn’t filled with a slew of attorneys although Andrew Giorgione’s attorney sat through the entire thing. An attorney from PA Department of Community & Economic Development popped in and out a couple of times. Sometimes there would be a random lawyer-looking person who’d come in on a random day. Sit. Observe. Take some notes and leave.

Unlike the City’s Chapter 9 hearing, the media didn’t swarm the Courtroom. There was no “overflow room for the press” necessary. No national media outlets. No reporters from the AP or any State publications. On behalf of Roxbury News, I tweeted the proceedings and James Roxbury sat there with me almost the entire time taking notes and making connections to videos and information he’s had for years in his tremendous archives. The Patriot News had reporter Matt Miller there except for the day he was sick then Eric Veronikis came in his stead, although neither seemed terribly interested in the proceedings. Mr. Miller even nodded off a few times as admittedly the days grew long, especially after lunch. Most significant and perplexing, though, is that Mr. Miller never did take advantage of the permission the Judge gave media to sit in the juror’s box so we could see the exhibits—the emails, contracts, and documents, which were projected on computer screens only visible to the participants in the case, not the audience. Being a bench trial, all the juror seats were empty alongside of the Court in between the Judge, the witness stand, and the attorneys at their tables. Some days I sat there all by myself in the juror’s box, an ignored sideline voyeur of the action taking place in front of me.

There were no citizens in the Courtrom, no citizens there for citizens’ sake. Familiar residents Bill Cluck member of the current The Harrisburg Authority (THA) Board and Shannon Williams, THA Executive Director attended at various points in time on various days, but it’s true they were there for professional reasons as well as being interested citizens. Myself is included in having a dual role there. A job to do, but an interested citizen nonetheless. However, it’s fair to say it is quite difficult to devote 9:00am to 4:30pm day after day. Tis not feasible for the typical citizen.

Yet this is a citizens’ story. For the first time, we the citizens of the City of Harrisburg are officially hearing parts of the real story about how the Incinerator mess got as messy as it is. The mess which the citizens of Harrisburg are increasingly feeling the pressure to clean up.

The Courtroom may not have been filled with citizens or media, but it was filled with details, information, names, timelines, emails, contracts, and accounts of what happened in 2005 and 2006 which resulted in this unusual $25 million financing deal.

What’s so unusual about it? Well, by the end of Day 6 after 10 witnesses, it’s unusualness became more evident. In 2005, the Barlow Projects, Inc. Incinerator retrofit was months behind and out of money. Barlow was in financial shambles, on the verge of bankruptcy. In the Fall of 2005, The Harrisburg Authority and Mayor Stephen Reed were well aware of the grave situation. Unpaid contractors were walking off the job, Barlow had threats of lawsuits, the Incinerator was only partially finished, and Barlow was out of the money THA had given it by way of the City and Dauphin County being guarantors on the 2003 retrofit bonds.

No money, no time, and the Incinerator still unfinished carrying approximately $200 million of debt at this juncture in 2005. Barlow needed $25 million more to finish the project. Barlow was broke and utterly unable to get financing. The Harrisburg Authority could not legally guarantee any borrowing of Barlow’s. The City of Harrisburg, that is, City Council, as well as Dauphin County had made it clear after the 2003 retrofit bonds, they would not be guaranteeing anymore debt on that Incinerator.

Thus, traditional lending was off the table. When CIT was called upon to help, they decided that very quickly. In no uncertain terms, CIT told Barlow and THA it would not lend anyone any money to complete the Incinerator. No loan.

So based on the desperation of Barlow, THA, and Mayor Reed, a plan was developed. CIT determined for the deal to happen, Barlow’s patented technology license would be sold to CIT for $25 million. THA would then pay CIT $25 million to be able to use that technology at the Incinerator.

It’s called a Technology Sub-Licensing Agreement, and quite suddenly with reinstatement and amendment, this one became worth $25 million, the exact amount Barlow said it needed to finish the Incinerator retrofit project.

Barlow and THA had previously signed a Technology Sub-Licensing Agreement, which stated that THA would pay Barlow $0.50/ton of trash burned at the facility for a duration of 20 years. It’s estimated that the Harrisburg Incinerator burns 800 tons a day at maximum capacity, which comes out to be around $2.9 million.

At one point during Barlow and THA’s relationship, THA was credited with $2.7 million towards this original technology sub-licensing agreement. In many people’s eyes, including then-THA Executive Director Tom Mealy, this meant that THA had already paid in full for the right to use the Barlow-patented technology at the Incinerator.

But as witness after witness articulated in one form or another, desperate times call for desperate measures. Barlow needed $25 million to complete the project THA had already paid the company to do. THA needed the Incinerator finished and had no more money to give. Willing to collaborate, CIT had $25 million, yet would only do a deal on their terms. In a swift move, the conditions were stipulated:

    • The deal would not be considered a loan. It would be an asset sale, and the asset would be the technology license.
    • CIT would not deal with Barlow but rather only with THA.
    • THA would pay the $25 million licensing fee in quarterly payments of $500,000 at 7% interest.
    • Come “hell or high water,” THA would make the payments. No matter if the Incinerator project ever got complete or even got complete within Barlow’s assurance of 4 months from the deal, THA owed the money and would not miss payments for any reason. CIT would take no construction risk in this deal.
    • THA’s payments would be qualified as “operating expenses,” thereby obligating those payments to CIT before all and any Incinerator debt.  First money in, last money out, a common phrase in the Courtroom.

    Daniel Lispi, who was a former Reed Administration Director of Special Projects and then hired as a special consultant to THA on the retrofit project, said on the stand, “I don’t think the terms of the loan were particularly attractive.” Later he said, “Our position as a team was we weren’t happy with everything with the transaction, but there was the overarching need to finish the Incinerator.”

    “Did Mayor Reed direct you to close this transaction?” Lispi was asked.

    “I believe the direction was to proceed to go forward to close this transaction, yes.”

    Looking perturbed and inconvenienced for being so questioned, Lispi is considered one of the major promoters of this unusual financing deal. In fact, there are email exchanges between Lispi and THA solicitor Bruce Foreman in which Foreman is expressing his concern about the terms of the CIT deal. Lispi placates him by saying even if Barlow fails, THA will just refinance and take CIT out, and “eliminate any potential claims by bondholders that they were subordinated in contravention of their rights.”

    Basically Lispi told Foreman, don’t worry. There’s a plan. A perfectly precise plan.

    The perfect plan was that a) THA would get the $25 million and treat it as a “bridge loan;” b) Barlow would finish the project by March of 2006, the Incinerator would start operating and generating revenue; c) THA could then get traditional financing, bury the $25 million in a refinancing, end all ties with CIT, and this whole thing would be like a bad dream.

    Harrisburg Dauphin County Tom Mealy Bruce Foreman

    As insurance to this perfect plan, THA entered into a side agreement with Barlow specifying that Barlow would make the CIT payments, not THA. The first CIT payment would be due March 31, 2006, and Barlow contractually vowed to make that payment and all others thereafter with the implication this would occur until THA’s refinancing could take place.

    As a matter fact, the ultimate plan was that Barlow was going to purchase the Incinerator from THA once the retrofit was complete. The purchase price on paper was $260 million. CIT would be the arranger and underwriter of the purchase deal for a fee of $4 million or thereabouts. In Court, CIT’s presentation packet of the deal was put on display, much to the chagrin of ex-CIT Senior Managing Director Dan Morash who was on the stand at the time.

    The perfect plan.

    While there was worry in the air, everything was figured and aligned as it should go with risks addressed as inconceivable. THA solicitor and Executive Director both testified they each told Lispi and THA special counsel Andrew Giorgione they were skeptical about Barlow’s ability to perform. “We were overruled on that,” Foreman maintained.

    In order to alleviate CIT’s concern about any possible bond defaults that would tip bondholders off to the CIT insistence of first money in, last money out, Giorgione wrote to CIT’s attorney on January 3, 2006,  ”I think the risk of default on the bonds and hence, operating expenses is so remote given the City and County’s unlimited power of taxation, that CIT’s risk is negligible.” 

    If there was one name that came up over and over by witness after witness, it was Andy Giorgione. Both THA witnesses and CIT witnesses named him as the point person. He was who everyone dealt with. He was the one who assured THA the CIT’s terms were manageable. He was the one who gave CIT the representations and warranties the finance company needed for the comfort to go forth in the transaction. He was the one who convinced Dauphin County the arrangement could be done. He was the one who asserted that involving City Council or the bondholders would hinder the expediency of the deal. He was the one who declared the public would “crucify” them if the media found out.

    Yet Giorgione wasn’t alone in pushing the deal through. In an email dated December 28, 2005, Dan Lispi writes, “The advantage [to the CIT deal] is we get the money quickly to complete the plant without having to go through the governmental approvals which will take months of bloody war.”

    CIT did its part in pushing by coming up with the creative financing deal in the first place and nodding satisfaction each time Giorgione said all was taken care of on his end. CIT didn’t necessarily double-check or hire outside PA counsel to verify the legalities of the situation.

