News2012March

News Around The Burg

March 2012

Receiver Resigns after Requesting Incinerator Inquiry

March 30 -- Harrisburg receiver David Unkovic today abruptly resigned his post, just two days after requesting federal and state probes into how the city's debt-ridden incinerator was financed.

This past Wednesday, Unkovic said he had sent letters to U.S. Attorney Peter Smith and State Attorney General Linda Kelly asking them to investigate several bond deals that financed upgrades to the incinerator.

At the time, Unkovic said he was "disturbed" by details of those deals. He has said previously that those deals had "unusual actions in them." Unkovic also named state and county officials, as well as the administration of former Mayor Stephen Reed, as complicit in those deals.

Unkovic was confirmed as receiver in December by Commonwealth Court, which now must confirm a new receiver.

The news of Unkovic's resignation shocked Harrisburg.

Initially skeptical of Unkovic, many residents had warmed up to him, increasingly believing that he wanted both to unmask the details of the incinerator debacle and was committed to making the fairest deal for the people.

"Mr. Unkovic had been serving the city well," said Councilman Brad Koplinski. "He listened to every voice on the subject and was fair and honest. He was asking the right questions and coming to the right conclusions. I hope that the governor and the DCED secretary appoint a replacement that will continue to review the information in a fair manner and uncover the truth."

"He was getting to the root of the problem and putting pressure on the right people," said Councilwoman Patty Kim. "I'm furious."

Unkovic already had begun implementing aspects of his financial recovery plan for Harrisburg. He recently had selected companies to bid on Harrisburg's assets in an effort to retire some $317 million in debt accumulated as the result of repeated efforts to upgrade the incinerator over many years.

Mayor Linda Thompson said she expected to continue to implement the plan, which has been approved by Commonwealth Court.

"The prior receiver’s team is still in place and my administration continues to operate under the court-directed, state approved financial recovery plan," she said. "I have hired a business administrator and chief of staff, and we will move forward implementing every aspect of the financial recovery plan under my control. We remain focused on the goal of eliminating the structural deficit and returning this city to fiscal solvency.”

A new receiver could choose to continue under Unkovic's plan or could petition the court for changes.

"I am sorry to hear that Mr. Unkovic will no longer serve the city of Harrisburg as receiver," said Thompson. "It has been a pleasure working with him since July 2011. He was committed to the recovery of the city, and I think everyone involved recognizes and appreciates his dedication and public service."

Advisory Committee Schedule Released

March 28 -- The committee that will advise Harrisburg's receiver will hold twice-monthly public meetings for the remainder of the year, giving residents a chance to hear discussion of the recovery plan.

Receiver David Unkovic yesterday released the schedule for the advisory committee, which will meet the second and fourth Wednesday of every month at 8:30 a.m. in City Council chambers in the City Government Center. The first meetings will be held April 11 and 25.

The committee consists of Mayor Linda Thompson, Council President Wanda Williams, Harrisburg Regional Chamber of Commerce President David Black and a representative of Dauphin County. Members can send designees in their place.

Unkovic also is expected to attend the meetings.

The advisory committee is tasked with consulting with Unkovic on the implementation of his financial recovery plan for Harrisburg.

Administration Called on Carpet over Late Audits

March 27 -- Harrisburg City Council members tonight lambasted the Thompson administration, some calling it "incompetent," for an inability to complete fiscal audits that have endangered certain city grants and bonds.

Finance Director Robert Kroboth defended the administration from an onslaught of criticism, saying that the 2009 and 2010 audits remain undone due to staffing shortfalls, the city's other severe financial issues and the refusal of council to fund positions needed to complete the audits.

"The matter continues to be one of professional capacity," he said. "We still don't have on board a business admnistrator or a chief of staff."

Councilwoman Susan Brown-Wilson would have none of it, saying that it's impossible to rationalize missing the 2009 audit deadline by nearly two years and the 2010 deadline by almost a year.

"Excuses are the tools of the incompetent," she said. "All we have out of this administration are excuses and excuses and excuses."

