Harrisburg receiver submits recovery plan; bankruptcy still possible

By Caroline Salls

Pittsburgh, Feb. 7 - The City of Harrisburg, Pa.'s receiver, David Unkovic, submitted a financial recovery plan for the city to the Commonwealth Court as the first step in addressing Harrisburg's financial distress and getting it back to fiscal solvency, according to a news release from the office of the receiver.

"Although the city's financial distress is a complicated problem, it is a problem that can be and must be solved," Unkovic said in the release.

The receiver determined that the city needs to address three primary challenges, including the level of debt related to its incinerator, the city's structural deficit and the city's management.

Key initiatives of the recovery plan include

• Directing the Harrisburg Authority and Harrisburg Parking Authority to participate in a request for qualifications and proposal process for the monetization of the incinerator and the parking facilities, creating upfront cash proceeds related to the sale or lease of these facilities;

• Directing the Harrisburg Authority to undertake a request for qualifications and proposal process for management and operation of the water and wastewater systems;

• Directing the city to hire a full-time chief operating officer to lead and manage the day-to-day operations of the city and to make priority and policy recommendations to the elected officials and the receiver;

• Addressing the city's structural deficit with the understanding that additional negotiations and analysis are required;

• Making adjustments to the city's 2012 budget that must be undertaken by the city officials upon Commonwealth Court's approval of the plan; and

• Continuing to implement and enforce an emergency action plan that was issued by the secretary of the Department of Community and Economic Development.

"Recognizing the urgency of the city's short-term and long-term cash flow needs, we will work as quickly as possible to obtain quality proposals and move forward to address the debt," Unkovic said in the release.

Bankruptcy option

Although he wants to achieve a consensual plan outside of bankruptcy, Unkovic said in his 194-page recovery plan that he is prepared to file for Chapter 9 bankruptcy "in order to protect the ability of the city to perform its vital and necessary services" if he is unable to come to an agreement with stakeholders.

As previously reported, the city's October petition for relief under Chapter 9 of the Bankruptcy Code was dismissed on Nov. 23 in response to objections filed in the case.

The objectors claimed Harrisburg did not qualify as a debtor, citing a Pennsylvania law that was recently amended to prohibit a third-class, financially distressed city from filing bankruptcy until July 1, 2012.

According to the release, negotiations with stakeholders will continue moving forward and will be concluded after the value of selling or leasing assets is determined and the extent of the city's debt is known. The recovery plan will be amended by the receiver when the negotiations are complete.

The court is required to conduct a hearing on the recovery plan within 30 days of receipt of the receiver's plan and confirm a plan within 60 days of receipt.

When a plan is confirmed by the court, a four-member advisory committee will be established that will include the mayor and city council president, an appointee of the Dauphin County commissioners and an appointee of the governor.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.