    Mayor Reed manipulated the City’s Consent by presenting the authority of himself, the City Solicitor, and the City Controller as sufficient, which it seems it wasn’t. Not only that, but Reed allegedly pushed the deal through by telling everyone what to do to get it done by any means necessary. THA Solicitor Bruce Foreman testified he attended a meeting in the Mayor’s Office, which included all three members of The Harrisburg Authority at the time—John Keller, Fred Clark, and Leonard House. A breach of the PA Sunshine Act perhaps.

    The THA Board did its part by passing the Resolution to approve the CIT deal. Solicitor Bruce Foreman did his part by presenting the formal legal opinion CIT required for its pre-closing records. THA Executive Director Tom Mealy signed when and where he was asked to sign, and Dauphin County pretty much turned a blind eye despite witness testimony that County Commissioners were aware of some if not all of what was going on. While on the stand Dauphin County special counsel during the CIT/THA financing, Mette, Evans, and Woodside attorney Tom Smida stated, “I did look down the wrong path.” He then defended himself by saying more than once, “I was told repeatedly that, ‘We are going to do this project.’”

    On the stand, Dan Lispi said, “No one stood up at a meeting to say, ‘I don’t think you should do this.”

    No one.

    To be sure, this particular case will not pass judgment on those who never stood up to say, “stop.” There will be no judgment of the individuals who perpetuated the CIT financing, nor were there questions directed as to fees or personal gain. That’s not what Federal Judge John E. Jones III is being asked to form an opinion on. He’s merely asked to either void the contract or at least put CIT’s $25 million in line with all the other debt the Harrisburg Incinerator owes.

    As Judge Jones said on the last day right before we all left the Courtroom, “It’s a tough case.”

    While that’s certain, it’s an even tougher story for the citizens of Harrisburg. The Judge’s verdict will only reach so far, and the people of the City will still be left to seek answers, justice, and reparations for the deals done in their name. The solace right now, though, is that the truth is just only starting to come out.

    All drawings by Ammon Perry: Doodletillomega: Illustrations and Drawings by Ammon Perry

01.08.12

The Trial: THA vs CIT (Part 1)

At a June 2007 presentation to Harrisburg City Council, Andrew Giorgione declared, “If you would ask me again, should we have done the CIT transaction, that one I would have said no. I would have said no. I’m aggravated that we did that to this day. And I was probably as principle as anybody else pushing for it. I was really scared that, that we were going to run out of funds, that we were going to…we were gonna….I was scared we were going to wind up where we are. That’s the bottom line.” (See video here.)

Subterfuge

Subterfuge is defined as deceptive strategy used to achieve one’s goal.

That’s what The Harrisburg Authority is claiming against CIT Capital USA, Inc, a Fortune 500 finance group. In January of 2006, CIT and The Harrisburg Authority (THA) entered into a financial agreement for $25 million dollars, money desperately needed to complete the plagued retrofit of the Resource Recovery Facility, a waste to energy plant commonly referred to as the Harrisburg Incinerator

In January 2008, THA filed suit against CIT asserting that the financial transaction between the two entities is void and unenforceable because of the way in which the deal was done.

To the Courtroom

The trial began on Wednesday January 4, 2012, just last week. It has gone on for 3 days in a row, a total of about 23 hours so far. When Court recessed on Friday, former professional consultant to the Incinerator Retrofit project, Dan Lispi was on the stand. He’s the fifth witness in this hearing The Plaintiff (THA) has called 3 witnesses from its list—-former THA legal counsel Andrew Giorgione, former THA Executive Director Tom Mealy, and expert witness David Traeger who testified on the value of the financial transaction between THA and CIT. Dauphin County (joined with the Plaintiff) has brought up expert witness Gerald Yarnall, CPA who testified about the nature of the structure of the transaction, and the Defendant CIT has introduced one of its witnesses already, skipping around to accommodate schedules. Dan Morash who was a the negotiator and overseer of the transaction on CIT’s part took the stand on Day 2 and discussed his meetings with THA’s representatives as they all contrived the deal.

By far, the witness on the stand the longest was Andy Giorgione who endured over 7 and half hours of inquisition. He was once a Harrisburg City Solicitor, but at the time of the CIT financing, Giorgione was contracted as “special legal counsel” for THA. Giorgione had participated in the hiring of Barlow Projects, Inc. in 2000—the company broughtto do the Incinerator retrofit–as well as in the 2003 THA bond issue. In 2005 Giorgione was upholding similar legal and advisory duties for THA. On the stand, Giorgione defined his role as counsel brought in on “special assignments.” He was bond counsel on financings, “primarily incinerator matters,” he said. ”On CIT and other matters, we took the lead versus the THA solicitor.”

His “special assignment” for THA in the Fall of 2005 was to negotiate a financing deal with CIT and to advise THA on how to proceed. However, Giorgione was sure to emphasize at the beginning of his testimony that  he did not give a formal, legal opinion on the CIT matter, most specifically on those things which concerned him the most about the CIT transaction, that is: the structure of the financing; a condition that the repayment would be an obligation as an “operating expense;” and THA’s responsibility to the Local Government Unit Debt Act, which puts limits on how much debt a municipality can accrue. <

As Giorgione himself said on the stand, the CIT transaction was “fairly abnormal in certain aspects.” He also stressed it was a frantic time for THA and the Incinerator Retrofit Project.

The Backstory

There are certain details of the story that all parties seem to agree on and some details which are indisputable The CIT financial transaction happened late 2005 into the very beginning of 2006. The first meeting between THA and CIT occurred on December 1, 2005 in New York City and the deal was closed by the 13th of January 2006. Prior to the December meeting, Barlow had informed THA that it was in crisis mode. For the second time, the company had run out of money in the midst of retrofitting the Incinerator. The project was months behind and work had stalled. Barlow’s sub-contractors were not being paid. The company was on the brink of bankruptcy and with the Incinerator in mandatory shut-down, not operating, not generating revenue, the situation was dire.

Harrisburg Debt CIT the Harrisburg Authority Mayor Steve Reed Dan Lispi Andrew GiorgioneBarlow informed THA that it needed $25 million more to finish the retrofit. Being near bankruptcy, Barlow was in no position to secure its own financing. Not only could THA not back any loans of Barlow’s, but traditional financing was also out of the question for THA or the City of Harrisburg. Who would finance a non-working, broken, half-repaired public waste to energy facility?

Hoping for a solution, Barlow introduced THA to CIT. Barlow and CIT had a relationship. CIT owned an incinerator in Tulsa, OK and had contracted with Barlow to manage it. The Harrisburg Incinerator saga was very much known to CIT and one of its Senior Managing Directors, Dan Morash.

On December 1, 2005, Andy Giorgione and Dan Lispi on behalf of THA, James Barlow, and CIT’s Dan Morash met over dinner in New York City to discuss what could be done to secure $25 million so that Barlow could finish the retrofit in Harrisburg.<

Here’s what they came up with.

No loan in “the classic sense,” to use the words of CIT’s attorney Norman Greenspan of Blank Rome, LLC. Rather, it was to be considered a “technology sale agreement.” For $25 million, CIT would buy Barlow Projects, Inc’s patented Aireal® Combustion System Technology. Via a Reinstated and Amended Sub-Licensing Agreement, THA would make quarterly licensing fee payments of $750,000 to CIT for the right to use the technology until the amount was paid off 5 years from the transaction date at 7% interest.

CIT had some other terms as well. Two clauses were part of the financing package: 1) “last money in, first money out and 2) “hell or high-water.” Quite aware of the fragile state of the Incinerator, CIT demanded that the licensing fee be defined as an “operating expense.” By doing this, CIT was assured its payments before any debt service payments. From its point of view, CIT may be the group to put money in last to fix the problem, but it wanted to be sure it was in line first to get its money back out. On the stand, Morash of CIT explained it as “a substantive equivalent of a debtor in possession financing.” As far as the hell or high-water clause, basically that stated that no matter if the Incinerator retrofit went smoothly, got completed or not, the money was still owed with first payment due March 31, 2006.

All parties considered this transaction a “bridge loan.” Temporary. Barlow assured THA that the retrofit would be finished by March of 2006, months behind schedule but still before the first CIT payment due as well as before the 2003 bond payments were due in June. Once the Incinerator retrofit was complete and the facility was operating efficiently and stably, revenue would be generated and traditional financing would be available. THA would refinance the Incinerator’s debt, satisfy the $25 million financing, and thereby end all ties with CIT.

There were even plans and a term sheet in place for Barlow to lease the Incinerator from THA once the retrofit was complete. A lease deal of $260 million was conceived which would take care of the Incinerator’s $213 million stranded debt along with CIT’s $25 million. When the future lease deal took place, CIT was to act as “arranger and underwriter” for of a fee of about $5.5 million.

None of that ever happened and by March of 2007, THA was in default to CIT. The two parties entered into a Forbearance Agreement in June 2007.

THA is claiming that the Forbearance Agreement is also void and unenforceable. CIT argues otherwise stating the Forbearance Agreement does two things. First it cements the responsibility of THA’s original obligation to the transaction and secondly, it takes away THA’s rights to sue CIT.

Who Knew?

One of the profound questions of the trial—-who knew about this transaction and who did not? Of course, who knew leads to who is responsible.That’s definitely one of the points of ponder for Federal Judge John E. Jones III (of the Dover School Board Intelligent Design case) as he considers the claim of subterfuge.

