Retirees sue to open sale of bankrupt Chester’s water assets to private companies
The Retiree Committee, representing the largest creditor group in the bankruptcy proceeding, says that limiting bids to public ownership will impact livelihoods of people dependent on city pensions.
A group representing retired Chester workers filed a lawsuit Wednesday in an escalation of the retirees’ effort to open the sale of the bankrupt city’s water assets to private companies.
The Retiree Committee, which represents the largest creditor group in Chester’s bankruptcy, says the plan by a state-appointed bankruptcy receiver to accept only bids that would keep the water assets controlled by a public entity would result in the city getting less money in a sale.
Top of mind for the retirees are $127 million in unfunded pension obligations and $232 million in unfunded healthcare obligations, according to the complaint. A sale of water assets that fails to replenish those funds in full would harm the 250 retirees represented by the committee, the suit says.
“Livelihoods are at stake — for the retirees who dedicated their working lives to public service, the families who deserve improved City services and greater economic opportunity, and the future of a community we all deeply care about," committee cochairs Alan Davis and Chuck Bolgunas said in a statement.
The sale of Chester’s water assets was intended to give a lifeline to the city in its attempt to replenish the pension funds and claw out of bankruptcy. Chester’s state-appointed bankruptcy receiver proposed last year that the water assets be sold to a public entity that would operate as a regional water utility.
Chester’s ability to sell the Chester Water Authority — one of three water assets — could hinge on a forthcoming Pennsylvania Supreme Court decision that should determine who owns that water utility and who has the right to sell it. The case originated with a 2021 proposal to sell the authority to Aqua Pennsylvania Inc. for $410 million.
The retirees’ lawsuit uses that figure as one example of the amount Chester could get from a privately owned company, while saying that bids from publicly owned entities were nearly $300 million less.
The deadline for the bidding process is Sept. 2.
This is not the first time that the Retiree Committee has objected to the plan, but the lawsuit could bring the issue to a head.
It will be up to Judge Ashely M. Chan, who has been overseeing the Chapter 9 bankruptcy proceedings, to weigh the benefits and costs of the differing approaches.
State-appointed receiver Michael Doweary, who will step down July 1, said previously that limiting bids to public entities was “the best way to ensure reasonable rates, preserve public jobs, and generate sustaining annual revenue.”
“While still reviewing what was filed, the Receiver’s position remains that the water assets should continue to be publicly owned,” Doweary’s office said in a statement.
The receiver’s concern about a rate hike is not out of thin air. Water privatization has become a hot-button issue in Harrisburg in recent years, as for-profit utilities have been scooping up water and sewer systems from municipalities and as consumers sour over rate increases.
In the lawsuit, the Retiree Committee asks why rate hikes could not be precluded in a sale to a private company and how a reduction in rate hikes outweighs the loss of value in a sale.
“In light of the imminent bid deadline, the Court must order a course correction to ensure that all potential bids — from both public and private entity bidders — are received," the lawsuit says.