Because of the late audits, the Harrisburg Authority cannot reissue certain water and sewer bonds. In addition, fiscal audits must be up to date for the city to apply for most grants.

For months, the administration has claimed that the audits were on the verge of completion, saying recently that the 2009 audit was further delayed because the city's outside auditor, the accounting firm Maher Duessel, kept requesting more documents.

Maher Duessel Vice President Tracey Rash, who has been auditing Harrisburg's books since 2003, countered that she has not asked for more documentation than usual. She is merely waiting for the city to provide everything she needs to complete the audit, including several more documents from a 25-item list she gave the city in November.

"I would say a majority of that list are standard items," she said.

Rash also said she received a "flurry"of documents just two days ago, but that several remain missing.

Kroboth said he hoped to complete the 2009, 2010 and 2011 audits by year-end, but that the timing would depend upon beefing up the city's finance and accounting staff.

The city currently is hiring a chief operating officer and a senior accountant, both of which would aid the effort. The positions are mandated in the receiver's financial recovery plan for the city.

Kroboth said that Mayor Linda Thompson has narrowed the COO search down to two candidates, but that the administration has not yet begun interviewing for the senior accountant job.

The council plans to take up the issue of the late audits again during its April 25 meeting.

Court: Harrisburg to Get a Second Receiver

March 27 -- A court has ordered a separate receiver for the Harrisburg incinerator, adding yet another complication in the city's already complex financial and political situation.

Last week, Dauphin County Court of Common Pleas Judge Todd A. Hoover granted a request by several of Harrisburg's creditors for the appointment of a receiver, who would oversee the day-to-day operations of the facility.

The plaintiffs -- TD Bank, the National Association Manufacturers and Traders Trust Co. and Assured Guaranty -- have also asked the court to order the city to immediately make good on debts owed to them, with these payments taking a priority over all other city obligations, including paying its workforce. Hoover did not rule on this request.

Hoover now will establish procedures for the appointment of the receiver.

The lawsuit, filed in 2010, is one of several filed after the city, two years ago, stopped paying on Harrisburg Authority bonds it had backed for repeated upgrades to the incinerator.

David Unkovic, the city's state-appointed receiver, had opposed a separate receiver for the incinerator.

Unkovic currently is in the process of selling the incinerator to try to retire some of the facility's debt, which now totals more than $317 million. It is unclear if Hoover's decision will affect Unkovic's plans.

Council Doubles Parking Permit Fee

March 20 -- Harrisburg residents will pay more to park on the street, as the City Council tonight voted unanimously to double the price of a residential parking permit.

A parking permit now will cost $30 a year, twice the previous amount, which had remained unchanged for 27 years. A two-week guest permit will increase from $2 to $5.

The council also is considering proposals to raise parking meter rates and to install 88 new parking meters in Midtown. However, those issues remain undecided, said Councilman Brad Koplinski.

Koplinski said that the council will wait to see whether street meters are included in city receiver David Unkovic's plan for a long-term lease of the city's parking assets before deciding how to proceed. Just today, Unkovic released a lengthy list of companies that he deems qualified to bid on the parking assets (see story below).

Unkovic includes raising parking meter rates -- and extending the hours of parking meter enforcement -- in his financial recovery plan for the city.

Also tonight, Council President Wanda Williams said she received a response to a letter the council sent the U.S. Department of Justice last month asking for a federal probe into how upgrades to the city's troubled incinerator were financed.

U.S. Attorney Peter J. Smith responded that the matter "is under review in this office" and that other federal agencies also have been notified, including the U.S. Securities and Exchange Commission.

Smith, though, declined to make any further comment over what actions, if any, his office might take.

Unkovic has said that his attorneys also are reviewing incinerator financing issues and may make a decision soon over whether to pursue actions against companies or individuals involved in the deals.

Receiver Narrows List of Parties for City Assets

March 20 -- Harrisburg's receiver today named the companies that he will ask to bid on the city's assets as part of his financial recovery strategy for the city.

Receiver David Unkovic deemed these entities to be eligible to bid, following a request for qualifications from them. Only a few companies were eliminated from competition.