Who knew becomes clearer from the exhibits being presented in the Courtroom–emails, reports, contracts, amendments, resolutions, hand-written meeting notes. Documents the public hasn’t ever seen before.

We see correspondences amongst the architects and participants of this unusual financial transaction. Emails of attorneys for THA and Dauphin County back and forth about what’s going on. Memos from former Harrisburg Mayor Steve Reed’s Business Administrator Linda Lingle in regard to the City’s position on the matter. Comments by THA’s Executive Director Tom Mealy and its solicitor Bruce Foreman conveying apprehension at the quick-moving deal. In one email, Bruce Foreman is expressing concern about the CIT deal and writes if Barlow doesn’t finish on time, “we are really screwed and have a $25 million debt to boot.” Tom Mealy’s hand written “Pros & Cons” sheet cites a con as “deception of $25m loan” and “the bridge loan interest rate 7%.” Pros include “quickest means to obtain money.”

When asked what he meant by the word “deception” seen multiple times in his handwriting, Mealy nervously stated, “The process, probably, it made me uneasy.” THA attorney Steven Grubb of Goldberg Katzman asked Mealy if he had discussed his concerns with anyone. He said he did so with THA’s solicitor Bruce Foreman and the Mayor’s Office. Dauphin County Mette Evans and Woodside attorney Dan Sullivan asked the former THA Executive Director, “Did you tell Dauphin County your concerns?”

“I don’t think so,” Mealy replied.

While Dauphin County seems to be maintaining it wasn’t kept informed of what exactly was going on with the CIT financing nor did it give its consent as a guarantor of some of the 2003 bond issue, an email on Mette Evans & Woodside letterhead suggests that Dauphin County representatives were in the know. When asked under oath how a specific email from Giorgione had ended up on Mette Evans letterhead, Giorgione deadpanned, “I have no idea.”

As a matter of fact, most of the 2005-2006 emails being displayed in the Courtroom are from Andy Giorgione to various persons—to CIT attorneys; to Dan Lispi, Bruce Foreman, Tom Mealy; and to Dauphin County Commissioners and County counsel.

Giorgione’s messages indicate a range of stress, frustration, urgency, placation, and exhaustion.

At one point during Day 1 of the trial, Giorgione was asked if the then-Mayor was kept informed of the proceedings. “Oh, yes. Of course.”

Later during his testimony Giorgione said Reed had “certain interpretations of what the law said, what needed to be submitted to Council and what didn’t.”

City Council didn’t know about the CIT transaction until long after it was signed and owed. The public wasn’t made aware of it either.

The only opportunity the public had to review the CIT financing proposal was on December 21, 2005 at a THA Board meeting when the Resolution to accept the proposal was passed.

The Harrisburg Authority Board

In 2005 into 2006, THA’s Board was John Keller, Chair; Fred Clark; and Leonard House.

When the Resolution of the CIT financing proposal for $25 million was brought before them, the Board unanimously voted to accept it.

A major point of issue in the case, though, is that pages were “slipped in” to the financing proposal after THA Board passed the resolution to accept it. Debate surrounds a paragraph in the Resolution that delegates certain authority to amend the deal as the documents make their way towards signing. That particular condition gave power to THA’s Executive Director, Board Chair, and Solicitor to make changes to the document before closing.

What type of changes? THA’s attorneys argue that the CIT financial documents went through “substantial” changes, which thus, should have required the documents to come back before the Board for ratification. The proposal never came back before the Board, before the public for approval after the “slipped in” pages.

The slipped in pages essentially made THA the sole obligator for the $25 million “loan.” THA had attempted to make Barlow responsible for the payments to CIT by establishing “Amendment No. 9.” However, when CIT discovered this amendment, it threatened rejection of the deal. Thus, the paperwork had to be altered.

Now CIT contends that that one paragraph in the Resolution released THA from the duty to go through the public process of re-accepting the deal.

THA says that’s the subterfuge part.

To Be Continued

THA vs CIT carries on Tuesday, January 10th at 9:00am with former THA consultant Dan Lispi further testifying.

While the end result of this trial will be either THA owes the $25 million or not, there’s a lot more at stake here. This is the beginning of officially (as much as we can) understanding what happened to the City of Harrisburg to put it in so much debt. This is the beginning of the public hearing and seeing who was involved, how it happened, what actions took place, and what the reasons are.

More to come.

**With Judge Jones’ permission, I’m tweeting daily from the Court. You can read my tweets @roxburynews. Also, for archive videos on many of the meetings and events being discussed in these proceedings, visit Roxbury News.

01.04.12

The 2012 City Budget

The City of Harrisburg begins the year in a budget limbo of sorts.

City of Harrisburg PA Mayor Linda Thompson City Council Brad Koplinski Public Safety

Update: On Monday, January 9th, Harrisburg Mayor Linda Thompson vetoed the 2012 Budget that City Council had passed before the end of 2011. After the mandatory 3 day wait, City Council convened and overrode the Mayor’s veto with a vote of 6-1. Kelly Summerford was the only Councilor to cast the vote against the override. City Council has made it clear that it will re-open this Budget for more tweaking. Council has until the end of January to do so, and the final Budget must be passed by February 15th. Yet before then, Harrisburg Receiver David Unkovic’s Recovery Plan will be filed on February 6th.  Harrisburg Budget & Finance Committee Meeting, January 17th at 5:30pm in City Council Chambers. Harrisburg Receiver Public Forum at 6:00pm at the Arsenal Building (1800 Herr Street).

Right before the ring of the new year, City Council’s Budget & Finance Committee chaired by Susan Brown Wilson presented an amended budget, cutting the Mayor’s Proposed 2012 Budget of $55.5 million by $1.2 million to establish a $54.3 million budget for the City of Harrisburg.

Minus Gloria Martin Roberts and Kelly Summerford at the legislative session, City Council passed the amended Budget 4-1 with Brad Koplinski casting the lone vote against the Budget. Afterwards, he said he did so because there weren’t enough cuts and it included a property tax increase. “Harrisburg’s residents can’t afford anymore increases.”

Cuts included 12 positions, 10 of which are currently vacant. Yet, two of them were not, thus, two lay-offs: the Communications Director/Senior Advisor to the Mayor and the Ombudsman/Assistant to the Mayor.

In total, the cut positions are as follows:

  • Communications Director/Senior Assistant to the Mayor
  • Ombudsman/Assistant to the Mayor
  • Deputy City Solicitor
  • Senior Accountant
  • IT Administration & Communications Assistant
  • Health Officer
  • Executive Director HBG Broadcast Network
  • Economic Development Director
  • Demolition Specialist
  • Motor Equipment Operator
  • Motive Body Mechanic
  • Labor II (Public Works)

Other cuts include reductions to the operating budgets of the Mayor’s Office, Public Works, and Parks, Recreation, and Enrichment, to name a few.

Contrary to erroneous media reports, City Council’s Budget increased Council’s legal fees by $50,000 (not $300,000 as reported by The Patriot News) and cut the Mayor’s advertised Business Administrator’s salary from $125,000 to $90,000 (The Patriot News reported it was cut to $30,000). And while WHTM abc27 reported there were no cuts to public safety, Council’s Budget did cut the operating expenses of the Bureau of Police by $118,250. Certainly, no police positions were added.

Neither were there any fire fighters added in 2012. However, City Council did budget $850,000 more in overtime costs to the Bureau of Fire, up from the $500,000 the Mayor had budgeted. During the Budget hearings, both the Mayor and her Finance Director Bob Kroboth said the overtime costs were budgeted low in order to “motivate contract renegotiations” with the fire union. At the time, this tactic of proposing an approximately $1.5 million cut from the 2011 actual overtime costs without adding any fire fighters clearly made several Councilors uneasy.

The 2012 Budget is not finished yet. Following the last 2011 City Council Legislative, Wanda Williams (who was voted new Council President on 1/3/12) stated the Budget would be re-opened in 2012 so that Council could work on it more. Of course, the Receiver has the ultimate word on the City’s Budget.

While Harrisburg Receiver David Unkovic was present and scrupulously taking notes at each of the series of 2012 Budget public hearings (except for one night, which he sent a proxy), he has been mum on his point-of-view about the City’s Budget or its process. On the night of the vote, though, City Councilor Patty Kim disclosed that Unkovic had told her in a meeting that the City would have to begin to reconsider how it thought about government services, intimating greater cuts are yet to come.

Until Unkovic presents his Recover Plan on February 6th, we are sure not to hear the Receiver’s thoughts on the passed Budget. Per law, the Mayor has 10 days to veto the City Council Amended Budget. If she does, Council then has 3 days from her veto to override it by five votes.

Enraged by what the Mayor called City Council’s “spiteful” act, it is unclear whether the Mayor will exercise her veto right. She did say, though, she would be contacting the Receiver about this budget process.

Alas, once again the City of Harrisburg finds itself in the midst of officialdom and peeves, suspended in uncertain wonder, anticipating what happens next.

So we wait.

