by Bill Keisling

This month’s Penn State Board of Trustee (BOT) election demonstrates both the strengths and weaknesses of the alumni reform group, Penn Staters for Responsible Stewardship, or PS4RS.

The group vetted and selected six nominee candidates by committee, from which members selected three final candidates.

The group then spent $20,000 on advertising the final three candidates on billboards and the web, while members angrily went after incumbents.

This process upended the traditional politics of getting on the Penn State Board of Trustees. But not all are happy with the new politics of the group.

And it’s not at all clear that the group’s future is secure.

There can be no doubt that the alumni group has been effective in placing a few new alumni members on to the large and diversified Penn State Board of Trustees.

In the May 3 BOT election all three candidates endorsed by PS4RS won election to the school’s governing board by impressive margins. Those candidates not endorsed by the group didn’t even come close.

The winning candidates — Barbara Doran, Bill Oldsey, and Ted Brown — pulled 15,085; 13,940; 11,403 votes, respectively.

The closest any candidate got to these totals was incumbent Paul Shuey, who lost his seat on the board by pulling only 4,521 votes. The other incumbent up for reelection, BOT co-chair Stephanie Deviney, pulled only 2026 votes.

That PS4RS candidates handily routed both incumbents from the BOT certainly sends a warning to others seeking election or reelection to the board next year.

Most interesting and emblematic of the new politics of BOT elections was the defeat of longtime Pennsylvania politician Robert Jubilier, who only pulled 3,030 votes.

Jubilier in many ways is an emblem of old politics, both in Pennsylvania, and the BOT.

Jubilier of course is the former state senator, president pro tem of the state senate, and lieutenant governor who was swept out of his senate seat in the surprise primary election of 2006, in the wake of dissatisfaction against incumbents in a legislative pay raise scandal.

In Jubilier’s failed campaign for the BOT we see that old guard mistakenly seems to regard new web politicking as something for kids.

Instead, Jubilier tellingly sent emails to political insiders in Harrisburg, like state Rep. Bryan Barbin, asking for their support. Emails from Jubilier also went to deceased Congressman John Murtha, and even to former lawmakers convicted of crimes, like Bill DeWeese and Jane Orie. That Jubilier thought these old-time pols could help him with his bid for the BOT really shows how out of step he is.

Such a campaign based on the help of political insiders might have helped Bob Jubilier five years ago, but certainly not today.

Also worthy of consideration was the fate of Kathleen Pavelko, who heads the WITF public television and radio stations in central Pennsylvania, and regularly appears on its airwaves. Pavelko pulled only 2,732 votes, despite being a familiar face to many.

But that does not mean there are not problems with the new politics, or dissatisfaction with the way PS4R vetted its candidates prior to awarding its endorsement.

In the heat of the campaign, alums and PS4R members alike expressed disenchantment and upset with the reform group’s private vetting procedure.

Some now want to reform the reform group.

The process worked this year as follows: Some thirty candidates sought PS4RS’s endorsement. Candidates seeking endorsement answered questionnaires and met with selection committee members.

The group’s selection committee then picked six preliminary nominees from this field.

Only then did all the group’s members select the final three candidates by ballot.

This semi-closed process led to cries of foul.

If endorsement by the group has become so all-important, the process should be more public, the argument goes. Why not select PS4RS’s candidates in open primary elections on the group’s websites, they argue, instead of relying on a preliminary closed vetting process?

Candidates not selected by the group’s vetting committee said they should at least have had a chance to openly appeal to all the group’s members on the web, instead of submitting to the closed committee.

Some group members also felt the process limited their ability to pick a candidate. There was angry debate on the group’s web and Facebook pages.

Should this nominating process be corrected to everyone’s satisfaction, there are other problems on the horizon. Even if PS4RS candidates win all the elections in the coming years, there are only nine seats held by alums on the Board of Trustees. The BOT has more than thirty members. Even if they continue to win elections, alums still won’t hold anywhere near a majority on the board.

The biggest looming problem seems to be one of the overall mission and goals of the reform group. What exactly does PS4RS hope to reform?

The group’s influential and widely read Facebook website is titled, “We intend to vote out the Penn State Board of Trustees.”

Following the BOT election, some newspaper wags suggested the group was really only out for revenge, and that the only real goal was to remove BOT trustees who had a hand in firing Coach Joe Paterno.

Index of the ongoing series by Bill Keisling

Six Decades of PA’s Governors, AG’s & Republicans

• Six Decades of PA’s Governors, AGs, and Republicans: Part One
• Six Decades of PA’s Governors, AGs, and Republicans: Part Two

Harrisburg Watershed Series

• Part One- Private interests seek to grab invaluable water shed for pennies on the dollar
• Part Two- “Fraud, inside deals and corruption”
• Part Three- “Perpetrators swim like sharks, claiming to be victims”
• Part Four- Harrisburg Incinerator Forensic Audit report indicates bonding industry and public officials kept the ‘party’ going
• Part Five- Harrisburg Incinerator Forensic audit has essential two audiences
• Part Six- Harrisburg Incinerator Forensic Report deal with last desperate attempt
• Part Seven- After 30 years, Patriot-News still hasn’t gotten the entire story
• Part Eight- Receiver: Gov. Tom Corbett obstacle to Harrisburg debt criminal investigation

Corbett/Penn State/Sandusky Series

• “Tom didn’t want to do it” but Narcotics Agent nabs Sandusky
• ‘JoePa’ takes the fall: Tom Corbett throws Joe Paterno under the bus, inept media, and the decline of the Pennsylvania Attorney General Office
• Timeline: Penn State / Sandusky / Corbett
• Six Decades of PA’s Governors, AGs, and Republicans: Part One
• Six Decades of PA’s Governors, AGs, and Republicans: Part Two
• Note to New Era: “Tom Corbett was a blatantly political prosecutor.”
• Freeh Report ignores the obvious question: What about Tom Corbett?
• Tom Corbett gives the lie to Tom Corbett
• Timeline Clery Act violations and failures to investigate by Tom Corbett and Penn State University
• Republican AG Candidate changes tune on investigating Sandusky case
• Only an independent blue-ribbon panel can properly investigate the Sandusky scandal
• Freeh Report critique released by PSU alumni group
• “Silent No More”: A victim’s tale of his abuse by Jerry Sandusky and Tom Corbett
• Crony in the court; Corbett and the NCAA lawsuit
• The Paternos’ response to Freeh

A Museum of Harrisburg’s Debt History

• Ghosts of a City: The roots of the Harrisburg bond debt crisis; Introduction
• The ghost of a city: Harrisburg’s debt history: 1900 to the present
• Harrisburg’s debt history: Fire and rain
• Harrisburg’s debt history Chapter Three: Fire and Water
• Harrisburg’s debt history Chapter Four: Slide Show
• Harrisburg’s debt history Chapter Five – A smashing success
• HARRISBURG’S DEBT HISTORY CHAPTER 6: ‘Debt is not a disgrace’
• Harrisburg’s Debt History Concluding Chapters – Carpet baggers, politicians, muted media and compulsive borrowing

Sandusky Trial Transcripts: Victims tell story in their own words:

• Authorities had ample Red flags over fifteen years: Sandusky victims in their own words
• The Sandusky trial transcripts Part 2
• Sandusky victims in their own words, Part 3
• Analysis of the Sandusky transcripts – Part Four
• District Attorney Ray Gricar drops the ball

Hershey Trust Series

• Hershey Trust Series: A tap on the shoulder from Mr. Hershey
• Fixing the Hershey Trust: What if Milton Hershey came back today?
• Hershey Trust announces more student housing at site of controversial golf course

Miscellaneous by Bill Keisling:

• Moral and legal authority of PA’s highest offices and the equal enforcement of our laws are in doubt
• Harrisburg debt over hang problem is in wrong courtroom
• Pennsylvania constitution sheds light on Harrisburg’s debt troubles – and outcome
• The woman who did not hear
• Report: Corbett Administration considers privatizing PA Department of Public Welfare
• The tainted prosecution of Justice Joan Orie Melvin
• The battle of the house judges: ‘Not illegal, but merely unethical’
• Pennsylvania courts in crisis Part 1
• Penn State trustee election heats up
• Harrisburg to seek bids to privatize sanitation and trash collection
• An overview: Take my incinerator, please!
• LCSWMA board minutes shed light on long road to buying the Harrisburg incinerator
• LCSWMA set to become the trash czar of Central PA

Miscellaneous by others:

• Corbett tries to explain away NewsLanc’s accusations
• Hershey Trust abuses and sham investigations
• Former Mayor Stephen R. Reed is under fire for Harrisburg’s debt
• REPORT REGARDING THE PENNSYLVANIA STATE UNIVERSITY

by Bill Keisling (Part of a series)

One little-discussed repercussion of Harrisburg’s financial insolvency is that the Lancaster County Solid Waste Management Authority (LCSWMA) is set to become the region’s de facto manager of waste.

Originally founded decades back to handle Lancaster County’s solid waste and garbage, the authority’s takeover of waste processing in surrounding counties has been striking.