The parties deemed qualified to bid on a long-term lease of the city's parking assets are:

• Boenning and Scattergood, West Conshohocken, Pa.

• Brandywine Realty Trust, Radnor, Pa.

• Harrisburg First LLC (Guggenheim Partners)

• Harrisburg Forward LLC

• Harrisburg Parking Partners LLC

• Interpark Holdings, Switzerland

• Keystone Parking Group

• Morgan Stanley/Central Parking, New York

• National Development Council, New York

• Northwest Financial Group, Jersey City, N.J.

• Ontario Teachers’ Pension Fund/ IMPark, Toronto

• QIC Private Capital, Australia

The parties deemed qualified to bid on the purchase of the city incinerator are:

• Cambridge Project Development of Miami

• Interstate Waste Services of Ramsey, N.J.

• Lancaster County Solid Waste Management Authority (LCSWMA)

• Wheelabrator Technologies, Hampton, N.H.

The parties deemed qualified to bid on the management of the city's water/sewer system are:

• Aqua America, Bryn Mawr, Pa.

• CH2M Hill, Englewood, Colo.

• Pennsylvania American Water, Hershey

• United Water Environmental Services, Harrington Park, N.J., with Kohlberg Kravis Roberts & Co. LP

These companies now can submit formal proposals for these assets, describing, in detail, the financial and other terms that they propose for them. Proposals also would form the basis for further negotiations.

Unkovic has said that he'd like to enter serious negotiations for the assets in late April or early May and finalize the deals in June.

Harrisburg's incinerator and parking assets are being put on the market to help retire a debt, estimated at $317 million, for multiple upgrades over many years to the incinerator. The water/sewer bids are intended to improve the operation of the chronically mismanaged system.

New Midtown District Envisions More Cops, Better Security

March 20 -- Midtown Harrisburg would get an extra dose of police protection under a plan to create a new improvement district focused on neighborhood security.

The Midtown Improvement District (MID) would hire off-duty Harrisburg police officers to patrol a wide area ranging from Forster to Maclay streets and N. Front to N. 7th streets, said Eric Papenfuse, owner of the Midtown Scholar Bookstore, who is spearheading the effort.

"This would be specifically dedicated to public safety," said Papenfuse as he announced the initiative today. "You fundamentally have to create a safe environment."

The MID would be funded by a fee, averaging $60 a year, for each of the 4,100 properties within the district, with larger commercial property owners paying more.

An annual $420,000 budget would fund as many as 10 off-duty officers, who would be paid about $35 an hour, including insurance and other costs. The MID also would have a physical location, which would act like a police substation.

Papenfuse said the city's police union is enthusiastic about the proposal, as Harrisburg currently offers little overtime to its officers.

The effort began when a Midtown Scholar employee was mugged walking home after work, said Papenfuse. Since then, several formative meetings have been held with various neighborhood groups, which all have signed on, he said.

The MID must navigate a series of steps before becoming a reality.

First, a public meeting will be held April 9 at 7 p.m. at Midtown Scholar so residents can hear more about the initiative, ask questions and offer suggestions.

A formal proposal then must be drafted and approved by property owners in the proposed district. The proposal would fail if owners representing 40 percent of properties reject it. If it passes muster with property owners, the plan must be approved by City Council.

If all goes smoothly, the MID would take effect around Oct. 1, said Bill Fontana, executive director of the Pennsylvania Downtown Center, which is assisting the effort.

Fontana said there are 35 business improvement districts in the state right now, but that the MID would be the first residential improvement district.

Papenfuse said that the MID is intended to fill in a critical gap in city services, as cash-strapped Harrisburg simply cannot afford extra police.

Moving forward, the MID could expand its mission, as it might be able to apply for various grants that would fund additional projects, such as for historic preservation and infrastructure improvements.

"Once we have an improvement district in place, it opens us up to all kinds of other funding possibilities," said Papenfuse.

