A tiny community west of Philadelphia is staring down a financial crisis and, seeing it as the only lifeline, hoping to be declared financially distressed by state officials.
Delaware County’s Colwyn Borough, population 2,546, has a shortfall half the size of its $2 million annual budget.
Borough leaders are seeking help through the state’s Act 47 program, which aims to assist struggling municipalities by appointing outside financial advisers to develop a recovery plan.
In February, the typically divided and contentious borough council struck a rare chord of harmony by agreeing to enter Act 47.
At a Tuesday hearing in Colwyn, organized by the state’s Department of Community and Economic Development, residents and borough officials delivered testimony about the community’s deep mismanagement and long history of infighting.
Councilman Jesse Brundage rattled off a list of unpaid bills including benefits to retirees, outstanding sewer debts, and the costs of litigation from dozens of lawsuits.
“The bottom line is we need the state to help us to come up with a plan to pay down these large debts while still carrying on with day-to-day operations,” Brundage said. “There is no down side in having 47 in place. In fact, I look forward to this happening.”
Colwyn has one of the worst funded pension programs in Pennsylvania, said Jonathan Hendrickson with the Department of Community and Economic Development.
“They had two different meetings in February, and they were unable to pay their bills. That’s indicative of a governance issue,” Hendrickson said.
In a February report about the borough’s financial morass, consultants Stevens & Lee made the dysfunction plain.
“Colwyn’s governance is ineffective at best,” according to the report. “Borough council meetings are disorganized and unruly.”
The borough hasn’t completed an audit since 2011, and the consultants couldn’t find financial records from 2012, 2013, and 2014.
“A major concern is that there are a number of unpaid invoices that are not incorporated into the cash-based accounting records that were available,” the report stated.
Hendrickson stressed that assistance wouldn’t come in the form of bailout, but rather “extraordinary technical assistance.”
If approved, state officials will appoint a coordinator to help Colwyn devise a rebound strategy.