There has been some public talk of waste regionalization. But, for the most part, the talk has been in boardrooms, without much public oversight or input.

For example, J. Marc Kurowski, chairman of the Harrisburg Authority, told his board on March 23, 2011, that “the (Harrisburg) Authority has received a regional waste management system proposal from the Lancaster County Solid Waste Management Authority to purchase the Harrisburg Resource Recovery Facility. The Authority is continuing to evaluate the proposal, including the meeting that has been organized to meet with the stakeholders on March 31st. Attendees will be Harrisburg City Council, the Mayor, the Bond Insurer AGM, County Commissioners and members of the City’s Act 47 Team.” (Emphasis added.)

A year later, on June 27, 2012, LCSWMA’s Warner paid a visit to a board meeting of the Harrisburg Authority. The minutes state:

“Mr. James Warner, CEO of the LCSWMA, thanked the Board for their decision to support the Receiver in the lengthy RFP process that has been complied with by LCSWMA. He stated that LCSWMA is happy to partner with the City and the Authority in moving forward and that they are committed to provide whatever resources are needed to finish this transaction in a timely manner. LCSWMA looks forward to working toward the resolution of a final transaction and pledges their support to help all entities in reaching a resolution to provide a regional solid waste facility that benefits all who currently use the Harrisburg facility and to allow the Harrisburg facility users the benefit of utilizing the Lancaster facility at certain times and the Lancaster facility to benefit from the use of the Harrisburg facility. They look forward to the combined regionalization and management for a more viable and reliable approach to the region’s solid waste management needs and to assist with the City’s debt crisis.” (Emphasis added.)

For years, as part of the incinerator and landfill business, LCSWMA and other authorities like it have all been receiving and processing waste from municipalities near and far. When one municipal waste plant goes down for maintenance or breakdown, another region’s incinerator takes up the garbage slack.

There’s also been talk for years about regionalizing the Susquehanna Valley’s waste disposal system.

Way back in April 1999, for example, LCSWMA’s board minutes recount a Request for Proposals from Dauphin County:

“The Dauphin County lntermunicipal Solid Waste Authority has accepted the (Lancaster) Authority as a possible site to receive Municipal Waste from Dauphin County within the next ten years. The Executive Director will be executing all documents as required,” the minutes relate.

Within the decade, the minutes also reflect, environmental regulators deemed the Harrisburg incinerator’s ash field full. So the Harrisburg incinerator could no longer bury ash on site.

As a consequence, throughout the late-2000s, incinerator ash by the ton and the truckload were carted to LCSWMA’s Lancaster County landfill for burial.

Ash from Harrisburg, buried in the lush fields of Lancaster County, would greatly help LCSWMA’s bottom line, the Lancaster Authority’s minutes reflect.

But, in the end, it was the financial insolvency of Harrisburg and its incinerator authority that really opened the door for LCSWMA’s waste ascendancy in the Susquehanna Valley.

On October 26, 2011, Warner met with the board of the Harrisburg Authority.

Warner, the minutes read, “wanted the public and the Harrisburg Authority to be aware that the flexibility of the system utilized by the LCSWMA facility allows them to be able to service a large regional area and to make room at their waste-to-energy facility for sudden needs by diverting waste from the Lancaster transfer station to their landfill as needed. This type of waste delivery balancing of processing/transferring waste is performed on a daily basis. This is the type of flexibility that LCSWMA proposes as a regional waste system that would incorporate the waste shed from Dauphin County into a larger waste shed combined of Dauphin and Lancaster Counties wherein there would be two waste-to-energy plants, one landfill and two transfer stations.” (Emphasis added.)

Harrisburg’s insolvency meant that the role of LCSWMA and its executives would quickly grow to more than just moving around waste and unwanted ash. They’d for some reason get a seat at the table to help bust the capital city’s sanitation union.

Minutes of a Harrisburg receiver meeting in December 2012, reflect that LCSWMA was playing a role in the drafting of Harrisburg’s move to privatize its sanitation services.

“Input has been received and provided by the City’s Public Works Director and The Harrisburg Authority,” the Harrisburg receiver’s minutes read. “The RFP (Request for Proposals) (to privatize Harrisburg’s unionized sanitation department) is currently being reviewed by with Lancaster County Solid Waste Management Authority (LCSWMA), at their request and we’re hopeful that their responses will be provided in the near term.”

At that meeting, an executive from Republic Service, owners of York Waste Disposal, showed up to inquire about whether his company could get the private contract to haul Harrisburg’s waste. “I hope I’m not too late in the game,” Don Isabella, the York Waste executive, said. He noted that Lancaster Authority had been part of the draft proposal to privatize Harrisburg’s garbage workers, and wondered, “were any of the haulers or the industry experts consulted or had a chance to look at this?”

He might well ask.

Making the transition complete and official, on August 22, 2012, Lancaster County Commissioners amended LCSWMA’s charter to read: “Board of LCSWMA wishes to further amend the Articles of Incorporation to specifically include a regional purpose and mission of the Authority.”

Coming up: I’ll examine LCSWMA’s history and charter and ask the question: how had a public authority chartered to handle Lancaster County’s trash come to control the waste of the entire Susquehanna Valley region? 

By Bill Keisling – (Part of a series)

Many times when I’m confronted with documents, I simply reprint the document, often without commentary. The readers get it and appreciate and understand the document.

Another advantage of reprinting the document is that the subject is hoisted by his own petard.

In the case of this article, we learn many revelations:

• LCSWMA really got into the Harrisburg incinerator deal accidentally, and had first hoped to increase the Lancaster authority’s own capacity.

• The original purchase price of the Harrisburg incinerator was only $45 million which has now swollen to as much as $150 million.

• LCSWMA proposes to pay off Covanta’s $25 million loan.

• The higher purchase price was set by Dauphin County commissioners, not the city of Harrisburg or the Harrisburg Authority. Dauphin County strangely is also a creditor: how did the county come to set the price?

• There were four engineering studies, three of which LCSWMA says it won’t release because of a non-disclosure agreement with the Harrisburg Authority.

• LCSWMA’s CEO thought he could convince Moody’s not to rate this bond transaction. He was wrong.

The following gives all these revelations to the readers “straight from the horse’s mouth.”

Lancaster Authority minutes detail plans to buy Harrisburg incinerator, retrofit Lancaster’s own incinerator, and pay off operator Covanta’s $25 million loan to Harrisburg

Details of the proposed sale of the Harrisburg incinerator to the Lancaster County Solid Waste Management Authority (LCSWMA) are hard to come by these days due to the Harrisburg Authority and receiver’s insistence on confidentiality.

But comments made by LCSWMA’s chief executive officer Jim Warner and others to their board in 2008 and 2011 shed much light on various aspects of the complicated deal.

Insights into the sale price, how the price was proposed, the bond deal, borrowing, due diligence studies, Moody’s bond rating, and arrangements to borrow money to pay back up to $20 million loaned to the city of Harrisburg by the plant’s operator, Convanta, are all found in the minutes of LCSWMA’s board of director’s meetings.

For many years, as far back as 2008, Warner told the LCSWMA board that the authority was seeking bids to study the viability of simply upgrading Lancaster’s own incinerator (called the Resource Recovery Facility or RRF) with a fourth burner to increase the authority’s capacity to handle waste.

In board minutes dated February 29, 2008, titled, “System Capacity Study,” the entry reads, “In January, a Request for Proposals (RFP) was sent to five of the best and most qualified waste management consulting firms seeking proposals to evaluate the system capacity of all of the Authority’s programs. One of the primary objectives of the study will be to measure the cost and capacity issues associated with constructing a fourth operating unit at the RRF. Proposals are due by March 7, 2008 and a recommendation will be made to the Board at the April Board meeting.”

Consultant engineering firm Dvirka and Bartilucci was selected for the study.

A May 15, 2009 entry in the minutes reads, “Dvirka and Bartilucci System Capacity Study – This study was done to document what issues may be present if LCSWMA’s system capacity was expanded at the Waste-to-Energy plant (WTE, or incinerator). This report includes an economic model associated with this effort if it is pursued. The Report is finished and is ready for release to the public…. (Authority Solicitor Alex) Henderson explained that the motion is to receive the report and authorize the staff to use the conclusions in the report to engage the general public and municipalities.”

Soon, however, CEO Warner would make it clear that LCSWMA was on two tracks. One track would be upgrading the Lancaster Authority’s own incinerator with a fourth burner to increase available capacity. The second option was to forego the plant upgrade and buy Harrisburg’s incinerator.

Senior Manager Tom Adams explained this two-tracked approach to the board on March 11, 2011:

“LCSWMA is moving forward with proposals received from consultants regarding the fourth unit expansion work at the RRF. As there is no guarantee yet for the outcome of purchasing the Harrisburg facility, it is necessary to continue moving forward to ensure that, in the event the purchase does not occur, the timing for the possible fourth unit expansion is still on track. Proposals have been received and interviews have been scheduled at the end of March for the three companies that submitted proposals. A recommendation will likely be made in April for the Board to approve a consultant if the project is to move forward. (CEO Jim) Warner noted that, though LCSWMA plans to select a consultant, expenses for this project will not be incurred until the outcome on the Harrisburg offer is determined.