"Lighten Up Harrisburg" Sets Sights on Bridges, Streets

March 17 -- Since moving to downtown Harrisburg three years ago, occupying an apartment with a view of the Susquehanna River, Matt Krupp has watched the lights on Walnut Street Bridge go out, one bulb at a time.

With the black wrought iron truss bridge looking at night like a mouth filled with missing teeth, Krupp, a local attorney, decided to do something about it. First, he went to Mayor Linda Thompson with his idea and got her blessing.

He then turned to Historic Harrisburg Association for organizational assistance and launched Lighten Up Harrisburg. The project has established a mission to not only replace bulbs on the 122-year-old bridge, but also to repair and replace lights throughout the city and to locate areas where lighting is needed.

“I thought it would be a great idea as a private citizen to step up and do a little work to help the city,” Krupp said.

Since meeting with the mayor in January and writing letters to raise money and support, Krupp and HHA Executive Director John Campbell said the response has been overwhelming.

“It’s exploded,” Campbell said.

To date, they have raised $4,250, which is a few hundred shy of the $4,700 they need for city workers to replace the bulbs on the bridge.

Donations have come in from such businesses and groups as Sutliff Chevrolet, Penn National Insurance, Midtown Scholar Bookstore, Friends of Midtown, Capitol Area Neighbors, Downtown Improvement District, HHA and the Peoples Bridge Coalition, which is raising money to replace part of the span destroyed by flooding in the 1990s.

“I think the beauty of the project is that it’s not an organization, it’s a collaboration of various groups,” Krupp said.

Neighborhood groups are helping to identify where street lighting needs repair or replacement and where lights or more lighting is needed. One group wants the burned-out lights on the Market Street Bridge, Walnut Street Bridge’s neighbor, to be replaced.

Lighten Up is in the process of forming a committee, from architects to electricians to volunteers, to help identify what needs to be done and the costs. Once things are organized, the mayor will announce this civic-minded effort in a press conference, said city spokesman Robert Philbin.

Campbell said repairing, replacing and adding lighting is a crime-fighting measure. He noted that a recent mugging in Midtown occurred on a street corner where the lamp post is down. “Where there’s no light, there’s crime,” he said.

For Krupp, a 30-year-old Montgomery County native, this is his first foray into civic activism. He said he felt compelled in his new home to act. Eventually, he wants to see LED lighting on the Walnut Street Bridge, which would allow it, with a flip of the switch, to change colors, such as to green for St. Patrick’s Day.

City Beefs Up Security for St. Patrick's Day

March 16 -- Harrisburg will fortify its police presence this weekend with 31 additional officers, a show of force intended to protect St. Patrick's Day revelers.

Mayor Linda Thompson said today that the city's force will expand with the addition of six mounted state police, four state police squad cars, two Capitol police cars and 15 off-duty Harrisburg police paid for either by state funds or by funds provided by downtown restaurant and bar owners. This force will complement the 10 city officers on regular duty.

Many of the additional officers will patrol downtown, where thousands of people are expected to flock for St. Patrick's Day celebrations. Some, however, will beef up security in other parts of the city, Thompson said.

"This entire city will be protected," she said.

Thompson took these measures following a series of high-profile crimes in recent weeks, including a murder outside a downtown club, the murder of a cab driver on Allison Hill and the robbery of a state lawmaker in a parking garage.

Thompson said that an expanded police presence also will be on hand the following weekend, when the city's annual St. Patrick's Day parade takes place. She said she has received assurances that the state will pay for additional security during the city's numerous events this summer.

Thompson also said that she is trying to secure $500,000 from Dauphin County's share of discretionary gaming funds to pay for additional police hires in Harrisburg. She said that she contacted county Commissioner Jeff Haste on Tuesday and is awaiting a response from him.

Differing Views of City's Future Aired at Forum

March 15 -- Harrisburg will grow stronger. Or become a ghost town. Or muddle through to eventual, hard-fought stability.

These three visions were presented tonight by three city officials: Mayor Linda Thompson, Councilwoman Eugenia Smith and receiver David Unkovic, respectively, as each spoke extensively about where the city could be heading under the receiver's financial recovery plan.

