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Judge appoints former DCED chief counsel as Hbg. receiver

By - Last modified: December 2, 2011 at 9:56 AM

Harrisburg is in receivership.

Commonwealth Court Senior Judge James Kelley today appointed David Unkovic as the fiscal decision-maker for debt-ridden Harrisburg.

Under the recently amended Act 47 law, which sets the process for receivership, the receiver has 30 days from the appointment to craft a recovery plan and submit it to the court for approval.

Unkovic is the former chief counsel at the state Department of Community and Economic Development. He testified Thursday about his qualifications, which include 32 years of municipal finance experience, and to dispel reports of conflicts related to past employers that have connections to Harrisburg's debt crisis.

He spent 27 years at Saul Ewing LLP in Philadelphia. The firm represents Assured Guaranty Municipal Corp., the primary bond insurer of the city's incinerator debt along with Dauphin County.

The incinerator debt is $317 million, city officials said. With no action on a recovery, that debt grows by about $1 million every month, said Robert Philbin, a city spokesman.

Unkovic also worked for PFM Asset Management LLC in Harrisburg from 2006 to 2008. PFM represented the county in incinerator debt financing.

In addition, he previously represented RBC Capital Markets, a subsidiary of the Royal Bank of Canada, based in Toronto. RBC was an underwriter of the incinerator debt.

Before his July appointment as chief counsel at DCED, Unkovic worked at Cozen O'Connor, the Philadelphia-based law firm the state hired to fight Harrisburg's recent bankruptcy petition.

Unkovic said in court he has no connections to any of the financial deals involving Harrisburg's incinerator. In the case of Saul Ewing, he said he left prior to AGM retaining the firm.

In the order, the judge found Unkovic to be qualified with no disqualifying conflicts of interest. He has been appointed for a period not to exceed two years, subject to extension, according to the Act 47 law.

The law stipulates that the receiver must have a minimum of five years experience and demonstrable expertise in business, financial or local or state budgetary matters. The appointed receiver also must be a resident of the commonwealth for at least one year before appointment.

Unkovic is a lifelong Pennsylvania resident. He lives in Montgomery County.

In a related matter, a federal lawsuit filed Thursday is moving forward, said Paul Rossi, the attorney for three Harrisburg plaintiffs.

In the suit, the Rev. Earl Harris of St. Paul Baptist Church, city firefighters' union President Eric Jenkins and former mayoral candidate Nevin Mindlin argue that the legislation creating the option of state receivership, Senate Bill 1151, was a "special law" that singles out Harrisburg.

SB 1151, signed into law in October, gave the governor power to declare a fiscal emergency to ensure a third class city's vital and necessary services are funded should its officials fail to approve a recovery plan under the state's Act 47 distressed municipalities program.

The City Council rejected plans in August and September, which propelled the legislation forward.

The suit also argues the law unlawfully removed a commuter tax from the city's toolbox as a way to generate additional revenue. Other Act 47 cities, including Reading, have implemented the tax.

The legislation should be declared unconstitutional on the basis it violates the rights of city residents to due process of law and equal protection, Rossi said. It strips away representative democracy, he said.

"This was against Harrisburg," Rossi said.

The suit wasn't filed to prevent Unkovic from being appointed receiver, he added. The decision to appoint him came as no surprise, Rossi said.

The plaintiffs are hoping to prevent the sale of Harrisburg assets, he said. They plan to file a motion next week for an emergency restraining order.

If the receivership legislation would be deemed unconstitutional by the court, the commonwealth and its receiver would not have the power to authorize the sale of assets, Rossi said.

What happens to the troubled incinerator and city parking garages should be up to the elected city officials, he said.

If the federal court rules against his clients, he expects to appeal, he said.

Editor's note: This item was modified from its previous version to update throughout.

Click here to see the lawsuit.

Click here to see the receiver appointment memorandum and order.

Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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