Receiver: Chester ‘not seeing a dime’ of parking revenue because of ‘one-sided’ contract

Chester’s receivership team is sounding the alarm on the city’s parking contract with PFS VII, which it found to be “very one-sided in favor” of the vendor.

A closeup of a parking meter

A parking meter is pictured in this file photo. (AP Photo/Keith Srakocic)

In Montgomery and Delaware counties, what do you wonder about the places, the people, and the culture that you want WHYY to explore?

Chester’s receivership team is sounding the alarm on the city’s parking contract with PFS VII, which it found to be “very one-sided in favor of the parking manager” when compared to industry standards.

“There’s an individual right now who’s getting a parking ticket from a meter that’s going to the parking manager, the city’s not seeing a dime of it,” said Vijay Kapoor, chief of staff to Receiver Michael Doweary, during his public presentation on the matter.

In an interview, Kapoor said that the receiver’s office began looking into the contract a year and a half ago. Now, the receiver is weighing his options to possibly terminate the contract under receiver law.

  • WHYY thanks our sponsors — become a WHYY sponsor

Kapoor said the contract is “hurting local businesses” by adding a barrier to downtown shopping and “hurting the city of Chester.” The receiver alleges Mayor Thaddeus Kirkland pushed the deal through partly to benefit a lobbyist friend.

The concerns regarding the deal were brought to the public’s attention on Dec. 28 at the bi-monthly Municipal Financial Recovery Advisory Committee (MFRAC) meeting where Kirkland, a city councilmember, a governor’s representative, and a county representative usually meet to discuss the city’s worsening financial crisis.

The contract in question was recently subject to an evaluation by an outside firm, Walker Consultants, as well as an internal investigation by the receiver’s office. The findings were presented to the committee. However, Kirkland and Councilman Al Jacobs were notably absent from the meeting and didn’t provide an advance notice for their unavailability.

Those present at the meeting such as C. Kim Bracey, the executive director of MFRAC, were shocked to hear the findings.

“This is just bad and I don’t know what to do. The state’s tired of doling out money to bail out the city on dumb stuff like this,” Bracey said.

WHYY News reached out to the city for comment and a spokesperson for the mayor said that Kirkland would be unable to provide a comment until he meets with the Chester Parking Authority.

According to the Delco Times, Kirkland fired back in support of the contract and against the receiver’s team at a city council meeting the day after the MFRAC meeting. He said business owners are not complaining about the current parking issues, saying the meter installation came in response to commuters using city streets as all-day parking when taking the train to Philadelphia for work. Kirkland also cited spending time with family during the holiday season as the reason for his absence from the meeting.

‘Unilateral power’

PFS VII is a Delaware-based LLC working with the Chester Parking Authority on responsibilities including installing parking meters, receiving collections, and issuing citations.

Under the company’s watch, Chester’s hourly meter fee grew to $2.00, which, according to the receiver, is higher than Philadelphia and other suburban municipalities such as Media, Upper Darby, and West Chester. The cost for expired tickets was found to be “significantly higher than other local jurisdictions.”

The receiver’s office spoke with business owners in downtown Chester and found that some local businesses have been agreeing to pay tickets for customers.

When the receiver’s office looked into the details of the contract, what they found troubled them. The contract with PFS VII called for the installation of 1,500 parking meters, including 500 on Widener University campus.

  • WHYY thanks our sponsors — become a WHYY sponsor

While Chester is set to receive an “advance” of $1,000,000 at pro-rated intervals as the 1,500 meters are installed, it will only receive a percentage of the annual meter revenue after the parking manager’s costs were covered — on a 10-year schedule. To date, Chester has only received $300,000 of the advance, while PFS is receiving all of the parking fees, because only 750 meters have been installed.

According to the contract, the parking manager has the “unilateral power” to decide when to share revenue. Because the city has no ability to force the installation of all 1,500 parking meters, the vendor can technically continue to collect 100% of the revenue for as long as it wants.

The city has the option to terminate the contract. However, it would come at a price of $12.1 million — money that the cash-strapped city doesn’t have.

But, the receiver’s stance is that his office has the authority to terminate the contract without the city being subject to the fee.

“If the receiver acted under Act 47, then our position would be that the city would not be on the hook for many of these buyout provisions,” Kapoor said.

Act 47 is a Pennsylvania law that gives the state-appointed parties the ability to assist financially distressed municipalities.

PFS VII is currently the focus of litigation related to plans to add meters on Widener University’s campus, which the receiver sees as the way the deal “really works financially for the vendor.”

Widener opposes the plan and filed a complaint in the Delaware County Court of Common Pleas in 2019. Judge Barry Dozor issued a temporary injunction which stopped the installation of parking meters on campus. The trial is set for February.

“At this point, Widener University has actually offered the city $325,000 a year for 10 years, a total of $3.25 million, if the city guarantees that it will remove the meters from its campus,” Kapoor said.

This deal only works if the contract with PFS is terminated.

Meanwhile, PFS VII put the city on notice in July 2021 that it is on the hook for its legal fees in the Widener case to the tune of nearly $750,000 and counting, while simultaneously filing a separate action in Pennsylvania Commonwealth Court to stop the receiver from attempting to modify or terminate the contract.

The origin of the city’s deal with PFS VII has also garnered scrutiny lately.

Eric Haggett, of Walker Consultants, said during the meeting that there was “significant ambiguity in the Chester parking contract in comparison to very specific, defined standards that we see in most parking management or asset monetization contracts.”

WHYY News reached out to the Chester Parking Authority in order to get a hold of PFS, but did not receive a response Monday.

On April 25, 2018, Chester signed a master asset agreement with PFS VII “to finance, construct and operate the City’s parking system.” Although Chester was not in receivership at the time, the city’s Act 47 coordinator didn’t take a position on the matter.

However, in the exit plan, the coordinator recommended that Chester “retain qualified financial and legal advisors to help the City formulate its positions with respect to any potential asset monetization.”

Chester officials did no such thing, according to Kapoor.

The city didn’t conduct a preliminary parking study, nor did Chester seek the expertise of independent financial advisors. The city did not seek input from residents or even affected business owners.

There was “internal disagreement” within the city government about going forward, and attorneys at the time also expressed concern about the details of the contract. However, Mayor Kirkland went forward in negotiating the deal and city council subsequently signed off on it.

Prior to the December meeting, the receiver’s office had conversations with city officials regarding the parking contract. Kapoor described the current relationship between the two bodies as “tense” and said that more recent conversations have not been productive.

At the upcoming MFRAC meeting on Jan. 11, there will likely be more information available on the receiver’s next steps.

Get daily updates from WHYY News!

WHYY is your source for fact-based, in-depth journalism and information. As a nonprofit organization, we rely on financial support from readers like you. Please give today.

Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

Together we can reach 100% of WHYY’s fiscal year goal