Newly Obtained Memo Raises Questions About Aqua’s Proposed Non-Refundable Payment to City of Chester 

 

On November 27, 2020, the Receiver for the City of Chester, Michael Doweary, sent a memo to the Chester Mayor Thaddeus Kirkland and the Chester City Council with the subject line “Response to your budget proposal.”¹ The memo, obtained by the CWA through Right to Know Law requests, begins by recapping the “primary proposals” made by the Mayor and City Council, listing the first such proposal as: “To accept Aqua’s offer to purchase the water system assets, execute the asset purchase agreement and receive $12 million that can be used in 2021.” The $12 million payment referenced in the memo is detailed in Aqua’s proposed Asset Purchase Agreement (APA), which provides that within two business days of the APA’s effective date, Aqua will deliver to the City of Chester “a payment in the amount of Twelve Million Dollars ($12,000,000).”² The APA calls the payment a “deposit”; however, under the APA, the City of Chester may keep the $12 million under certain circumstances even if Aqua does not ultimately purchase the CWA.³ 

To be clear, there is nothing normal about this. As pointed out in the CWA’s court filings, Aqua and the City have attempted to give their dealings a veneer of legitimacy by including “non-refundable deposits” as part of the bidding process. In so doing, they may have made the City the first municipality in the nation to ever issue a Request for Proposal (RFP) including, as a “key factor” in evaluating bids, “the total amount of any non-refundable deposits or immediately accessible payments to be made by the Offeror to the City.”⁴ Aqua was alone in offering a non-refundable payment,⁵ a payment so enticing that the Mayor and City Council have already decided how to spend it. As Doweary explains in his memo: “Your most recent version of the budget relies on $12 million from Aqua that’s tied to accepting their current proposal to purchase the water system assets.”⁶

But what exactly is this $12 million payment, this “deposit” that the City may keep even if the Aqua deal ultimately falls through? Doweary, in his memo, offers this answer: 

“Some parties have described the $12 million advance payment as a ‘no risk, no strings attached’ offer that the City should take now. I disagree with that assessment. Aqua is offering the $12 million on the condition that the City accepts the asset purchase agreement as proposed.”⁷

Is Doweary characterizing this as an offer of money in exchange for a vote in support of Aqua’s proposal?

In Commonwealth v. Moran, the Pennsylvania Supreme Court examined the legality of payments to local governments in exchange for government officials making a decision in favor of the entity offering the payment. The Court noted that, under 18 Pa.C.S. § 4701, a “person is guilty of bribery, a felony of the third degree, if he offers . . . any pecuniary benefit as consideration for the decision . . . or other exercise of discretion as a public servant . . . .”⁸ The Court explained the broad application of the statute, which criminalizes “every possible type of offer made or designed to influence official action,”⁹ and stated:

There could be no clearer indication of legislative intent: the conduct § 4701 was intended to address is the exchange of privileged treatment in any governmental process for something of value. To ensure equality and impartiality in the legislative, judicial, and administrative processes, public servants are prohibited from exercising their influence more favorably for any person or entity willing to pay something of value, regardless of whether that value inures to the benefit of the public servant or the entity served. The statute’s aim is to prevent the purchase of special influence and to ensure public servants retain the integrity in dealing that their position of public trust requires.¹⁰ 

In Moran, the Court concluded that an offer, or the solicitation of an offer, of “payment of extra money” to a local government on the “condition” of “successful or expedited completion of a legitimate process” is “patently improper” and “what the bribery statute manifestly addresses.”¹¹ When Doweary states that “Aqua is offering the $12 million on the condition that the City accepts the asset purchase agreement as proposed,” what exactly is Doweary saying?  Is Doweary contending that the payment from Aqua is improper, like that described in Moran, or is he saying something else?  The Doweary memo raises questions about this payment from Aqua that CWA ratepayers and City of Chester residents deserve answers to.

Endnotes:

¹ Memorandum from M. Doweary to T. Kirkland and City Council (Nov. 27, 2020) (“Memo”), available at http://chesterwaterfacts.com/wp-content/uploads/2022/05/Document-to-link-to-Endnote-1.pdf.

² Aqua’s Asset Purchase Agreement at p. xv, available at http://chesterwaterfacts.com/wp-content/uploads/2022/02/Promises-What-Promises-7.2020.pdf.

³ See id. at p. xvi; see also “Receiver for the City of Chester Status Update” (Dec. 2, 2020) at p. 2, footnote 2 (in which Doweary explains: “The payment from Aqua was an initial $12 million payment to be non-refundable unless the City sold the CWA to another entity and which is not conditioned on the City being successful in the CWA litigation.”), available at http://chesterwaterfacts.com/wp-content/uploads/2020/12/CWA-report-12-22-20.pdf.

⁴ See Complaint in Chester Water Authority v. City of Chester, et al., CV-2021-009082, Delaware County C.C.P. (Nov. 5, 2021), at p. 9 ¶¶ 41-42, available at http://chesterwaterfacts.com/wp-content/uploads/2022/05/Document-to-link-to-Endnote-4.pdf.

⁵ Id. at p. 10 ¶¶ 44-47.

⁶ Memo at unnumbered p. 1.

⁷ Id. at unnumbered p. 2 (emphasis added).

⁸ Commonwealth v. Moran, 104 A.3d 1136, 1139 (Pa. 2014) (quoting 18 Pa.C.S. § 4701(a)).

⁹ Id. at 1146-47 (quoting 18 Pa.C.S. § 4701 cmt).

¹⁰ Id. at 1147.

¹¹ Id.