Second appeal to further delay Harrisburg privatisations

A high-profile lawyer for a broke state capital is plotting to appeal a federal court ruling placing Harrisburg in state receivership, further delaying the possible divestment of a waste incinerator as well as a potential parking concession.

Harrisburg, Pennsylvania, has hired a scene-stealing legal eagle to derail its foisted-upon state receivership, but the move is likely to only delay a now next-to-certain privatisation programme.

Attorney, pro-whistleblower and occasional stage actor Mark Schwartz filed an appeal to grant Harrisburg Chapter 9, a rare bankruptcy code drawn up for the exclusive purpose of municipal debt restructuring.

The appeal is his second: a judge rebuffed him in December, citing a missed filing deadline, and the potential outcome is up in the air. What is clear is that privatisation of public infrastructure, long a deliberated solution in this desperate state capital, is an imminent fact of life.

But guessing when that will happen is a crapshoot. “As a practical matter, I would call it a foregone conclusion,” said William Leinberger.

Leinberger, chief deputy controller for the city, is referring to a rock-strewn path leading back to 2008 – before Harrisburg went bankrupt – when LambaStar Infrastructure made an ill-fated bid of $215 million for a citywide parking garage concession. 

He is also talking about spring 2011, when LambaStar and EQT Infrastructure teamed to purchase from Harrisburg its cash-swallowing waste incinerator in a packaged deal that would also include a parking concession. That offer got killed, too. A concurrent outside review went so far as to support a parking concession and incinerator sale – just not to the LambaStar-EQT team.

When a federal court judge said no to Chapter 9 in November, Harrisburg was put into state-appointed receivership. Said receiver, in addition to reviewing a lease of the incinerator – a central villain in heaping $300 million in debt on Harrisburg – is also exploring privatising water and wastewater management.

Harrisburg aside, Pennsylvania as a whole is in dire fiscal health, with a newly assembled public-private partnership (PPP) committee set to outline a course of action should a hopeful pro-PPP bill get a nod in 2012.

Lawyer Schwartz, who acted in a production about In Cold Blood author Truman Capote, is charging $300 an hour – costing Harrisburg $110,000 to date. Schwartz has claimed to have exposed corporate underhandedness at Prudential and Home Depot, and is awaiting word from middle district court. 

He said he had no inkling about when a verdict might come.