Last Week's Financial Fireworks, Part II

The resolution authorizing the City of Pittsburgh to enter into an agreement with nonprofit institutions to document a commitment made by these organizations to provide limited voluntary financial assistance to the City for the years 2008, 2009 and 2010...

...in lieu of, I presume, the possibility of instituting other mechanisms of revenue collection on some of them during those coming years #cough# taxes #cough# service charges...

... was held pending its own special post-agenda discussion by the Council, which has been scheduled for April 30 [.pdf].

Highlights:

Theresa Smith was the first to speak against consummating the voluntary agreement. She said she would feel "hypocritical in accepting this money today" in light of the fact that the Council recently set aside legislation making it easier for seniors to receive a tax break owed them under State Act 77.

Bill Peduto very much approved of the idea of a special meeting: he said he has "files and files" of data on our present arrangements with the nonprofit community and what those might instead become, and was keen to have the forum to lay it all out.

Darlene Harris offered, "When I see commercials in the middle of a Superbowl, and the City isn't getting anything..." and she just trailed off in exasperation. She was in no hurry to approve the agreement before the Council.

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Then the previously tabled ordinance (Dowd's originally) providing that the City Treasurer take responsibility for according State Act 77 property tax breaks to eligible seniors, instead of having them apply for it separately each year, was revived for its own post-agenda discussion: a week sooner, on April 21 [.pdf].

Prompted by this renewed interest, Ricky Burgess mentioned his shelved legislation requiring "revenue-neutral budget conciliation". He is leery of the financial implications that the facilitation of this existing tax break, as one example, would have on the city's new 5-Year Plan.

Patrick Dowd, in response to Burgess's keen interest in keeping the 5-Year Plan scrupulously balanced with itself, said, "I feel like this budget is based on false revenues and hidden expenditures."

Dowd leveled the following criticisms of the plan and its utility:

1) Pittsburgh employs no facilities maintenance plan -- even though every year, Pittsburgh does wind up allocating significant resources to fix up its public buildings. The strategy for doing so year-by-year is never presented, and the expenditures appear nowhere in our annual budget document.

2) Payments coming in from other entities are over relied-upon to inflate the budget. Ratepayers from the Penn American water company, Dowd said in particular, are required to prop up the budget each year. Past payments from the city's School District were also mentioned.

3) The City, he alleged, has been annually declaring certain incoming moneys as "revenue" -- even though these are really "pass-through" moneys which are predestined to leave the city's hands and go on to their intended targets.

"The reason we're in this situation," Dowd said in conclusion, referring to the acuteness of our continued financial jeopardy, "is because it's a shell game". Neither Burgess nor anyone else said anything in response to those criticisms. Revenue-neutral budget conciliation has yet to be scheduled for any further discussion.

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Lastly, bonds. Water Authority bonds.

The "forward bond swap took place in 2007," as Dowd described the genesis of the deal -- what came later was "the second sort-of-necessary component" to yield $2 million in short-term savings in 2008.

It was merely this back-end of the bond swap, in other words, that Dowd voted to approve as a Council member.

Aside from that, he acknowledged a lot of discomfort talking about it at the table, since he has already raised the issue so vociferously through the press as a component of his mayoral campaign. Relatively briefly and sheepishly, he urged the Council to empower the Controller put a $15,000 contract up for bid for the purposes of fiscally auditing Water Authority bond "swaptions", including at least the swap of 2007-2008.

Jim Motznik was the first to protest: "I don't support using tax dollars" to conduct the audit, he said.

"The Water and Sewer Authority should vote on it. If they voted it down, I'm sure there was a reason."

Darlene Harris then called attention to Dowd's vote in April of 2008 to approve what he just had termed "the second sort-of necessary component" of a "2007 forward swap deal". She had a great many notes arrayed before her, to which she referred to underline and italicize that arguable inconsistency.

"On April 29th, you said..." Harris would begin, time and again. It was almost always April 29th, but she sounded genuinely miffed.

Harris also bemoaned how long it was already taking the Controller's office to get around to an audit of Animal Rescue services she had requested, and still other audits in line.

Doug Shields on the other hand said upon his turn, "I don't have a problem with it."

Referring back to the time the deal was struck, Shields recalled, "We asked what's the deal. They didn't want to give us the information then."

