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Intrigue, possible sale looms over meeting of board of Chester Water Authority

Nov 2, 2017 | Press


The solicitor of the Chester Water Authority is questioning why the financial oversight group for the city of Chester was mulling a sale of the CWA more than a year before Aqua America had offered $250 million to purchase the authority and take it private.

Conversely, the city is questioning why the CWA is dragging its feet in turning over documents including authority bylaws and board actions.

It appears the city and the CWA are engaged in a tug of war over the ratepayers, with the company’s customers and ratepayers stuck in the middle. Chester Mayor Thaddeus Kirkland, in a letter to the CWA board said the city, as the municipality that created the authority, reserves the right to reclaim and transfer the authority’s assets.

“I believe the city has been treated, as least thus far, as a passenger in this process when, in reality, we can put ourselves more in the driver’s seat,” Kirkland wrote in the letter, addressed to CWA Board of Directors Chair Cynthia Leitzell and dated October 25th.

Kirkland wrote that the city reserves the right to “reclaim and transfer operation of the authority’s assets,” and to “dissolve the authority.”

Friday afternoon at an emergency meeting at Neumann University, the water authority board will attempt to find out more details about the Pennsylvania Department of Community and Economic Development (DCED) inquiry into CWA’s assets and what the city’s intentions are in seeking to exit state financial support under Act 47.

CWA has countered with a Right-to-Know Request that procured a receipt from the DCED ordering articles of amendment, incorporation and miscellaneous filing for the CWA dated prior to the release of the Act 47 Recovery Plan last year.

“We’re still trying to figure out if the idea to sell the authority came from Aqua or DCED,” said Francis Catania, the solicitor for the CWA. “I have proof that as early as May 2016 they were talking about it.”

Catania is suggesting that the Act 47 recovery coordinators, Econsult, the firm contracted by DCED to draft the city’s Act 47 Recovery Plan in August 2016, were shopping for a potential suitor for the sale of assets even before the recovery plan was drafted.

“The DCED is stonewalling us,” Catania said. “They’ve given us partial info that has been heavily redacted despite our repeated requests. I don’t know what they’re trying to hide.”

The Act 47 Recovery Plan mandates that the city of Chester has until May 2018 to eliminate its budget deficit and address its funding deficit. On the condition that by May 2018 the city provides a sound fiscal plan for exiting Act 47, Chester can extend the deadline to 2021. Otherwise the city will enter receivership.

The plan’s bullet points for financial growth was to reduce expenses, attract businesses for an increase of tax base and for an enhancement of existing revenue sources.

Selling the CWA was not part of the plan of the economic recovery plan, but Catania is saying that the records show differently.

“It always seems like we’re the last to know,” Catania said.

Kirkland supported the board’s unanimous “No” vote on the sale to Aqua, writing “(I) do not believe accepting such an unsolicited and un-vetted offer to be prudent.”

Thursday over the phone, the mayor said DCED and Econsult have not specifically urged the city to sell.

“Quite frankly, they haven’t advocated one or the other, they’ve placed options on the table,” Kirkland said. “They have not said ‘sell.’”

Catania countered, “If this is a completely innocent inquiry, I don’t know why we’re having so much trouble getting the documents we’ve asked for.”

He added that he doesn’t believe the city has a right to sell the authority, as 78 percent of the CWA customers live outside the city of Chester.

“We believe the authority belongs to the ratepayers,” Catania said. “The board has been consistently saying that.”

For the surrounding communities that are serviced and get their water from the CWA, 13 municipalities from Delaware County have filed resolutions against the sale to Aqua or other corporate entities.

Aston Commissioners President Jim Stigale said after looking into the rates and services provided by Aqua, it was clear that the large corporate entity would bring higher costs and diminished quality of service.

“We’re satisfied with the CWA services, we’ve been able to control expenses, and they’re very good, quick to respond on a township level,” Stigale said. “This private corporation is more about profits than service to the residents.”

Kirkland wrote that some form of monetization of the water system “will almost certainly be part of the final stretch of the recovery effort,” but Thursday said cooperation between the city and CWA is of chief importance.

“We’re not going to allow anything to be taken away, we’re in a position to help our city in a great way,” Kirkland said. “Everybody knows the urgency in working together in a way that is beneficial for the community, the CWA, the board and everybody involved.”

“We have a commitment to working together with the CWA to provide great service.”

Chester Water Authority, which is not in financial distress, serves more than 42,000 customers, impacting about 200,000 individuals in the city of Chester and other parts of Delaware and Chester counties over 656 miles of pipeline. Dating back to 1866, the authority draws its water from the Susquehanna River on the borders of Chester and Lancaster counties and the Octoraro Reservoir and has received multiple awards for its superior taste.

It flows into 17 of Delaware County’s 49 municipalities and 16 of Chester County’s 73 municipalities.

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