Water conflicts intensify in Chester amid significant financial crisis and bankruptcy.
As Chester, Pennsylvania, approaches the third anniversary of its contentious bankruptcy, significant developments signal a potential turning point in the city’s recovery efforts. Recently, the state-appointed bankruptcy receiver, Vijay Kapoor, filed a motion with the Commonwealth Court seeking a ruling on a crucial issue impacting the city’s ability to sell its water assets—an essential component of Chester’s path out of bankruptcy.
In his filing, Kapoor contends that a state law enacted in 2012, which transferred control of the Chester Water Authority from municipal oversight, is unconstitutional. This law, amended at the last minute and passed without debate, resulted in a shift from a five-member board, appointed by the city council, to a nine-member board with limited city representation. If the court rules favorably for Kapoor, it could clarify several legal uncertainties surrounding the management and sale of the water authority, which serves 46 municipalities across Chester and Delaware Counties and generated revenues of approximately .7 million last year.
The Chester Water Authority has previously attracted significant interest from potential buyers, with Aqua Pennsylvania submitting a bid exceeding 0 million for the entity as part of efforts to develop a regional water authority. The annual budget for the city of Chester is approximately million, underscoring the importance of these water assets as a financial lifeline.
Environmental concerns also loom over the water authority’s recent actions. Kapoor has requested that the court compel the authority to produce financial documents related to a recent 14% rate increase, which translated to an additional on average annual residential bills. The authority has attributed these increases to expenses arising from bankruptcy-related legal fees and declining credit ratings. Meanwhile, Kapoor has criticized the authority for allegedly using ratepayer funds for a costly ad campaign with questionable implications.
Chester, home to a population that is predominantly African American, has faced significant economic challenges, including a staggering pension deficit of million. The city’s financial distress led to its designation as “distressed” in 1995 and resulted in the imposition of a state receiver in 2020. As Chester navigates this complex legal and financial landscape, the timing of the court’s ruling remains uncertain, as does the pathway to recovery for a city that represents a rare example of urban bankruptcy in the United States, where only around 30 of the nation’s more than 35,000 municipalities have sought bankruptcy protection. The sale of water assets is viewed as central to the city’s long-term viability and an essential step toward terminating a prolonged state of financial uncertainty.