"We're going to end up putting the burden on the taxpayers," said Smith. "Taxes will be raised, and people will not be able to afford to live in this city under these plans. It's just a fact."

Thompson, Smith and Unkovic offered their differing opinions during a two-hour forum sponsored by the community group Harrisburg Hope and held before a large crowd of some 150 people at Midtown Scholar Bookstore.

Smith reiterated her support for municipal bankruptcy as the only way that the city could avoid disposing of its valuable assets, such as its parking garages. Without the revenue from these assets, the city was certain to eventually declare bankruptcy and/or raise taxes to such a level that residents would be driven out, she said.

Thompson passionately disagreed with that assessment, calling the financial crisis "solvable."

She likened Harrisburg's dire situation to that of an individual in a similar predicament.

That person, she said, might have to leverage his house to pay his debts, and Harrisburg also must sell or lease its most valuable assets. The other alternative: immediately raising taxes to unacceptable levels, she said.

"I'd rather have the assets I can leverage than raise your taxes," she said. "It's going to be painful, but as long as we have assets, I will not put it all on your backs."

For his part, Unkovic said he had no choice but to immediately put the city's parking assets and its incinerator on the market to raise the cash to settle about $317 million in debt accumulated over many years from upgrades to the city's troubled incinerator.

He must determine how much these assets are worth, he said, before he can move onto subsequent steps, such as asking for concessions from labor unions and the city's creditors.

"Once we know what these numbers are, then we can negotiate with the creditors," he said.

Unkovic said that municipal bankruptcy remains on the table, but only as a final resort.

"We don't want a city in bankruptcy," he said. "It's better to work a solution out without bankruptcy."

Thompson and Smith did agree on one thing -- that Unkovic has proven himself to be a friend of the city and a far better, more conscientious leader than either imagined when the state passed a bill mandating a receiver last year.

"We couldn't have asked for a better person to be receiver," said Smith.

Both she and Thompson defended Unkovic from a charge by city resident Ron Chapel, who accused him of practicing "plantation politics" and wanting to force "undesirables" out of the city.

"Mr. Unkovic and I have a cooperative relationship," said Thompson. "I respect him, and he respects me."

The forum was held as the city marked another low point in its long financial crisis.

Harrisburg today defaulted on $5.3 million of general obligation bonds. While it has defaulted previously on incinerator bonds it has backed, it had never defaulted on its own general obligation bonds.

Unkovic said that he didn't want to order the default. However, two weeks ago, he forbade the city from continuing to transfer money from its water/sewer fund to its general fund to meet operational expenses. Therefore, the city had no money to pay the bonds, unless it stopped paying its municipal workforce.

"The reason the general obligation bonds weren't paid was to ensure that vital services continue," he said. "It's unfortunate the city can't make this payment, but some things may get worse before they get better."

The greatest applause from the audience came when Unkovic said he had turned over the Harrisburg Authority's recent forensic audit on the incinerator to his team's lawyers for analysis and possible action. He previously has questioned the appropriateness and legitimacy of several bond financings related to the incinerator.

"I've asked my lawyers to go through the forensic analysis carefully and determine if there are areas of action that can be brought," he said.

14 Companies Hope to Bid on Parking Assets

March 13 -- A large group of companies would like to bid on a long-term lease of Harrisburg's parking assets, the city receiver reported late today.

Receiver David Unkovic listed 14 companies that have answered a request for qualifications, a significant number that indicates how valuable these assets may be on the open market.

The interested parties are:

* Boenning and Scattergood, West Conshohocken, Pa.

* Brandywine Realty Trust, Radnor, Pa.

* Guggenheim Partners, Chicago

* Harrisburg Forward LLC

* Harrisburg Parking Partners LLC

* Interpark Holdings, Switzerland

* Keystone Parking Group

* Morgan Stanley/Central Parking, New York

* National Development Council, New York

* Northwest Financial Group, Jersey City, N.J.

