FOR CHESTER, HEALING WATERS
CITY, CWA HOLDING TALKS TO HELP CITY GET BACK ON SOLID FOOTING, NO SALE SEEN
After months of friction, the Chester Water Authority and the City of Chester have entered into negotiations that could potentially move the city out of Act 47 status, some officials said – if the state’s coordinator doesn’t “hijack the process.”
“Things are going well,” Chester Mayor Thaddeus Kirkland said. “The conversations are continuing. I believe we are making progress ... This will be an awesome change for the city.”
In fact, he said if all the components work out as anticipated, he added, “This could put us out of Act 47.”
Chester City has been in Act 47 – designated as ‘distressed’ and under state control of its finances – status since 1995. In 2015, Econsult Solutions Inc. and McNees Wallace & Nurick LLC were appointed as the city’s Recovery Coordinator.
In their Act 47 recommendation in May, Econsult recommended selling the Chester Water Authority assets to create revenue. The city had been running at a deficit for years, reaching $8-9 million per year from 2014-2016. It balanced its revenues and expenditures in 2017 and expected to do so again this year.
According to Econsult’s May presentation, Chester started 2017 with approximately $28 million of unpaid obligations. By the end of 2017, $17 million in past due pension costs remained, including the police pension fund, which the report stated “is dangerously underfunded.”
In May 2017, Aqua America presented an unsolicited offer to buy Chester Water Authority for $250 million. The Chester Water Authority rejected that offer.
At one point, Chester officials contended that they had the unilateral right to sell the authority assets since the authority was founded in the city. The majority of the other members of the authority, which serves residents in the city, as well as a slew of other municipalities in both Delaware and Chester counties, did not agree with that assessment.
Approximately 22 percent of the Chester Water Authority’s 42,000 customers are located within the city of Chester and about 78 percent reside elsewhere in Del- aware and Chester counties.
The Chester Water Au- thority strongly disagrees that the only viable option available to the city to exit Act 47 is through the sale of the authority.
In a July 6 letter sent to the Pennsylvania Depart- ment of Community and Economic Development, the state agency that oversees the Act 47, Kevin Dooley Kent, an attorney for the CWA, wrote, “The recom- mendation is inconsistent with Act 47 and unsupport- able.”
Kent also questioned Econsult’s actions within the allowed standards of the Act 47 process, saying that Econsult met privately with Aqua America in April 2017, a month before Aqua offi- cials approached CWA.
In closing, Kent wrote, “The authority reserves all of its rights and remedies.”
In the meantime, officials from the Chester Water Authority and the city of Chester have been negotiating with each other and working with another private firm, Corvias, which has been working with the city’s new Stormwater Authority and enacting new fees on residents and businesses, to find a solution that works for both parties.
CWA solicitor Frank Catania said that part of that includes delineating boundaries for the city and the authority, but not for the purpose of a sale.
“The whole purpose for us for entering into this is to avoid that,” he said of a sale.
He explained what Corvias’ focus is.
“Their proposal won’t involve selling their customers to anybody,” he said. “They’re going to make some recommendations about how we’re going to be able to get some money for improvements, how we manage contracts or capital improvements.”
Catania explained that Corvias’ goal was to devise a solution to have Chester emerge from Act 47.
“They want to make sure that the rate payers are protected from a sale and they want to help the city as much as possible,” Catania said.
The Chester mayor underscored that both sides were collaborating for the good of all.
“We’re working through to make sure that things are correct and in order,” he said, adding that the intent is that both the authority and the city work toward an agreement.
The CWA solicitor disagreed with Econsult’s conclusion.
“We were very offended and said so because we thought their whole report is not sufficient,” Catania said of Econsult. “The next step is they’re going to issue their recommended exit plan on Aug. 20. We’ve continued to talk to the city pretty vigorously. We’re both proceeding in good faith.
“Both of us are jointly trying to protect the rate payers despite what the Act 47 folks say,” he said.
Kirkland agreed and said false rumors need to be put to bed.
“We have been working in good faith with the water authority for the positive end,” the mayor said.
The CWA solicitor said the next move is on Econsult.
“What we don’t know is if the Act 47 (coordinators) are going to try to hijack the process,” Catania said. “They may not or they may ... We don’t know. They haven’t told us what their position is ... We’ve been working very well with the city. They want to protect the rate payers. All eyes are on the Act 47 coordinators.”
Attempts to reach Econsult Friday were unsuccessful.