MONEY GAMES
Pa. Receiver chases Chester’s financial woes:
In a report that alleges that the Chester Stormwater Authority offered the Philadelphia Union to reduce its fees in exchange for land for a basketball facility and that claims Chester City Hall is top heavy and elected officials there have not contributed to the city’s fiscal stability, the state-appointed Receiver laid out actions needed to be taken to begin to steer the city toward financial solvency.
In response to the Receiver for the City of Chester Status Update filed with Commonwealth Court on Dec. 2, both city and Stormwater Authority officials had diametrically opposing views to the report’s findings.
In the report, the Receiver noted that the office had been contacted by several city businesses, including the Philadelphia Union, who told them that Joseph Oxman, solicitor for the Stormwater Authority of the City of Chester, had approached the soccer organization to offer a reduction in its stormwater fees if it provided the authority land to build a basketball facility.
If it didn’t, the Receiver’s report stated, the Stormwater Authority planned to purse the fees it believe to be owed, which Oxman said are in excess of $300,000.
The Receiver also referenced litigation involving Best Homes DDJ, LLC in which similar allegations were made against the Stormwater Authority.
“The Receiver consider the claims made by these Chester businesses to be serious,” the court documents state. “Chester cannot expect to attract businesses to
locate here if there is validity to the foregoing allegations.”
At this point, the Receiver said they were not seeking additional assistance from the court as they are attempting to learn more about the situation. However, they reserve the right to ask for the court’s assistance, should they need it, later.
“Michael Doweary, the Receiver, has absolutely zero authority over the Stormwater Authority and if he believes he does, we will fight that vigorously,” Oxman said. “There’s no Receiver ever that could have oversight over a duly organized municipal authority ... For Mr. Doweary to make any comments about the inner workings of the Stormwater Authority is quite unethical and out of line.”
As a result, Oxman said he is seeking to have the Stormwater Authority as an intervener in the case, something he said the Stormwater Authority has been attempting to do but has been denied as of yet. “It’s almost as if we’re being denied due process under the law as a Stormwater Authority,” the solicitor said.
In an order issued
Wednesday, Commonwealth Court Judge J. Andrew Crompton wrote that an email sent to CommCourtRemote@pacourts.us was not sufficient to be considered. “That email is used solely for communications regarding remote access for WebEx purposes,” Crompton wrote, encouraging the Stormwater Authority to file an application in accordance with the statute.
Oxman said the recent filing “is a complete mischaracterization of any potential project that the Stormwater Authority may be doing with the Union. The record has to be set straight ... We unequivocally have never offered a reduction in assessed fees to commercial property owners for an exchange of anything.”
The Receiver’s office reaffirmed the statements in the Dec. 2 filing.
“The Receiver stands by what he said in the status update which Mr. Oxman himself confirmed in an email to the Receiver’s counsel on Dec. 3,” Vijay Kapoor, chief of staff for the Receiver, said. “In an email to the Receiver’s counsel on Dec. 3, and in a response to a local blog, the Stormwater Authority’s solicitor wrote in all caps, ‘THE AUTHORITY ONLY OFFERED A REDUCTION IN WHAT WAS OWED TO US BY THE UNION, TOTALING OVER 300K, IN EXCHANGE FOR A CONVEYANCE OF LAND FROM THE UNION TO THE AUTHORITY.’ That is exactly what the status update said occurred – the Stormwater Authority’s solicitor offered to reduce the stormwater fees it believes that the Union owes in exchange for the Union’s land.”
Kapoor said all the Re
ceiver wants is to discuss this with the Stormwater Authority.
“The only thing that the Receiver has asked the Stormwater Authority to do is to have a meeting with the Receiver to discuss this proposed basketball facility concept since such a project may require issuing debt which, according to the approved Recovery Plan, the Stormwater Authority cannot do without the Receiver’s written permission,” he noted. “The Receiver disagrees that he has no authority over the Stormwater Authority.”
Oxman said the Stormwater Authority is in the very preliminary stages of reaching out to the Union about the development of a multicourt sports facility on the Sons of Ben parking lot for the authority to build a basketball facility with 12 courts and a 3,000- to 5,000-seat
stadium in exchange for reducing the $300,000-plus in past fees the authority says the Union owes it, not a reduction of its assessed fees.
“Part of our mandate is economic development,” the solicitor said, pointing to the acquisition of properties by the Port Authority of New York and New Jersey as an example. “Basketball is God in Chester ... Chester has a national reputation.”
He said the authority had reached out to some sports facilities management firms about the idea and was conducting preliminary analysis of the viability of the project.
“It was a win-win situation,” Oxman said, noting no such travel basketball facilities in the Chester area; the ability to draw from the tri-state area; the proximity to the airport and the Amtrak train station; Ches
ter’s basketball reputation; and the local hotels in close proximity to the site. “The money that would’ve come into the city would’ve been immense.”
He said the project would draw national media attention and would be capable of hosting national high school championships. He said he also could conceive of hosting a tournament among Historically Black Colleges and Universities.
“We’re looking at doing this project without any stormwater fees being used for the property,” Oxman said, adding that it would be developed with outside developers. He added whether it happens at the Union or not, it will be developed.
