Pennsylvania court thwarts bankrupt city's plan to sell water authority 

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The Pennsylvania Supreme Court ruled the beleaguered city of Chester is not the sole owner of its water authority and therefore cannot sell it without the consent of the two counties it serves. 

The bankrupt city's leaders had hoped the water authority sale could provide much-needed cash. The city's state-appointed receiver said he hasn't given up hope of selling the authority. 

"The city remains on a path to greater financial stability and improved operations. However, we recognize that this ruling makes it more difficult for the city to exit bankruptcy," receiver Vijay Kapoor said in a statement. "We will continue to relentlessly work on behalf of all involved to reach a successful outcome."

The board of the Chester Water Authority celebrated the decision. 

"The decision draws a clear line between public ownership and privatization," CWA Board Chair Noel Brandon said in a statement. "The court sided with everyday residents who drink CWA water and affirmed that the authority belongs to its customers — not to a receiver, politicians, or private interests."

The city has been attempting to sell the Chester Water Authority since 2019, when it put out a request for proposals seeking a buyer. Bids came in from the two major private utility companies in Pennsylvania, both of which offered more than $400 million. 

A lower court ruled in 2021 that the city had the right to sell the authority, but the CWA appealed. The case was frozen when the receiver filed for bankruptcy in 2022. 

The Supreme Court ruled last week that neither the city nor the water authority had control of the sale. The city needed the support of Delaware County and Chester County.

The question of ownership dates back to a 2012 law, which granted seats on the CWA's board to the two counties, when they had previously been held solely by city appointees. 

Kapoor said in a statement he hopes to challenge the law's constitutionality because it applies only to the CWA.

"While we are disappointed with the Supreme Court's decision, we continue to believe that the 2012 Act 73 amendment that stripped control of the Chester Water Authority from the city is unconstitutional special legislation," Kapoor said. "That issue was not before the Supreme Court in this case."

The receiver also hopes to sell or monetize the city's sewer and stormwater assets. The office of the receiver has previously claimed in legal filings that it hopes to sell or lease these assets to a publicly owned entity. 

The city owes at least $127 million to retirees for unfunded pension benefits and $232 million for unfunded retiree healthcare benefits, Bloomberg reported.