Chester’s state-appointed bankruptcy trustee on Monday proposed what could be the ultimate economic rescue for a city drowning in debt.

In a motion filed Monday afternoon, bankruptcy trustee Michael Doweary asked a U.S. Bankruptcy Court judge to approve a plan that would allow his office to seek the sale of the city’s water systems, preferably to a public entity that would operate a new regional agency.

The proposal – which is likely to face a wave of resistance from officials who run the systems in question – aims to speed up the city’s exit from its nearly two-year-old bankruptcy.

“The city’s goal is to ensure guaranteed annual payments,” the bankruptcy trustee’s office said in a press release, which did not disclose amounts or possible upfront fees for the planned sale.

” READ MORE: Chester’s stunning economic decline: How it went from a manufacturing boom town to bankruptcy

But after the lawsuit was filed, Vijay Kapoor, the bankruptcy trustee’s chief of staff, said: “There may be a lot of money at stake here.”

Three years ago, Aqua Pennsylvania agreed to pay the city $410 million for the Chester Water Authority, one of the entities that would be involved in a sale of Chester’s water systems.

Doweary, the state’s bankruptcy trustee, who had opposed any private takeover of the city’s water resources for fear of a possible private takeover of the city’s water resources, which could ultimately lead to an increase in water prices, refused to allow the city to sign the agreement at the time and insisted that the water resources remain in public hands.

He said his plan would “minimize impacts on ratepayers and provide a regional solution to stormwater management.”

Chester, the only city in Delaware County, has been in the state’s “distress” for nearly 30 years, has been in receivership since 2020 and in bankruptcy since November 2022 – primarily due to a shrunken tax base and several years of missed pension payments.

It is one of only about 30 municipalities nationwide to file for bankruptcy since Congress opened up the possibility in the 1930s.

Earlier this year, the state auditor general’s office described the city’s pension system as “in serious distress.” The bankruptcy trustee’s office is in ongoing negotiations with creditors and pensioners.

The city’s fiscal year 2024 spending of $70.6 million is about $2 million more than projected revenues.

After decades of job and resident losses, Chester’s tax base has been wiped out. Property taxes and earned income taxes make up only about a third of the budget. The city funds Harrah’s Philadelphia Casino and Racetrack and a waste-to-energy plant with annual revenues of about $13 million.

Chester’s tax revenues “are insufficient to fund basic city services,” the receiver’s press release said.

Regarding the planned sale of the city’s water systems, Kapoor said on Monday: “We have to move forward on this.”

“We have subsidies that are disappearing. We may have a budget cliff in 2026.”

Water costs in Chester

The insolvency administrator’s office said one aim of the proposal was to keep water costs under control for individuals and businesses.

Property owners in Chester currently pay bills to three different entities: the Chester Water Authority, which provides water to 34 communities in Delaware and Chester counties, the Delaware County Regional Water Quality Control Authority (DELCORA), a wastewater treatment company that serves several cities in the two counties, and the Stormwater Authority of Chester, which manages the city’s stormwater and collects the controversial so-called “rain tax.”

” READ MORE: A “rain tax” triggers a storm of indignation in the Philadelphia region and a court case with far-reaching consequences

On average, the three bills cost homeowners about $1,000 a year. By comparison, the average water bill in Philadelphia is about $895, in a city where the median household income is about 40 percent higher than in Chester.

Horace Strand, executive director of the stormwater authority, said his attorney is currently reviewing the bankruptcy trustee’s documents.

The recipient’s plan

The insolvency administrator will solicit “requests for proposals” from interested parties who wish to purchase, manage and operate the water and sewer authorities as well as the city’s share of DELCORA, “provided it is publicly owned,” the press release said.

“If done right,” Doweary said in the press release, “the plan could not only help Chester get its financial situation under control,” but also “provide a regional solution for stormwater management.”

Mayor Stefan Roots, who was sworn in in January, said he supports the plan, calling it “our best way to keep Chester Chester and ensure we have the revenue we need to meet our obligations and improve and maintain the services our residents need and deserve.”

Kapoor said: “We are taking a very, very big step.

“This will not solve all of Chester’s problems. This is a step. We think it is an important step and a step we need to take.”