Bloomberg News

Harrisburg New Receiver Named as Corbett Turns to General

May 11, 2012

Pennsylvania Governor Tom Corbett named William B. Lynch, a retired U.S. Air Force major general, to serve as receiver for Harrisburg, the capital trying to stave off bankruptcy.

If approved by a state court, he would succeed David Unkovic, a former bond lawyer who cited “political and ethical crosswinds” when he resigned March 30. The court earlier agreed to a recovery plan submitted by Unkovic to lease or sell city assets to help reduce its debt load.

“Lynch’s experience leading diverse groups to a common solution is critical to success in this position,” Corbett, a Republican, said today in a statement. “I have the greatest confidence that the general will get us all back on track and focused on a better future for the people of Harrisburg.”

C. Alan Walker, the secretary of Community and Economic Development, asked the court to appoint Lynch, 69. The general has assisted U.S. reconstruction efforts in Iraq and oversaw the Pennsylvania National Guard from 1999 through 2004.

“I’m a bit of a sucker for challenge,” Lynch told reporters at briefing in Harrisburg. “This seems to be something that needs to be done. It seems to be something that can be done particularly by someone who doesn’t bring a lot of preconceived notions to the issue.”

Bob Philbin, a spokesman for Mayor Linda Thompson, called the appointment of Lynch, a Vietnam War veteran, “perfect.”

Leadership Needed

“Implementing a recovery plan is not unlike a complex military operation,” he said by telephone. “What’s needed is strong, forceful leadership.”

Unkovic quit two days after he requested state and federal probes of financing of an overhaul and expansion of a municipal trash-to-energy incinerator that drove the city into insolvency.

City Council President Wanda Williams, Controller Dan Miller and Treasurer John Campbell have asked a judge to suspend the state takeover until Unkovic’s departure is investigated.

“It doesn’t matter if Corbett appoints Ghandi, Mother Teresa or Warren Buffett,” Mark Schwartz, a lawyer from Bryn Mawr who represented the three, said by e-mail. “A new receiver without a new environment means little.”

Free Hand

Once appointed, Lynch can carry out recovery initiatives without the consent of the council and the mayor. Unkovic’s plan also called for savings from labor contracts and concessions from creditors, once the value of city assets was determined.

After Unkovic resigned, Corbett asked Walker’s agency to implement the former receiver’s proposals. Unkovic had said he would submit a more detailed plan for final court approval.

Separately, the economic development department provided an update on the recovery plan to the Commonwealth Court, which is overseeing its progress. Sales or leases of some city assets have been put off until after June, while a transaction involving the incinerator remains on track to be completed that month.

Harrisburg racked up more than $300 million in obligations tied to the incinerator, which doesn’t generate enough revenue to repay the debt. The city of about 49,500 began skipping bond payments in 2009, forcing Assured Guaranty Municipal Corp. and Dauphin County to cover them and adding penalties to what it owes.

The creditors won a ruling from a county court to establish a separate receiver for the incinerator, and have asked for the appointment of Robin Davidov, a retired executive in Maryland, to the post.

To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

William B. Lynch, a retired U.S. Air Force major general, has been named act as receiver for Harrisburg, the capital trying to stave off bankruptcy. Source: National Guard Bureau via Bloomberg

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