Surrounded by city and state leaders at Chester’s Access Community Center on Sept. 10, Pennsylvania Governor Josh Shapiro announced an almost $100 million reinvestment package for the city. The development is largely an allocation of state money to specific projects within Chester, with some additional support from the private sector and Delaware County.
Chester is just four miles from Swarthmore College and is entering its fourth year of bankruptcy, an extremely rare status for American cities.
Most of the money being allocated is from the Department of Transportation for projects to improve roads and mobility. This includes the revamping of a stretch of Route 291 that has long been considered dangerous and cuts much of the city off from the riverfront. Some of the funds will also go toward improvements to a private multipurpose sports facility, the infrastructure that connects Widener University’s campus with surrounding neighborhoods, and local arts and community safety programs.
A Constrained Situation
According to Joseph Wharton Professor of History and Political Economy John Caskey, who has long studied Chester’s local economy, the announcement reflects a decision to prioritize the city in state development planning and could spur positive change. However, because the funding the governor could tap into was largely for road and beautification efforts, it likely will not address the root of Chester’s financial struggles head-on.
“Chester’s major problem is it has a very weak tax base and a lot of need for social spending,” Caskey said in an interview with The Phoenix. For that reason, he said the recent allocation more reflects which projects Shapiro could find money for rather than a direct relief of those pressures.
“The transportation funding does address a real problem in Chester, so in that sense, it’s good. Does it bail out Chester? No.”
The Philadelphia Inquirer reported that following the governor’s opening remarks at the announcement, neither Shapiro nor Chester Mayor Stefan Roots mentioned the ongoing bankruptcy.
A History of ‘Distress’
In 1995, following four decades of population and job loss, the post-industrial city was declared to have reached “distressed” status under a Pennsylvania law that allows state intervention to assist struggling municipalities. Since then, Chester has been the subject of varying levels of state oversight. Multiple expert reports and plans intended to help get the city ahead of its financial obligations have produced limited results.
In 2020, Chester was put under state receivership and in 2022, it went into bankruptcy with $48 million in pension deficits, among other shortcomings.
Caskey said that Pennsylvania’s Department of Community and Economic Development, which was involved in the recent reinvestment package announcement, might feel partially responsible for many decades of unsuccessful reforms.
“I think they never faced up to reality,” he said, referencing the fact that the agency made repeated recommendations for improvement and tax base growth without providing the necessary funding for such endeavors.
Providing an investment large and direct enough to address the city’s long-term economic woes, however, would likely require the state legislature’s approval. Pennsylvania has had a divided government since 2015, and Democrats — the party more likely to back such subsidies — have not held full control of Harrisburg since 1993. Chester is far from the only Pennsylvania municipality facing financial trouble, so convincing lawmakers from other regions to earmark dollars for the city is a tall task.
The constraint on regular state support simultaneously makes Shapiro’s September announcement more momentous and limits its scope. The governor’s administration must operate within the bounds set by the legislature when choosing which potential projects around the commonwealth to fund.
Of the $97 million in state, county, and private money now on its way to Chester initiatives, $52.6 million will go toward the Route 291 Complete Streets project to slow down traffic, ease passage across the road, and build a pedestrian trail. Another $27.5 million, including $14.5 million in matching funds from Philadelphia Union, which plays at Chester’s Subaru Park, will allow the riverfront Sportsplex to build many new amenities and provide more youth programming.
A total of $13.5 million in state and private funds will go toward improving the infrastructure connecting downtown Chester with Widener University’s campus, as well as repairing the school’s Lathem Hall. The rest of the money is reserved for other neighborhood leadership, arts, and site repair efforts.
Finding A Way Out
Caskey, who has written a working paper examining Chester’s economic struggles, said it was important for the city to have institutions like Sportsplex, Subaru Park, and Widener University, which draw people to the area and provide crucial resources. But it remains unclear how much revenue they send to the Chester government, especially because Widener University pays no property tax as a nonprofit educational institution and Subaru Park sits on land owned by the county, not the city.
The recent investment, therefore, funds many projects that may relieve spending pressures and expand the tax base as the result of potential economic growth, but doesn’t do so directly. Still, Caskey said the Route 291 project, specifically, could create positive changes in two ways: by opening up a market for new businesses across the road from major riverfront attractions, and by raising the property values of neighborhoods across the road through enhanced access.
“Most people who live in Chester never go across that highway because they have no reason to and it’s not very welcoming. The hope is to undo some of the damage that highway created,” Caskey said.
These effects would be real sources of hope, but Caskey thinks they would take decades to materialize, if they do at all. “[Economic growth from indirect policies] is slow, and I’m not even sure it’ll have that much impact because there are other things that matter,” he noted.
Shapiro also announced that Chester would be designated as an Enterprise Zone, which makes it easier for the state and city to facilitate reinvestment and redevelopment projects. In Caskey’s opinion, this is another step that may help some, but won’t solve the underlying problems. Past state and federal opportunity zone designations, which came with tax breaks and incentives for prospective industry, have not had much success overcoming the city’s high tax rates and safety concerns.
Historical initiatives have helped the city find new revenue and stabilize temporarily. One such example are the state laws that incentivized and cleared the way for a casino opened in Chester in 2007, which has provided a pre-determined minimum of $10 million in yearly local fees.
These isolated revenue sources, however, tend to account for a smaller percentage of the city’s budget each year because they don’t bring economic activity that grows with spending obligations.
A bail-out from the state to give the city funds to pay off its debts and escape bankruptcy would be a big help, but is unlikely to happen at sufficient scale or at all unless the makeup of the legislature changes drastically. Any other worthy endeavor, like substantially increasing economic activity and the percentage of residents that are middle-income, or improving community safety and the school district, will take time.
City bankruptcy is incredibly rare. Since 2001, just 31 local governments have filed for bankruptcy out of almost 39,000 eligible municipalities in the United States.
In a particularly high-profile saga, the city of Detroit, Michigan, declared bankruptcy in 2013. Major industrial and philanthropic organizations with historical ties to the city, like Ford and Kresge, chipped in to avoid a forced sale of some of the city’s most prized assets in what became known as the “Grand Bargain” between public and private interests to emerge from bankruptcy. In more recent years, Detroit has received attention for exciting redevelopment projects and a recovering economy.
Given its small size and lack of well-endowed institutions, however, Chester doesn’t have the same options. “I don’t see the Grand Bargain,” Caskey reflected. “I’m at a loss to figure out how this could work out.”
Under these circumstances, Caskey is pleased with the September announcement and other ongoing work to help improve things where possible: “With limited resources, I think people are pretty smart and trying to do reasonable things.”
