The Chester bankruptcy receiver wants the ‘rain tax’ board to disclose how it’s spending the money

In the bankrupt City of Chester, where more than one in four households lives in poverty, the state receiver and the mayor are demanding that the stormwater authority release details on how it is spending the “rain tax” fees it is collecting from residents and businesses, which rank among the highest in the country.

And of the more than 2,200 such entities in the United States that are part of a growing movement, the Chester authority has a relationship with the local government that likely is ranked among the most acrimonious.

The receiver’s office “is absolutely concerned about the burdens on Chester’s ratepayers, most of whom already pay high taxes,” said Vijay Kapoor, the chief of staff. He added that the board’s refusal to produce financial details “makes it all but impossible for them to know what they are getting for their money.”

In response, the board said it was “under no obligation” to comply with the requests. “We don’t have a problem releasing financial documents,” Horace Strand, who is head of the Stormwater Authority of the City of Chester, said Tuesday, “but all requests have to be done properly.”

The receiver countered last week by asking U.S. Bankruptcy Court to order the authority, which has borrowed more than $30 million from the state — a debt borne by ratepayers whose monthly fees doubled in October — to release its financial details. It argued that under state law, the authority, established in 2016, was obligated to do so.

Of the board’s reluctance, said Mayor Stefan Roots, “It appears they have something to hide.”

Strand took umbrage at implications of corruption or mismanagement, saying that since the authority was created, he has overseen $50 million in project and related costs “with no malfeasance.”

Countered Roots, “As a resident of Chester, I have no idea what they’ve spent $50 million on.” Roots has been especially critical of a $10 million grant-funded project to create a flood-control retention pond — which he has dubbed “Lake Inferior” — at a park in the city’s West End. Although that area is historically flood prone, he argues that cheaper alternatives are available.

Asked at the semi-monthly bankruptcy committee meeting Tuesday whether he has seen evidence of the authority’s impact, receiver Michael Doweary responded, “That’s the kind of information we’re looking for.”

Strand says the authority has made significant flood-prevention improvements, including new piping and the building of retention basins.

» READ MORE: A ‘rain tax’ spurs a storm of controversy in the Philly region, and a court case with broad implications

At the Tuesday meeting, Kapoor raised questions about the number of people on the board, which, according to minutes posted on the authority’s site, met six times last year. No meeting lasted more than 30 minutes, one ended in 15 minutes. Board member annual salaries range from $12,000 to $24,000, Strand said.

Kapoor said the articles of incorporation “enumerated five board members” and it now appears to have “at least seven.”

Strand said that pending a court ruling, two members of the council and a city official stepped down from the board last week after the city solicitor ruled that they couldn’t draw the two salaries. If they rejoin the board, said Strand, it would grow to nine members.

Chester residents derisively label the fee “the rain tax,” and evidently aren’t wildly fond of it. As of April 25, 1,711 liens have been filed against property owners for non-payment.

Strand said the fee is not a tax, but is dedicated for a specific purpose. He said the jump to $16.50 in October was a return to the original fee, which was cut in half after a public outcry.

It is relatively new to Chester, and would be to most municipalities in the nation, although the stormwater-utility movement has been a rising tide in recent years as communities contend with heavy rain, ever-increasing volumes of paved surfaces, and tougher federal standards.

Philly, with monthly fees of $18.50, has had one for years, but not many other towns in the region do.

» READ MORE: 15 billion gallons of sewage-polluted water flows annually into Philly’s rivers and streams, report says

The fees are based on an estimate of a property’s hard surfaces or “impervious cover.”

In Chester, Widener University, one of the city’s largest landowners, was socked with a $170,000 annual fee, and later won a significant reduction.

Chester residents have grounds for calling it “the rain tax,” based on a Commonwealth Court decision in a suit brought by West Chester University, which was hit with a $130,000 annual bill.

The court found that the stormwater fee the school is paying is in real life a tax; thus, tax-exempt entities shouldn’t have to pay it. The case now is before the state Supreme Court.

No dates for oral arguments have been set, said a spokesperson for the state Attorney General’s Office, which is representing the university.

Given that only about 30 of the nation’s more than 35,000 municipalities have filed for bankruptcy, Chester almost certainly is the only bankrupt city in the country with a stormwater authority.

In addition to concerns about stress on ratepayers, says Kapoor, the receiver holds that the authority’s assets belong to the city and that that the receiver has an obligation to do what it can to maintain their value, should it decide to “monetize” them.

» READ MORE: Chester's bankruptcy was 70 years in the making

Strand said he views the receiver’s request for financial information as part of a power grab. “It’s a takeover,” he said. “That’s what it’s all about.”

Kapoor said it’s a fact-finding mission. Without documentation, he said, it isn’t possible to “fairly assess the reasonableness and uniformity of the rates imposed on city residents.”

A Bankruptcy Court hearing on the receiver’s motion is scheduled for June 5.