Monday, December 22, 2014

Is Corbett's Harrisburg solution part of the problem?

Can bond lawyer Unkovic cure Harrisburg of owing too much?

Is Corbett's Harrisburg solution part of the problem?

PA state Department of Community and Economic Developemnt chief counsel David Unkovic, "the bond attorney who Gov. Tom Corbett chose to take over Harrisburg (last Friday) has multiple connections to city creditors," has provoked accuastions by Harrisburg officials resisting the takeover of a "blatant conflict of interest," writes Patriot-News reporter Eric Veronikis here.

"One of his past employers — for 27 years — was the Philadelphia-based law firm Saul Ewing, which represents bond insurer Assured Guarantee Municipal Corp., the city’s largest creditor...

"He also worked for the law firm Cozen O’Conner, which is fighting Harrisburg’s bankruptcy petition on behalf of the state; and Harrisburg financial adviser Public Finance Management, which represented Dauphin County in financing incinerator debt" for the ill-advised $300 million-plus incinerator renovation.

The incinerator project blow-up drove Harrisburg to file for Chapter 9 federal bankruptcy protection in an attempt to cut debt without selling assets or laying off workers (which is what Corbett and other state officials want Harrisburg to do.) 

Adds the Patrot-News: "Unkovic said he mostly worked as bond counsel for municipalities,.. 'I am going to pursue this with great determination to come up with the best possible plan for the city,' Unkovic told the paper.

Unkovic's appointment makes sense if you see Harrisburg's dire finances as a technical problem requiring an expert solution from one of the people who helped Harrisburg borrow more money than it can now afford to pay.

It makes less sense to City Council, which sees one of the predators who pushed the city into dire financial states now charged with selling assets and breaking contracts - to protect bondholders.

"This [receiver petition] is simply the latest instance in which the state has not taken steps to help Harrisburg, but hinder it," said Harrisburg City Council's majority bloc, which favors bankruptcy and opposes a state takeover. "Everyone that has followed the process knows that the solution will be a combination of new revenue and debt forgiveness... The state should come to its senses and start to become part of the solution and not part of the continuing problem."

 

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
Business Videos:
Also on Philly.com:
Stay Connected