Water disputes intensify amid the historic bankruptcy of Chester city.

As the City of Chester approaches the third anniversary of its tumultuous bankruptcy, critical developments may signify a turning point for the municipality. On Tuesday, the state-appointed bankruptcy receiver submitted a request to the Commonwealth Court seeking a ruling on a fundamental issue that could facilitate the city’s plans to sell its water assets, integral to its path out of bankruptcy.

Receiver Vijay Kapoor contends that a specific state law enacted in 2012, which transferred oversight of the Chester Water Authority from the local government to a state-controlled entity, is unconstitutional. With a potential ruling in favor of the receiver, legal ambiguities surrounding the water authority’s governance could be resolved, significantly impacting Chester’s financial recovery strategy.

The Chester Water Authority, which provides services to 46 municipalities across Chester and Delaware Counties and generated revenues of approximately .7 million last year, is at the center of the receiver’s strategy to form a regional water authority. Notably, Aqua Pennsylvania made a bid exceeding 0 million for the authority four years ago, which underscores its substantial value amidst Chester’s financial strife, where the annual city budget hovers around million.

The Environmental Protection Agency estimates that U.S. households collectively expend around 0 billion annually on water services, highlighting the substantial economic implications of water asset management and the regulatory environment. Kapoor’s position emphasizes that the water assets should operate as a public entity, independent of shareholder interests.

Kapoor criticized the state law that altered the water authority’s governance, describing it as a legislative act lacking transparency and public debate. In an opposing view, Frank Catania, the attorney for the water authority, suggested that the receiver’s actions represent a similar overreach, alleging that the receiver and city officials are in effect soliciting a bailout from customers, the majority of whom reside outside Chester.

In conjunction with these developments, Kapoor has requested the water authority to disclose financial documentation related to a recent 14% rate increase, which raised the average residential bill by approximately . This increase has been attributed to legal expenses related to the bankruptcy process and deteriorating credit standings.

Furthermore, the receiver’s filing references that the 2012 legislation was narrowly tailored and implicated Chester specifically, resulting in a governance model that favored appointment by Chester and Delaware County commissioners, rather than local representation.

As uncertainty looms regarding when the court might make a decision, and the future of Chester’s bankruptcy remains in the balance—having already cost the state .5 million in legal fees by the end of 2024—the necessity for a resolution is palpable. The city, now comprising a demographic that is predominantly Black, has been classified within the state’s “distressed” category since 1995 and transitioned into receivership in 2020 due to a staggering million pension deficit and numerous missed payments.

Kapoor’s assertion that the sale of water assets is essential for stabilizing the city and preserving retirement benefits speaks to the broader challenges Chester faces as it strives for recovery amidst a declining tax base and the legacies of its industrial past. While Chester’s plight mirrors that of other economically challenged cities, it remains a unique case; among over 35,000 municipalities across the United States, only about 30 have resorted to filing for bankruptcy.