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Luzerne Foundation gives community service award to Attorney Allan Kluger

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Nuangola targeting ‘nuisance properties’

<p>WILKES-BARRE &#8212; As council prepares to vote tonight on shouldering an additional $37 million in debt, an economist is saying better days are ahead for the city.</p><p>That outlook contrasts sharply with the dismal financial picture presented by the consultant hired to craft a recovery plan for Wilkes-Barre city government.</p><p>The opposing views play key roles in the pending binding arbitration of a new contract for union firefighters and focus on the consultant&#8217;s report identifying the problems driving the city toward economic collapse.</p><p>On the firefighters&#8217; side, Professor H. David Robison, Ph.D., head of the Economics Department at LaSalle University in Philadelphia, went beyond strictly city numbers and expanded his view to include regional, state and national data to argue Wilkes-Barre has the ability to pay for a multi-year contract for the union.</p><p>Since the last arbitration in 2010, the economy has improved, unemployment is down, wages have increased and there&#8217;s been development and business growth. &#8220;When we see that, and we see the projects going on in the city, those are the things that need to be considered,&#8221; Robison said.</p><p>Robison, who has done economic forecasting in the private sector, criticized what the city&#8217;s consultant, Public Financial Management, presented, describing it as narrow and relying on cherry-picked information to support its &#8220;doom and gloom&#8221; outlook. The city has problems, but not to the extent as described by PFM, said Robison.</p><p>&#8220;They have an incentive to be gloomy and pessimistic,&#8221; said the professor.</p><p>The city paid $75,000 to PFM since Wilkes-Barre entered the state&#8217;s Early Intervention Program last year in an attempt to improve its financial health. The city could end up paying more to PFM to guide it out of the morass described by the consultant, Robison pointed out.</p><p>&#8220;PFM is selling its service,&#8221; he said.</p><p>Hold on, countered Gordon Mann, a director with PFM in Philadelphia. Robison is also being paid by the Wilkes-Barre Fire Department Local 104 of the International Association of Fire Fighters to make its case for a new contract. The previous three-year deal expired at the end of last year and the union is looking for a 3 percent pay hike that the city doesn&#8217;t want to give because it&#8217;s almost broke, Mann argued.</p><p>&#8220;He&#8217;s being paid to deliver a particular point of view,&#8221; said Mann.</p><p>Robison said his fee was $10,000 and that included lodging, research and preparation of the report.</p><p>Robison, PFM and Vijay Kapoor, the former PFM director hired as the economic expert for the city in the arbitration, have crossed paths before, Mann said. What Robison is selling when he says the situation isn&#8217;t that bad, PFM isn&#8217;t buying.</p><p>&#8220;That&#8217;s what he&#8217;s testified to in every place he testifies,&#8221; Mann said.</p><p>&#8220;We&#8217;ve looked at the numbers. We stand by the numbers,&#8221; he added.</p><p><strong>&#8216;Nowhere near as bad&#8217;</strong></p><p>The &#8220;Baseline financial projection&#8221; prepared last year by PFM set in motion the events leading up to tonight&#8217;s second and final reading of the debt-restructuring ordinance. The measure is designed to improve cash flow in order for the city to pay its bills and replace damaged sections of the Solomon Creek wall.</p><p>PFM&#8217;s report is significant not only for what it says, but also for what it doesn&#8217;t, making it of little value to Robison.</p><p>His counterparts for the city, PFM and Kapoor, put Wilkes-Barre on the doorstep of being declared an Act 47 distressed municipality and placing it under tight financial control of the state.</p><p>&#8220;In my mind, that Act 47 is just a union-busting, take-away-everything kind of law,&#8221; Robison said.</p><p>The PFM report has the city running out of money next year and its situation growing progressively worse as expenses outpace revenues. That&#8217;s a short-sighted view for Robison and doesn&#8217;t take into account what&#8217;s happening on the local, state and national levels in terms of employment, inflation and wages, he argues.</p><p>The city isn&#8217;t the basket case PFM makes it out to be, he added, while acknowledging it has problems of ballooning pension debts, poverty and transitioning from its industrial past.</p><p>&#8220;The pension problems are nowhere near as bad if you put in more reasonable actuarial assumptions,&#8221; he said.</p><p>Poverty is a problem in every city and the still unanswered question is how do you move people out of it, he said.</p><p>&#8220;The other big problem is what I&#8217;ll call finishing off the industrial history,&#8221; said Robison.</p><p>Cities that have &#8220;moved away from being purely industrial are doing the best&#8221; and Wilkes-Barre is showing signs of that with high-tech jobs at Pepperjam, ReferLocal and LSEO, he pointed out. The downtown is undergoing a growth spurt with the conversion of office buildings into upscale apartments that are attracting millennials with good paying jobs.</p><p>&#8220;Wilkes-Barre is changing and that&#8217;s sort of my point,&#8221; Robison said.</p><p><strong>&#8216;Not hyperbole&#8217;</strong></p><p>The other side agreed a change is under way, but it&#8217;s for the worse.</p><p>Kapoor, founder of The Kapoor Co. in Asheville, N.C., said his analysis shows the city is in bad shape.</p><p>He compared Wilkes-Barre to other places that are about to go into Act 47. He serves as a part of the Act 47 coordinator team for New Castle and Reading.</p><p>&#8220;This is among the worst financial conditions in the state that I have seen,&#8221; Kapoor said.</p><p>The development that Robison refers to in the downtown isn&#8217;t bailing out the city with earned income tax and other revenues, Kapoor noted.</p><p>&#8220;None of that growth matters unless it translates into tax dollars coming in,&#8221; he said.</p><p>Kapoor distinguished his work from Robison&#8217;s, saying it&#8217;s the difference between what an academic does versus someone who advises cities.</p><p>&#8220;There is nothing in the data I have seen to suggest to me that organic growth is going to turn the tide,&#8221; Kapoor said.</p><p>Robison overlooked the more than $107 million in combined, unfunded liabilities for pensions and other post-employment benefits owed by the city, Kapoor said. The city has to decide whether it&#8217;s going to spend additional money on wages for the firefighters and other employees or devote it to the pensions.</p><p>&#8220;It was not hyperbole for us to say we&#8217;re afraid of them running out of money,&#8221; said Kapoor.</p><style>
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<div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2017/05/KapoorCo-Wilkes-Barre-Fire-Presentation-Final-4-3-17-2.pdf">
<div class="neCaption">Vijay Kapoor&#8217;s report </div></div><div class="metaInfo"><photo0>https://www.timesleader.com/wp-content/uploads/2017/05/KapoorCo-Wilkes-Barre-Fire-Presentation-Final-4-3-17-2.pdf</photo0><caption0>Vijay Kapoor&#8217;s report </caption0><photoCredit0></photoCredit0></div><div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2017/05/RobisonWilkes-BarreFire2017-2.pdf">
<div class="neCaption">Prof. H. David Robison&#8217;s report </div></div><div class="metaInfo"><photo1>https://www.timesleader.com/wp-content/uploads/2017/05/RobisonWilkes-BarreFire2017-2.pdf</photo1><caption1>Prof. H. David Robison&#8217;s report </caption1><photoCredit1></photoCredit1></div><div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2017/05/web1_web1_Wilkes-Barre_logo-2.jpg">
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<div class="metaInfo"><bylineMeta><p>By Jerry Lynott</p><p>jlynott@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Jerry Lynott at 570-991-6120 or on Twitter @TLJerryLynott.</p></shirttailMeta></div>

One city, two opposing economic outlooks for Wilkes-Barre