Receiver questions feasibility of public water system for Chester


Headquarters of the Chester Water Authority.

The city receiver’s office questioned whether the Chester Water Authority could be kept in public hands as CWA officials questioned the receiver’s motives.

During the Municipal Financial Recovery Advisory Committee meeting, Vijay Kapoor presented a report titled “Water System Monetization Assessment Progress” which outlined the Receiver’s concerns regarding unanswered questions associated with the Chester Water Authority and its operations.

In response, Chester Water Authority lawyer Frank Catania released a three-page letter denying that the authority is making money off of Chester ratepayers, explaining where to find information about the CWA, among other things.

In May 2017, Aqua made an unsolicited $250 million bid for the Chester Water Authority assets, which CWA rejected. In January 2019, the CWA approved a 10% rate increase to provide the $60.2 million to Chester in exchange for the city’s commitment not to terminate or acquire any CWA projects for 40 years, the assets being placed in a trust. Three months later, Aqua sued CWA and Chester, claiming it would cost their customers $75,000 with no benefit to them. All of these cases have been the subject of legal proceedings for years.

In his presentation, Kapoor said the estimated revenue from CWA City ratepayers in 2019 was $10 million and operating expenses from those same ratepayers that year were $3.5 million.

“So the question we have here is to assume that these numbers are reasonable…where does all the other taxpayers’ money in town go?” Kapoor asked. “Where is he going now? … Are our urban ratepayers currently being overcharged or are they perhaps subsidizing suburban ratepayers?

Kapoor said Chester Water Authority tariffs are not necessarily subject to state oversight by the Public Utility Commission.

“You don’t really have third parties looking to find out what the rates are,” he said during the presentation, adding that CWA has denied that Chester ratepayers are being overcharged.

Catania referenced the 2019 lawsuit filed against CWA and the city by Aqua/Essential Utilities seeking to end a settlement between the two “on the alleged basis that CWA providing funds to the city would discriminate against ratepayers. suburban “.

Kapoor told the committee they had been trying to get information from the Chester Water Authority to assess their offer and try to determine if the system could remain in public hands.

The presentation focused on the timing and actions when the Chester Water Authority offered Chester $60 million to prevent a sale to a private owner. Part of that would have included dividing operations into two divisions — a city division covering Chester ratepayers and a western division covering Delaware County ratepayers not in Chester and Chester County ratepayers.

As part of this, the city planned to hire Corvias to handle management of the Chester Division for a 30-year deal funded by the city’s taxpayers.

Kapoor said the receiver was unable to speak to Corvias about their discussions on these issues.

He spoke of the difficulty the Receiver had in trying to get basic information about data from the Chester Water Authority, such as future capital improvement plans; rate forecasts; number of equivalent housing units broken down by residential, commercial, industrial, fire protection and other services; the total annual flow billed in gallons for these customers; bank loans; and collective bargaining units with unions.

Kapoor said the receiver’s office filed a right-to-know request in late 2020 for this information so that PFM’s financial advisors could evaluate and compare offers received by the city to buy CWA’s assets.

Kapoor said the CWA denied the receiver’s request, citing 14 reasons, including the lack of documents and the security-threatening disclosure.

“In our view, it’s a bit of a stretch here for basic information,” he said.

Kapoor said the information would allow the receiver’s team to assess the offer and see if it can stay in the hands of the public while shedding light on the overcharging of Chester residents.

“At the end of the day, it may not be feasible,” Kapoor said. “It may not be feasible at all, but it’s there and we think it needs to be checked.”

Catania highlighted the availability of information on electronic access to the municipal market, providing business activities, official statements, financial information, including audits and more at Issuer?id=D40A91BBB92B5EA07479337F1CDD913B.

“Apparently, receivership staff and colleagues at DCED have been unable to find, or more likely unwilling to acknowledge, this data for over a year and a half,” Catania wrote, noting that the $60 million offered to Chester are a settlement to be made. money available at the city, not an offer.

“CWA is the only entity other than the federal government that has come together to make such significant funding available to the city,” he continued. “The receiver’s employer, the Commonwealth, has a huge budget surplus but has not made substantial money available to the city. CWA’s revenues are reinvested in its operations, benefiting all taxpayers. It does not need to pay dividends to shareholders, especially foreign investors.

Catania said the receiver seems to have a definite goal.

“The Receiver and his team just seem to be trying to give the impression that they are trying to do ‘due diligence’ on what is a pre-determined attempt to sell the CWA to Aqua,” he said.

“There is a fairly simple option available to the receiver if he is indeed acting in good faith regarding the exploration of the fallout from the city’s operations: Ask the people of Chester if they would like, in addition to the $60 million in settlement fund, spin out of city operations so that they are under city control and all city ratepayer revenue is under city control,” Catania continued, adding that he is unlikely to happen. “There appears to be no willingness on the part of the Commonwealth to grant the city any autonomy after decades of state control.”

Catania said CWA representatives met with the receiver’s office in September and followed up with a written proposal, but were “blocked.”

Kapoor said, “The receiver’s team would just like the opportunity to speak freely with a company that the CWA and the city have hired to develop a concept that could keep the CWA in the hands of the public while providing the city with enough income to meet their financial situation. We are puzzled that the CWA still refuses to allow us to do so, even after we offered to have the CWA join us in these conversations. Additionally, the Receiver’s Office has made no assertion that the CWA is drawing any sort of windfall from the city. Based on the assumptions of the concept paper, we simply asked if Chester residents were being charged an appropriate amount.