Shields then let loose an interesting bit of data as he was explaining his position. "If the Budget Director thought it was okay to loan $45 million to the Water Authority..."

Some background: Scott Kunka serves both as Mayor Ravenstahl's Budget Director, and at the pleasure of the Mayor as a Water & Sewer Authority board member. $45 million is the same sum we remember from Ravenstahl and the ICA's proposed debt assurance account. There have been rumors floating around that yet another Water Authority bond machination was the original intent of what Kunka has been describing as the City's "extra" $45 million -- that is, until the Mayor appointed Dowd to the Water Authority board late last year, and the deal subsequently was discarded.

"There's some smoke there," offered Shields, by way of wrapping things up.

Bill Peduto then recalled for us that when the deal in question originally came to Council, he was "shouting at the Budget Director, at [State Rep. Don] Walko," who chairs the Pittsburgh Water and Sewer Authority (PWSA). Apparently, useful information was not forthcoming in as timely a manner as Councilman Peduto would have liked.

"We are the government," Peduto clarified, perhaps for Councilman Motznik's benefit. "We must oversee that."

Peduto further alleged that the audit "will also look at" a bond deal/deals struck in the autumn of 2006.

The discussion having come back around to his turn, Dowd repeated his defense of the familiar criticism that has been making the rounds, which was now arising from a fellow Council member at the table: that he voiced support for the bond deal along with a unanimous Council in April 2008.

"If you don't do it in '08", Dowd reiterated, by which he meant go through with the back-end of a forward-bond swap from the previous year, "You don't get the savings projected in '07."

Dowd also clarified that the audit he is proposing would be performed by an outside agency via an RFP, not by Controller Lamb himself -- so it would not delay other pending audits.

Harris then objected that "using words like bankrupt" (which Dowd has been known to use in the media) is "damaging to the PWSA". She warned of the bad impact this could have on the Authority's credit rating, and thus its ability to sell bonds in the future.

After further assailing "that inaccurate information" of Dowd's, and pointing out again that the City Controller is backed up on audits, Darlene Harris concluded, "It's just a bad time."

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Doug Shields opined that "rating agencies take public comment with a grain of salt -- it's whether you've got a market, and the underlying financials."

Shields went on, "as far as the bond markets go, I trust them as far as I can throw them." And once again, on the audit, "I don't think it's a bad idea."

Theresa Smith said of Dowd's proposed audit, "I think it's a good idea," but "I do think we need to wait until some of the audits come back."

The preliminary vote to perform the audit went as follows: Ayes 3 (Shields, Peduto, Dowd), Nays 4 (Motznik, Payne, Harris, Smith), Kraus not present, Burgess not present. The final vote probably will be conducted on Tuesday.
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Our People In Uniform

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Pittsburgh Chief of Police Nate Harper accepts condolences and gratitude in front of the City-County Building, and is even asked for an autograph.

The period for public viewing of the caskets of Pittsburgh's fallen heroes is now underway concluded, unless otherwise informed. People are invited to pay their respects on the 1st floor of the building until 10:00 AM Thursday morning, when a funeral procession at noon will head north on Grant St. and wind around to the Peterson Events Center in Oakland. (Post-Gazette map)

Meanwhile, off the coast of Somalia, the American container vessel Maersk Alabama was today boarded and taken by pirates. The crew has since retaken the ship -- but as the pirates fled they were able to take the ship's captain hostage. More officers in uniform are being called upon to protect us, and the story is developing. (NYTimes)

Last Week's Financial Fireworks, Part I

Several interesting discussions took place on Wednesday, April 1st, during City Council's standing committee meetings.

First came the administration's request of the Council to sign off on an agreement with the ICA which would place $45.3 in something akin to an irrevocable trust fund; or "set-aside money" for repayment of debt, according to Finance Director Scott Kunka.

Kunka explained that although the financial markets have conspired to make it impossible to leverage $5 million savings off of this in the manner outlined in the 2009 budget projections, another refinancing opportunity has been identified for 2012 that also would make profitable use of these funds.

Councilman Patrick Dowd responded during his turn that it was "good to hear you acknowledge that at long last", and that "that was my expressed concern at the time" -- October 2008, during annual budget hearings. The majority of Council approved Mayor Ravenstahl's budget over Councilmen Dowd's and Peduto's objections.