* Ontario Teachers’ Pension Fund/ IMPark, Toronto

* PaNGo Mobile Parking, Israel

* QIC Private Capital, Australia

* Vion Municipal Capital, Atlanta

Harrisburg's municipal parking system includes 9,119 parking spots in 10 garages and five surface lots.

Unkovic now will determine which companies are qualified to answer a request for proposals, which will detail the companies' financial and operational plans.

Unkovic has said that he hopes to enter into negotiations with companies for the parking assets in late April or early May and finalize an agreement by mid-June.

Harrisburg's parking system is very profitable. In 2010, the Harrisburg Parking Authority generated more than $13.7 million of revenue and nearly $8.9 million of free cash flow.

The parking system is the third set of city assets to receive interest from multiple parties. Last week, Unkovic reported that five companies were interested in buying the city incinerator, while five others expressed interest in managing the water/sewer system.

The sale of the incinerator and the long-term lease of the parking system are pieces of Unkovic's plan to retire about $317 million in debt accumulated due to multiple upgrades over many years to the city incinerator.

Harrisburg under Receiver's Authority as Court Confirms Plan

March 9 -- A Commonwealth Court judge late today approved the financial recovery plan for Harrisburg, allowing receiver David Unkovic to move forward with his strategy.

Judge Bonnie Brigance Leadbetter confirmed the plan eight days after Unkovic defended it in court. She also dismissed objections to the plan by several city officials.

Her ruling lets Unkovic continue a process, already in place, to sell the city incinerator and lease the city's valuable parking garages to help retire about $317 million in debt tied to the incinerator.

Unkovic revealed last week that multiple firms are interested in these assets.He said that he hopes to conclude deals for them by the end of June.

Leadbetter said that Unkovic must return to the court for approval to sell or lease city assets. She also expects him to get additional court approvals as his plan, which she called "preliminary," is modified.

In addition to settling the incinerator debt, Unkovic has proposed steps to help Harrisburg balance its deficit-ridden annual budgets. These steps include increasing the resident earned income tax from 1 to 2 percent, re-negotiating city employee labor contracts, raising certain fees and re-organizing how the police and fire bureaus operate.

If Harrisburg cannot sufficiently reduce its debts through these measures, Unkovic said he will seek concessions from creditors. If that fails, he is prepared to recommend municipal bankruptcy for the city, he has said.

To improve city management, Unkovic plans to hire a chief operating officer and outsource management of the water/sewer system to an outside firm.

In court, city Treasurer John Campbell and Controller Dan Miller testified that Unkovic's plan severely underestimates the city's annual operating deficit and therefore should be stayed. Leadbetter dismissed their objection as premature.

Harrisburg to Default on General Obligation Bonds

March 9 -- Harrisburg will default on almost $5.3 million of general obligation bonds, marking a new low point in the city's financial crisis.

Receiver David Unkovic said today that the city will not make its scheduled March 15 payments on two general obligation bonds: the series 1997D bond for $2.735 million and the series 1997F note for $2.53 million.

Making those payments would have depleted the city's treasury, not allowing it to continue to pay its municipal workforce, Unkovic said.

The bonds are both insured by Ambac Assurance Corp., which likely will cover those debt service payments for the city.

Two years ago, the city stopped paying Harrisburg Authority bonds it had backed for improvements to the city incinerator. However, until now, the city had not missed payment of a general obligation bond.

General obligation bonds typically allow a municipality to meet major expenses that cannot be paid in full over a single year. Harrisburg, however, repeatedly has issued these bonds to plug budget gaps and to make payments on other bonds, according to the receiver's financial recovery plan for the city, released last month.

As of Jan. 1, Harrisburg had $60.3 million of general obligation bonds outstanding. In 2012 alone, it is scheduled to make payments of nearly $12 million on these bonds, which constitutes about 21 percent of the city's entire annual operating budget

City Wants Payment from Loan Fund Debtors

March 8 -- A collections company will work for free to help Harrisburg recover about $800,000 in delinquent loans tied to a now-suspended program that gave taxpayer-funded loans to private businesses.

