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Originally published Friday, March 30, 2012 at 12:35 PM

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Pa. capital's financial overseer resigns

Gov. Tom Corbett will move swiftly to recommend another financial custodian to help restore stability to Pennsylvania's debt-laden capital after his first appointee said he was resigning Friday, a spokesman said.

Associated Press

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HARRISBURG, Pa. —

Gov. Tom Corbett will move swiftly to recommend another financial custodian to help restore stability to Pennsylvania's debt-laden capital after his first appointee said he was resigning Friday, a spokesman said.

David Unkovic, a municipal bond lawyer who was confirmed to the post in December by a state Commonwealth Court judge, submitted a letter to the court and called Corbett's chief counsel, Corbett's spokesman Kevin Harley said. Court staff said a filing submitted Friday by Unkovic was in the custody of President Judge Bonnie Brigance Leadbetter and wasn't immediately available to the public.

Harley called the resignation "unexpected and unfortunate," but said he did not know Unkovic's reasons for resigning. Unkovic did not return messages left at his office and home Friday.

On Wednesday, Unkovic told reporters that he was asking state and federal prosecutors to look into an auditor's report on the financing of a renovation of the city's nearly 40-year-old trash incinerator. Unkovic had also complained he was not getting cooperation from various creditors that are suing the city.

His plans to date had included tax increases on city residents and selling or leasing various city assets, such as parking garages. But he also had warned that seeking federal bankruptcy protection would be an option if parties with a financial stake in Harrisburg did not pitch in to wipe out the debt.

Harley said Corbett had not been unhappy with Unkovic's actions as the receiver.

"The governor believed that the receiver would be independent and certainly Dave was acting independently of the administration, as appropriate," Harley said.

Harrisburg is dogged by a number of financial problems, but the incinerator debt is the most pressing. The city and the city authority that owns the incinerator are tens of millions of dollars behind in payments on the approximately $300 million in debt tied to it, and city officials have not developed a plan to repay it.

In October, the state Legislature gave Corbett unprecedented power to appoint a custodian to assume control of Harrisburg's finances. Suburban Harrisburg lawmakers were concerned that city officials would try to slap a tax on commuters or seek bankruptcy protection in an effort to force creditors, such as Dauphin County and bond insurer Assured Guaranty Municipal Corp. of New York, to assume part of the debt.

Three city residents are challenging the law in federal court.

A divided City Council did try to seek bankruptcy protection in October, but a judge threw out the petition, saying the city had been legally barred by a separate state law - signed June 30 by Corbett - from seeking bankruptcy protection and, in any case, had no authority to go over the mayor's head to file it.

Mayor Linda Thompson, who had opposed the bankruptcy filing, said she was sorry to see Unkovic resign.

"He was committed to the recovery of the city and I think everyone involved recognizes and appreciates his dedication and public service," she said in a statement.

Some critics of the state's takeover, including city councilman Brad Koplinski, had come to support Unkovic.

"He was asking the right questions and coming to the right conclusions," Koplinski said in a statement.

Auditors hired by the Harrisburg Authority released a report in January that said professionals, consultants and advisers who were paid significant fees bypassed due diligence and red flags to press the renovation of the incinerator.

The people involved with the project should have known that neither incinerator revenue nor the city of Harrisburg would be able to cover the debt, the report said.

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