The attorney for the Chester Water Authority (CWA) told area lawmakers the City of Chester’s financial problems were ignored for years and the resulting push by the state to sell the utility is the product of a “manufactured financial crisis.”
Francis “Frank” Catania is the attorney for CWA. He made those comments in a series of emails with state representatives and senators as the debate over selling the municipal-owned utility flared up yet again. Catania gave Delaware Valley Journal access to the emails.
Gov. Tom Wolf’s economic lockdown has been particularly devastating for Chester, which has been crippled by the closure of Harrah’s Casino. In 2016, the casino contributed an estimated $15 million annually in taxes to the city, according to the Philadelphia Inquirer.
In response to the crisis, Wolf declared an “Act 47” fiscal emergency for the city, which had been struggling financially for more than a decade.
“Unfortunately, the unforeseen COVID-19 pandemic is now threatening all of the progress that the city has made,” Department of Community and Economic Development (DCED) Secretary Dennis Davin said. “For this reason, the governor has issued a declaration of fiscal emergency for the City of Chester so that an emergency action plan can be developed and help the city regain its financial footing.”
Wolf and the DCED suggested the sale of the CWA could generate funds to mitigate the city’s financial hardship. But the CWA — along with some lawmakers — reacted with fury. Republican State Reps. John Lawrence and Bryan Cutler wrote a letter to Wolf in late April saying a forced sale of the CWA by the DCED “would be a gross abuse of power under any circumstance,” but especially so when the public is so focused on the COVID-19 pandemic.
While Wolf referred to the CWA as a city “asset,” some lawmakers like Lawrence and Cutler believe the CWA is an “independent municipal authority,” so the city does not have the right to sell what it does not own.
The CWA also vigorously asserts its autonomy, noting its service area extends into other parts of Delaware County and southern Chester County.
In Catania’s most recent email to lawmakers, he accused Chester of running a long confidence game or making the most of a nationwide catastrophe:
Despite their characterization of the City’s financial troubles as recent, the DCED and the City’s Act 47 Consultants, have watched and done nothing as the City’s financial condition deteriorated from 2011 to the present. … The City has been unable to produce 2017, 2018 and 2019 financial statements for reasons fully known to DCED and the Act 47 team but not made public.
- Question: How can one not conclude that the DCED and the Act 47 teams wanted to let the City sink financially so that the City’s only option was to attempt a CWA sale?
The City’s financial decline was over multiple years and fully observed by DCED and the Act 47 team and they did NOTHING. This is a manufactured financial crisis. (Emphasis original).
City of Chester officials say the CWA has been acting in bad faith.
“What was a possible solution two years ago is no longer, as two more years of delay, significant litigation expenses, and the economic crisis caused by COVID-19 have apparently foreclosed lesser options,” Aignér Cleveland, the city’s spokesman, told Delaware Valley Journal.
“The City is committed to exploring all options available, but the Mayor, and now the Governor, are facing the truth of the situation — a dramatic solution is going to be required,” he added. “After a year’s delay caused by silly CWA litigation, we were heartened that the CWA expressed an interest in participating in these negotiations originally, but we are now seeing them manufacture excuses not to attend meetings with the City. ”
The city has been under “Act 47” supervision since 1995. However, declaring a fiscal emergency “is an accelerated version [of that] process and if necessary, DCED can file a petition for the Commonwealth Court to appoint a receiver,” according to the DCED’s website.
In 2017, Aqua America offered to buy the CWA for $320 million, proposing a decade-long rate freeze as part of the package, but the CWA rejected the deal.
Not long after, CWA “seemed open to a proposed $60.2 million settlement from CWA that would include a 10-percent rate hike for its customers in exchange for the city releasing any claims to authority assets for 40 years,” the Delco Times reported.
Litigation brought the conversation to a halt, and CWA has recently acknowledged it has several ongoing cases that would prevent a sale, either by itself or by the city.
Chester Mayor Thaddeus Kirkland has appealed to ratepayers at a new website — chesterwaterproposal.com — promising that “whatever path we select will be the right one for the City of Chester, the rate payers across the CWA system, and the good men and women who maintain our water supply.”
“Now more than ever we need a path to solvency,” Kirkland says on the website. “And that path, if it involves a deal for the CWA assets, must include responsible and safe water quality, quality employment protections for our workers, and fairness to our ratepayers.”
The CWA’s own homepage, meanwhile, offers a second-by-second tally of the dollars “ratepayers have saved… in comparison to AQUA’s rates” had the 2017 sale gone through. The total was an estimated $123 million as of late Tuesday afternoon.
In Catania’s “Update No. 8” email, he thanked those lawmakers who have voiced opposition to the sale of CWA, but exhorted, “your support and requests are being ignored by both the City and DCED.”