Chester Receiver Michael Doweary dropped a legal bombshell last week, asking a federal bankruptcy judge to allow Pennsylvania’s Supreme Court decide who owns the Chester Water Authority (CWA).
“The City agrees that the automatic stay should be modified for the limited purpose of allowing the Appeals to proceed,” said Doweary’s attorneys in an Oct. 10 court filing.
It was a stunning turn of events, given that Doweary’s initial move to put the financially-stressed City of Chester in bankruptcy in 2022.
The move had CWA attorney Frank Catania questioning whether the Receiver wanted to keep Chester on poor financial footing so he could push through a CWA sale.
“[T]heir strategy seems to be, ‘Let’s see how bad we can make things in the city, so that when a court finally does get to evaluate this, the city’s in really bad shape financially,’” he told DVJournal.
After Doweary was appointed Chester Receiver in 2020, he outlined a long list of problems for the city. He found fault with city leadership over pay and what he called a one-sided parking contract. Chester also has a total of $369 million in unfunded pension benefits and retiree healthcare. Additionally, it lost $400,000 in a phishing scam and another $100,000 in an alleged ghost employee scheme.
The sale of CWA has been portrayed as a way to help Chester regain solvency.
The city, and Doweary, argue they own CWA and its assets. CWA officials said the utility has “complete autonomy” on its affairs because it owns all buildings and facilities. That meant the city can’t sell the utility under the cover of darkness.
Chester attempted to sell CWA in 2020 to Aqua Corporation, just before Doweary became Receiver. The Commonwealth Court approved the sale a year later over objections of the utility. Shortly after CWA appealed to the Pennsylvania Supreme Court, Doweary put the city in bankruptcy – halting that case. Aqua said this month it wanted the Pennsylvania Supreme Court to hear the Chester-CWA case.
With the latest filing, the Supreme Court could get a likely final say on CWA’s future.
Doweary’s attorneys portrayed the bankruptcy plan as one that seeks to “radically alter the course of [Chester’s] history.” They accused the CWA of taking advantage of residents due to the work of a “Republican political machine” formerly run by John J. McClure.
Despite the fact that McClure died in 1965, attorneys suggested “the Machine” sought to break the CWA away from Chester control in 2011 through the passage of Senate Bill 375 in 2012. The legislation expanded the CWA board from three Chester city-appointed members to nine. The new board composition would include three members from Chester, three from Chester County, and three from Delaware County.
“Within the span of a week, the Machine had stripped Chester of control over the CWA board without compensation,” wrote Chester Receiver lawyers. “Just as McClure used subterfuge to steal the equivalent of $5.6 million from Chester residents in 1939, the Machine took control of the CWA’s board from the City without disclosing what they were doing and without compensating the City.”
While Republicans controlled the County Councils in Chester and Delaware in 2012 (Democrats ran the City of Chester), it was majority Democrats who appointed the current CWA board in November 2022.
CWA attorney Frank Catania said the board regularly discusses anti-takeover action during executive sessions at every single meeting.
“It’s never been rescinded. It’s never been changed,” he said, referring to anti-takeover measures initially passed by the CWA board in 2017.
The Receiver’s accusations surprised former Delaware County Council Chair Wallace Nunn.
“He’s blaming this on a machine that doesn’t control it, frankly, a machine that doesn’t control anything anymore,” Nunn scoffed to DVJournal.
Nunn saw the current fight over CWA as an argument between the current Democratic power structure over utilities. Doweary and Delaware County opposed the sale of the Delaware County Regional Water Quality Control Authority (DELCORA) to Aqua Pennsylvania. The Pennsylvania Public Utility Commission stayed that sale last year.
“Rather than him blaming his Democrat allies, he’s reaching back to a guy who died in 1965 … His problem’s in Media,” said Nunn.
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