Also on March 11, 2011, Solicitor Henderson explained the purchase price of the Harrisburg incinerator at that time was only $45 million, as outlined by a Memorandum of Understanding, or MOU:

The minutes read: “Mr. Henderson commented that he had had the opportunity to speak with all the Board members about the MOU and everyone has had the opportunity to review it and ask questions. After these preliminary remarks, there will be an opportunity to ask more questions. The MOU is not a Purchase Agreement. It is not an Agreement to purchase the HRRF (Harrisburg incinerator) or even an offer to purchase the HRRF. This document states that LCSWMA would like to enter into a process to determine if agreements can be developed to integrate the HRRF into the Lancaster County system. It is really a document that outlines what the process might be to reach an agreement. This is done because this type of transaction involves a great deal of time, resources, and effort on both sides, but particularly for LCSWMA. It makes sense to have some understanding that the overall parameters are in the ballpark before embarking on this lengthy process.

“The schedule is laid out in the MOU on page 4 of the document. The encouraged execution date for the MOU is April 15, 2011. This MOU was designed to be signed by the owner of the facility, which is the Harrisburg Authority, but also the entities that direct the waste flow control and have guaranteed the Harrisburg Authority’s debt, which are Dauphin County and the City of Harrisburg.

“(Incinerator operator) Covanta will also need to sign the MOU, if executed, as they are the current operator and have a long-term contract with the facility. If the MOU can be executed by mid-April, a six-week due diligence process will be set up to review additional information before final agreements can be put in place.

“There will be another three-week process to finalize the agreements. If the schedule would be implemented as laid-out in the MOU, closing could be possible on August 31, 2011. One of the binding parts of the MOU is that we proceed on this schedule and do our best to accomplish it. The MOU outlines discuss, in great detail, the $45 million purchase price.”

On July 22, 2011, the LCSWMA board was given the following detailed report by CEO Warner:

“Possible Harrisburg RRF Acquisition – This project has kept LCSWMA very busy. Recently, LCSWMA met with (accounting firm) Trout, Ebersole and Groff and discussed expectations on a large list of what will need to be reviewed by them such as Harrisburg’s Accounts Receivable, all types of other accounts, agreements, such as consultants, etc. Harrisburg’s business, as it relates to solid waste, will take some time to figure out as they are an entity that also manages water and sewer assets, although they do budget separately for the waste operations. Trout, Ebersole and Groff’s due diligence will take an estimated 4 to 6 weeks. LCSWMA also met with (consulting engineers) ARM Group who will start looking into some different aspects. Though at this stage LCSWMA does not anticipate acquiring the land where the ash is currently located, LCSWMA plans to lease about 56 acres and all information about existing in-place ash will need to be evaluated to determine if there are opportunities to continue filling ash on that site. The characteristics of the ash will be needed as well; ARM is working on this.

“(Consulting engineers) HDR will also perform some internal work with the hardware at the HRRF (Harrisburg Resource Recovery Facility).

“Each of these three companies will work on due diligence from different aspects. They have not been given the ‘go ahead’ yet. The Non-Disclosure and Due Diligence Agreement was put together as a late development and it is ready as soon as a decision is made to sell the HRRF to LCSWMA.

“The Harrisburg Authority is ready to go. The Harrisburg City Council rejected the Act 47 plan. The Act 47 Team is no longer there to consult with the City. The (Harrisburg) Mayor now has to come up with a plan in the next 14 days, and the City Council will need to approve it. LCSWMA feels confident that any plan will involve selling the HRRF. The debt for the City is $310 million. There can be no plan to pay off the debt by increasing efficiency. The City’s annual budget is similar to LCSWMA’s, at around $50 million. The main part of the plan was to sell HRRF to LCSWMA and do a long-term lease or sale of the parking garages. None of the Council members or the Mayor opposes the sale of the HRRF to LCSWMA, but they do oppose the lease or sale of the parking garages.”

Warner told the board that the original $45 million sale price of the incinerator had swollen to $124, but that the total borrowing could reach $150 million, including “the subordinated debt to pay off the Covanta loan; that principal will likely only be due in 20 or more years which could be another $15 to $20 million, putting the total debt at around $150 million.”

The $25 million here mentioned was a loan made by incinerator operator Covanta to the City of Harrisburg in 2007 to finish the botched $300 million repair of the facility. As terms of the loan, Covanta also won the right of last refusal on the incinerator sale. Covanta currently operates not only the Harrisburg incinerator, but the firm also has operated the Lancaster incinerator for LCSWMA since the late 1980s

Warner told his board that it was Dauphin County that came up with the incinerator sale price of $124 million, and not the city of Harrisburg or the Harrisburg Authority, which nominally owns the plant.

“The next step is to enter into acquisition negotiations with the Harrisburg Authority. This was already done with the County and that is how the $124 million offer was determined. The Harrisburg Authority is not pleased that the County negotiated a sale price for their asset. The County did this to attempt to enhance the value and to try to develop a plan with the debt guarantor in Act 47. I hope that when negotiations progress with the Harrisburg Authority, they will also conclude that the $124 million is a fair offer. The entire extra value, the additional $79 million (difference between $45 and $124 million), is due to the guarantees from the City of Harrisburg and/or guarantees and contributions from the Commonwealth of PA that are not quite in place yet. LCSWMA’s offer is contingent on these factors.

“One of the things that adds value is the electricity purchase. LCSWMA is meeting with the Secretary of the Department of General Services, which purchases all of the goods and services for the Commonwealth. Some general agreement will likely come from this meeting that the State will purchase all of the electrical output of the Harrisburg plant. There is a proposal drafted that will be given to them to help lock in the electric revenue component of the valuation. The next six months are going to be even busier while working on the due diligence and managing negotiations for this project. The Harrisburg Authority has indicated to the City that it is willing to sell the asset as part of the Mayor’s plan. An Executive Session has been scheduled to discuss some other details.

Board Chair R. Edward Gordon “asked if LCSWMA has begun to discuss the financial aspects of this project,” the minutes relate.

“Mr. Warner replied that LCSWMA has met with Walter Kulakowski (of Guggenheim Securities) about having his company as a partner for underwriting, and with Wells Fargo who has a good, broad, public finance team in Philadelphia. Locally, I met with (financial services firm) Janney Montgomery Scott because they have very strong retail coverage in Pennsylvania. The first two parties are definitely interested and Janney will indicate their interest later.”

Warner continued, “This is likely to be a very large debt issue of about a $150 million. The plans are to finance $120 million, then borrow another $12 million for the 10% that must be put in the reserve account, bringing the cost to $132. The cost of issuance is likely to be $2.5 or $3 million, bringing the total Minutes of the Board of Directors Meeting July 22, 2011 Page 3 of 14 to about $135. Then there is the subordinated debt to pay off the Covanta loan; that principal will likely only be due in 20 or more years which could be another $15 to $20 million, putting the total debt at around $150 million.”

Where did this leave the second option of retrofitting Lancaster Authority’s existing incinerator? Chairman Gordon asked CEO Warner

“Mr. Gordon asked how this has impacted the engineering for the fourth unit at this point?

“Mr. Warner responded that it has not impacted that potential project at all because that schedule has been set aside while all effort is ongoing with the possible Harrisburg RRF purchase. An acquisition of Harrisburg will put LCSWMA and waste disposal in Lancaster County in a terrific position for a long time. The main component of the purchase would not be because LCSWMA can do a better job than has been done by the Harrisburg Authority, it is because it has extra capacity that can be easily accessed via the Transfer Station as Lancaster County’s capacity grows. At this time, the financial strength of our system is extremely strong and thus will remove the need to raise our rates.

Board member (and current chair) Karen Weibel, “asked if there is still work to be done at LCSWMA’s RRF and at what point might that work be focused.

“Mr. Warner replied that in the combined proforma, assuming LCSWMA owns the Harrisburg RRF, it anticipates borrowing $20 million in 2014 or 2015 with a payback of only 10 years because it is not new construction. This will cover all the items needed to be upgraded, such as new cranes, control room reconfiguration, ash handling system, etc.

“Mr. Houck asked what the approximate timetable is for delivering the financial side of the Harrisburg ‘package.’

“Mr. Warner replied that it depends on how quickly LCSWMA can negotiate the purchase. There is no way to control the speed with which they do business. The Harrisburg Authority has very responsible management and only has a Board of three people. They have been very transparent with their business. Covanta also helped clean up the previous situation at the HRRF, but not without its own struggles with the plant. It takes a lot of care, and money must be invested regularly to keep a RRF running as things begin to break. There is some disagreement between Covanta and the Harrisburg Authority regarding the service agreement that is causing the facility to become further distressed, which is another reason why it must be sold.

“LCSWMA plans to meet with Covanta after the potential purchase to set up a priority list, find out what needs to be done, and make the investments necessary for Covanta to get the plant operating better than it is currently.

“Mr. Houck asked what Wally Kulakowski and Wells Fargo think about the market.

