Respecting Authority?

Respecting Authority?
Dauphin County General Authority Spending Foolishly?

by Frank Pizzoli

Actor George Raft acquired and disposed of about $10 million in the course of his career. “Part of the loot went for gambling,” he explained, “part for horses and part for women. The rest I spent foolishly.”

With $1.3 billion (yes, that’s a “B”) in outstanding debt service, Dauphin County General Authority (DCGA) has spent foolishly, according to newly elected Dauphin County Commissioner Lowman Henry (Pictured Right). He hopes to open up the situation for public scrutiny now that he’s been sworn in for duty. “I’d change just about everything,” Henry says.

First, here’s some background. PA law has a long-standing tradition of allowing governmental entities — school districts, boroughs, cities, and counties — to form “authorities.” These authorities borrow money and issue bonds to finance public projects that would otherwise be carried on the books of governmental entities. For example, DCGA built the Dauphin County Human Service Building on Front and Market streets, thereby giving the county budget some breathing room. “That’s what authorities are supposed to do,” says Henry, irritated that DCGA has evolved into other business arenas outside both its basic mission and beyond the county line.

As far as authorities go, DCGA is in a unique position. “DCGA has the ability to operate a bond fund based on borrowing and lending rules from the early 1980s. Essentially, they can borrow at one interest rate and lend to other authorities at a higher interest rate. Under current rules, borrowing low then lending higher is no longer allowed. DCGA was ‘grandfathered’ in,” Henry explains.

With money available, Henry reports, the original thought was for the DCGA to purchase properties through bond issues and eventually turn over the profits to the county general operating fund to help offset the cost of county government. “That’s not what happened,” says Henry. “Although the bond issues are making money, the profits are being eaten up by the operating costs of the purchased properties.” The authority currently owns three golf courses outside the county and a hotel at the Pittsburgh International Airport. Worse yet, they just bought Forum Place, a high rise office complex in downtown Harrisburg, and asked to have it removed from the tax rolls, another loss of income to the county, Henry points out.

Regarding these “extra-county” deals, a controversy is brewing and expected to play out over the coming months. “Before being elected, I was stonewalled by DCGA with requests for the records on deals,” explains Henry. He strongly believes that DCGA’s mission is one of reducing county expenses and directing its profits back to the county’s operating budget, helping to keep the county’s books in the black. “I don’t believe that DCGA ought to participate any real estate deals outside of county use or betterment,” Henry says, he stresses, adding, “an authority shouldn’t ever take a tax-paying property off the books.”

One current authority member points to the large profits made by DCGA as a strong point. “If there have been large profits made, they’ve been sunk back into the operating losses of the properties purchased,” Henry counters, citing Dauphin Highlands, an authority-owned golf course. “Dauphin Highlands is operated as a tax exempt piece of real estate competing against several other county owned and operated golf courses. That’s an unfair advantage to individuals who pay their taxes and pay for capital improvements from their own pockets,” Henry says.

Henry can’t yet determine if authority profits were ever directed back to the county general operating budget. If profits have been made, they may only have benefited DCGA by making possible more outside acquisitions — not their purpose in life. Their purpose is to “assist with keeping county government solvent,” Henry says passionately. He tells MODE that he hopes to persuade sitting authority members to his point of view on the purpose, role, and mission of a county authority. Apparently, he has persuaded two other county authorities to his view. Commissioners recently consolidated the Dauphin County Economic Development Corp. and the Dauphin County Industrial Development Authority into a new department known as the Department of Community and Economic Development.

Meanwhile, the city is faced with yet another “authority” in the form of Downtown Improvement District (DID), a much-needed set of improvements to a section of the city wrongly perceived as dangerous. DID’s mission is admirable — but how do city residents, business owners, and property owners involved make sure that yet another “authority” doesn’t, somewhere down the road, saddle it with outrageous debt or a set of rules and regulations far removed from its original purpose?

It seems weekly that we hear of another authority described as “not accountable” to the public embroiled in controversy. The party line is that these numerous authorities are only accountable to the elected officials who appoint them. Problem is, by the time some glaring situation is known, the elected officials who appointed them are out of office. The public is stuck with the consequences, usually a bill of some sort.

Since this is a “whisper” city, and the usual drill is to unveil an already-decided upon plan of action and then force it onto the public real fast and hope opposition will go away, perhaps we need to be vigilant over the formation of more authorities. Public involvement must be “front loaded” on these and similar projects in the future. Public involvement is not a perfunctory afterthought allowed at a public meeting announced with three days notice.