Big Water’s Got a Friend in Pennsylvania: They Sit at the Highest Levels of PA Government

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CHESTER, PA — The City of Chester Receiver, Michael Doweary, his staff and subcontractors have a duty to be truthful and transparent with Commonwealth citizens. The public dissemination of false information by the Office of the Receiver regarding the Chester Water Authority (CWA) and in particular, the Commonwealth’s and Receiver’s interactions with CWA, breached these duties.

On 1/25/22, in the Municipal Financial Recovery Advisory Committee Meeting (MFRAC) of the City of Chester, the Receiver’s Chief of Staff, Vijay Kapoor, asserted that the CWA is making a large sum of money annually from the City. Francis Catania, CWA’s solicitor, notes, “I have already detailed why that statement is demonstrably false in letters dated November 27, 2020 and December 3, 2020. The falsity of Mr. Kapoor’s statement is also objectively verifiable from the CWA’s extensive financial data that it is on the Electronic Municipal Market Access (EMMA) website. At this time, the Receiver’s staff and his colleagues at DCED have not acknowledged this data for over a year and half.”

The facts are as follows:

  • CWA has had a $60 million dollar settlement offer open to the City of Chester since January of 2019. This offer is not a bid for the CWA to buy itself, but a settlement to make cash available to the City of Chester and keep the CWA in public hands.
  • CWA is the only entity other than the federal government that has stepped up to make such substantial funding available to the City of Chester. The Receiver’s employer, the Commonwealth, has a massive budget surplus in 2021, yet has not made material sums available to the City of Chester.
  • CWA’s revenues are invested back into its operations, for the benefit of all ratepayers. It does not pay dividends to shareholders, such as foreign investors.

In the meeting, the Receiver’s Chief of Staff referred to a subcontractor as having a potential solution. That subcontractor is Corvias; they presented at several meetings at which representatives of the Act 47 Team attended—namely lawyers from McNees Wallace and DCED employees. The Receiver’s Chief of Staff’s assertion that this information had just become known to the Receiver is beyond misleading. Mr. Kapoor’s employer, the DCED, are members of the Act 47 team with which the Receiver and his staff still consult to this day. The Act 47 team had commented extensively on their earlier discussions with Corvais.

Corvias was removed from consideration in the settlement discussions with the City of Chester and CWA negotiating directly because there was no apparent justification for the approximately $1 million in annual fees it sought to extract from its proposed involvement. Corvias itself did not explain its own asserted value add. It was clear that to be fiscally responsible to the CWA ratepayers and the City’s residents that the City of Chester and CWA were better off settling directly between themselves without Corvais’ expense.

In addition, Corvias has a litigation-riddled history when it comes to its contracts with government entities, which the Receiver has never once mentioned. See, e.g., Fort Bragg Families File $5 million Lawsuit Against Housing Company Corvias, Cumberland County News, Fort Bragg, N.D. June 30, 2020; Addi et al. re Corvias Management et al, USDS Dist. Maryland (Baltimore) 1:19-CV-03253. Docket searches reflect more settlements and satisfactions of judgment than can be listed here.

Indeed, the false assertion that CWA is somehow making a financial windfall off of the City of Chester appears to have been scripted for the Receiver’s Chief of Staff by Essential Utilities (“Aqua”) in an attempt to divert attention from the lawsuit Aqua filed against CWA and the City of Chester in 2019. That lawsuit sought to stop a settlement between CWA and the City of Chester on the alleged basis that CWA providing funds to the City of Chester would discriminate against suburban ratepayers. That lawsuit is still pending.  

This is not due diligence. The Receiver and his team seem to be manufacturing a story to justify their own pre-determined attempt to sell the CWA to Aqua. Aqua has been negotiating a purchase agreement with the City of Chester at the Commonwealth’s direction since at least the summer of 2020. Drafts of the agreement were shared with the Receiver, DCED and McNees Wallace but not revealed to the public.

Through CWA’s right-to-know requests it is clear that the Commonwealth has been implementing a behind closed-doors effort to privatize publicly-controlled water systems for the benefit of investor-owned utilities like Aqua in order to distract from the Commonwealth’s failures in its management of Act 47 communities. Is this the real reason why is the DCED with Aqua’s assistance in the form of a lawsuit derailed the settlement discussions between the CWA and the City of Chester in 2019? The right-to-know emails plainly show that the Governor’s office was coordinating the effort.

There is a fair and straightforward plan available to the Receiver if he is indeed acting in good faith concerning his office’s exploration of breaking up CWA and placing the City of Chester’s water operations under the City’s direct control. That plan is to be transparent with Chester residents and businesses. In addition to the $60 million in settlement funds, would the Receiver want to spin off the City of Chester water operations to the City? Why not let the Chester residents decide. Do the residents want to decide who controls the Chester City operations and revenues from it?

It is doubtful the Receiver will do this because we know from the aforementioned DCED documents that the Commonwealth has developed a policy of privatizing public systems by selling them to Wall Street, and because there appears to be no willingness whatsoever by the Commonwealth to allow the City of Chester any autonomy after decades of state control.

Francis Catania, CWA’s solicitor, states, “In November and December 2020, I passed this information directly to the Receiver. He did nothing with it. Now, his staff propagates the click-bait nature of another victimization of the City of Chester to further the DCED agenda. The Receiver needs to stop blaming CWA for his inaction and let the people decide.”

Even without the benefit of the foregoing information, it would be evident to anyone that the suggestion CWA is inhibiting the Receiver’s efforts to keep the Authority in public hands is absurd. CWA representatives met with the Receiver’s team in September 2021 to take the first step in reaching this objective collectively, followed-up with a detailed written proposal and were stonewalled. The Receiver’s team had asked that discussions about a spin-off of City of Chester operations remain confidential at the time, but apparently the Receiver and his team have decided to openly make reference to their discussions with CWA and blatantly misrepresent them. We will make the correspondences between the Receiver’s team and CWA representatives public so that the truth can be seen now that the Receiver’s team has so blatantly misrepresented them.

The Receiver’s Chief of Staff already had improper access to material covered by a nondisclosure agreement (NDA), the CWA took issue with that and requested assurances designed to protect confidentiality, and the Receiver’s team refused, making clear that the meetings and discussions were them trying to appear like they had exhausted due diligence to keep CWA in public hands before publicly claiming they have no choice but to move forward with the Aqua Asset Purchase Agreement (APA) they, the DCED and the Governor’s office negotiated in 2020. They should make the details of the APA public today.

The CWA has been in litigation since 2019 defending all of their ratepayers and their right to keep the CWA under public control. The Receiver’s Chief of Staff allegation that the CWA is stonewalling efforts to keep the CWA in public hands is nonsense. Why has the Receiver and his colleagues at the Commonwealth been involved in back-room discussions with Aqua to sell the CWA for years? Why the lack of transparency? CWA has consistently been forced to go to Court to defend their ratepayers and to obtain orders to bring much needed light on the subject forcing real information to be turned over.

The truth is out. Ratepayers are watching, voicing their opposition to the sale, and taking their displeasure to the ballot box. The Commonwealth and the DCED must stop the siege against the City of Chester attempting to force them to sell the CWA.

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