Judge Bonnie Brigance Leadbetter of the Commonwealth Court confirmed the state-appointed receiver’s recovery plan, also known as the Harrisburg Strong Plan, in a prompt decision from the bench this afternoon.
“I will confirm the plan—I am confirming the plan,” the judge said shortly before 12:30 p.m., immediately after Mark Kaufman, the attorney for the receiver’s team, wrapped up his presentation. Calling the plan the “best chance this city has seen in a long time to get its fiscal house in order,” Leadbetter pledged to sign the confirmation order in the next few days, possibly as early as tomorrow.
The hearing, which started at 10:30 a.m., included testimony from William B. Lynch, whom Leadbetter had approved as Harrisburg’s receiver in May of 2012. His position has been “all-consuming since that day,” Lynch said on the stand, but “overall very rewarding.”
Lynch said that what distinguished Harrisburg Strong was a successful emphasis on cooperation. When Kaufman asked him to identify his “guiding principle,” Lynch said it was to “focus on the positive” and “point groups in a direction where they could see what was in it for them.”
“I’m convinced this is the best deal we could get for the city, and frankly for the other parties involved,” Lynch said.
Gerald Cross, executive director of the Pennsylvania Economy League’s central division, also took the stand to walk the court through budget projections for the city over the next several years. Without the plan, which injects money into the budget through parking taxes, an earned-income tax hike, and relief from various debt obligations, the city would face a budget shortfall as early as January, Cross said. Such a shortfall would compromise the city’s ability to pay vendors, whose “patience is tried already,” according to Cross, and who now “want money upfront.”
At one point, Kaufman asked Cross to describe what would happen if the city were struck with a major snowstorm. “You wait until you can pay for diesel fuel,” Cross said.
The plan has had to clear significant hurdles, included a perception among members of the public that its provisions did not equally distribute pain between the city and its various creditors. Dan Miller, the Republican candidate for mayor, gave a presentation Monday night before City Council, titled “The Poor Pay More,” in which he claimed that the receiver’s plan disproportionately burdened city residents, without obtaining meaningful concessions from other parties.
In court, Kaufman dismissed these concerns summarily, detailing what he saw as the sizeable losses agreed to by creditors like CIT, Ambac, and Covanta. Ambac, Kaufman suggested, had done the “noblest job,” by agreeing to a delayed repayment structure on the city’s general obligation debt, despite having not been paid by the city for the past two years. Ambac “has done more than its fair share,” Kaufman said.
Leadbetter promised her confirmation after explaining that she saw no possibility that anyone would appeal. Lawyers representing Dauphin County, the suburban municipalities around Harrisburg, and Assured Guaranty, the bond insurer for the incinerator debt, all made brief appearances during the hearing in support of the plan. Leadbetter also said she was “highly optimistic the plan can succeed.”
Her confirmation was met with enthusiasm by the receiver’s team, who had prepared to put the plan’s next steps on hold until the 30-day appeal period had expired. As the judge announced her approval, Steven Goldfield, one of the plan’s chief architects, shared a fist bump with Bill Cluck, chairman of the Harrisburg Authority board. “I can move the deals,” Goldfield later said. “All the law firms in Philly are starting right now.”
Lynch, who had been sitting a few feet away, concurred. “About three-quarters through the hearing, Steve turned aside,” he said, “and started making a to-do list.”