“Mr. Warner replied that LCSWMA has an AA- rating with Standard and Poor’s and everything will be done to ensure that this rating is maintained because having that rating will save LCSWMA millions of dollars. Some work will need to be done with Moody’s, as it currently has LCSWMA’s rating at A3, which is below the S&P’s rating by four notches. There has been some thought of not asking Moody’s to rate this. However, that will be determined later.”

(In late February 2013, Moody’s threatened to downgrade LCSWMA’s credit rating. – editor’s note.)

“The other issue is that this may be a taxable issue because it is not new construction. Most issues for LCSWMA are non-taxable. Hartman, Underhill, and Brubaker’s office is looking into this issue. Every quarter point right now is worth about $4 – $4.5 million in the proforma over 20 years. This has been modeled at 53⁄4%, which might be the taxable portion, but LCSWMA has been trying to be conservative. Rates are great right now; if LCSWMA can do 5 1⁄4%, it will pick up $8 million and there will be a market for the Authority’s bonds.

Also discussed at this board meeting was a “Non-Disclosure and Due Diligence Agreement/Harrisburg Resource Recovery Facility.”

The minutes reflect that, “This was finalized late yesterday afternoon. (Solicitor) Henderson will review the details. Mr. Henderson described, in detail, the relative aspects of the Non-Disclosure and Due Diligence Agreement as drafted and provided to the Board. This document is a truncated version of the Memorandum of Understanding (MOU) that was previously distributed, without the deal points. On July 15, the Harrisburg Authority posted a notice that if there were other interested parties, interest should be indicated by August 5, 2011. There is no promise that a deal will proceed by entering into this Agreement. Staff recommends the Board approve the Non-Disclosure and Due Diligence Agreement as drafted so the Harrisburg Authority will receive the confidentiality it requested.”

But nearly a year and a half later, LCSWMA’s secretive deal to purchase the Harrisburg incinerator would still be pending.

Big stakes for both Harrisburg and Lancaster in pending incinerator deal

Deal requires not only careful consideration, but also public participation

by Bill Keisling

From the perspective of observers in Harrisburg, Lancaster County Solid Waste Management Authority’s (LCSWMA) bid to buy the Harrisburg incinerator certainly is a big, and an important, piece of the puzzle to get Harrisburg on the road to solvency, and to keep the capital city out of bankruptcy court.

But it’s by no means the only piece of the puzzle.

One big problem is that Harrisburg is about $330 million in debt from its botched incinerator retrofit.

No one knows for sure at this point, but it’s believed that LCSWMA is offering about $120 million for the incinerator. That leaves some $200 million in outstanding debt.

The only other assets known to be on the table are the lease of the city’s parking garages, and similar smaller pieces, like management of the city’s deteriorating water and sewer works.

But it’s hard to see how those assets are going to cover the remaining $200 million in debt. Maybe, if Harrisburg is lucky, those smaller assets may bring $100 million.

So that leaves behind, after all the deals are made, somewhere in the neighborhood of $100 million of “stranded” debt — give or take. And that’s not a cheap neighborhood.

But, for a variety of reasons — political and economic — there can be no “stranded debt” after these assets are sold or leased.

And that means that someone is going to have to take a $100 million dollar haircut.

There is a solution, former Harrisburg Receiver David Unkovic wrote in his plan.

“The solution requires a comprehensive recovery plan that really works,” Unkovic wrote. “Ultimately, significant and difficult contributions will be required from many stakeholders.”

Read between the lines: Harrisburg simply does not have $100 million.

So, obviously, for the plan to work, the bondholders and insurers will have to agree to take a $100 million haircut.

And that’s an expensive haircut.

Cart before the horse

But there’s a horse and a cart problem:

“Until the actual value of certain assets of the City is determined through a request for proposals process and until the exact extent of the structural deficit (the amount by which the City’s operating expenses consistently exceed its revenues) is understood, it is not possible to determine exactly what contributions are required from various stakeholders,” Unkovic pointed out

“Once the value of the assets is known and the extent of the structural deficit is known, the Receiver can complete negotiations with the stakeholders,” Unkovic continues.

But, and here’s the big but:

“This will require a consensual process,” Unkovic warns (my emphasis). “For the most part, the stakeholders will need to voluntarily agree to contributions in order for the plan to work.”

In other words, the Harrisburg receiver’s office simply doesn’t have the legal authority to force the “stakeholders” (read “bondholders”) into accepting this deal.

Currently, the “stakeholders” – the bond insurer, Assured Guaranty Municipal (AGM); Dauphin County; as well as a smaller player, CIT Capital Markets — are in state court seeking the entire amount they say they are owed.

The irony of course is that these same parties helped to push the city into insolvency, by doing things like profiting from careless bond swaps, and by not insisting on proper insurance, like a performance bond for the incinerator repairs.

So these supposedly aggrieved “stakeholders” themselves are far from blameless in this historic mess.

Still, if these parties don’t agree to settle for much less, and continue to pretend in state court that they are blameless, the deal could easily fall apart, and Harrisburg could be pushed into bankruptcy court.

A gazillions moving pieces

There are other political problems on the horizon for the LCSWMA’s incinerator hopes

The entire package — sale or lease of assets, and voluntary agreements to forgive the remaining debt — has to be presented to Harrisburg city council in one piece, at one time, or it risks being voted down by council

It’s politically and economically impossible for Harrisburg city council to approve any deal if stranded debt is left on the table

Even then, the commonwealth court judge could spike the deal

Or, as I say, a creditor could balk: and then the whole mess slides into bankruptcy court

And there are, as one observer recently said to me, a “gazillion moving pieces” the Harrisburg receiver has to contend with less the whole recovery plan flies apart and the capital city winds up in bankruptcy.

From Harrisburg’s perspective, bankruptcy court looks increasingly like a bad idea

There’s the uncertainty of what may happen. There’s never been a case this big, with so many unexplored implications, in bankruptcy court. This is sailing in uncharted seas

The major creditors, including the bond insurer, certainly could tie up proceedings in federal court for years

One lawyer tells me, for example, we may see, in federal bankruptcy court, as many as two interlocutory appeals all the way to the U.S. Supreme Court. (An interlocutory appeal is an appeal filed in the middle of a case, during which the case proper is essentially frozen, while higher courts weigh in.)

This means Harrisburg could be in legal limbo — a city of 50,000 twisting in the wind — while the case and appeals wind their way through the federal court system, up and down, and up and down again, for up to 10 years.

Legal fees will be astronomical for all parties, public and private.

High stakes card game

So everyone here is playing a very high-stakes card game, weighing their risks, and potential outcomes.

One possibility is that the bond insurer won’t want to voluntarily eat $100 million, as prescribed by the receiver’s plan, and may decide to take its chances in bankruptcy court

Or, the bond folks could simply decide it’s cheaper to manage the problem by paying a team of lawyers tens of millions to shepherd the case through federal court for a decade, keeping the $100 million on its books

On the other hand, creditors may fear pushing the plan and the city into bankruptcy, one observer tells me

In Chapter 7 court, bondholders might face the biggest cram-down “since Linda Lovelace met Harry Reems.”

The federal court may deal harshly with these same creditors if they are seen as playing an obstructionist role (or a ‘fraudulent participatory’ role in the fast and loose bond dealings leading up to this), and the receiver’s plan is destroyed.

In other words, in bankruptcy court, the bond insurers might wish they’d simply taken the $100 million haircut offered by the city receiver.

LCSWMA has, for now, tremendous leverage

Increasingly, as I say, for these and other reasons, most seem to recognize the Receiver’s Plan must prevail.

All this gives tremendous leverage to LCSWMA in its bid to own Harrisburg’s troubled incinerator.

But LCSWMA hasn’t been particularly forthcoming about its reasons for wanting to own the plant, or its finances

LCSWMA has done next to nothing to explain the deal to the public in Lancaster County

For example, one obsersver wondered aloud to me whether a large part of LCSWMA’s interest in the Harrisburg facility may actually revolve around its desire to bury incinerator ash on the site of the current Harrisburg Public Works Building.

Ash disposal is a big and expensive part of the incinerator business. The current site can hold no more ash

As I noted last week, LCSWMA is almost certainly attempting to take advantage of the moment to seek state environmental approval to dump ash at the Public Works building site, on the one hand.

On the other hand, I’m told, environmentalists could demand a highly expensive, state-of-the-art ash handling facility on the site — not just a landfill — due to the huge amount of ash already buried there (dozens of acres of buried ash), and its proximity to the Susquehanna, water table concerns, and so on.

All this also underscores the importance of things like proper long-term insurance for environmental issues.

Uninsured, or under-insured, environmental liabilities can bite Harrisburg and LCSWMA in a big way decades down the road.

A state-of-the-art ash handling facility, moreover, if required, could easily cost ten of millions of dollars.

So these issues alone, if they are not carefully considered and weighed, have the potential to destroy the economics of the deal for LCSWMA, and Harrisburg.

But at this point no one seems to think it’s worth scuttling the deal, or the Receiver’s Plan, over LCSWMA’s desire to bury ashes on the site. There obviously has to be compromises all around for this plan to work.

LCSWMA recognizes this, and is apparently be negotiating for all it can get, while it can get it.