See the document (as passed): 2012 Budget

Read Harrisburg resident Nevin Mindlin’s Two Cents Worth on the 2012 Budget: “City Council: Please, Finish the Budget Right”

12.19.11

The Good, The Bad, and The New Year

I know, I know…..it’s been awhile. A few weeks.

I haven’t maintained the site on its usual schedule. It’s easy for me to say it’s because it’s the holiday season. The days are getting shorter. The cold air.City of Harrisburg, Chapter 9 Bankruptcy, Linda Thompson, Pennsylvania, the Incinerator, David Unkovic, Receiver

These are the things which slow the business of the world down.  Families and friends, decorating and eating, laughing and cheers’ing. In the City, the holidays are especially spirited as the shops and restaurants put up boughs and bows, strings of lights are everywhere, neighbors’ homes look festive, and parties, gatherings, events, spontaneity, goodwill and so many merry things are only walking distance away.

Yet none of that really has relieved the City of minding its business. In fact in that regard things have gotten busier, more thought provoking, more curious, more disclosing. Since Thanksgiving, we in and out of Harrisburg have heard constant flashes of news about Harrisburg:  the Federal Judge dismissed the bankruptcy petition, presented her reason why. In between, a State-appointed Receiver was given a public hearing then the Commonwealth Court ordained him. New Year’s Eve in the City is back on. Muggings, stabbings, shootings. During the day and at night. Harrisburg’s Receivership is legally challenged by three citizens citing due process and equal protection. The City Council Majority appeals the Federal Judge’s Chapter 9 decision. A few days later, the appeal is dismissed because it was filed too late. Mayor Linda Thompson disregarded paying her property taxes and mortgage, but within a week, she makes good on her “payment plan” and brings her mortgage up to date.  The 2012 Budget process begins and word spreads fast that it calls for taxes to be raised. The Receiver’s Plan will be ready by January 3rd The Receiver requested & was granted an extension so his Plan is now due to be filed by February 6th. The Penn State chaos is coming to town.

There are ongoing conversations, conferences, and concerns about the School District, the Broad Street Market, and City Island. Street lights, trash, and crime.

Public meetings have been occurring multiple times a week—-the Mayor’s Town Halls, City Council sessions, Budget Hearings. And now the Receiver, David Unkovic, too, will meet with the people of Harrisburg to explain his approach and answer questions.

Then in the background we hear of long-time politicians retiring and candidates campaigning. Gerrymandering. Redistricting. Yes, the City of Harrisburg is divided in two. Congressional districts that is.

None of it has slowed down.

Behind the facade of jolly holidays in the City, businesses are stressing, residents are worrying. Visitors are uncertain, the citizens of the region are cynical, and the world is watching.

In the past few weeks, as I’m out and about, the question I get the most is “What do you think about it all?”

The Good

Harrisburg’s State-appointed Receiver seems like a decent person, very cerebral, very conscientious. I’ve seen him talk. I’ve seen him answer questions. I’ve seen him frustrated. I’ve seen him ponder. I’ve seen him deliver his message. David Unkovic has a goal and a strategy but isn’t hesitant to say, “I don’t know that yet.” His intentions are two-fold. Not only does he want to help the City of Harrisburg, he wants to try to set a model of fiscal security for distressed municipalities across the Commonwealth.

He’s here to do a job. Unkovic has yet to miss a Harrisburg 2012 Budget Hearing and hasn’t failed to meet with stakeholders or chat with citizens who ask him to lend them his ear.

While philosophically I don’t believe in “The Receiver,” so far, I like David Unkovic. I’ve decided to put a certain amount of trust in him. However, Unkovic could be gone tomorrow and another Receiver would take his place. Someone who won’t be David Unkovic. That would be a problem.

For now, the best thing we can hope for our City is that David Unkovic pulls it off.

This ideal—that this Receiver succeeds in implementing fair solutions for Harrisburg’s crisis—points to another good thing.

Since we are in Receivership, the City’s finances are under the direction, discretion, and protection of the State.

That’s a positive aspect of Receivership. It means the State is overseeing the City’s finances, and for various reasons, this is necessary. The Thompson Administration has failed to gain the public’s trust in dealing with Harrisburg’s fiscal quandary. While, yes, some of Linda Thompson’s inability comes from the fact that Reed left a mess, a convoluted, crony-laden, “uncommon” mess (to use Receiver David Unkovic’s word), most of Linda Thompson’s inability to manage proficiently comes from the fact that she is plumb incompetent. This has revealed itself several times before her ascension to the Mayoral seat and after, both personally and professionally. Shame on Thompson’s Communications Director Bob Philbin for saying of her recent failure to pay her City property obligations, “This is a personal matter and has no bearing on the mayor’s office.”  Yes, it does. To we her fellow residents, this should indicate attitude and approach. This should indicate that someone who can’t manage her personal finances is in charge of public money.

She is a metaphor of Harrisburg’s problems.

The Bad

Linda Thompson.

She’s bad for the City and its reputation. She has had two years to show us that she can do this, that she can handle the extreme challenges of the City of Harrisburg with grace and skill. Yet, we haven’t seen her be effective. And while Bob Philbin has done a cliché job of trying to make “The Mayor” suitable, she’s not. All too often, Linda Thompson is abrasive, inappropriate, and incorrect. Her errors are either by ignorance or deceit. The attempt at a polished Linda Thompson–scripted, informed, spinning keenly—is who we sometimes see at a press conference or a town hall meeting, using (ironically enough) the story of a personal mortgage as analogy for the City’s debt situation.

Then other times we see the fast-talking, long-winded Linda Thompson riddled with defensiveness. The ranting one that misuses and mispronounces words while blaming others and talking about herself in third-person.

While many of us in and out of the City are convinced she is not much more than a ferocious street-smart grifter, I admit I do not know her personally and do not care to. She’s not my friend nor my foe. Those are not terms I view her in. Linda Thompson is much more simply the mayor of my City. Therefore, I observe her closely, scrutinizing her Administration in most things. Just as I would were I interviewing a candidate for a job. For now, Linda Thompson is my government, just as every other elected official in my jurisdiction is. I view her in that light.

Mostly at this point, I see her as bad PR for the City, and while she and a few of her supporters may decry such a conclusion as unfair and prejudiced, that’s not true in my case. The cry of prejudice is one too quickly touted.

Now, of course there’s prejudice out there, but it is not merely an issue of one group pitting itself against another. Prejudice in this City is profuse with a extreme stress put on the color of a resident’s skin. Whites disparage blacks and blacks disparage whites. Others are disregarded in between. It’s another bad part of our City.

So is the litter and blight. The lack of Public Safety officers and the dilapidated infrastructure. These are the issues that make the residents’ daily quality of life depressing, frustrating, and demoralizing.

It’s what makes so many citizens angry and apathetic.

That’s the worst part of our City of Harrisburg, the apathy.

The Good

“Apathy can be overcome by enthusiasm, and enthusiasm can only be aroused by two things: first, an ideal, with takes the imagination by storm, and second, a definite intelligible plan for carrying that ideal into practice.” –Arnold Toynbee

Without a doubt, there are ideals in place. Shared and passed back and forth during public conversation and neighborly chatter. These ideals absolutely trigger the imagination. Residents are brainstorming initiatives, swapping information, generating sketches of concepts, and then the “second” phase happens—plans are getting made and new practices are being set.

We have a long road ahead of us. For years the City was neglected in too many ways, and now we have to care again to make it better. We have to envision it and do it despite anything else.

What do I think about it all?

I think 2012 will be good. I think there are dedicated, passionate people who can make the City of Harrisburg better. I think together we can do it. It won’t be easy and it won’t be good without us deliberately making it good, but I’m encouraged, I’m excited, I’m enthusiastic. I’m making plans.

Our City, our concern. Let that be Harrisburg’s motto in the new year.

11.21.11

Power In Our Hands

Takeover sits on the horizon of the City’s view. Out there approaching like an unidentifiable ship, hazy and mysterious, but definitely there.

Of course, it’s sardonic to use a ship analogy since it is one Harrisburg’s Mayor Thompson has used time and time again, famously saying, “I’m in control of this ship.”

No, she’s not. She isn’t nor has ever been, and now because of that, the citizens of the City of Harrisburg find ourselves being taken over.

Harrisburg, PA Mayor Linda Thompson State Takeover PA Receiver Governor Corbett David UnkovicQuite quickly, too.

It’s a fact since Senator Piccola’s classic “takeover” remedy was introduced. It has been an expedited process, one of those fast-moving bills that proves our legislators can finagle expediency under the right terms, whatever those may be. It was just this past Friday that Governor Corbett directed the filing of the Petition to name a Receiver of the City of Harrisburg. David Unkovic, former Chief Counsel of the PA Department of Community & Economic Development where he held that position for four months before turning in his resignation on Thursday, seemingly in anticipation of his new role as Harrisburg’s Receiver. With no clear regard to typical process and procedure, the “Respondent,” i.e. the City of Harrisburg, has merely two days to answer the Petition for Receiver, an unusually swift timeline. Such a timeline could technically allow a hearing on the Petition in Commonwealth Court by Wednesday morning, before or at the same time as the City’s Chapter 9 hearing. In law, it’s all about the timing.

