Commentary: Lawyer wants to fight for Harrisburg

June 26, 2011
by Laura Vecsey
Harrisburg Patriot-News

This is what it sounds like when a big-shot attorney like Mark D. Schwartz — who knows a lot about government, bonds and Wall Street — has Harrisburg's back.

"Those in city government should be outraged at this abuse and indirection. They need to be on the same page, and they need to recognize the tools that they have. This is what the Act 47 report should have done," said Schwartz, a Bryn Mawr lawyer and former public-finance investment banker.

"This report is bad. Maybe the Act 47 team got paid by the page. It's generic. There's no history of how this debt came about. The state would done better to have given Harrisburg the $980,000 they paid consultants for this report so Harrisburg could apply it to the incinerator debt."

Get the picture?

It makes you wonder what difference it might have made if the counsel retained by Harrisburg City Council to protect Harrisburg was willing to speak out on behalf of Harrisburg. Because in that case, at this point, Harrisburg probably would be better represented by Schwartz than by Cravath, Swaine & Moore.

Cravath, the world-class, high-powered firm came to the city's rescue in October, offering pro bono service after the City Council fought off Mayor Linda Thompson's choice of Scott Balice as financial adviser.

Cravath lent some much-needed expertise, and by March, months ahead of the Act 47 plan delivered two weeks ago, Cravath delivered a meticulous breakdown of Harrisburg's options under Act 47 and Chapter 9 bankruptcy.

Unfortunately, the analysis was so nuanced in the way it set out all potential scenarios, it lacked the punch Harrisburg needed to stand tall against the Act 47 process.

Cravath never made a specific recommendation about what Harrisburg should do given its distressed status, especially given the de facto bankruptcy that the city faces in September, when there will be no more money to operate city services.

But things have gone from bad to chaotic in the two weeks since the Act 47 report was presented, including a move by Sen. Jeffrey Piccola, who has a bill aimed at fast-track passage that would allow a state takeover of Harrisburg, should the city fail to adopt or implement the Act 47 plan.

No one has heard what Cravath has to say about this. Schwartz, meanwhile, is itching to get in this game. The 57-year-old litigates high-profile cases throughout the country.

"Sen. Piccola of Dauphin County [got] a bill out of committee [that] strips Harrisburg out of Act 47 and bars it from entering bankruptcy and put it under an oversight board.

"This bill should be named 'The Full Employment for Lawyers Bill,' because it promises that litigation will end when Sen. Piccola's grandchildren have grandchildren. To really understand the nature of the problem, Sen. Piccola and other commonwealth [officials] need to look in the mirror," Schwartz said.

"For example, Philadelphia taxes ballplayers for days they are in Philadelphia. Harrisburg can take steps to tax nonresidents for money they earn while in the city. Guess who they are? Sen. Piccola and the other 202 members of the General Assembly, as well as the members of the other branches of government and their staffs," Schwartz said.

"The report made reference to land in the city that is not taxed because it is held by nonprofits. Well, guess who owns the most tax-exempt land and buildings? None other than the commonwealth, comprised of Sen. Piccola and the others," he said.

Schwartz's biggest complaint is that the Act 47 report does not fulfill the mandates of the law, since the recommendations are vague.

Schwartz says the City Council has the authority to act as it chooses.

"Under Act 47, the City Council already has the power to file a bankruptcy petition. It is the body that must act. Council and the mayor clearly don't understand the tools that council has under the act and under bankruptcy," he said.

Schwartz said the real issue is that it's "premature to have a side in favor of bankruptcy vs. nonbankruptcy. [The city] has delicious options." So far, he has an appointment to meet with at least one municipal leader and would eagerly meet with all members of the City Council and the mayor.

In the meantime, Schwartz said he's sure where copies of the 418-page tome from the Act 47 team belong: "In the troubled incinerator."