The big picture: toward public understanding and participation

That said, when you look at the big picture, the chances of the receiver’s plan holding together at this moment seem astronomically slim, considering all the players, and all the interests at play.

Another real risk here involves the secretive nature of the receiver’s overall plan.

If the plan is simply dropped on an unsuspecting public, without much prior explanation, it could easily fly apart, for political or legal reasons alike, as we witnessed with the recent secretive deal cobbled together by the Corbett Administration to privatize the Pennsylvania Lottery.

The news will only get worse.

The dirty little secret is that the $330 million in incinerator bond debt is only a fraction of the more than $1 billion in bond debt run up by Harrisburg over the last decades of fiscal and political irresponsibility.

I’m going to explore some of these issues in future articles,

The aim is not to be a pain, or to cause trouble, for its own sake.

Harrisburg got into this mess precisely because of fast and loose financial dealings, coupled with deliberate attempts to keep a supportive or a critical public out of the loop.

More ill conceived fast and loose financial deals simply will not cure the ill conceived fast and loose financial deals of the past.

It will only make things worse.

Not only will problems not be solved for Dauphin County residents.

Lancaster Countians stand a real risk of being pulled into this quicksand.

This mess was created precisely because there was little or no attempt to gain public understanding or support for past deals.

For David Unkovic’s audacious yet reasonable plan to work — if we want to push this car out of the ditch — we clearly must all be pushing in the same direction.

City receiver eyes selling Public Works Building and grounds adjacent to Harrisburg’s incinerator, to the Lancaster Authority with the incinerator, to bury ash.

‘The secretive plan is driven by a perceived need to help shoe-horn the pending deal with the Lancaster Authority, whose bid to buy the troubled Harrisburg incinerator has run into increasing political and financial turmoil’

by Bill Keisling

The Corbett administration, the City of Harrisburg, and the Corbett-appointed city receiver are set to announce plans seeking bids to privatize large parts of the beleaguered capital city’s Public Works Department, including its unionized sanitation and trash collection operations.

The plan is part of a larger, secretive, and growing deal to sell the city incinerator to the Lancaster County Solid Waste Management Authority.

Under the Corbett administration-approved plan, the resulting unneeded headquarters for the city sanitation department, located in Public Works Building, directly next to the city incinerator, off South Cameron Street in Harrisburg, will be part of the proposed sale to the Lancaster Authority.

The Public Works Building eventually may be demolished, allowing the parcel of real estate to be used to bury waste ash from the incinerator.

The plan is part of a sweetened deal to make the sale of the incinerator more profitable for the Lancaster Authority, which foresees a need in the future to bury incinerator ash.

Whether the grounds of the Public Works Building will have to be rezoned at this time, or pre-approved for ash disposal by the state Department of Environmental Protection, is not immediately known.

The proposal to lay off the city’s unionized trash collectors and replace them with private contractors was buried deep in the receiver’s February 2012 plan.

But, in the receiver’s plan, the proposal to seek bids for private trash collection in Harrisburg was floated for supposed internal budgetary reasons.

Page 110 of the receiver’s plan reads:

“If these savings and efficiencies cannot be realized through negotiation with existing employees, or if THA (The Harrisburg Authority) is unable to secure the necessary financing for this new system, the City and THA shall investigate contracting out for residential collection services to ensure a reasonable cost per collection. Given the urgency of the situation, the City should concurrently conduct negotiations with the bargaining unit and prepare for receiving competitive bids for service, effectively creating a managed competition to determine the most economical method of providing service. Any consideration of contracting for residential collection should include bulk waste (collection) as part of the same effort.

“Many communities contract for all solid waste collection services,” the receiver’s plan reads. “Private services are readily available and often offer a more economical service than that provided by city crews. In order to achieve savings through modernization and upgrading of equipment, there needs to be agreement between management and the bargaining unit on performance and productivity standards and work rules that will lead to the provision of competitive service by existing city crews.”

In reality, the plan is not so much about saving money in the sanitation department.

The secretive plan instead is driven by a perceived need to help shoe-horn the pending deal with the Lancaster Authority, whose bid to buy the troubled Harrisburg incinerator has run into increasing political and financial trouble.

The Corbett Administration has recently run aground with equally secretive plans to privatize the Pennsylvania Lottery, the liquor store system, and the Pennsylvania Department of Public Welfare.

In each case, critics have said that the politically clumsy Corbett administration has undisclosed and/or ulterior motives for its drive to privatize public services. This seems to be another instance.

One obvious ramification to this latest plan is that the cost to Harrisburg city residents for trash collection may skyrocket at a time when Harrisburg Mayor Linda Thompson is seeking re-election.

In the near term, the thinking goes, Lancaster County residents should benefit from the land deal — at the expense of Harrisburg citizens.

Policy critics of the jinxed Harrisburg incinerator have long proposed creating a regional trash disposal authority, which would not pit residents of Dauphin, Lancaster, and York counties against each other, and which would create more financial stability.

Critics have also decried decades of secretive backroom deals involving the hidden finances of the Harrisburg incinerator, and blame lack of public participation and political involvement as a main reason for the plant’s monumental and ongoing failure.

This unfolding new plan, unfortunately, seems only to offer more of the same.

Harrisburg City Controller Dan Miller, himself a candidate for mayor, told NewsLanc, “I did hear about a week ago that there were plans to privatize sanitation, but that’s all I know.” Controller Miller points out that Harrisburg “is getting about $1.5 million from the state a year for trash collection. I don’t know how that will be affected by all this.”

A Request for Proposals, or RP, to privatize Harrisburg city trash collection should appear in the near future on the City of Harrisburg’s website.

by Bill Keisling

Penn State’s governing body, the Board of Trustees, or BOT, continues to be rocked by the aftermath of the Jerry Sandusky sex scandal.

Two standing members of the Board of Trustees who served during the ouster of former Coach Joe Paterno are up for re-election to the Board, and the election campaign promises to be rocky.

Present Trustees Stephanie Nolan Deviney, an attorney from Exton, and Paul V. Suhey, an orthopedic surgeon from Boalsburg, are opposed by the alumni watchdog group Penn Staters for Responsible Stewardship (PS4RS).

PS4RS has vowed to oppose the re-election of all standing BOT members, including Nolan Deviney and Suhey, and to nominate its own choices for replacement trustees.

This election then serves not only as a test of strength and approval of the current trustees, but also as a test of the strength of the reform group. Last year, PS4RS helped elect new trustee Anthony Lubrano.

Nolan Deviney currently serves as vice-chair of the BOT and has already attempted to apologize for the handling of the sacking of the late Coach Paterno.

“Let me be clear – we got this wrong. None of us are proud of how we handled this and we accept responsibility for the fall out it has caused,” Nolan Deviney writes on a post on her webpage. “I agree 100% with Sue Paterno’s statement – Joe Paterno did deserve more.”

Trustee Nolan Deviney’s web post apology is particularly interesting. It provides, for the first time, a detailed timeline and narrative of events leading to Paterno’s sacking.

In response to heated questions from alumni, Nolan Deviney also released, for the first time, the contract signed by PSU with former FBI Director Louis Freeh, whose July 2012 report many have criticized as a political whitewash.

Trustee Nolan Deviney has also drawn fire for working in the same law firm, Fox Rothschild, that represents former PSU attorney Cythnia Baldwin in the ongoing criminal prosecution of school officials.

“The attorney who is representing (Baldwin) is not in my office,” Nolan Deviney writes on her blog.  “In fact, I have never even met him, let alone spoken to him about this, or any other, case.  I had no involvement in the selection of my firm to represent Ms. Baldwin.  I have no monetary interest in this representation.  An ethical wall was immediately established to prevent any conflict between my role on the board and my firm’s representation of Ms. Baldwin.”

Paul V. Suhey, meanwhile, is from an old-line family with deep historical roots to the State College community. Unlike his fellow trustee Nolan Deviney, Suhey has not released a narrative of events leading to Paterno’s ouster. “Dr. Suhey was elected to the Board of Trustees by the alumni for a three-year term beginning July 1998 and was reelected for succeeding terms,” his trustee webpage explains.

Displeased alumni have a limited ability to change on the Board of Trustees.

Of the Board’s 32 members, only nine are elected to the BOT by alumni, and these in staggered elections, as we see this year.

“The size and composition of the Board of Trustees has not changed since 1951,” Penn State’s website explains.

“Penn State’s 32-member Board of Trustees is composed of the following: Five trustees serve in an ex officio capacity by virtue of their position within the University or the Commonwealth of Pennsylvania. They are the President of the University; the Governor of the Commonwealth; and the state secretaries of the departments of Agriculture; Education; and Conservation and Natural Resources. Six trustees are appointed by the Governor; nine trustees are elected by the alumni; six are elected by organized agricultural societies within the Commonwealth; and six are elected by the Board of Trustees representing business and industry endeavors.”

The Pennsylvania State Senate this week holds hearings to discuss an overhaul of the BOT, including proposals to limit the governor’s influence on the body.

The balloting of this year’s election to the BOT begins on April 10. Results will be announced on May 3.

