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Judge confirms William Lynch as Harrisburg's new receiver

- Last modified: May 24, 2012 at 10:34 AM

A hearing is taking place today in Commonwealth Court to vet the nomination of Harrisburg's next fiscal receiver.

3:45 p.m.: In her ruling to appoint Lynch to the post of receiver, the judge said it would be ideal to have someone with significant experience in municipal finance and bond deals. However, that's not necessary, she said.

Leadbetter said she found Lynch to be capable and willing to tackle the "very daunting job" ahead of him, based on his past leadership roles in the military and with the state.

"For the plan to go forward, we need to have a receiver," she said.

The judge reiterated that Lynch must come back to the court before selling any city assets or entering into any major contracts, according to the agreement with Unkovic when the preliminary plan was approved.

Lynch said he has been briefed on the plan, but is not intimately familiar with it yet.

He said he intends to focus on consensus building and creating an environment where stakeholders can work together to create a financially stableHarrisburg. He said he always has had the ability to see the crux of the matter and convey that to others.

He said he believes patience and unquestioned integrity are the answer to the problem.

"If people trust you, they do it if the reasons are good," he said.

Commanding is easy, while leading is the difficult part, Lynch told the judge.

"It won't be my first rodeo," he said.

The new receiver added that he has been assured by Gov. Tom Corbett that he will have the support and resources he needs to get the job done and turn the capital city around.

Harrisburg City Mayor Linda D. Thompson said in a statement that she is pleased with the expeditious action Leadbetter took in approving Lynch.

“Gen. Lynch brings precisely the kind of leadership and experience that is needed at this point in the city’s fiscal recovery process," the mayor said.  “I look forward to working with Mr. Lynch to continue implementation of the city’s recovery plan.”

Lynch’s annual salary will be $125,000.

2:51 p.m.: Judge Bonnie Brigance Leadbetter said she will enter an order confirming Lynch's appointment as receiver. She said she finds him capable and willing to do the job.

1:15 p.m.: Judge Bonnie Brigance Leadbetter has repeatedly said this hearing is not about the past. She wants to maintain a narrow focus which is getting a new receiver in place.

She also pointed out that this is not a civil or criminal proceeding.

City Council attorney Mark Schwartz said he wants an open process that takes into account everything that happened.

12:35 p.m.: A hearing designed to begin the process of appointing a new receiver for Harrisburg has so far focused solely on why the former fiscal overseer resigned.

David Unkovic today told Commonwealth Court Judge Bonnie Brigance Leadbetter that creditors of the debt-ridden city were undermining the asset process.

Prior to his resignation in late March, a Dauphin County judge approved a request from the county and Assured Guaranty Municipal Corp. to designate a separate receiver for the city's troubled incinerator. That order is under appeal.

"They were trying to put me into a box fairly quickly," Unkovic said.

Unkovic also said he believed he was about to be removed as receiver for a perceived lack of ability to negotiate with the creditors. He resigned before that happened.

Steven Kratz, a spokesman for the state Department of Community and Economic Development, said Unkovic had the full confidence of the department and governor.

Creditors wanted certain results and expected the receiver to go along with a state Act 47's team proposed plan for the city, which projected amounts for asset sales, Unkovic said.

Unkovic sought proposals for the assets, hoping offers would take care of the incinerator debt and annual structural deficits. That process is ongoing.

Unkovic said he saw the asset process as crucial but that creditors did not back off on litigation.

Their undermining affected the entire debt solution process, he said.

He also said he viewed a separate incinerator receiver as a creditors' receiver and felt that would have limited his ability to maneuver.

Kratz said the second receiver would have little or no effect on the advancement of the court-approved recovery plan.

"The pressures of the office were getting to him," Kratz said.

Initial report

The state Department of Community and Economic Development petitioned the court to appoint retired United States Air Force Maj. Gen. William B. Lynch to the post.

The hearing began at 10:30 a.m. in Courtroom 3001 of the Pennsylvania Judicial Center in Harrisburg.

DCED Secretary C. Alan Walker filed the petition under the direction of Gov. Tom Corbett. If appointed, Lynch would replace David Unkovic, who resigned at the end of March.

Under the commonwealth's Act 47 law, Corbett is authorized to direct the DCED secretary to file a petition in the court for a newly appointed receiver when the position has become vacant.

The law requires a hearing within 15 days of a petition. A decision must be made within 60 days.

Lynch, 69, spent 40 years in the military, including serving as an air operations division director for the National Guard during operations Desert Storm and Desert Shield. He also has been Pennsylvania's adjutant general under three governors.

Harrisburg carries more than $326 million of incinerator debt, DCED spokesman Steven Kratz has said. When the city entered Act 47 in December 2010, the debt was $288 million.

Check back for updates. You can also follow reporter Jason Scott, @JScottJournal, on Twitter for updates throughout the day.

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