Receiver files plan modification to halt Stormwater Authority board salaries, restore five-member board

Receiver Michael Dowry and his team told the Municipal Financial Recovery Advisory Committee on May 13 that they have filed a plan modification in Commonwealth Court asking the court to stop salary payments to the Stormwater Authority (SAC) board and to require the authority to operate with five board members as set in its articles of incorporation.

Vijay Kapoor, chief of staff and the receiver-designate, led the presentation, saying the filing targets two central problems: “board members are receiving unauthorized compensation,” and “the Stormwater Authority board is operating with more board members than is authorized under the articles of incorporation.” Kapoor said the receiver filed the modification after negotiations and prior orders did not change the authority’s practices.

The filing lists an overview of SAC compensation from 2017 through 2024. Kapoor said, “If you add all of these up through 2024, this is at least $816,000, that was paid out in what we believe are unauthorized salaries.” He said the initiative (labeled SAC 1 in the filing) would stop current and future salary payments and reserves the receiver’s right to seek recoupment of unauthorized payments.

Kapoor cited Section 5610(d) of the Municipal Authorities Act and the Chester Home Rule Charter to support the claim that board compensation requires City Council authorization. He said the receivership and city solicitor reviewed council minutes and could find no resolution or minutes authorizing SAC board member compensation, and that SAC’s articles of incorporation likewise do not authorize officer salaries.

The presentation also alleges the authority voted or otherwise operated with nine board members at points since 2020 even though the articles enumerate five seats. Kapoor traced additions in February 2020 and December 2023 and said the Municipal Authorities Act procedures to amend articles were not followed. He said the filing also notes instances when three City of Chester elected officials served on and accepted compensation from SAC, which the city solicitor advised in a February 15, 2024, opinion violated the Home Rule Charter.

Kapoor described steps taken before filing: the receivership raised concerns in court filings in November 2022, exchanged correspondence with SAC, took depositions (including the executive manager and board chair in October 2023), and in March issued an order directing SAC to cease salaries. When the authority did not comply, the receivership filed the plan modification in Commonwealth Court. Kapoor said the Commonwealth Court judge may schedule a hearing within 30 days and that the court “shall confirm the modification within 60 days” unless the court finds the modification arbitrary or inadequate.

During Q&A an unidentified councilman asked why the modification was filed now rather than earlier. Kapoor said legal uncertainty required waiting on a January 29, 2024 Pennsylvania Supreme Court decision about receivership powers, and that the receivership pursued negotiations and other remedies before resorting to court.

The receivership plans to make court filings available and to update the committee at the next MRAC meeting; Dowry said the team hopes to have a significant update by the committee’s June meeting.

Ending: The plan modification is pending at Commonwealth Court; no judicial outcome was reported at the meeting.