Harrisburg city's fiscal overseer abruptly quits

Posted: March 31, 2012

HARRISBURG, Pa. - Gov. Corbett will move swiftly to find another financial custodian to restore stability to Pennsylvania's debt-laden capital city after his first appointee said Friday he was resigning, a Corbett spokesman said.

The custodian, municipal bond lawyer David Unkovic, had been confirmed to the post in December by a state Commonwealth Court judge.

Corbett spokesman Kevin Harley called his resignation "unexpected and unfortunate," but said he did not know his reasons for resigning. Unkovic did not return messages left at his office and home Friday.

On Wednesday, Unkovic told reporters he was asking state and federal prosecutors to look into an auditor's report on the financing for renovation of the city trash incinerator. Unkovic complained he was not getting cooperation from the various creditors suing the city.

His plans included tax increases on city residents and selling or leasing city assets, such as parking garages. He also warned that seeking federal bankruptcy protection would be an option if parties with a financial stake in Harrisburg did not pitch in to wipe out the debt.

Harley said Corbett had not been unhappy with Unkovic's actions as the receiver.

"The governor believed that the receiver would be independent, and certainly Dave was acting independently of the administration, as appropriate," Harley said.

Harrisburg is dogged by a number of financial problems, with incinerator debt the most pressing. The city and an authority that owns the incinerator are tens of millions of dollars behind in payments on the approximately $300 million in debt tied to it, and city officials have not developed a plan to repay it.

In October, the General Assembly gave Corbett power to appoint a custodian to assume control of Harrisburg's finances. Suburban Harrisburg lawmakers were concerned that city officials would slap a tax on commuters or seek bankruptcy protection to force creditors to assume part of the debt.

Three city residents are challenging the custodian law in federal court.

A divided City Council did try to seek bankruptcy protection in October, but a judge said the city had been barred by a separate state law - signed June 30 by Corbett - from seeking bankruptcy protection and, in any case, had no authority to go over the mayor's head to file it.

Mayor Linda Thompson, who opposed bankruptcy, said she was sorry to see Unkovic resign.

"He was committed to the recovery of the city, and I think everyone involved recognizes and appreciates his dedication and public service," she said.

Some critics of the state's takeover, including city councilman Brad Koplinski, had come to support Unkovic.

"He was asking the right questions and coming to the right conclusions," Koplinski said.

Auditors hired by the Harrisburg Authority released a report in January that said professionals, consultants and advisers who were paid significant fees bypassed due diligence and red flags to press the renovation of the incinerator.

The people involved with the project should have known that neither incinerator revenue nor the city of Harrisburg would be able to cover the debt, the report said.

|
|
|
|
|