Financially Distressed Cities Isolate Poor and Minorities, Former Receiver Says

Segregated minority and poor populations foster municipal distress, according to the former receiver for the city of Harrisburg, Pa.
by | March 18, 2013

Segregated minority and poor populations foster municipal distress, according to the former receiver for the city of Harrisburg, Pa.

David Unkovic, who resigned as Harrisburg’s receiver a year ago, presented a paper on the topic Monday afternoon at the Bond Buyer Symposium on Distressed Municipalities in Providence, R.I., according to Bloomberg News. In the paper, he says he was “disturbed” by comments from public officials and others outside Harrisburg who said that its financial situation was caused by “those people,” Bloomberg reports. Unkovic said the situation is “more stark” in Detroit, which, like Harrisburg, is a majority black city.

Last week, Washington, D.C., lawyer Kevyn Orr was named the emergency financial manager who will guide Detroit through financial restructuring. Eighty percent of Detroit’s roughly 700,000 residents are black and nearly one-third of the city lives in poverty, according to 2011 survey figures from the U.S. Census Bureau. Detroit has suffered a decreasing population and rising poverty amidst the decline of the auto industry. It now faces more than $14 billion in long-term obligations. Meanwhile, its largest revenue stream -- property taxes -- has plummeted as the housing crisis slashed home values and this year roughly half of the city’s 350,000 property owners failed to pay their taxes, according to a Detroit News analysis of government records.

In what could be a warning to Orr, Unkovic, who is white, wrote that local governments “tend to isolate the poor, including many minorities, in defined political subdivisions where they receive substandard education, substandard services and substandard opportunities.” He said in the paper his experience in Harrisburg included a meeting with about 30 white people from a Pennsylvania chamber of commerce who complained that Harrisburg officials weren’t listening to their suggestions on the need for business-tax rebates. Unkovic was of the opinion, however, that they would have better luck if they worked harder to include minorities in creating economic development initiatives in the first place.

Unkovic abruptly quit his post as Harrisburg’s receiver in March 2012, after he had become increasingly agitated at pushback from lobbyists and some state and regional lawmakers over his efforts to win more concessions from the city’s creditors. His resignation came three days after a Dauphin County court ruled that a second receiver should be hired to oversee the operations and bond debt of the local incinerator, the failed operation that led the city to declare bankruptcy in the first place.

Orr, who is black, officially takes his post Mar. 25. He has stepped down from his position at the Washington law firm Jones Day and said he plans to move to Detroit to take on the job. If he fails to restructure the city’s finances and it declares bankruptcy, it would be the largest such municipal filing in U.S. history.

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Finance