An organization representing some retired municipal employees filed suit against the state-appointed receiver for Chester, Pennsylvania over the city’s planned sale of the Chester Water Authority (CWA) earlier this summer. Their complaint isn’t what you’d expect. Rather than attempting to block a concession to a private partner, the retirees are trying to force one. The city’s receiver is currently planning to sell a concession but is limiting ownership of the system to public authorities. According to the municipal retirees, such a limitation leaves hundreds of millions of dollars in proceeds on the table.
Municipal employees and their representatives typically oppose water utility privatization, but the situation in Chester is anything by typical. The city is bankrupt, and its largest creditor is its retired employees. The city reportedly has $127 million and $232 million in unfunded pension and healthcare benefits, respectively.
The city and its state-appointed receiver have been trying to restructure the CWA, via a privatization or otherwise, for a very, very long time now. The city’s latest RFP was issued in May and responses were due in early September. The politics around the transaction have been tough, and much is riding on a forthcoming decision from the Pennsylvania Supreme Court, which finally heard oral arguments in May. Chester’s proposed disposition of its water authority, via privatization or otherwise, is a good place to learn about the many challenges and stakeholder conflicts that can emerge when a downtrodden American city tries to restructure its balance sheet, because every imaginable conflict or issue has come up for Chester.