This speed of process of the Receiver along with an abundance of connections between the nominated David Unkovic and various specters of Harrisburg’s Incinerator chaos such as law firms like Saul Ewing (who currently represents the bond insurer Assured Guaranty) and Cozen O’Connor (who currently represents the State against Harrisburg’s Chapter 9 filing) and financial advisors like Public Financial Management, all this has led to intense public confusion, suspicion, fatigue, and apathy. Again.

Who can keep up with the City of Harrisburg, with what’s going on? It’s a challenge to understand what happened, what could happen, or what didn’t happen. Even more onerous is attempting to process it and develop a stance on it. What do you think about it?

For many of us, it’s easier to withdraw, shrug our shoulders, and c’est la vie it. Unfortunately, for City of Harrisburg residents that seems a viable survival mechanism as we are being dragged along this ride of bureaucracy and politics. Our elected leaders, we are told, have failed us. Thus, the structure of authority has spoken and is setting up to fix the problems. Law has been written and swiftly implemented to account for the crisis. All awhile we the people are stuck in the middle like children in a divorce, pawns in some conceptual game of power.

The State in its infinite wisdom is failing us, too, and perhaps the worst because it is neglecting to be sensitive to Harrisburg citizens’ sense of democracy and freedom. We the people of Harrisburg are being done to. This is happening to us under the guise of for us. “This is unavoidable,” they say. “This is what must be done. Officials have flunked, so we need to put someone in their stead.”

It’s not so much that this particular point is being argued on the public stage—or at least very scarcely and hardly with proof. Most people believe Linda Thompson, the Chief Executive Officer of this City, is incapable of running an Administration that can address the issues Harrisburg faces, small to grand scale. Yes, she must go.

However, the State is acting cowardly. Rather than use the tools that exist to remove an incompetent Harrisburg, Pa Mayor Linda Thompson State Receivership David Unkovic Bankruptcyelected official, it is taking the easy way out by manufacturing dominance.

“Harrisburg will be fine,” we are told.  Simple words of solace for an obviously defunct situation.

So with that being said and not much more, many residents go about their business, yet with a droning throb in the pits of their stomachs and a slightly bad taste in their mouths because something just doesn’t seem right.

It’s not right. It’s not right to usurp local power and take away the accountability of the people in a democracy.

Never mind what one thinks of the City Council majority. As mistaken as they have been and as they have indeed contributed to the confusion, suspicion, fatigue, and apathy prevalent in Harrisburg right now, the four Councilors who stood together and firm have acted to reveal evidence of the complexity and nuance of Harrisburg’s situation. Their insistence, their declarations, and their inquires have served  to bring more attention to a sordid saga. How did the capital city of Pennsylvania get to this point? How did a public project go so terribly bad? Especially with so much government in one place—literally within four blocks of one another, four levels of government?  How did the City become so demised? How did this happen?

These questions are relevant. Investigating them yields various approaches to dealing with the myriad problems Harrisburg faces. It’s too base to declare do this and it will fix that. As if that is all that matters. The untangling is much more convoluted than one fix here and all the rest will be fine. We need more comprehensive attention and more innovative analysis.

It is with those questions abuzz in our minds and on the street, we try to keep up, try to understand. We ponder if this Receiver is a good thing or a bad thing that is being done to us. We ponder municipal bankruptcy and audits. We try to keep up with the next steps, the next story, the next headline, and the next revelation. We try to process it and take a stance.

Yet all anyone in this City wants is a city thriving. That’s the common denominator. We want Harrisburg better. Right now, our City leadership is not able to give us that in any way and we’re left standing here confused, suspicious, fatigued and apathetic, some of us so much so that we’re willing to sacrifice our own democratic values just to have a semblance of so-called security. The State does have the power to give us that. The County, too. Both governments have the authority to truly help and engage with the citizens of Harrisburg. But if they won’t and don’t do it as it should be done fairly and democratically, then we will have little choice but to usurp them as they usurp us.

11.13.11

A Process Designed to Fail

The deadline for the City of Harrisburg to submit a Consent Agreement to the Secretary of PA’s Department of Community and Economic Development is tomorrow, Monday November 14th.  So far, there have been two public sessions where–for the first time ever–the Mayor and all City Council members sat around a table and discussed solutions to Harrisburg’s fiscal crisis.

City of Harrisburg Consent Agreement Mayor Thompson City Council Brad Koplinski Patty Kim Susan Brown Wilson Municipal Bankruptcy Chapter 9 Mark Schwartz Debt

Five and a half public hours later with at least that many hours out of the public eye in so-called “Creditors’ Meetings” and what does the City have? Not a Consent Agreement, but rather headlines that read “deadlock” and statements from the Mayor saying “I’ve done all that I can do,” along with statements from City Council demanding more.

But really, who knows what was supposed to happen here. No municipality has ever gone through the PA “Consent Agreement” process. The City of Harrisburg is the first. It wasn’t part of the Act 47 program when Mayor Thompson applied for the State panacea. It was added after the fact. Before its addition, the statute defined itself only so far. At a certain point in the law (a point where no municipality had gone before), the program was unclear, indeterminate. When Harrisburg trod that far, the State whoa’ed and affixed parts, punitive parts. The statute became suddenly more defined, more strict, more threatening, and more consequential.

Now since it was already there, in the program, Harrisburg has become the lab rat. The City is the experiment and as it is, the pros and cons of this new aspect of Act 47 will be ascertained through Harrisburg’s experience.

The Consent Agreement process as it is written, quite frankly, seems designed to fail. For 5 1/2 hours, the public has watched the Mayor, City Council members, and bureaucrats sit around and essentially twiddle their thumbs. Only three concrete things have come out of these public meetings—the original Coordinator’s Act 47 Plan dated July 8th as basis for the Consent Agreement; in general City officials agree to include the sale/lease of the Incinerator and the Parking System; and the City has asked its creditors for $100M in debt forgiveness. That’s what has materialized out of 5 1/2 hours. Indeed there were a lot of wasted words, wasted arguments, wasted power struggles.

Of course, we don’t know what has happened in the closed door sessions. We’ve gotten tidbits. This past Monday, November 7th was the first Creditor’s Meeting which word has it lasted for over 6 hours. What was the outcome? Not that they recapped the earlier meeting for the audience, but that night in public, City Council decided to send a letter to its creditors asking for $100M in concessions. Tuesday the letter was sent off with the next Creditors’ Meeting scheduled for Thursday morning. By Wednesday evening, the primary creditor, Assured Guaranty, told Harrisburg a) no way to such concessions from them b) they wouldn’t attend the Creditors’ Meeting.  So they didn’t.

The Thursday morning Creditors’ Meeting still occurred, but all we know is that notably Dauphin County representatives left early, and after a few hours the consensus amongst the handful who were left in the room was that City officials would return that evening to draft another concession request to creditors. However, what seemed to happen was this—when they arrived for the 7:00pm meeting ready to decide on concessions, the Mayor had in her hand a Consent Agreement, drafted and ready on the table.

She took it upon herself to cut to the chase and get this thing done. As she deemed fit.

It makes sense she did this because at the public meetings, Mayor Thompson made it quite apparent she is adamantly against losing her relevance and authority as Mayor of Harrisburg. It is her main worry. As she said, she did not become elected by the people of this City to have the State come in and take that away from her.

Thus, like a good governable steward, she is doing what she must to retain the glory she sought. And that means coming up with a Consent Agreement the State will accept. Surely, the Mayor Thompson didn’t write it alone or without keen guidance.

The City Council majority–2 of whom were reelected this week–clearly have a different approach. While their strategy is unknown, intermittently they have questioned this Consent Agreement process along the way.They’ve declared it unfair, they’ve asked for real numbers, they’ve debated, they’ve engaged, and they’ve even played along. Yet at no point do they seem concerned with losing the power of their elected offices.

Unfair, oh well. The debate and engagement only slightly yielded results. Playing along they must, but what was most interesting out of their questions, comments, and digressions was a call for the 2012 Budget. How can they develop a Consent Agreement, which calls for a plan “to provide long-term financial stability to the distressed city,” if the Mayor has yet to provide her Budget for the next year? The Budget process started weeks ago, was due to be presented last week, then got moved to November 22nd. It makes sense that all who are at the table, including the bureaucrats helping with the numbers, would need that Budget to develop a Consent Agreement.

Unfortunately, though, the bureaucrats didn’t step in and back City Council’s request, which the Mayor flat-out refused. The bureaucrats could have nodded and told the Mayor it was a valid request. Instead, they just did what they did for 5 1/2 hours—sit there offering generic suggestions and contemplative responses pretty much only when asked.

Surely, the Mayor Thompson didn’t write it alone or without keen guidance.

If the State wanted to design a process that actually had some viability at such a juncture as the City of Harrisburg finds itself in right now, a professional moderator should’ve been be brought in.

That is a curious aspect of this whole Consent Agreement process. By its very statutory definition, it is a process of negotiation. And as we all know, Harrisburg officials has some lofty, hefty things to negotiate—not just with creditors but amongst themselves. There are many accusations that the City’s elected officials don’t know what they’re doing, don’t know how to negotiate, but it seems a reasonable response to that is why would they? These are City residents, elected at large. A Council slot is a part-time, no-support-staff gig for about $20,000 a year. Why would we expect these people to have the practice to negotiate at the level of skill and expertise that Harrisburg’s situation warrants?