Since the money was transferred to a different city account right as those talks were taking place, Dowd asked Controller Michael Lamb if the agreement has essentially been enacted already.

"We haven't done that", Lamb clarified -- it is not secured under terms of the agreement which has yet to be consummated.

Kunka tried to make some clarifications about what appears in the "draft agreement". Councilman Doug Shields cut in out-of-turn to implore Kunka to cease calling it a "draft" agreement. "No one signs and executes a 'draft' agreement", Shields insisted. Some cross-talk ensued.

Kunka at length rallied to clarify that the Finance Department has created an account for the vehicle, but hasn't put the money in it yet. Dowd asked Kunka that if by putting the money into that account, would that be what the ICA had once referred to as the "fund in the nature of an irrevocable trust" which is designed to "lock the money away" for debt.

"That's your characterization, Doctor Dowd" began Kunka -- which prompted Dowd to clarify,"Councilman Dowd. I'm a Councilman."

Councilman Jim Motznik then jumped in out of turn to deplore the "personal attacks" at the table.

Peduto gently tapped the gavel, begging "Guys guys guys guys," and explaining for the record that there have been no "personal attacks" made.

Dowd asked Kunka who would get to decide to use the money in that fund and what it would be able to be used for; he pointed out that the 5-year forecast calls for it to be used for "certain obligations" but that alone. He also wanted to know the deadline for using this money, since the ICA potentially could cease to exist in 2011. Dowd also revealed a hard-line position in favor of "locking it away" for debt.

Kunka opined that to lock the money is "really not prudent". And as to putting it away under a formal financial defeasement agreement, "Why put it in another account with new fees?"

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Dowd yielded for the moment and Shields took his turn. After arguing with the City Solicitor at length over the meaning of "draft agreement" -- this appellation for the agreement obviously irritated him -- Shields also contended that the $45.3 million transfer that had already taken place in 2008 was illegal. "But here we are."

Nonetheless, the Council "graciously" approved the 2009 budget, Shields said, in part because some members recognize the possibility of a force majore which would require breaking into the piggybank. What he wanted to know was, much like Patrick Dowd, what are the proposed parameters for who gets to make those decisions.

Kunka insisted that the preparatory transfer that had already taken place was not illegal and that the parameters for the funds is clear in the agreement -- it would take the "City's" and the ICA's joint approval, and it would only go to pay down debt.

Shields said rather this agreement would merely "a-ssure" people (as opposed to en-sure) that Pittsburgh has set aside money to pay down debt -- and critically, a role for Council is not specified. He alluded to some "tax issues in Alabama", and complained that the administration has held up the Council's duly budgeted hiring of a city attorney for three months, who might help in these matters.

Shields demanded a motion to hold the bill until these matters were addressed. No second was forthcoming at that time. Finance Chair Councilman Bill Peduto cut him off for time purposes and proceeded to Councilwoman Darlene Harris's turn.

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Harris asked Lamb directly, was the initial money transfer illegal? Lamb said, "No, we move money all the time."

Kunka chimed in that other cities are talking about layoffs, and we're talking about how to spend "an extra $45 million the City's been able to accumulate."

Harris began asking if the Council would have to approve an expenditure from the special $45M debt assurance account, and Kunka answered that the administration would be limited by Council's appropriation. They can't spend money if the Council doesn't ask for something generally. Also, it itself can be used to make annual debt service payments.

So the way that would work (if I understand correctly) is that money would be withdrawn by the Mayor and the ICA from the ordinary debt service fund for anything the City decides to spend money on, and then money would be transferred from the $45M special account to replenish the ordinary debt service account. So in the final analysis, yes the fund could be expended on anything the City routinely desires, at the Mayor's and the ICA's joint discretion.

Councilman Ricky Burgess began by saying he's "a great fan of Mr. Shields." That's he's "extraordinarily knowledgeable", and a real "treasure" to the City of Pittsburgh for these reasons. He then asked Controller Lamb directly if he has a problem with the agreement.