Trustee candidates perhaps best known to central Pennsylvanians include Harrisburg attorney Bill Cluck, an active member of PS4RS and chairman of the Harrisburg Authority, which oversees the troubled city incinerator; and Kathleen Pavelko, chairman and CEO of WITF, the region’s public radio and television stations. Pavelko used to work in State College broadcasting.

Candidate Pavelko perhaps also holds a key advantage: in a crowded field of 39 candidates, she drew the number one ballot position.

Here is the official list of candidates appearing on the ballot for the alumni election to BOT, listed according to the ballot positions drawn Feb. 28:

1. Kathleen A. Pavelko, president and CEO, WITF, New Cumberland, Pa.

2. Pratima Gatehouse, vice president, Production Design, Avalon Partners, Short Hills, N.J.

3. Eugene J. Bella, retired, Murrysville, Pa.

4. Paul V. Suhey, orthopedic surgeon, Martin & Suhey Orthopedics, Boalsburg, Pa.

5. Thomas A. Conley, Air Force pilot, District of Columbia Air National Guard, Washington, D.C.

6. John W. Diercks, retired, United States Air Force, State College, Pa.

7. Edward “Ted” B. Brown III, president/CEO, KETCH Consulting Inc., State College, Pa.

8. Rudolph K. Glocker, managing partner, Pediped Footwear, Henderson, Nev.

9. Christopher J. Bartnik, senior vice president, East Region Benefits Leader, Wells Fargo & Co., Chantilly, Va.

10. Vincent J. Tedesco Jr., director, Lockheed Martin Corp., State College, Pa.

11. William J. Cluck, attorney, Law Offices of William J. Cluck, Harrisburg, Pa.

12. Stephanie Nolan Deviney, attorney at law, Fox Rothschild LLP, Exton, Pa.

13. John M. Mason Jr., associate provost & vice president for research, Auburn University, Auburn, Ala.

14. Robert J. Bowsher, writer and accountant, San Diego, Calif.

15. Doreen Ulhney Schivley, retired speech therapist and special education teacher, Kent County Board of Education, State College, Pa.

16. J. Andrew Weidman, chairman, Reinsel Kuntz Lesher LLP, Reading, Pa.

17. Ben J. Novak, retired, Ave Maria, Fla.

18. O. Richard Bundy, president and CEO, University of Vermont Foundation, South Burlington, Vt.

19. Matthew A. Bird, project controls manager, Bechtel Group, Gettysburg, Pa.

20. Frederik O. Riefkohl, senior vice president, CSA Group, Annapolis, Md.

21. Mark S. Connolly, intellectual property director, E.I. DuPont de Nemours & Co., West Chester, Pa.

22. Barbara L. Doran, wealth advisor, Morgan Stanley Smith Barney, New York, N.Y.

23. Darlene R. Baker, vice president of operations, PSKW LLC, Warminster, Pa.

24. Robert J. Hooper, president/chair of the board, Vermont State Employees Association, Burlington, Vt.

25. Amy L. Williams, founder and managing director, SageWorks Rx LLC., Wayne, Pa.

26. Robert N. Grimes, chairman, CEO and president, ConStrata Tech Consulting, Potomac, Md.

27. Jeffrey N. Goldsmith, account executive, Premium Card Solutions, Harrisburg, Pa.

28. David K. Mullaly, retired teacher, Annapolis, Md.

29. Robert P. McKinnon, founder, GALEWILL Design, Inc., Hastings on Hudson, N.Y.

30. Ted J. Sebastianelli, retired, deputy HR director, Military District of Washington D.C., State College, Pa.

31. Christopher R. Owens, mobile banking manager, Pennsylvania State Employees Credit Union, Mechanicsburg, Pa.

32. Gregory A. Slachta, MD, retired urologic surgeon, Ridgeland, S.C.

33. Charles R. Mazzitti, president, Mazzitti & Sullivan E.A.P. Services, Elizabethtown, Pa.

34. Gregory “Sandy” S. Sanderson, CEO, CollClub Sports, Pittsburgh, Pa.

35. Robert C. Jubelirer, partner, Obermayer Rebmann Maxwell & Hippel, Boalsburg, Pa.

36. William F. Oldsey, operating partner, Atlas Advisors, Basking Ridge, N.J.

37. Patrick J. Howley, Baltimore, Md.

38. Ryan M. Bagwell, senior interactive developer, Hirshorn Zucherman Design Group, Middleton, Wis.

39. Scott T. Kimler, owner, ST Consulting, Ladysmith, British Columbia, Canada

Source: Centre Daily Times

Who needs criminals when you have judges like this?

by Bill Keisling

With the conviction of Pennsylvania Supreme Court Justice Joan Orie Melvin this February, Pennsylvania now faces the specter of the second legislative impeachment of a high court judge in 20 years.

The last impeachment of a Pennsylvania Supreme Court justice happened in 1994, with the removal from the bench of Justice Rolf Larsen.

It’s beyond debate that Pennsylvania today is plagued by courts and a judiciary that is awash in behavior that is unethical, and often outright criminal.

Making matters worse, no one seems able to do anything about the slide of Pennsylvania judiciary into blatant criminality.

The recent record speaks for itself.

The son of former Chief Justice Stephen Zappala was part owner of a detention facility that for years bribed Luzerne County judges in the infamous Cash for Kids scandal, in which some 6,500 kids were sold down the river in return for judicial enrichment. While Chief Justice Zappala’s son maintains he did nothing wrong, and was not prosecuted, it was years before court watchdogs could attain an investigation of the bribed Luzerne County judges.

The current chief justice, Ronald Castille, in 2011 was caught funneling millions of dollars allocated for a Philadelphia family court to a golfing buddy.

The wife of Supreme Court Justice Seamus P. McCaffery over the years collected hundreds of thousands of dollars in “referral fees” from law firms with cases before McCaffery.

In 2010, Perry County judge, Joseph Rehkamp, was accused of assaulting his wife, who said he was drunk at the time and tried to choke her.

A York County judge, Thomas Kelley, was investigated (but not prosecuted) on charges that he broke his girlfriend’s arm in a domestic dispute. Also in York County, the former police commissioner complains he was unable to attain an investigation of a courthouse sex ring .

In Philadelphia, meanwhile, this January, nine current or former traffic court judges were charged by the FBI with fixing traffic tickets.

This news comes only 25 years after the infamous Philadelphia Roofer’s Union court scandal, when nine judges were caught taking envelopes of cash from union officials.

It goes on and on, from unfettered criminal activities in the state supreme court, to misbehavior by local magistrates.

With judges like this in Pennsylvania, who needs criminals?

Physicists tells us our universe is inexplicably drifting apart at an accelerated rate, presumably due to some unseen dark energy or force that is literally tearing apart the fabric of space and time.

In a similar fashion, corruption in Pennsylvania’s courts has also undeniably accelerated in recent years, and is equally pulling us apart at the seams, debasing and endangering our society.

Instead of the amiable, trustworthy and beloved Judge Thatcher written about by Mark Twain in his Adventures of Huckleberry Finn, Pennsylvanians increasingly find themselves going before Judge Dredd.

The historical record speaks for itself, or ‘loquitur pro se ipsa’, to use the Latin phrase of lawyers.

The last legislative impeachment of a judge by the Pennsylvania legislature before Justice Rolf Larsen’s impeachment in 1994 occurred 183 years earlier, when Northumberland, Luzerne and Lycoming County Judge Thomas Cooper was removed from the bench in 1811.

Judge Cooper in 1811 was hit with 10 counts of “official misconduct,” including instances of bad temperament and charges that he sat on cases where he had a “pecuniary interest.” (Are you at all worried, Justice McCaffery?)

Judge Cooper jailed one man for wearing a hat in his courtroom, and locked up another for whispering during proceedings. That’s a far cry from awarding your golfing buddy a $12 million contract, or sitting by while 6,500 kids are sold down the river to a private detention facility.

Pennsylvania’s founder, William Penn, found himself with a similar judicial temperament issue in 1685.

The year before, in 1684, Penn appointed wealthy landowner Nicholas More as the state’s chief justice.

“Like many of Penn’s political appointments, More was a man of wealth. He had purchased 10,000 acres of land from Penn. Penn believed that men with a stake in the colony’s future would serve Pennsylvania best, and he had faith in the abilities of men of business. Unfortunately, More, a physician with no legal training, was arrogant and contentious and thus temperamentally unsuited to the job,” writes Teddi DiCanio.

“Using a brief clause in Pennsylvania’s Charter of Liberties, the Assembly impeached More. On May 15, 1685, an Assembly member introduced a formal complaint. More, a delegate that day, was asked to withdraw. After some discussion, the individual articles of impeachment were approved one by one. To name a few, the Assembly charged that More had: bullied a jury into rendering an unjust verdict; mistreated judges; harassed a witness; summoned juries unlawfully; altered a charge; and missed serving in several circuit courts.”

Let’s forget for a moment that More secured his appointment as chief justice only after buying 10,000 acres of land from our illustrious Quaker founder William Penn, and how that would look today.