“Not only will this bring jobs for city residents, it will create incredible opportunities for local basketball programs to have an absolute state of the art to play in,” he said. “It’ll be great for the travel teams.”
Oxman called the Union’s conversation with the Receiver “a desperate attempt of getting out of paying what they owe us. They have ignored the Stormwater Authority since its inception ... We have reached out to them numerous times.”
He said he invited the Union to go through the Authority’s appeals process to outline how they are mitigating stormwater, as Kimberly Clark did with a successful fee reduction. Widener University went straight to court litigation before reaching a settlement with the authority.
“We’re very upset that the Union decided to be able to appear to use this project in some way against the Stormwater Authority,” Oxman said. “It appears they have no intention of paying what they owe ... It appears they want to thumb their noses at the city of Chester.”
The Philadelphia Union spoke of the relationship that they have with the city.
“We have a wonderful partnership with the City of Chester, the school district, the mayor, and the city’s leadership,” Union officials said in a statement. “Our partnership and friendship with the City of Chester is very strong and productive. Collectively, along with the Riverfront Alliance, we have collaborated to put together a master plan which we think will have a tremendous positive impact for the community. We look forward to continuing to strengthen those relationships through the programs we have created and funded such as the creation of the Chester high school soccer program and continued development of the waterfront.
The statement continued, “We have spoken to Mayor (Thaddeus) Kirkland on several occasions about this topic and are confident we will work toward a solution that is beneficial for everyone. Candidly, we were surprised at the assessment given the millions of dol
lars that were invested in stormwater mitigation services and equipment when the stadium was built. We look forward to having a conversation and are open to a fair solution that takes into consideration the millions of dollars we have already spent.”
In addition, the Receiver’s filings also addressed concerns with regards to city operations.
In looking at the Chester’s 2021 budget, the Receiver said the $53.6 million spending package would be supported by
$52.4 million collected in revenue and $1.1 million in cash carried over from
2020. This budget is a 3 percent reduction that the
$55.5 million adopted for the 2020 budget.
The largest expenses were employees’ salaries at $15.3 million and pension costs at $10.8 million and the largest sources of revenue came from earned income tax revenue at $15.7 million and casino revenue at $12 million, although it’s unknown how Gov. Tom Wolf’s COVID-19 restrictions announced last week
will impact those numbers.
“The Receiver and his team have worked diligently to ascertain the city’s true financial condition to provide a realistic budget that not only meets Act 47’s requirements, but also moves Chester towards fiscal and operational recover y,” cour t documents state. “The Receiver acknowledges that this budget requires significant shared sacrifice from stakeholders, particularly city residents and city employees and that much more work needs to be done.”
In this budget, the city’s three pension plans would be paid for the 2021 allotments, including $8.5 million for police, $1.1 million for fire and $1.1 million for officers and employees. However, as of Jan. 1, 2021, the city will still owe approximately $36.7 million in past pension payments and fees related to them.
As such, the Receiver said a 1 percent distressed pension earned income tax should be levied upon city residents. In the last two years, this tax has been lev
ied upon commuters and funds had been used for purposes other than the pension, according to the Receiver.
“We did not want to increase taxes on residents, but we had to do so to make sure that the city complied with the law,” Kapoor said. “Previously, the city only levied the distressed pension tax on commuters when the law requires the tax to be levied on commuters and residents.”
Revenues raised through this tax would then be placed into a separate fund distinct for the pensions.
Kirkland said, “If we put a 1 percent tax on our folks, its going to be a hardship.”
The Receiver also wants to roll back the salary increases for the mayor and two council members, noting that prior to 2020, the two impacted council persons and the city Controller made $35,000 each and the mayor made $41,000. At the beginning of this year, these two council members and the city Controller had their salaries increased to
$60,000 and Kirkland’s salary increased to $75,000.
“Fundamental fairness requires that elected officials also contribute financially towards the goal of fiscal stability,” the Receiver’s report stated. “To this point, that has not occurred.”
Kirkland said these salaries had not been raised in
20 years and that previous
Republican administrations slashed them further prior to a transition. “It had been reduced by the time we had gotten in there,” he said.
The Receiver also favors making changes in organizational structure, including the appointment of Cyrise Dixon, former chief of staff for the Chester Police Department, as acting chief operating officer and creating a clear chain of command.
The report also stressed a priority in funding staff that deliver “vital and necessary services.” To that end, the Receiver stated that some employees will be laid off while others who had been furloughed will be called back.
“The Receiver found that the city’s organizational structure was top heavy with duplication of management positions and managers who oversaw only a few employees,” the filing stated. “This makes neither fiscal nor operation sense. In analyzing city operations, due to the current fragmented organizational structure, the Receiver’s team was often left asking the question, ‘Who’s in charge?’”
The mayor stood by city employees.
“Before the pandemic, there was no concern that we were top heavy anything,” Kirkland said. “We put people in place who are doing the job. They’re professionals. They do their job ... The city of Chester deserves the good employees who work on their behalf.”
The Receiver also wants to increase city employees’ health care contribution from 3 to 5 percent up to 15 percent.
Kirkland said city officials have been having conversations with the Receiver with the goal of fiscal viability.
“At the end of the day, it is our hope that we will be able to work through our financial woes and put the city on solid financial ground,” the mayor said.