"I don't have a problem with it per se," responded Lamb. "I think we should lock it away," meaning in a real irrevocable debt defeasement account -- this would enable the city to truly write debt off its books, which he described as a "technicality". The suggested method may be "Okay from the Finance Department's cash-management system", but not from "the point of view of City financial reports." But aside from that "philosophical" issue which he does not get to decide, the agreement on the table is not problematic in itself.

As to Burgess's question what would happen if the ICA sunsets and dissolves, Lamb (or was it Specter?) said he believes actually the City Controller steps into that role.

"Okay," began Burgess. "You three say we can approve this. If the Controller had a problem, I'd say no. Or Specter." Or the administration's Director Kunka, the third. And so Burgess left the impression he'd be supportive of the agreement.

Then he floated a proposal of the approximate type he has made in the past and says he will continue to make in the future -- that all future casino revenue should go right into debt service. Does anyone at the table have sympathy for that idea, Burgess asked?

"Sympathy would be the right word, yes," said Kunka, smiling broadly.

Lamb clarified that $10 million of that was already factored in to the 5-year plan. Burgess appreciated that input, but suggested that anything in excess of that sum also should go toward debt service.

Motznik chimed in to agree with Burgess's comments, and to emphasize that the City is "saving a lot" on this deal. He asked that for casino revenue, maybe it should be split between debt and pension funds. "We're all gonna be using that pension fund one day."

Councilman Peduto used his turn to say he voted against the 2009 budget for these very concerns. He agrees with Lamb on the "philosophical" distinction of the need to lock money away. Furthermore, by not mentioning a role for Council, he opined that Part 2 and Part 5 of the agreement could run afoul of the Home Rule Charter. He said he would support Mr. Shields's recommendation to hold the legislation.

Back again to Dowd: he said, "the agreement is the crux of the 5-year plan", it's "foundation". He supports the fund "in concept", but the way it's being done is with a "lack of accountability." "We're just handing it over and hoping." There is "no mechanism for holding the Mayor or the ICA accountable" for what they choose to spend it on.

Furthermore, Dowd alleged there's not sufficient detail as to what debt is going to be repaid. If 2012 "is so ripe and good, we should tie it down." In short, it's missing a time frame, a series of bonds, and projected savings calculations. That gets back to accountability.

Harris declared her intention to vote yes on the preliminary vote, but to get together with Shields and Peduto during the week-long interim before final action to attempt to improve the agreement with respect to their reservations about it.

Councilwoman Smith said the same thing.

Councilwoman Payne asked, "I thought accountability was in that it could only be used for debt."

Kunka said, "The point is, we don't -- we want to have the flexibility."

Shields motioned to hold the legislation up again. "We all want to see things moved along," he allowed, but if the legislation does not change in a week, "then it'll be a recommital" at final action, meaning back to the drawing board anyway. He said the ICA was open to making certain alterations, but it would take some time and serious attention. This time Shields's motion got a second from Dowd, so it was voted upon.

On the motion to hold: Ayes 3 (Shields, Peduto, Dowd), Nos 5 (Motznik, Payne, Harris, Burgess, Smith). Kraus not present.

On the ensuing motion to grant preliminarily approval to the agreement: Ayes 5 (same as nays above), Nos 2 (Shields and Dowd). Peduto abstained in the spirit of trying to "work with the administration."

Next on the agenda would come: whether or not to levy payroll preparation taxes or certain fees on certain non-profits, the possibility of instituting revenue-neutral budget conciliation, and a proposed audit for the 2007 PWSA bond swap deal.

How to Help

Officials have set up something called the Pittsburgh Fallen Heroes Fund to accept donations from those wishing to support the loved ones of officers Eric Kelly, Paul Sciullo and Stephen Mayhle.

Mayor Ravenstahl says the public can designate how the money is spent, if they'd like.