What we should instead consider is that these earlier 17th and 19th century legislative impeachments, involving Judges Cooper and More, mostly had not so much to do with outright and unchecked criminality, as we see today, so much as simple bad temperament

Today, as many visitors in our courtrooms can attest for themselves, literally scores of Pennsylvania judges could be impeached today for loutish, bad or rude behavior.

The reasons outright criminal behavior has undeniably increased in Pennsylvania’s judiciary in recent years makes for an interesting story of its own.

Reformers say it’s a simple matter of the breakdown of court discipline, as administered by our State Supreme Court.

And that, court critics have been saying for years, is by design.

To be continued …

When things get rough for Pennsylvania politicians, each party will reach for its own house judge to overrule the other party’s lower-court decision.

by Bill Keisling

Editor’s note: Pennsylvania politicians spend years appointing judges to the state’s courts, and helping them get elected to ever higher courts. When the sledding gets rough, those politicians reach for, and expect help from, those politically appointed judges.

Today’s political turmoil on the Pennsylvania Supreme Court is nothing much new. The following article was excerpted and only slightly updated from Bill Keisling’s 1993 book “When the Levee Breaks, a history of the Pennsylvania Turnpike.”

Tunrpike commissioner Peter J. Camiel was loved by Pennsylvania Democrats in the 1980s, and just as disliked by Republicans, and bedeviled by corruption charges involving old-time patronage practices.

Camiel was one of the more colorful characters in the history of Pennsylvania politics. He certainly lived a life. In his youth he was a light-heavyweight prizefighter in Philadelphia. At nineteen he set out to see the country. He threshed Kansas wheat, poked Wyoming cows, worked as a longshoreman organizer and a theater stagehand in San Francisco.

An expert crap shooter, one night working as a stagehand, he won $3,600 from actor John Barrymore.

Before long he drifted back to Philadelphia where he was elected a Democratic ward leader. In 1952 Camiel won a state senate seat in an upset victory, beating the brother of the Republican city boss.

Time would make Camiel a millionaire wholesale beer distributor. He felt no compunction about using his public office to further his beer business. Once in the state senate he fought a bill that sought to raise $37 million for Philadelphia schools when he learned the proposal levied a small tax on beer and liquor. In 1971 he won passage of a law allowing beer distributors a monopoly to import beer from out-of-state brewers.

Camiel became chairman of the Philadelphia Democratic committee in 1970. As Philadelphia boss he cut a deal with Pittsburgh Democrats in 1971 to nominate one of two open state supreme court seats. Democrats at each end of the state would select a candidate.

Camiel picked Robert N.C. Nix, Jr., a black. Nix’s father, Robert N.C. Nix, Sr., was the state’s first black congressman, elected from Philadelphia in 1958. The Pittsburgh Democrats tried to balk at the prospect of running a black for supreme court, but Camiel held them to their agreement. Nix was elected and, by seniority, would become chief justice in 1984.

Chairman Camiel, meanwhile, deepened a feud with Philadelphia mayor Frank Rizzo. In 1973 he accused Rizzo of approaching him in the bathroom of the Bellevue Stratford Hotel and offering him control of the city’s architectural contracts if Rizzo could select the next nominee for city district attorney. This episode tarnished Rizzo’s Mr. Clean image, some say hurting his chances to become governor. Rizzo, in 1976, ousted Camiel as party chairman.

Hoping for a political comeback, Camiel won an appointment as turnpike commissioner. The comeback hit a snag with charges of corruption. On October 25, 1980, a federal jury convicted Camiel and two others on mail fraud charges. The feds accused them of placing thirty-six no-show “ghost” workers on the state senate payroll between 1974 and 1978.

Convicted with Camiel were state senator Vinnce Fumo, and senate majority leader Thomas Nolan. Fumo during some of the time in question had served as chairman Camiel’s patronage chief, with the title executive assistant in charge of patronage. The three had written letters requesting jobs for the no-show workers, hence the mail fraud charges. Some of the ghosts ended up working at Democratic party headquarters while others didn’t work at all.

Part of the trial centered on whether certain patronage practices may have still been legal at the time they were perpetrated. A city party official, referring to then-recent legislative patronage reforms, told reporters, “The case presented the thorny question of, ‘When they did what they did, was it considered illegal at the time or merely unethical?‘” It clearly was a case of old-time practices judged in the harsh light of a new day.

Camiel and Nolan took the jury’s guilty verdict like rocks. Reports had Fumo, then thirty-seven years old, “visibly shaken” by the jury’s decree. “I’m crushed,” he told reporters as he left the courthouse. “I feel just utter despair.”

Even before the verdict Fumo was reported to be considering getting out of politics. Politics was just getting too clean.

Convicted on all fifteen charges brought against him, Fumo faced seventy-five years in the pen and a $15,000 fine. His electorate seemed to take it in stride. He was re-elected a few days later, but was not sworn in pending appeal.

Governor Thornburgh had already suspended the indicted Pete Camiel from the Turnpike Commission. The Philadelphia Inquirer, meanwhile, boasted about a series of articles it had published that it claimed was responsible for the guilty verdicts.

Camiel Nolan and Fumo, as I say, appealed and, the next year, on August 4, 1981, federal judge Clifford Scott Green threw out the convictions.

In response to pre-trial motions, Green acquitted the three of fraud charges, citing not so much a lack of evidence as conflicting evidence. Some of the conspirators and unindicted co-conspirators hated each other, Green ruled, so he found it hard to believe they’d cooperate in any scheme. (One or two of those involved had earlier deposed Camiel from the county chairmanship.)

The prosecution had maintained there was one scheme, the defense said there was no scheme but, if there was, there were two unrelated schemes, while judge Green said evidence suggested there may have been as many as four separate schemes. Because the prosecution had developed evidence for one grand scam, the same evidence couldn’t be applied to prove several scams, Green ruled, and dismissed charges. It wasn’t exactly what you’d call a great moral victory.

The day after charges were dropped, the Inquirer, forgetting its earlier claim of proud responsibility for the convictions, ran a gushing puff-piece on Fumo.

The paper described him glowingly as Philadelphia’s wheeling and dealing “golden boy,” who somehow now stood redeemed and venerated. When he heard the charges against him had been thrown out, “I let go a lot of emotion,” Fumo told the Inquirer. “I cried for a while.” Now a free man, Fumo brimmed with all the possibilities of a fresh start. He’d finally be sworn in for another term in the state senate. From here out he’d be a man of the people, a reformer, he promised. “There’s a tax relief bill I want to get through,” he bubbled. “Oh, there’s just a lot of things, a long list.”

This wasn’t Fumo’s first brush with trouble. He’d resigned from his first stint in state government, as a commissioner in Gov. Milton Shapp’s office of professional and occupational affairs in the 70s. He’d been accused of using that office to spy on Shapp’s enemies. Even so, the Inquirer pointed out, no one ever alleged Fumo used his offices for “personal enrichment.”

Things weren’t so bright for Pete Camiel. Soon after the acquittal, turnpike chairman Jack Greenblat wrote governor Thornburgh to say Camiel would be reinstated as commissioner. Thornburgh objected, saying only he had the power to reinstate a commissioner. The governor said Camiel’s acquittal, caused by a variance between the crimes charged and those proven by the evidence, “appeared to be based more on a legal technicality than a finding of innocence.” Thornburgh cited a court ruling which, he said, empowered him to suspend anyone “for acts of misconduct that may fall short of an indictable offense.”

Republican Thornburgh directed Republican attorney general LeRoy Zimmerman to seek an immediate court injunction to prevent Democrat party boss Camiel from being reinstated to the Turnpike Commission.

There ensued a memorable partisan battle in the state courts. State lawyers, I’m told, to this day, still talk about the partisan “battle of the house judges.”

Each party reached for its own house judge to overrule the other party’s lower-court decision. (Republicans went to State Supreme Court Justice William Hutchinson, while the Democrats used Commonwealth Court President Judge James Crumlish.)

Observers say this fight over Camiel was actually an attempt by Thornburgh to gain more control over the commission, particularly the awarding of bonds. While the court battle raged the commission lacked votes. Thornburgh deliberately worsened the situation by instructing his representative on the commission not to vote, creating a lack of quorum. Without a working panel of commissioners the turnpike was paralized. Day to day business like the processing of purchase orders and hirings ground to a halt. Fidelity Bank of Philadelphia, the turnpike’s trustee, went to court to break the deadlock (some say Thornburgh encouraged the bank to sue). Thornburgh viewed the fight over Camiel as a bargaining chip to win more leverage (and largesse) in future turnpike battles.

The Battle of the House Judges culminated with Camiel issuing vague instructions to a young turnpike lawyer to telephone state Supreme Court Chief Justice Nix after hours for an emergency order that would serve to retain Camiel as commissioner. Nix, nominated to the court by Camiel, was only too happy to help his patron.

Chief Justice Nix went so far as to suggest the type of order which the young, befuddled and shaken turnpike attorney would best request. (Not long afterward Camiel got his own lawyer; the joke at the turnpike was that Chief Justice Nix called Camiel to say the young turnpike lawyer didn’t know what he was doing.) Camiel remained as commissioner.

