Over the years, I’ve sat through innumerable City Council meetings and watched many ordinances and resolutions get passed—some smart, some not-so.
Smart: Insisting that the Harrisburg Authority have competent, independent people on its board and as its executive director.
Not-So: Hiring attorney Mark Schwartz in about 10 minutes, without several council members ever even hearing of the man before that night.
However, I don’t think I’ve been so troubled as I was during one recent meeting, when the council, unanimously, confirmed three mayoral appointments to the Harrisburg Economic Development Loan Committee, thereby getting Harrisburg back into the banking business.
Yes, this city, some $350 million in the hole for its troubled incinerator, under state receivership and in default on its general obligation bonds—constantly on the brink of not making payroll and not being able to pay vendors—is now lending money to other people.
How did we drop down this rabbit hole?
Last year, Harrisburg sold the historic McFarland Press Building at the foot of Allison Hill to an out-of-area investment group calling itself McFarland LP. The Thompson administration then earmarked the windfall for a number of projects, including reviving the Economic Development Loan fund.
Therefore, city businesses now can apply to the newly appointed committee for a chunk of money from an initial pot of $163,735.
Mayor Thompson and several council members have assured me that their program will not meet the same fate as the notorious revolving loan fund run by former Mayor Steve Reed, who doled out millions of dollars in loans to city businesses, many of which never paid them back. There will be checks and balances and oversight and responsible decision-making over who gets loans and for how much, they’ve told me.
Unfortunately, I’m sure that, given enough time, this program also will become troubled. Politicians simply cannot resist playing with all the toys in their toy boxes. Right now, however, that is not my greatest concern.
The greatest concern is this: the City of Harrisburg should NOT be acting as a bank. Period.
Harrisburg is a city government, not a bank. It is supposed to police streets, collect trash, fight fires and maintain infrastructure, jobs already often beyond its stretched resources. Does Harrisburg have the ability to expand its reach of services to include lending money to restaurants, coffee houses and shoe stores? No, it does not.
I don’t question that the new appointees to the Economic Development Loan Committee will do the best they can. But how can a handful of part-time volunteers perform the due diligence required to lend money? And what will they do when they begin to get pressure from this or that politician to make a loan to a relative, friend or supporter? It will happen.
Then, after loans are made, does the city want to spend its precious time and staff resources servicing loans, chasing down payments and filing court complaints for delinquency? I have no confidence that a city government, which filed its 2009 audit more than two years late because, it said, its finance department was short-staffed, has the capability to do any of this. Banks have entire departments of experienced, full-time people who do nothing all day but judge, process and service loans.
So then why did this program get revived at all?
Unfortunately, the sale of the McFarland building became Christmas morning for the city’s politicians. The sudden flush of cash, which totaled about $1.3 million, was spread around to have maximum political impact during this election year. So, a piece of it went to fund improvements to private homes, another piece to encourage private homeownership and another piece to lend money to private businesses.
I’m not fond of any of these uses, as they all dole out public money to select individuals, not to the community as a whole. When I questioned one city councilman about his “yes” vote for the loan fund committee, he responded that—well, it’s only about $160,000—what else could Harrisburg do with such a limited pot of money when its needs and debt are so great?
Here’s what: stripe 2nd and 3rd streets; pave a few roads; beef up the city’s depleted planning and codes staffs; re-lay a stretch of the decrepit river walk; fix streetlights and poles. These ideas, which benefit all city residents, not the chosen few, are far more pressing to public safety and welfare than propping up a handful of failing, unproven or well-connected businesses.
Last year, I wrote that Harrisburg is a city moving in two directions at once, with a failing government but an increasingly dynamic and diverse private sector. Since then, the contrast has only become starker. Government has become more indebted and desperate. Meanwhile, new businesses and the rehabilitation of long-neglected historic buildings are adding vibrancy to city life that Harrisburg has not seen in many decades.
So, to sum it up, the bankrupt public sector now will lend money to the far healthier and more financially stable private sector. How strange. How political.
Lawrance Binda is editor-in-chief of TheBurg.