Now the Mayor is a bit different. As the Chief Executive Officer, she has full-time job with advisors and support staff. That being said, Harrisburg’s particular Mayor Thompson is a contentious personality. That has become even more evident during these public negotiation sessions. Her tactics are brusque, offensive, facetious, and arrogant. It doesn’t make for a constructive atmosphere.

So rather than just have a few bureaucrats sit at the table nervously shuffling papers, why didn’t the State provide a professional moderator? Some negotiation coaches to workshop with City Council and the Mayor, that would have been helpful, especially to those citizens who sat hour after hour in the public meetings waiting for something productive to happen.

The City has scheduled the final leg of the public Consent Agreement meeting for Monday night at 5:05pm.  What can possibly happen, though, with this process? Seems Harrisburg is backed in with only two choices. Either citizens will witness an astounding solidarity amongst our elected officials or a countdown to the Governor’s call for takeover.  I venture to say expect the latter.

To read official statements along with Assured Guaranty’s letter rejecting the City’s concessions request: Heard Said

11.05.11

The Fifth of November

Originally written on November 5, 2010, this essay is one-year old. I would’ve forgotten it if the author Paulo Coehlo hadn’t retweeted the poem. I remembered this write-up & pulled it out of the archives. It’s remarkable & interesting that this was the City of Harrisburg one year ago today.

The Fifth of November

Remember, remember the fifth of November Harrisburg, PA
Gunpowder, treason and plot.
I see no reason why gunpowder treason
Should ever be forgot.
Guy Fawkes, Guy Fawkes,
‘Twas his intent
To blow up the King and the Parliament.

In 1605, Guy Fawkes along with fellow co-conspirators attempted to change the political system of Great Britain by blowing up Parliament during its reopening session, hoping to kill the Protestant King of England and seize power for a Catholic regime. They packed the basement of Parliament with gunpowder ready to light the wick that would destroy the political center of London.  However, the plan was foiled, and Guy Fawkes was caught, tortured, and executed.

In commemoration, on this day in Great Britain bonfires will blaze and fireworks displayed as celebrations center around a burning effigy of Guy Fawkes himself made by children for the specific purpose of throwing his likeness into the fires to hail the long ago saving of the King and Parliament.

Relief.  That’s what is celebrated.  Relief that it was a stopped attempt to destroy a capital and replace the political power with a radical, fanatical belief system.  As if it was meant never to be.

Here in Harrisburg, 405 years later, it almost feels as if we have no such luck.  That we may not be in time to stop the destruction of the capital city.  Known and unknown persons seem to be steadily conniving to (metaphorically, of course) stockpile loads of gunpowder in the undercroft of our City, light the wick, and boom!  Harrisburg destroyed, a burnt-out mess of bare bones picked cleaned by extreme greed, hubris, and deceit.

Indeed, something is amiss in our City.  The murmur of threat and liquidation is detectable and apparent in the air.  There are more secrets being leaked and tales of knowledge from the inside being told.  Needless to say, conspiracies abound.

It is sometimes difficult to tell what is true and what is untrue.

Yet there is hope for awareness because certain themes can be found.  We merely have to take this week (of 2010) in review to see that the People of Harrisburg have to shrewdly and carefully pay attention to what is going on around us so that we find the pocket of danger in time.

1)  Last Friday (10/29)—Dauphin County Commissioners filed a new suit against the City of Harrisburg.  They want $6.7 million reimbursement for payments they’ve made on the Incinerator debt.  Those Commissioners are paying legal fees with taxpayer dollars and any defense will cost taxpayers more dollars. It’s a vicious cycle of the spending of taxpayer money.

2)  Last Friday (10/29)—The Harrisburg Authority Chairman Marc Kurowski held a special meeting with Mayor Linda Thompson, her spokesman, Chuck Ardo, & the City’s finance director Bob Kroboth; City Councilmembers Patty Kim & Kelly Summerford; County Commissioner Haste and Dauphin County financial advisor Jay Wenger; and THA staff.  It was set up this way to avoid having to comply with the Sunshine Act, thus, not open to the public.  Despite THA Board member Bill Cluck request to his fellow board member Kurowski, there has been no public briefing of this meeting.

3)  Monday (11/1)—Mayor Linda Thompson dismissed 3 members of the Harrisburg Parking Authority Board and replaced them with same ole, same ole comrades in arms.  As one citizen of Harrisburg was heard saying, “She dismissed the only people in the City actually coming up with a feasible plan.”  According to Chuck Ardo, she ousted who she did because the Board did not suitably communicate with her about voting on a refinancing package that would, of all things, keep the City’s parking in the hands of taxpayers.  Corky Goldstein, who was one of the Board members who voted for and praised the HPA resolution, remains and is now joined by two of his previous colleagues from the Mayor’s School Board of Control.

4) Wednesday (11/3)—Dauphin County Commissioners had a public meeting and voted to get a loan to pay the upcoming $35 million debt payment due in December.  This loan will cost $4 million and according to the Patriot News, “Commission Chairman Jeff Haste said county officials will expect to recoup the loan principal and interest costs from the Authority and/or the city.”  We already know that Haste et al. aren’t afraid to sue the City for such recouping. (Click here to see the public notice of this ordinance).

Also at this meeting, Bill Cluck reports:

Haste also said they support a forensic audit but only if it is paid for out of proceeds of the sale or lease of city assets. He was willing to commit up to $1 million for the audit.

Haste revealed the substance, sort of, of the private meeting last friday among himself, mayor and her staff, Patty Kim and Kelly Summerford and Marc Kurowski and Authority staff.

Apparently four scenarios were presented to the group. Cluck told the Commissioners he was not aware of any such documentation of four scenarios and that the Board had taken no position on the issue (whatever those scenarios entail, but since Cluck has yet to be briefed on last Friday’s private session, he was at a loss to discuss).

Haste further claimed that the THA Chairman said he spoke for the Board. Cluck informed Haste and Pries that the Chair does not speak for the Board unless the Board has so authorized him, which they have not.

Haste said they discussed at the meeting that the roadblock is the inability of City Council to get four votes for any proposal.

This last comment of Haste’s is ironic because there is evident record of 4 City Council members voting together on various proposals over the past year.  It would seem that the real essence of this remark is that there aren’t 4 members of City Council who can be counted on to facilitate some plan that must be in the works.

 

5) Thursday (11/4)—The Harrisburg Authority had a special meeting and by a 2-1 vote, retracted a previous motion to look into the legality of the 2007 bond notes.  According to Cluck’s report, Kurowski expressed that he wants to look at the future and not the past.  Apparently fellow board member Westburn Majors agrees with him.  Cluck was the lone duck on this one, still scratching his head as to why that happened. (go to“Public Display” to see a THA spreadsheet of these 2007 notes)

It is not entirely certain what this series of events and actions mean. Yet. Again, though, the themes are strong. To be sure, we can’t be fooled into thinking all of this is merely coincidence.  There are ways to discover more, to uncover the truth. However to do so effectively and efficiently, citizens and taxpayers of Harrisburg must join together, en masse support, to show up to be heard, to ask questions, to call out, and to exclaim that this is our city and we will not be victims of treachery. Rather, we will join forces to share the burden of observation & witness and apprise one another of what we see.

If not for such a system of warning and exchange, what’s really happening underfoot will be overlooked.  The scoundrels will continue digging and preparing their den of ruin to cause the City to fall in order to realize their own selfish glory.

Let us only hope that:

By God’s providence he was catch’d, 

With a dark lantern and burning match.

Holloa boys, Holloa boys, let the bells ring!

Holloa boys, Holloa boys, God save the King!

And Harrisburg, too.

10.31.11

Tweet Stream: The Consent Agreement Meeting

Okay, so I’m doing something I haven’t ever done before.

todays the day Harrisburg Mayor Linda Thompson Consent Agreement State Takeover Bankruptcy

For the sake of getting a chronicle out of the first ever PA Consent Agreement Meeting as modeled by the first ever Governor-declared PA Fiscal Emergency, i.e. The City of Harrisburg, I’ve transposed my tweets from last night’s meeting. Below is the stream of my live broadcast from the room as the event unfolded.

To be sure, this event deserves a careful analysis. There are definitely some points below that require pause and discussion, pondering and consideration such as why was the Mayor so forceful about calling a vote to see who’s willing to sell/lease assets? Or even the disagreements between the Mayor and her ally City Council President Gloria Martin Roberts require some contemplation, but that will have to come later in the next couple of days.

Coming off the meeting, tweeting from 6:30pm to 9:00pm, I just wasn’t up to the task of writing up a commentary. Forgive me, but I give you this so you have something. I’ve already put it in readable order, dot to dot. As is. I didn’t even correct the typos and spelling errors, although I was so tempted to do so. I thought it best to give you the raw event as it happened. Visit http://twitter.com/#!/todaysthedayhbg for the original.