"We encourage them to include that information, for example: 'For the children,' 'For the mothers,' 'For the widows,' et cetera, Ravenstahl added. "They can designate on the college fund for the children if they so choose." (KDKA)

A link to a fund website should be available through the Fraternal Order of Police site soon; keep checking patiently. Meanwhile, donations can be sent to the following address:

Pittsburgh Fallen Heroes Fund
Greater Pittsburgh Police Federal Credit Union
1338 Chartiers Avenue
Pittsburgh, PA 15220

Sunday Monday: Life Marches On...**

Tomorrow Today -- Monday, April 6th -- City Council will hold a public hearing on proposed amendments to the city's Code of Conduct (i.e., "New ethics legislation") at 1:30 PM. *-UPDATE: Hearing to be rescheduled (Trib). Links:

Ordinance with proposed amendments (PDF)

Commentary on 'City Ethics', and the Council's new amendments

Notes and commentary on the Post-Agenda (mid-post)

This hearing won't be anywhere nearly as well-attended as more notable public hearings have been (Exhibit A, Exhibit B), but all the same if this issue speaks to you, do drop in and avail yourselves of your 1-3 minutes of face time with the Council.

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No slight to anyone else -- but if I had to nominate one blog post by which to judge the local Internet's reaction to the awful news, it would be this one.

Meanwhile, in due time, the incident will compel us toward yet another contentious debate about gun control -- one side rightly motivated to demand stricter regulations on assault weapons, and the other side almost as rightly offended by first one's attempt to "capitalize" on tragedy. Infinonymous opens this discussion for any of you who are interested, but only after taking a merciless look at the sick mind that committed these heinous acts.

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By way of transition...

But here's a thought. Instead of making what is expected to be a $4.1 million investment that fattens the bottom line of an out-of-state surveillance company, why not invest that money into the hiring and training of cops who are willing and able to work with the people in troubled neighborhoods to make those communities better? (P-G, Tony Norman)

Yes please. I am especially not a fan of those security cameras which will be operated by "community groups". And Tony's right -- we don't really have a ton of evidence on crime fighting efficacy.

MORE NEWS...

- City Council declined by a margin of 3-4 in a preliminary vote to spend $15,000 to audit the $414 million, poorly-understood-by-everyone-at-the-time, possibly legally questionable Water Authority bond deal. Council members Shields, Peduto and Dowd voted in favor; Council member Motznik, Payne, Deasy Smith and Harris voted against. (P-G, Rich Lord)

- City Controller Michael Lamb suggests levying a payroll preparation tax (h/t Ed Heath) on certain non-profits instead of just asking them quietly behind closed doors for a tiny voluntary donation. Almost everyone is speaking positively about the idea. Almost. (P-G, Rich Lord)

- Remember that week we were all concerned about the McArdle Roadway? Well, it's due to get a $1 million fixup, but there's a legitimate question of whether or not that's sort of throwing o.k. money after bad. (15211.org)

ALSO: I should add that City Public Works Dir. of Operations Rob Kaczorowski informed us a few weeks ago that hillside and drainage remediation AND transition to a concrete driving surface were both actively on-the-table of federal stimulus talks -- though concrete would require driving huge slabs of concrete into the earth, which sounds to me personally like making a burdensome project extra-super burdensome. But hey, if we're being stimulated.

- The URA is considering a $300,000 grant for one of the three hotel projects in the works in East Liberty. Also on the agenda for Tuesday is some business with Millcraft. (P-G, Mark Belko)

- The P-G Edit Board continues not to get it on this issue. I want City/County consolidation also, much in the same way I desire peace in the Middle East. But I'm not about to fly to the Holy Land, sequester the principals in a room, and clunk their heads together like Moe from the Three Stooges. The sooner we forget this whole approach, the sooner we can start building agreements from the ground up. (P-G, Edit Board)

And now...

OZYMANDIAS for MAYOR

Let him solve our problems.

The first MAYORAL DEBATE between Luke Ravenstahl, Patrick Dowd and Carmen Robinson is scheduled for TOMORROW, April 6th at 7PM on PCNC. Party time, party time.

**-UPDATE: Debate canceled for obvious reasons. (Trib, Jeremy Boren) Debate rescheduled for May 4th.

PCNC is a strange channel. Fully concluding all three debates a whole month before the election is a peculiar arrangement. The fact that we can submit video questions for one of them over the Internet is truly laudable.

FINALLY...

After writing this post, I briefly informed Comet Senior Political Analyst Morton Reichbaum of news that Patrick Dowd publicly implicated the Zappalas, Mossie Murphy, others, Greg Zappala, Mossie Murphy and others in a shady and rapacious municipal bond swap deal.

"Mossie Murphy?" Mort started. "God, I haven't heard that name in a hundred years."

