Allentown Mayor Pawlowski to Challenge Pa. Governor

HARRISBURG, Pa. — Allentown Mayor Ed Pawlowski is running for Pennsylvania governor.

Pawlowski, a Democrat serving his second four-year term, announced his candidacy on national television on Sunday and immediately swiped at incumbent Republican incumbent Tom Corbett.

"As mayor of the third-largest city in the state and president of the Pennsylvania Municipal League, I have seen first-hand the damage that has been done to our commonwealth over the past four years under the current administration," Pawlowski said in a statement. "I cannot sit idly by and let our state continue to suffer."

In a move that attracted widespread attention from the capital markets, Pawlowski this year orchestrated a 50-year lease of the city's water and sewer system to the Lehigh County Authority public works agency for $211 million. The city will use upfront money from the transaction to cover its unfunded pension liability, which Pawlowski called "a 500-pound gorilla."

Without the move, pension liability could have consumed up to one-third of Allentown's general fund budget by 2015, according to Pawlowski. That total is now about 20%. Without the water lease, "we'll be just another Pennsylvania city making ugly headlines," he told the City Council in April.

Goldman, Sachs & Co. last month priced $308 million of bonds that the authority sold to transfer the upfront payment to the city.  Additional bond proceeds will prefund capital improvements and provide the authority an additional operating cushion for the early years of the lease contract.

Pawlowski, a Chicago native, served as Allentown director of community and economic development before his election as mayor.

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