Tweet stream start time: 6:25pm

  • Lots of familiar HBG faces in the Hilton Ballroom for the Special Public Mtg on PA’s first ever Consent Agreement. About 50-60 right now.
  • The set-up: Officials at the front of the room at a roundtable. Rows of tables set in rows for audience. Candy in bowls.
  • In audience, I see: attorneys, members & exec dir of@TheHbgAuthority, various HBG Admin’trs, Chuck Ardo, Ruth Cruz, Eric Jenkins, reporters
  • Also in attendance at this Special HBG Mtg, a nice diverse crowd of HBG residents.
  • Original #Act47 Coordinator Team member Gerald Cross of PA Economy League present at HBG Consent Agreement negotiations.#latestart
  • We are waiting, waiting, waiting on HBG City Council member Eugenia Smith. And they’re going to start without her
  • Late, too, but not as much as Ms Smith. Agreed on eerie quiet. MT@byHeatherLong Kelly Summerford now here. Room extremely, eerily quiet.
  • Moderator for this meeting is Acting HBG City Solicitor, Jason Hess. He wishes all a Happy Halloween & anticipates a productive meeting.
  • No public comment tonite, but Acting City Solicitor will accept any public comments in writing. <#HBG
  • Process of mtg—HBG City Council will begin by responding to Mayor’s #Act47 Plan, Mayor respond to CC comments, DCED Fred Reddig’s turn.
  • HBG Acting City Solicitor going over what Consent Agreement must include. See here what he’s going over (dated 10/25): todaysthedayhbg.com/news-to-know/w…
  • Basically, before HBG Mayor, City Council, & DCED negotiate, getting terms of what Consent Agreement CAN & CANNOT be.
  • While this aspect of Consent Agreement negotiations happen in public, negotiations with HBG creditors can occur in private, Hess stresses.
  • Vital Services–police/fire, refuse collection & disposal, water, pension, & debt obligations. Must be addressed in HBG Consent Agreement.
  • Dem HBG Council candidate @SandraReid just joined audience. Surprising (shocking) Allen Bair & Michael Bretz not here. (2/3 Rs Team)
  • HBG’s PA representative Ron Buxton just joined the Special HBG Public mtg on Consent Agreement, too. Piccola going to show?
  • Fred Reddig addresses PA Economy League’s Gerald Cross—he’s here to help with numbers/calculations in case HBG officials need it.
  • Ahhh, HBG City Council member Eugenia Smith arrived to this Consent Agreement mtg.
  • . @TheHbgAuthority presenting to negotiating table. THA’s explaining written suggestions/comments THA submitted for HBG Consent Agreement.
  • . @TheHbgAuthority Chair Marc Kurowski says overall THA supports Mayor’s #Act47 Plan. “Not really any consternation” w/what’s in there. #HBG
  • . @TheHbgAuthority ”open” to appraising value in HBG’s water system & Dehart Dam. #assets #ConsentAgreement
  • Tmrw, @TheHbgAuthority will be meeting w/Lancaster Cnty Solid Waste to discuss Incinerator offer. #HBG
  • . @TheHbgAuthority asks for consideration of abt $2M in outstanding vendor pymts and consideration of CIT loan/suit in HBG Consent Agreement>
  • .@TheHbgAuthority will post its HBG Consent Agreement suggestions/comments on its website tmrw.hbgauthority.com
  • MT @byHeatherLong @TheHbgAuthority Brd Chair Kurowski confirms 4 interested parties in Incinerator. #HBG
  • First tension of eve. HBG Mayor wants to know why $25M CIT “unsecured loan” should be included. Says not in her plan b/c not HBG’s prob.
  • .@TheHbgAuthority arguing that CIT’s $25M may become an operating obligation thus will have priority over THA’s debt service. #fairwarning
  • Nods & that tension passed. Now onto discussion/negotiation on the Mayor’s #Act47. Basis for HBG’s Consent Agreement?
  • HBG Council being asked to articulate what should be in & what should be left out from Mayor’s #Act47 Plan. #consentagreement #negotiate
  • HBG Councilwoman Wanda Williams: On the Incinerator, I support a plan that has shared sacrifice from bondholders, insurers, & Dauphin County
  • Williams argues that risks were knowingly taken by bondholders, insurers, & Dauphin County, thus, shared pain is in order. #ConsentAgreement
  • Williams states it’s not right to put ttl burden on City when several other parties facilitated the loans HBG’s being held responsible for.
  • In regard to HBG’s structural deficit, Williams argues for taxing tools available to other PA municipalities. I.e. commuter tax, sales tax.
  • Wanda Williams: “It’s unfair” residents City of HBG, “an urban center,” will be solely burdened w/increased property taxes & service costs.
  • Susan Brown Wilson takes the mic & addresses DCED. Asks, how can you come up with numbers for a Plan when the data is not available? #HBG
  • Wilson: I want AGM to come to the City w/$7M for the next 5-7yrs. I want Dauphin Cnty to come w/$7M for the next 5-7yrs. #HBG
  • Susan Brown Wilson asserts the bond insurers took the risk. She wants to see AGM at the negotiating table. #consentagreement #HBG
  • HBG Mayor talking fast about “commuter tax,” saying City was stripped of the opportunity. Calls SB1151 a punitive bill. Punishing HBG.
  • Mayor announces that HBG City Council is invited to attend a creditors mtg (AGM will be there) to negotiate on November 7th.
  • HBG Mayor tells City Council that they have to be willing to leverage assets in order to make negotiation gains with HBG creditors
  • . @hbgpattykim speaks. She wants to start with the original #Act47Plan as basis for Consent Agreement, not the HBG Mayor’s #Act47Plan.
  • Patty Kim justifies beginning w/original #Act47 Plan because she says “the numbers add up.” (HBG Mayor has always said she used Novak’s #s)
  • HBG Councilwoman Kim wants to see City of HBG lease its assets to the Dauphin County or the State to citizens retaining some control.
  • Kim holds her ground. Tells the HBG Mayor that some of Mayor’s #Act47 initiatives are not defined how paid for. #backandforth
  • HBG Mayor takes umbrage to that & defends her #Act47 Plan, yet admits updates are needed. Kim says next mtg, she’ll have page #s.#proof
  • MT @roxburynews Mayor Thompson to Patty Kim: I’m not objecting lady, er Ms Kim. #ouch
  • HBG Councilwoman Eugenia Smith: [State] gave us a toolbox, gave us the tool. And in midst of us using them, they changed the rules on us.
  • Oh, back up for a minute. During Kim & HBG Mayor #backandforth, Kim poses good question–how will Act111 affect HBG’s #Act47Plan? #unions
  • Smith picks up on this Act 111 issue @HbgPattyKim brought up. Wants DCED’s Reddig to explain how HBG’s Consent Agreement will be affected.
  • Fair enough, Eugenia Smith asking where Dauphin Cnty is tonight. Not one Commissioner here? This is 1st time ever PA Consent Agreement, HBG.
  • In fact, Dauphin Cnty Commissioner Candidate Wendy Jackson could’ve scored major HBG rez points by attending tonite’s Consent Agreement mtg.
  • HBG Councilman Kelly Summerford enters to convo. Disappointed Dauphin Cnty officials not here. Disappointed in State for changing rules.
  • Summerford expresses the short time constraints City of HBG finds itself under is prob. “Backs up against the wall.” #Act47 process timeline
  • Councilman Summerford says he was never really worried about the numbers in the #Act47 Plans. Figured they would work out. #HBG
  • Summerford does ask DCED is this Consent Agreement a “living breathing document?” DCED says there’s an amend process. Thru the Secty of DCED
  • HBG Mayor motivated to work w/CC to avert #takeover, she says. “I don’t want anyone coming in here and telling us what to do.”
  • HBG Mayor says if CC wants to go back to initial Coordinator’s #Act47 Plan, fine, but reminds Council she got $900K in State $ (#wishlist).
  • HBG Mayor Linda Thompson, “My ego is not big.”
  • Fast talk & furied, HBG Mayor Thompson using her campaign tactics to rouse the crowd to agree w/her intent to avert #takeover.
  • HBG Mayor Thompson reminds CC that her Plan got more out of stakeholders than original #Act47 Plan. #concessions
  • . @Bradkoplinski commends Mayor on her #Act47 concessions, awaits @HbgPattyKim citations for Mayor’s #Act47 mistakes, &….
  • ,willing to go back to orig #Act47 if the original #Act47 Plan includes the concessions the Mayor got from stakeholders in her plan. #HBG
  • Question: Would HBG’s Consent Agreement be rejected if they propose a different Coordinator than original, ie Novak Consulting Group?
  • DCED’s Fred Reddig gives solid bureaucratic answer to HBG’s question—would have to see Consent Agreement suggestion for implementation.
  • Patty Kim has suggested HBG Mayor & CC would come up w/way to vote on Coordinator. #downtheroad. Now vote on what #Act47Plan to start with.
  • HBG City Officials vote to use the original #Act47 Plan as basis for Consent Agreement. claps in room.
  • That’s first concrete outcome of HBG Consent Agreement mtg–basis for negotiation is Novak Coordinator #Act47 Plan, not Mayor’s#Act47 Plan.
  • HBG Councilman Brad Koplinski addressing errors in orig #Act47Plan (over-est revs, under-est expenses), stranded debts, & Receiver powers.
  • Koplinski: The Mayor says SB1151 is punitive. That’s an understatement. #HBG
  • HBG Councilman Koplinski goes on to say he’s not object to selling/leasing assets, but it’s about the process. Receiver decides all.
  • Koplinski: Assets gone. Those revenues not replaced. Then taxes will go up in HBG & rez who can will leave, while those you can’t, burdened.
  • Koplinski: I voted for Ch 9 in order to get all stakeholders to table to negotiate. Even per Gov’s Declaration, the HBG sounds bankrupt.
  • Read the first ever PA Governor’s Declaration of Fiscal Emergency: The City of Harrisburg: todaysthedayhbg.com/news-to-know/w… #fivepages
  • Koplinski asks: 1) $100M concessions from Dauphin Cnty & bond insurers 2) 1% County-wide sales tax 3) sale/lease assets per Res 25-2010 #HBG
  • Koplinski also asks that the State pull back on its time restraints of Fiscal Emergency while City of Harrisburg takes the time to negotiate
  • Mayor responds to Koplinksi. 1) ask AGM & Dauphin Cnty for your concessions 2) asset sale/lease includes HBG CC 3) work on 1%..gonna be hard
  • Joke for those of us who’ve heard so many times—2hrs & “white paper.” @TheBurgNews @byHeatherLong @everonikis@roxburynews @JScottJournal
  • @IamSauerkraut And point to note–all HBG City officials voted “Yes” to use original #Act47 Plan as basis, including the Mayor. #unanimous
  • Koplinski & HBG Mayor going #backandforth on RFP process for lease of parking system. Definitely something to work out.
  • HBG Mayor wants to know right now–who supports leasing/selling of assets? Call the vote.
  • They’re making motions now, but this isn’t a valid HBG Legislative Session…..
  • Patty Kim: “I don’t think this is necessary.” #goodcall #HBG
  • HBG City Council Prez agrees w/Kim. Stops the vote. Prez: The only thing I’d vote to get rid of right now is that Incinerator.
  • HBG Council Prez Roberts talks abt State taking on some of City’s stranded debt. DCED rep gives long answer not able to per PA Constitution.
  • Then CC Prez asks the State Legislature reconsiders giving City of HBG tool of “commuter tax.” (Grell’s trade-off for SB1151 support)
  • Brown-Wilson steps in & says State’s priorities askew. Cites Corbett’s $11.5M to Philly biz Janney Montgomery Scott: philly.com/philly/blogs/i…
  • DCED Exec Dir Fred Reddig reminds Brown-Wilson Gov’s offers to HBG in August 23rd letter still stand: PennVest Grant, increased fire $, etc.
  • 8/23 Letter from Gov Corbett to HBG Mayor on State assistance: pl1462.pairlitesite.com/wp-content/upl…
  • So, things wrapping up & HBG CC members want to know who will represent Council in Creditors Mtg on 11/7? @HbgPattyKim says they need a pro
  • HBG not really getting solid answer on who will rep CC at Creditors Mtg on 11/7, but group talking about next public Consent Agreement mtg.
  • Councilwoman Patty Kim proposes that HBG City Council attys Mark Schwartz & Cravath, Swaine, & Moore be invited to Creditors Mtg on 11/7.
  • HBG Council proposes public Consent Agreement mtg on 11/7, Mayor says she has a Town Hall Mtg that night. Can’t do it.
  • HBG Council Prez quite respectfully tells Mayor she believes HBG rez will understand Consent Agreement Mtg is important to avoid #takeover.
  • While HBG Mayor says, “We’ll talk about it.” No, Gloria Martin Roberts moves to have next public Consent Agreement mtg on 11/7 @ 6pm. #done
  • This first ever PA Consent Agreement Mtg is done for tonite. Next one is November 7th @ 6pm in HBG City Council Chambers.

