Pennsylvania Governor Corbett Announces Commonwealth Court Has Granted Application to Vacate Receivership for the City of Harrisburg; Rescinds Fiscal Emergency

HARRISBURG, Pa., Feb. 26, 2014 /PRNewswire-USNewswire/ -- Governor Tom Corbett today joined Mayor Eric Papenfuse and Maj. Gen. (Ret.) William Lynch to announce that Commonwealth Court Judge Bonnie Brigance Leadbetter granted an Application filed by attorneys representing Department of Community & Economic Development Secretary C. Alan Walker to Vacate the Receivership for the City of Harrisburg. Governor Corbett also announced that he is rescinding the fiscal emergency declaration issued on October 24, 2011. Harrisburg is one of only a few cities in the nation to successfully emerge from state receivership.

"Beginning in 2011 when I declared a fiscal emergency in the City of Harrisburg, we charted a course for municipal financial recovery for which there was no blueprint in Pennsylvania, requesting for the very first time the appointment of an Act 47 receiver and creating the Office of the Receiver to spearhead the fiscal recovery of our capital city. These were bold moves, but extraordinary circumstances call for bold measures," said Corbett. "After decades of financial difficulties and nearly three years of fiscal emergency, we pulled everyone together to develop consensual solutions and provide a path to fiscal recovery for the people of Harrisburg."

In granting the Application to Vacate the Receivership, Judge Leadbetter authorized ongoing implementation of the Harrisburg Strong plan by a Coordinator. In turn, Secretary Walker has appointed Frederick Reddig as the Coordinator responsible to direct ongoing implementation of the Plan. Reddig, who has been involved in the management of Harrisburg's fiscal crisis since 2010, will begin his appointment as Coordinator March 1, 2014.  In doing so, he will continue working with city officials to implement the Harrisburg Strong Plan.

Maj. Gen. (Ret.) William Lynch, who has been serving as Receiver for the City since May 24, 2012, will exit his post Friday.

"As cities throughout the country have faced dire fiscal emergencies, Gov. Corbett never gave up on Harrisburg and its people," Lynch said. "The end result has been a course of recovery that will serve as a model for resolving municipal distress."

In her five-page Order, Judge Leadbetter cited two critical components of the Harrisburg Strong Plan, the monetization of the City's Incinerator and the parking system, both completed in December, which eliminated the statutory criteria for the existence of a fiscal emergency declared by Gov. Corbett in August of 2011.

Those transactions, the result of a collaborative effort put forth by Gov. Corbett, Gen. Lynch and his team, Harrisburg City Council, former Mayor Linda Thompson, Mayor Eric Papenfuse and City creditors, retired over $360 million in debt, while providing the City with a balanced budget through 2016.

"By working together, we overcame extraordinary challenges to create a sound plan for Harrisburg that did not include bankruptcy or bailouts," said Corbett.

Although the keystone transactions have been completed, ongoing implementation of the Harrisburg Strong Plan continues.  Most recently, the City negotiated a contract with Capital City Paid Firefighter's Association IAFF Local 428 pursuant to the Plan.  The Commonwealth Court will retain jurisdiction over the Plan to ensure that all parties comply with all remaining aspects of the recovery plan and that the Plan is fully implemented to its successful completion.

Reddig, currently a top advisor with Gen. Lynch in coordination of the Plan, has administered the Municipalities Financial Recovery Program since its inception and has coordinated recovery activities under the Act 47 program including extensive work in Chester, Johnstown, New Castle, Reading, Pittsburgh and Scranton.  The same team of professionals and advisors from Lynch's team will continue to advise Reddig moving forward in coordinating the Plan.

Media contacts:
Valerie Caras, Governor's Office, 717-783-1116
Steven Kratz, Department of Community and Economic Development, 717-783-1182
Joshua Maus, Office of General Counsel, 717-346-4463
Cory Angell, Harrisburg Receiver's Office, 717-585-8809

SOURCE Pennsylvania Office of the Governor