MEDIA – Delaware County is now suing to halt the creation of a trust fund agreement connected to Aqua Pennsylvania’s recent purchase of the Delaware County Regional Water Control Authority, which would be the water’s company biggest privatization of a public water and sewer system statewide.
The County filed its lawsuit in the Delaware County Court of Common Pleas on May 14, versus the Delaware County Regional Water Control Authority (DELCORA) of Chester and DELCORA’s Rate Stabilization Fund Trust Agreement between it and Univest Bank of Souderton.
The suit cites the Municipal Authorities Act in claiming DELCORA does not possess the authority to permit itself to distribute public assets to a private, for-profit company such as Aqua Pennsylvania – assets which were planned to be allocated to hold off sewer rate increases for nearly the next decade.
DELCORA, which treats 100 million gallons of wastewater daily for about a half-million customers in 42 municipalities in Delaware and Chester counties, was sold to Aqua Pennsylvania last September in a transaction valued at $276.5 million.
DELCORA’s allegedly Republican-leaning Board of Directors allowed the sale, though it is still pending approval by the Pennsylvania Public Utility Commission.
But after losing the November general election, the outgoing Republican Delaware County Council allowed DELCORA to create a trust agreement naming Univest Bank and Trust Co. as trustee to receive the sale’s proceeds, and spend them over the next eight years to cushion the impact of future rate increases.
The recipient of the trust funds would be Aqua Pennsylvania.
The suit termed the agreement, “a political patronage deal to benefit the outgoing members of the county council and their political supporters, to the detriment of the public at large.”
“In 2019, the Board of DELCORA, appointed by the former Republican majority on the Delaware County Council entered into an agreement – using a no-bid process and allowing no meaningful public input – with Aqua Pennsylvania to sell DELCORA and privatize its operations,” the County stated.
“Additionally, in the final days of their terms, the former Republican majority illegally created a trust to distribute assets from the sale directly back to Aqua Pennsylvania, and not to ratepayers.”
Democratic members of the Delaware County Council cried foul.
“It was nothing more than a giveaway to a political contributor and the hardworking taxpayers of Delaware County deserve better. With the [legal] action we took, we are advancing our goal of transparency and putting people over politics,” Delaware County Council Chairman Brian Zidek said.
However, DELCORA issued a statement and indicated the case was groundless, saying the sale was effectuated to save taxpayers money in the face of expected and future water and sewer rate increases imposed by the Philadelphia Water Department.
“Further and most importantly, the complaint would hurt ratepayers, as the Rate Stabilization Fund was established in an open and transparent process to stabilize rates for their benefit,” DELCORA said.
Aqua Pennsylvania also refuted the litigation and its assertions.
“Any insinuation that the company participated in a transaction that was a political payback is reprehensible and inaccurate. This is a time that we should be focusing county resources on bringing employees back from furlough and responding to the COVID-19 crisis, not on political agendas or expensive lawsuits,” Aqua Pennsylvania President Marc Lucca stated.
One week after filing the litigation, Delaware County wrote an ordinance seeking to dissolve DELCORA, transfer its attributes to the County and prevent the authority from taking any actions unconnected to the ordinance.
The lawsuit defendants oppose that ordinance, due for final reading and debate on June 3.
For counts of violating DELCORA’s Articles of Incorporation, the state Municipal Authorities Act and the Uniform Trust Act, the County is seeking permanent injunctive relief against defendant Delaware County Regional Water Quality Control Authority to comply with the Authorities Act and return all monies expended in violation of the Act, plus the plaintiff demands permanent injunctive relief against DELCORA to prevent the transfer of any DELCORA funds into the trust.
The plaintiff is represented by Carol Steinour Young and Dana W. Chilson of McNees Wallace & Nurick, in Harrisburg.
The defendants have not yet obtained legal counsel.
Delaware County Court of Common Pleas case CV-2020-003185
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com