Tweet stream end time about 9:00pm

10.28.11

Hear ye, Hear ye! A Public Process At Hand

Within days of the new PA law signed, i.e Senate Bill 1151, Governor Corbett did it. He used the law. He declared the capital city, Harrisburg, a “fiscal emergency.”

Mayor Linda Thompson Harrisburg PA Chapter 9 Municipal Bankruptcy filing

So what’s that mean?

We don’t know exactly. It’s the first time it ever happened. There seems to be two parts to it: 1) the Governor determines the Third Class City is “in a state of a

fiscal emergency.” Then 2) the Governor declares the City a “fiscal emergency.” We think the declaration is what happened this past Monday, October 24th, but we haven’t actually seen any official public notice of it. Per the statute (SB1151), the Governor shall “provide written notice of the declaration to the governing body of the distressed city along with a concise statement of facts supporting the determination.” (update: Since this article was written, the document has been made public. Click to read–“The Governor’s Declaration of Fiscal Emergency for the City of Harrisburg”)

Assuming it’s true, that the City of Harrisburg is Governor-declared “fiscal emergency” and the Mayor and City Council received a letter with facts and support, there’s a process to be followed. First step,

  • within 8 days of the fiscal emergency declaration, the Mayor and the City Council must schedule a Special Public Meeting to negotiate a Consent Agreement.

That’s happened. As has been publicly displayed, on Monday, October 31st @ 6pm in City Council Chambers, the Mayor, City Council, & a representative of PA’s Department of Community & Economic Development (DCED) will hold a public meeting to negotiate a Consent Agreement.

What’s a Consent Agreement, you may ask? It’s a plan of solvency. The very thing the City has been yearning for for the past year and a half.

See, the good thing about Linda Thompson coming into office is that her overthrow of Stephen Reed did expose the true financial crisis of Harrisburg. She likes to call herself “the one who blew the whistle.” Yes, it’s fair to give her that designation. By mere virtue of her taking office, the walls of security and false impression fell to reveal a tangled public mess.

Unfortunately, though, she doesn’t have the leadership skills to compensate for all the crumbling.

So here we are, in a state of State-imposed “fiscal emergency.” The word “takeover” looms before us.

And everyone keeps pointing to the last-chance option of developing a Consent Agreement to stave off the dismal takeover of Harrisburg’s democracy.

Thus, back to the question–what is a Consent Agreement?

It’s a plan that the Mayor and City Council develop together in order to address the City’s short-term as well as long-term issues of solvency. While no model of the Agreement is given, the statute is careful to give a list of cans and cannots. The City can sell assets. The City cannot consider a “commuter tax.” That kind of stuff.

Within 20 days of the Governor’s declaration of a “fiscal emergency,” the City of Harrisburg must present the Consent Agreement to the Secretary of Department of Community & Economic Development, and he has 3 days to decide—doable or not?

If he says “doable,” then the City has to pass the plan as ordinance within 7 days.  As it is scheduled now, all that should occur before the City is back in Federal Bankruptcy Court on November 23rd for the hearing on the validity of Harrisburg’s Chapter 9 filing.

Mayor Thompson has been very clear. She’s bringing her Mayor’s Act 47 Plan to the table, sans the “commuter tax,” of course since the State took that “political leverage,” as she referred to it, away.

The Mayor says she’s already come up with a good, solid plan to lead Harrisburg to solvency. This meeting is really about what City Council wants, she says.

That’s what it seems it’s going to have to be about since the Mayor has been clear she’ll be bringing her Plan back to the table as the best start and the public won’t be permitted to participate.

That’s right. Monday’s Special Public Meeting will not include public comment. Public observation, yes, but in a letter to Council, President Gloria Martin Roberts stated, “Please note that this is not a City Council meeting, it is a meeting specifically for Council, The Administration and any and all stakeholders that desire to come to the table.  It will be open to the Public, however there will be no public participation.”

Clearly, in Ms. Roberts’ mind, the public isn’t a stakeholder.

Watch we will. With Harrisburg Bankruptcy a hot anticipation on the horizon, we will watch as the City moves through this State-imposed process. Some of us think this is a good thing—bring the State in to clear out the muddle that is the muddle of our local officials muddling everything up. Others of us see this as a usurping of locally elected power, thus, a usurping of Us. While others add government cover-up and government protection of those people versus We the People of Harrisburg.

Complicated, complex thing this is. Anyone who says it’s simple isn’t doing or doesn’t want to do her/his homework and enter the quagmire this thing is. No one ever said it was easy. This certainly didn’t happen overnight  and it certainly isn’t going to get solved in that time period.

The time period the State is giving us, though, is 20 days. If we can’t do it, if the Mayor and City Council can’t develop a Consent Agreement, if no State-acceptable Plan emerges, then the next step:

    • The Governor may direct the secretary to file a petition in Commonwealth Court to appoint the individual named in the petition as a receiver for the distressed city.

This past Tuesday, Governor Corbett said he’s prepared to name a Receiver at the end of this 20 days should the City of Harrisburg not accomplish this last-chance step before it. No names were named and while the Mayor has lobbied for power, no power will she be given besides an ambiguous role of “advisor” on a committee of other advisors. A member of City Council will find her/himself there, too. Publicly elected-advisors.

Gloria Martin Roberts Harrisburg City Council Receivership State Plan

Before they become just that and nothing more according to the State, let’s gather and witness the process of the Consent Agreement. First meeting—Monday, October 31st at 6:00pm.

All drawings by Ammon Perry: Doodletillomega: Illustrations and Drawings by Ammon Perry