"He was like a -- a political pundit, years and years ago," Reichbaum remembers. "How he ever got involved in stuff like this, I don't know."

I asked him on which television, radio, or print media outlet we might have found him. "All over the place. Kind of like Bill Green," Mort replied.

"You know, now that I think of it, he was real palsy-walsy with a lot of guys in City Hall. A real Pittsburgh character. You know who would know more about him," Mort suggested -- and he enjoys talking like this -- "your friends Bill Green and Jon Delano."

Now, we may well have However, we both fell prey to a case of mistaken identity. This 2006 Trib article makes mention of a this Mossie Murphy that is a "son of the legendary Pittsburgh rainmaker and political consultant".

Complaints originating in Northhampton County, PA in regards to bond "swaptions" tied to Maurice "Mossie" Murphy and Merrill Lynch have been discovered by the Comet here.

The Poplawski Shooting

The first lines of something called "Policeman's Prayer"...

When I start my tour of duty God
wherever crime may be,
As I walk the darkened streets alone,
let me be close to Thee.

The Zappalas: Influence, Big Business, Exploitation and Vulgar Silence

The Zappala family is best known as a legal and judicial powerhouse encompassing a former Pennsylvania Supreme Court Justice, the current Allegheny County District Attorney and a present candidate for judge on the Court of Common Pleas.

Its also encompasses family members who deal in sweeping business interests -- not only in Pittsburgh, but sprawling ventures impacting the breadth of the Commonwealth which can best be described as controversial.

One of those business endeavors has just set off a tripwire on the contentious City of Pittsburgh political landscape. Others continue to be alarming.

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First let us make some distinctions.

One business and lobbying-oriented family member is Charles Zappala, brother to Supreme Court justice Stephen Zappala, Sr. Charles Zappala, for example, was tapped to be a 9% investor in the would-be Harrahs casino project in Station Square, care of Forest City Enterprises. An occasional business partner, Squirrel Hill insurance broker turned political player and financier William Lieberman, also was accorded a prospective 9% stake. The casino license went to Don Barden and the Majestic Star on the North Shore after former mayor Tom Murphy floated suspicions that "the fix was in" for Harrah's.

Another one is Greg Zappala, son to Stephen Zappala, Sr. and brother to Allegheny County District Attorney Stephen Zappala, Jr.

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Patrick Dowd started it. An as-yet unidentified Channel 11 News reporter made it happen.

Mark Ratuerkus & Running Mates provides the video. I don't know if WPXI carried it on-air, or if any of the other news outlets attending the press conference utilized it.

WPXI: Alright. Who's doing the bond deal, who did the deal?

Dowd: The folks who were associated with that: Merrill Lynch and JPMorgan. Go back and look at the names of the people that pitched the deal to the city.

WPXI: No, I want you to tell me. I want you to...

Dowd: I believe the Zappalas and Mossie Murphy were people -- two people among others who were associated with that deal. Greg Zappala, Mossie Murphy, others. (video)

"The Zappalas", he said.

WPXI: Are you suggesting that something was wrong with the deal?

Dowd: I think people need to take a look at it. We need to look in to that. I've called for an audit, I hope we get a chance to review it. I think we need to think about who did that deal and why it was done... but most importantly, my number one concern and I've said this before, repeatedly, going forward. How are we going to solve the problem of that bond deal. It's going to end up costing taxpayers more and more money. (ibid)

The known, potential and likely effects of the deal have been previously covered.

Pittsburgh is only one among many places in the Commonwealth of Pennsylvania in which public officials are feeling duped and taken advantage of by RRZ and by JPMorgan -- together.

JPMorgan turned to other politically connected friends to win contracts in Western Pennsylvania in 2003. That year, it bought Cranberry Township-based underwriter RRZ Public Markets Inc., near Pittsburgh.

Greg Zappala, the son of former Pennsylvania Supreme Court Chief Justice Stephen Zappala and the brother of the Allegheny County district attorney, brought his local government clients to the Wall Street bank. Along with them, according to two lawsuits, came windfall profits on derivative deals.