Mayor Linda Thompson would not reveal the name of the collections agency, saying that an agreement had not yet been finalized. Nonetheless, she said the company would try to secure payment on the loans at no cost to the city.

"We're outsourcing it to a private firm on a pro bono basis," said Thompson, adding that the firm would be named once the agreement is secured.

Former Mayor Stephen Reed began the "revolving loan fund" program, which was intended to seed business development in the city by offering start-up funding. The fund was supposed to replenish itself through principal and interest payments, allowing more loans to be made.

However, many recipients later went bankrupt and never paid back their loans. Many others quickly fell behind in their payments.

Thompson said that companies now owe the city about $800,000 for loans dating back many years. Of the 44 outstanding loans in the program, 31 are more than 90 days in arrears, so are considered delinquent.

Other recipients have had their debts forgiven by a bankruptcy court, Thompson said. The Reed administration itself had written off $1.5 million in loans as unrecoverable, she said.

Thompson now encourages debtors to contact the city, which will work with them to restructure their loans for easier payment.

The revolving loan fund program has been suspended indefinitely. However, Thompson said that she hopes to revive it someday, reforming it to ensure that loans are carefully tracked and repaid.

In addition to the outstanding loans, the city plans to use the collections agency to secure payment from 350 delinquent utility accounts, Thompson said.

City Assets Score Strong Initial Interest

March 7 -- Harrisburg's state-appointed receiver has reported strong preliminary interest in public assets that he's put on the market as part of his financial recovery strategy for the city.

Receiver David Unkovic said that five parties have submitted responses to his request for qualifications for the purchase of the incinerator. They are:

• Cambridge Project Development of Miami

• Interstate Waste Services of Ramsey, N.J.

• Lancaster County Solid Waste Management Authority (LCSWMA) of Lancaster

• National Water Fund

• Wheelabrator Technologies of Hampton, N.H.

In addition, five parties have submitted responses to Unkovic's request for qualifications for the management of the city's water/sewer system. They are:

• Aqua America of Bryn Mawr, Pa.

• CH2M Hill of Englewood, Colo.

• Pennsylvania American Water of Hershey

• U.S. Facilities of Philadelphia

• United Water of Harrington Park, N.J.

A request for qualifications is meant to demonstrate that a company is qualfied to submit a bid for the asset. If Unkovic agrees that a company is qualified, he will ask it to respond to a request for proposals.

A proposal would describe, in detail, the financial and other terms that the company proposes for the asset. It also would form the basis for further negotiations.

Unkovic has said that he'd like to enter serious negotiations for the assets in late April or early May and finalize the deals in June.

He also has issued a request for qualifications for the long-term lease of the city's parking garages. Those responses are due by March 12.

Bankruptcy Delays Re-Opening of Garrason's

March 6 -- A venerable Harrisburg watering hole is set to open under a new owner and name, but a lengthy bankruptcy process is holding up the purchase.

Would-be owner Adam Sturges said that he is prepared to buy and re-open Garrason's Tavern at 400 Forster Street, renaming it The Speakeasy. However, the ongoing bankruptcy of the current owner, Hollywood Restaurant Group, is delaying the process.

"It's still in bankruptcy, so it's taking longer than planned," said Sturges, long-time manager of McGrath's Pub downtown.

According to U.S. Bankruptcy Court records, Hollywood Restaurant Group, owned by Rob Fogleman, entered Chapter 11 bankruptcy in January 2011. Sturges said he had hoped to take possession of the property last November, but the process has dragged on month after month. Garrason's has been closed since December.

Sturges now hopes the process will conclude and his purchase will be finalized "within the next two weeks." In the meantime, he's been going through the permitting process -- applying for a liquor license and receiving city approval to renovate the 130-year-old building.

Last night, the Harrisburg Architectural Review Board [HARB] granted unanimous approval for Sturges to make a number of property improvements, most notably returning the building's facade to its historical state by removing the dingy plywood and plexiglass box at the front of the entrance.

