From the Times Herald-Record: Westfall, Pa. township forced to file for bankruptcy
Submitted by kfwadmin on Mon, 04/20/2009 - 8:06am
Westfall, Pa. township forced to file for bankruptcy
On hook for $20M judgment
By Stephen Sacco
Times Herald-Record
Posted: April 18, 2009 - 2:00 AM
WESTFALL TOWNSHIP, Pa. — The township has filed for bankruptcy protection because of a $20 million judgment a federal judge ordered the municipality to pay a New Jersey developer.
The township filed under Chapter 9, a rarely used section of the bankruptcy code that pertains to municipalities. Westfall is the only municipality in Pennsylvania to have filed Chapter 9 bankruptcy in living memory, officials said.
Jake Buchanan, vice chairman of the township's board of supervisors, said there was no way Westfall could pay the multimillion-dollar judgment. The township's annual budget is about $1 million, and it serves 2,430 people.
The bankruptcy filing means the township is protected from having to reduce services or sell off assets. Westfall will have trouble finding credit, but the township already operates on a cash basis, Buchanan said. If not for the judgment, the town would be in good financial shape, he added.
The township plans to restructure the debt in a series of hearings. It is likely a portion of the judgment will be voided, but taxpayers will be on the hook for whatever percentage the court decides the township should pay, Buchanan said.
Westfall's legal battles with developer David Katz have gone on for 23 years. Nobody who was in town government when the lawsuits began is in office anymore.
The litigation was over 750 acres of wooded property off Old Milford Road and Mountain Avenue that Katz bought in 1985 in hopes of building homes there. His development plan sparked a series of arguments over zoning and water and sewer lines.
"In the end, they will still have to pay," Katz said Friday.
Katz also said he had offered to negotiate payments with the town after the court judgment. Buchanan said no further negotiations are possible.
Though it is not common for a government entity to declare bankruptcy, it is not unprecedented. Orange County, Calif., declared bankruptcy in 1994 after losing $1.7 billion in taxpayer money on risky Wall Street investments.
Kent Manor
In the posted article about the Pennsylvania town's bankruptcy, the line that got my fullest attention was, "...'but taxpayers will be on the hook for whatever percentage the court decides the township should pay', Buchanan said."
Some well-meaning neighbors and friends have suggested that KFW should focus on school taxes and leave the town budget alone, as it is so much smaller. Well, if we lose the litigation now in process, the litigation that one Town Board member, Lou Tartaro, has publicly denied even exists, each property owner in Kent could be in debt for double or triple what their town taxes are now...and for years to come. This is not to say that KFW supports the development of Kent Manor or disapproves it...but I think that we are owed some mention and explanation of our status by our existing Town Board, some of whom were in office when the decisions leading to this litigation were made.
I'd be grateful to hear how other residents feel about this issue..