In search of the magic number: Chester receiver updates city bankruptcy status

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Michael Doweary, state-appointed receiver for the city of Chester, is in search of a magic number.

As Doweary navigates the city of Chester through bankruptcy, his office is developing the “baseline expenditure” amount necessary for the city to provide an adequate level of vital services to residents.

“There’s a structural deficit of $15 million a year — operating expenses exceeding operating revenues — just on baseline projections over the next five years,” Doweary said during Tuesday’s Municipal Financial Recovery Advisory Committee Meetings (MFRAC).

Doweary’s Chief of Staff Vijay Kapoor said arriving at a dollar figure requires a comprehensive analysis of several major expenditure areas including services that city employees provide, services that third parties provide to the city, and capital expenditures, such as road repairs.

If there aren’t any unanticipated delays, the receiver’s office intends to come up with the magic number by mid-fall of 2023.

Chapter 9 bankruptcies have three phases: eligibility determination, mediation, and the plan adjustment. Chester is currently in mediation, but some city officials are challenging the city’s bankruptcy eligibility.

While the receiver’s office wades through litigation stemming from the bankruptcy filing, Kapoor said Doweary is defining what success is for the city. The definition is actually linked to determining the cash flow needed to run the city in a sustainable way.

Kapoor said the office is “defining success as ensuring that Chester can financially and operationally provide an adequate level of vital and necessary services on an ongoing basis in a manner that is in the best interests of its residents.”

That would mean going beyond merely balancing the budget, he said.

“It’s going to require additional personnel, increased compensation to recruit and retain certain employees and investment in city infrastructure, all of which has been really hurt over the last 25 years,” Kapoor said.

Kapoor reiterated the receiver is not dragging his feet on the process. The city faces a very real “fiscal cliff” in 2025 once American Rescue Plan Act revenue dries up.

Officials say it’s not enough to see the city succeed for one year, success must be sustained — which is why Doweary’s office is crunching the numbers.

Shortly before the MFRAC meeting, residents and environmentalists presented a united front at the Philadelphia Liquefied Natural Gas Export Task Force’s public meeting at Widener University.

Residents raised concerns that their community was once again staring down the barrel of another polluting industry, looking to call the waterfront home in exchange for the promise of jobs and undefined “growth.”

Kapoor didn’t mention LNG by name, but in detailing the history of how one of the nation’s largest incinerators found a home in Chester, he said the city cannot just blindly accept any new revenue, especially if it negatively impacts public health. Chester currently receives $5 million a year from the Covanta incinerator in the form of host fees.

“The receiver does not think that dependence on revenues from industries with negative impacts on resident health is in the best interest of city residents,” Kapoor said. “And seeks to make a good faith effort to develop a plan of adjustment that does not require financial dependence on those [industries].”

Kapoor also said that this shift cannot happen immediately.

Doweary closed the meeting by highlighting the opportunity for Chester to change the course of history, a history marred by environmental impacts and physical hazards “while wrestling with the possibility of yet another questionable facility being built within city limits that is constructed for the greater good, but at the expense of locals.”