Zappala urged the Butler Area School District, in the countryside 40 miles (64 kilometers) north of Pittsburgh, to take cash out of bonds that couldn't be refinanced until 2008. (Bloomberg, Selway and Braun)

The article goes on and on and on. To give you an idea, starting at this point, the ensuing sections are headlined as follows: Bank Got More, Inappropriate Transactions, 'They Assured Me', Conflict of Interest, 'I Can't Quantify That', $5.4 Billion in Swaps, $100 Million More (that one deals with Jefferson County, Alabama), 'We Were Boxed', and 'Overwhelming Greed'.

JPMorgan, which, like other banks, balances the swaps by selling similar derivative deals on the open market, took a fee of $1.23 million, according to data compiled by Bloomberg. That's almost 10 times the fair rate, according to a lawsuit filed by the (Erie) school district against JPMorgan and its adviser in federal court.

There had been no court-filed responses as of mid- October. DiCarlo, Zappala and IMAGE didn't return requests for comment. (ibid)

Two well-placed sources who wish to remain anonymous further confirm to the Comet that RRZ was more generally pushing these bond deals aggressively all over the Commonwealth.

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More about that RRZ outfit.

The residents in the neighborhood did not know what was being built at Front and Thurlow streets, and the sign that read Delaware County Resource Recovery Facility gave no real indication of what the facility actually was. They had no idea how enormous the facility would be, or how much it would affect their daily lives. By 1991 the construction of the incinerator was complete. In a feeble attempt to win over the residents, Westinghouse provided free hot dogs, sodas, and balloons at the grand opening celebration.

The towering furnace across the street was an imposing sight for the residents of Front, Thurlow, Booth, 2nd, and 3rd streets and Highland Avenue. As the 300+ trash trucks per day began rumbling down their neighborhood streets on their way into and out of the Westinghouse site, the residents of the west-end of Chester started to feel the full impact of their new unwanted neighbor: the truck traffic from LCA Leasing and Abbonizio was increased many times over, the trash odors began competing with DelCora's sewage odors as the worst in the neighborhood. (EJNet, Russell)

Many other subsidiaries of the interconnected RRZ waste management empire were opening up operations nearby.

On December 18, 1992, all of the City Council members except for the mayor sent a letter to the governor and to the DER asking them to expedite the permitting of Thermal Pure. Holding no public hearing, the DER granted Thermal Pure a permit. State law instructs the DER to hold a public hearing as part of the permitting process when the permit is controversial or there is known public opposition. By not holding a public hearing, DER was saying that there was no known public opposition to Thermal-Pure, in spite of the 500+ signatures they had in opposition to BioMed.

In 1993, Thermal Pure Systems was permitted to sterilize 4 to 5 times the amount of infectious waste produced in the entire state of Pennsylvania -- 288 tons per day. Under state law, any incinerator or other disposer of medical waste can only take in 70% of the waste produced in that section of the state. This law suggests that Thermal Pure should only be able to process about 29 tons per day, or 10% of their permitted capacity. CRCQL sued the state on the basis of that claim, and the Commonwealth Court of Pennsylvania ruled in their favor. Thermal Pure was ordered to shut down because their permit was deemed invalid. (ibid)

Now get this.

But the Pennsylvania Supreme Court, using its King's Bench Power, snatched the case out of the Commonwealth Court and granted a stay on the order to shut down Thermal Pure. Recently, that same court overturned the Commonwealth Court's decision, re-validating Thermal Pure's permit.

Not coincidentally, one of the State Supreme Court Justices is named Stephen Zappala, brother of the partner in Russell, Rea, and Zappala. While Justice Zappala recused himself from the case, he clearly exercised his influence by convincing the court to use the outdated King's Bench statute.

While the Thermal Pure battle was underway, CRCQL had found out that Soil Remediations Services, a contaminated soil burning plant, was seeking a permit to operate behind Thermal Pure. SRS, the next in a seemingly endless line of waste industries trying to site in Chester, received immediate and intense opposition from the a now more organized CRCQL. Petitions, protests, and testimony at public hearing combined to send a clear message to SRS and DEP that the community did not want another polluter. In a strange twist of fate, the residents were able to convince all five members of City Council to oppose the permitting of SRS. (ibid)

A strange twist of fate indeed. Funny how those work.

The story continues. The community of Chester and Delaware County is obviously desperate to defend itself, and well-enough organized to do so.

