The Allentown, Pa., City Council approved a
Pawlowski, a driving force behind $1 billion of economic development initiatives in the city's nascent neighborhood improvement zone, said he would not resign. The 7-0 vote, before an overflow crowd at council chambers, is nonbinding.
Four people, including three city officials, have pleaded guilty to federal corruption charges since the FBI raided City Hall last July, taking documents, computers and other items related to a federal grand jury investigation in Philadelphia. The bureau has since requested additional records.
"These allegations have brought the city into disrepute and created a negative work environment, making it difficult to effectively conduct city business," said the council resolution. "The Allentown City Council concludes that the continued service of Ed Pawlowski as mayor … is a detriment to the well-being of the city, its residents and city employees."
Pawlowski, in his third term, emailed a statement to council members while in Washington attending the winter meeting of the U.S. Conference of Mayors.
"A bedrock principle of our justice system is that everyone, which includes mayors, councilmen, reporters and the public are presumed innocent. I certainly hope that this concept has not been suspended in the city of Allentown," said Pawlowski. "You would all want this protection for you, your friends or family members. I am simply requesting the same and am disheartened that council is taking punitive and dramatic action against me without the benefit of affording me due process."
Pawlowski in October suspended his run for the U.S. Senate, which he announced six months earlier. He briefly campaigned for governor in 2014, but withdrew in February of that year – four months into announcing his run -- citing insufficient fundraising.
Former city controller Mary Ellen Koval pleaded guilty last week to conspiracy to commit honest services fraud, related to her efforts in steering contracts with the city and the Allentown Parking Authority to her campaign donors. Late last year, former finance director Gary Strathearn and former assistant city solicitor Dale Wiles pleaded guilty to steering city contracts to campaign donors.
In September, Bethlehem entrepreneur Ramzi Haddad, who owns properties in the neighborhood improvement zone, pleaded guilty to bribery charges.
Allentown in 2013 earned a Bond Buyer Northeast Region Deal of the Year award for selling $224.4 million in bonds to finance the construction of the improvement zone -- a downtown business district that houses the new PPL Arena -- and the lease of its water and sewer system to the quasi-public Lehigh County Authority, which sold $308 million of bonds in July to finance the transaction.
Pawlowski said at the time that the water and sewer deal enabled the city to cover a pension liability that could have consumed up to one-third of Allentown's general fund budget by 2015. Allentown received an upfront payment of $211 million and will get an annual payment of $500,000 beginning this year.
Bond rating agencies reacted favorably to that deal. Moody's Investors Service and Standard & Poor's revised their outlooks on the city to stable and positive, respectively. S&P in February upgraded city GOs three notches, from BBB to A-plus. Moody's rates Allentown's general obligation bonds A3.
"Either way there will be backlash from the capital markets on the mayor's beloved city," David Fiorenza, a Villanova School of Business professor and former chief financial officer of Radnor Township, Pa., said of the scandal. "The downtown Allentown Main Street program has been the catalyst for revitalization in this city and there will be some setbacks. Allentown will continue with or without Mayor Pawlowski as the initiatives have been community driven in areas like the Hamilton District."