Sturges also plans to install an L-shaped awning on the south and west sides of the building, install a wrought iron handrail in front of the entrance, remove glass-block windows on the first floor and replace them with plate glass windows, repair and replace brick masonry around the openings and repaint the brick facade and trimwork.

The interior also would be completely renovated, Sturges said, with new floors, ceilings, a bar and tables. Sturges plans an American-style menu, offering high-quality dining at reasonable prices. He said he will open the space for lunch to serve the large population of government workers across the street.

The building's renovation will take some time. So, even after the building's purchase is finalized, The Speakeasy would not open for another four to six weeks, Sturges said. Lastly, he needs to return to HARB to get approval for his sign.

"There is much work I want to do," Sturges said. "That building has a lot of history, so we want to bring it back to what it once was."

Receiver Reveals Larger Deficit in Testimony before Court

March 1 -- Harrisburg will have an even harder time balancing its books, as the state-appointed receiver today said the cash-strapped city will have to sacrifice millions of dollars in anticipated annual revenue.

Receiver David Unkovic said he agreed with six suburban municipalities that Harrisburg should no longer transfer surplus water and sewer receipts to the city's general fund.

Unkovic conceded the lost revenue during a day-long hearing on his financial recovery plan for Harrisburg before Commonwealth Court Judge Bonnie Brigance Leadbetter.

"I communicated to (Harrisburg Finance Director) Robert Kroboth that no (surplus) money should be transferred from the sewer fund into the general fund," he told the court.

Before a crowded courtroom, Unkovic reviewed his plan to relieve Harrisburg of about $310 million in debt tied to the city's long-troubled incinerator, as well as balance its deficit-ridden annual budget.

Most of Unkovic's testimony reiterated the highlights of the financial recovery strategy for Harrisburg that he filed with the court on Feb. 6. That plan includes proposals to sell the city incinerator and lease its valuable parking garages to settle the incinerator debt. It also proposes a doubling of the resident earned income tax to 2 percent, a renegotiation of union contracts with city workers and possibly seeking concessions from creditors.

One of the greatest changes to the plan, revealed today in court, was the loss of $6.7 million just this year in water and sewer funds for the city.

Unkovic admitted he was unsure how this revenue would be made up. The loss would open an immediate hole in the budget, as those funds typically are used by the city during the first quarter of the year to meet payroll and pay other expenses before property tax revenue begins to flow into city coffers during March.

Unkovic said he might seek court permission to use some of the water/sewer surplus to help fortify the general fund just for this year.

The city has been transferring these surpluses into its general budget since at least 2006. The six suburban municipalities have now demanded that the practice cease and are requesting a refund of about $14.5 million.

Unkovic said it was not up to him to determine how much Harrisburg should charge for use of its water and sewer system. He added, though, that surpluses should have gone to improve system infrastructure, which now needs significant repair and upgrade to bring it into compliance with federal environmental regulations.

Leadbetter has until early April to accept or reject Unkovic's plan. He already has taken the first steps in his plan, asking for requests for qualifications from parties interested in either the incinerator or the parking garages.

Unkovic said that five to 10 parties have already expressed interest in each of the assets.

"Interest has been strong," he said, adding that he hopes to begin serious negotiations in late April and finalize the sale and lease in June.

In addition to Unkovic, City Controller Dan Miller and Treasurer John Campbell testified, asserting that Unkovic's plan underestimates Harrisburg's structural deficit, which they estimate at almost $30 million per year.

Miller said that Harrisburg may never be able to balance its books without a new revenue source, such as a commuter tax. Campbell said that raising property and income taxes solely on residents will backfire, causing people with money to leave the city.

Both Miller and Campbell claimed that the plan lacked sufficient detail to truly discern how much money the city will owe after asset sales.

"We have a plan with no numbers and no roadmap as to how it will be achieved," said Miller.

For his part, Unkovic said he simply won't know the true nature of Harrisburg's financial situation until assets are valued through the sales process and contracts are re-negotiated with the city's three labor unions. Ultimately, he said he believed the city would return to solvency.

"I think the city can be turned around," he said. "As dire as these numbers are, I am optimistic we can get there."