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Finally, there is the matter of these juvenile detention facilities.

Judge Mark A. Ciavarella and former Senior Judge Michael T. Conahan are accused of taking $2.6 million for sending children to two facilities owned by Pittsburgh businessman Greg Zappala.

Judges Ciavarella and Conahan each could face prison terms of up to seven and three months, according to the terms of plea agreements they signed last week.

No charges have been filed against Mr. Zappala, who is the brother of Allegheny County District Attorney Stephen A. Zappala Jr. and son of former state Supreme Court Justice Stephen A. Zappala Sr. (P-G, Tracie Mauriello)

So it is a crime to accept kickbacks, but paying them out is tolerable?

Meanwhile, the state Supreme Court has agreed to review all juvenile cases adjudicated in Luzerne County during in the last five years.

That's good news to parents such as Susan Mishanski, whose 17-year-old son was sentenced by Judge Ciavarella last year to 90 days in a juvenile facility in Carbon County.

She said the punishment was excessive and that it traumatized her son, a first-time offender who was expecting community service or a fine for punishing another boy last year. Instead, he was taken from the courtroom in shackles and brought to Camp Adams, where he was beaten by other teenagers, forced to wear ripped clothes four sizes too big and permitted visitors only twice a month for an hour, she said.

"He was humiliated and he was scared," said Ms. Mishanski of Luzerne County. "I'm absolutely thrilled now that [these judges] got caught." (ibid)

Further allegations emerged as the accused started pleading guilty.

Judge Ciavarella and a co-conspirator, former Luzerne County Senior Judge Michael T. Conahan, agreed in their plea deal to serve a little more than 7 years in prison and to be disbarred. (P-G, Tracie Mauriello 2)

Elsewhere in that article:

Dan Fee, a spokesman for Greg Zappala, said Mr. Zappala had no knowledge of the payments to the judges. Mr. Zappala has not been accused of any wrongdoing and is not a target of the investigation, according to a source close to the federal probe.

Attorneys for Mr. Zappala's former partner in the centers, Hazleton attorney Robert Powell, have said Mr. Powell made payments to the Luzerne judges. But they also called Mr. Powell a victim of extortion, and said he ultimately reported the shakedown to authorities. (ibid)

Again, these are the folks that sold Pittsburgh's Water Authority a bill of goods. I suppose they'll be deserving of a bailout.

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Some of this material has recently been discussed on an electornic bulletin board hosted by the Meadville Tribune. Here is how one reader put it:

But the vulgar silence on this issue is revolting. Have we become so self absorbed that we cannot see how those with influence continue to profit from our sheeple mentality, realizing that their crimes will go unpunished because either no one is paying attention, or the masses have become so accustomed to this type of behavior that even a horrific crime like this against children does not cause them to so much as raise an eyebrow let alone ask questions? If we don't challenge this type of abuse of power, then we deserve everything they do to us! (Meadville Tribune commenter)

Remember that Charles Zappala is a business partner of William Lieberman. Lieberman is the former chairman of the Intergovernmental Coooperation Authority (ICA), and has been the primary backer of its longtime Executive Director, Henry Sciortino.

Although I conducted primary interview research during my examination of Mr. Sciortino, I did not reach out to Mr. Zappala (nor to any Zappala, nor a Lieberman) for this blog post. The way I figure it, Greg Zapalla already turned down Bloomberg on this topic, and I wasn't in the mood for frustration. An expanse of information exists, and time is decidedly a factor.

We have the time.

There is much folklore about "the political machine", and certainly the Democratic party committee -- county and state -- is in one sense the machine, along with the elected officials they sponsor. Yet members of these parts of the machine by and large are not the machine operators -- not whom it ultimately serves.

The political superstructure actually accrues to the benefit of surprisingly few individuals -- lobbyists, financiers, industry leaders and power brokers -- roughly a third of which, by some estimates, may be Zappalas.

Lieberman is one example of another prominent figure in this much-discussed constellation of influence. He has the noteworthy and unfortunate distinction of having been a significant fundraiser for convicted State Sen. Vincent Fumo, among others. Among political wags, other local names discussed occasionally as stars unto themselves include John Verbanac and Ed Grattan.