This use of “house judges” continues to this day, with Gov. Tom Corbett’s selection of the friendly federal Middle District Court of Pennsylvania to hear his suspect anti-trust case against the NCAA, for example.

“Not illegal, but merely unethical” became the patronage battle cry at the turnpike, and throughout Pennsylvania’s courts for the next dozen years.

There have been relatively few prosecutions at the troubled state courts or, for that matter, throughout much of state government. This is not because those in government and on the courts are getting more honest — by all accounts they’re bravely crooked and getting braver. It’s not only because our law enforcement community has been so poorly and politically administered over the recent decades.

It’s mostly because we have created a political culture built on greed and selfishness. No one seems willing or able to draw the line between avarice and illegality.

There are no standards by which to measure proper conduct.

Postscript: In 2009 State Sen. Vince Fumo was finally convicted of “enriching himself.” Funo was found guilty of all 137 counts of political corruption brought against him by Republican U.S. Attorney Pat Meehan. Nevertheless, federal Judge Walter Buckwalter, of Lancaster County, and a graduate of F&M, sentenced Philly’s longtime political boss to only 55 months in Club Fed. Go figure.

The Peter J. Camiel Service Plaza meanwhile to this day is open 24/7/365, and serves the public at mile marker 304.8 of the Pennsylvania tunrpike, outside of Philadelphia.

Happy motoring!

by Bill Keisling

A public impeachment trial in the state senate is not only desirable in the case of Justice Melvin, but necessary.

For the second time in less than 20 years a Pennsylvania state Supreme Court Justice has been found guilty of criminal misconduct and is facing certain ouster or impeachment from the politicized and troubled state bench.

Almost immediately following Justice Joan Orie Melvin’s conviction in Pittsburgh last week, political operatives tied to the high court and the legislature put out demands in the press that Justice Melvin immediately resign, or face certain removal or impeachment.

We should have no doubt it would be best for politicians in all three branches of Pennsylvania government — the courts, the legislature, and the governor’s office — if Justice Melvin simply went quietly away into that good night.

But it would be best for the public, and perhaps for Justice Melvin’s family, if she stuck it out and demanded a full impeachment trial in the state senate.

It’s clear to just about everyone who’s followed their criminal cases that Justice Melvin and her sisters are victims of a suspect and tainted prosecution.

The justice and her two sisters — including former Republican state Senator Jane Orie — were improperly prosecuted by Allegheny County District Attorney Stephen Zappala Jr.

DA Zappala had obvious and unseemly personal conflicts of interest with the Orie sisters, who were long-time, and vocal, political opponents of DA Zappala’s family.

As such, the sisters are the latest victims in Pennsylvania of the misuse or appearance of misuse of a prosecutor’s great powers to settle scores and vendettas with political or personal enemies.

This was also a grave transgression of Republican Attorney General Tom Corbett during his run for governor.

Corbett, also from Allegheny County, went after Democratic enemies in the “Bonusgate” scandal, when he should have been going after Jerry Sandusky.

Ironically, former GOP Sen. Jane Orie was left untouched and protected by AG Corbett’s politically motivated “Bonusgate” prosecutions, as were other Corbett party members in the state senate.

The same witness that was ignored by a friendly Corbett was used by DA Zappala to convict Sen. Orie.

What led up to all this? It’s not a pretty story, and rather convoluted.

Before she was convicted in 2012, Sen. Orie was a critic of gambling expansion in the state.

Sen. Orie criticized the role of DA Zappala’s father — former Pennsylvania Chief Justice Stephen Zappala Sr. –for his mysterious paid work with the Pennsylvania Casino Association (PCA).

“It’s unclear what (the senior) Zappala did for the PCA; he’s not mentioned on its 2007 and 2008 federal tax forms,” the Allentown Morning Call pondered in 2010. “But Zappala and his daughter, Michelle Zappala Peck (the DA’s sister – ed.), the PCA’s bookkeeper, earned over $409,000 in 2008 even though the group did nothing publicly until October 2009, when it issued several press releases in support of table games legislation.”

Sen. Orie’s sister, Justice Melvin, also called for an audit of two private detention facilities that for years bribed Luzerne County judges to unlawfully incarcerate some 6,500 young people in the infamous Cash for Kids scandal.

The private detention firm at the heart of the scandal was co-owned by DA Zappala’s brother, Gregory Zappala, who has said he did nothing wrong. Zappala’s erstwhile partner was prosecuted and recently was released from federal prison.

For these obvious reasons alone, DA Zappala, or any prosecutor of integrity, should have recused himself from the Orie / Melvin prosecutions.

But the problems with the case run deeper than DA Zappala’s family conflicts of interest and long-running personal and political feuds with the Orie sisters.

The witness who got the ball rolling against the Orie sisters in the criminal cases — an intern named Jennifer Knapp Rioja who worked in state Senator Orie’s office — first complained about alleged improprieties involving politicking in the Ories’ offices to former attorney general Tom Corbett’s office.

As the Washington Post related in 2010, “Jennifer Knapp Rioja, the intern whose complaint started the investigation, insists that the first call she made was not to the Allegheny County District Attorney’s office but rather to the state Attorney General’s office..

“The biggest question coming out of all of this?” asks the Washington Post. “How in the world did Attorney General Tom Corbett’s office miss this? In his nearly three-year-long ‘mission’ to ‘clean up’ Harrisburg, he’s gone after some of the biggest fish in the Capitol. It doesn’t get much bigger than the woman who, at the time of her indictment, was the senate majority whip, the No. 3 Republican in the chamber.”

Why then did AG Corbett turn away witness Knapp Rioja?

It’s obvious. In order to help ease his path to the governor’s office, Corbett protected his cronies in the Republican-controlled state senate from investigation and prosecution.

Like DA Zappala, Corbett was more interested in prosecuting his political and personal enemies – prominent Democrats in the General Assembly — for these same offenses.

Tom Corbett, the record is clear, protected GOP allies like Orie in the state senate.

As we see here, the question in Pennsylvania increasingly appears to be not whether you have broken a law, but who you know, who you don’t know, and whether you have rocked a boat, or gone along.

These are some of the issues that should rightfully be addressed at a full impeachment trial of Justice Melvin in the state senate.

An impeachment trial in the state senate would no doubt be uncomfortable, to say the very least, for many politically protected state senators, their staffers, and Gov. Tom Corbett.

Political court operatives meanwhile threaten to short-circuit any highly embarrassing impeachment trial in the senate.

Their preferred plan is to dispose of Justice Melvin by misusing the court’s comatose and politically motivated Judicial Conduct Board to remove her quickly, before any more embarrassing information can be made public in an open impeachment trial.

But Justice Melvin, we should remember, has the right to appeal her conviction, as does any defendant. She also has 30 days after her conviction to respond to a Conduct Board complaint against her.

Justice Melvin’s sentencing won’t occur until May 7. Her conviction, by state law, and her rights of appeal, won’t even take effect until her sentence has been pronounced in May.

It’s worth remembering that former Justice Rolf Larsen was removed from the bench in a senate impeachment trial in 1994 only after he was criminally convicted for drug charges, and was awaiting his appeal.

So there are strong procedural comparisons to Melvin and Larsen’s predicaments.

A criminal conviction and a pending appeal, historically, are grounds for a public legislative impeachment, not a secretive Judicial Conduct Board proceeding.

There are other problems, both obvious and not so obvious, with a secretive Judicial Conduct Board disposition. Judicial Conduct Board proceedings typically can be tied up for months, or years. It’s called “due process.

As well, in the last few decades, the Judicial Conduct Board, like AG Corbett, has earned a reputation for protecting cronies, and going after only enemies of the court. That should not be allowed to happen in Justice Melvin’s case.

All of which means that a public impeachment trial in the state senate may not only be desirable, but is necessary to get to the bottom of things.

A public impeachment trial in the state senate would open a window and shine light on misbehavior at the highest levels of state and Allegheny County government.

It’s clearly in the interest of justice, and the public interest, to have a full trial in the state senate to air the case against the Orie sisters, and their prosecution at the hands of an unethical political, and personal enemy.

Ironically, in the mid-1990s, the Zappala family’s antics took center stage at the state senate impeachment trial of Justice Rolf Larsen.

At the time, critics of the court, like Common Cause Pennsylvania, suggested the Zappalas should have been more fully investigated and, like Larsen, removed from positions of public responsibility.

Should Justice Melvin assert her right to a full trial in the state senate, the Zappala family again will take center stage, and it will be déjà vu all over again.

The question then will be: why weren’t these problems involving these same individuals not properly addressed by the legislature in the 1990s, during the senate trial of Justice Larsen?

And did the legislature’s failure to act properly in the 1990s cause the problems we face today?

EDITOR: Bill Keisling is the author of “We All Fall Down”, the story of the impeachment of Pennsylvania state Supreme Court Justice Rolf Larsen, a once-popular Pittsburgh jurist. Keisling’s account suggests that Larsen’s impeachment was a blemish on democracy that should concern all Americans. Keisling describes the breakdown of nearly every democratic institution in the state that cradled American democracy.