Chester, the 34,000-person Pennsylvania city just south of Philadelphia that houses the region’s Major League Soccer team, has been in bankruptcy for nearly four years, after the pandemic exacerbated its decadeslong economic decline.

The city entered the spotlight this month when Gov. Josh Shapiro announced a $97M injection of public and private funds to “revitalize” the struggling city, but there is disagreement about what type of development should lead that revival.

Chester has a long industrial history, and some players in that sector see its prime transportation links as a good backdrop for a logistics-centric warehouse hub. But Chester’s top elected official is critical of industrial uses on the city’s waterfront and would rather see destination-oriented mixed-use developments.

“We don’t want any more smokestacks … It’s almost a shame it was ever industrial,” Mayor Stefan Roots told Bisnow.

“The industry that’s here, it’s obviously not contributing enough revenue to the city to keep us out of bankruptcy,” he added.

In 2020, then-Pennsylvania Gov. Tom Wolf declared a fiscal emergency in Chester, and the city entered bankruptcy two years later. 

The pandemic was a critical blow to the municipality’s finances as officials contended with a $46M pension funding deficit that was nearly as large as Chester’s entire 2022 budget. This came after the city’s population and tax base fell precipitously. The current number of residents is about half of what the city had at its peak in 1950.

Roots said there is no timeline for the city to emerge from bankruptcy, but Shapiro aims for the $97M to help chart its new future.

More than half of that money — $52M — is from the Pennsylvania Department of Transportation and Delaware County and was allocated to revamp part of Route 291, which is known colloquially as the “Industrial Highway.”

The thoroughfare has developable sites the city is promoting that could house new industrial uses, Chester Economic Development Authority Deputy Executive Director Lisa Gaffney said.

Roots was excited about improvements that he said would make it safer to enter and exit homes along the residential neighborhoods that the four-lane highway crosses.

The funding came as Shapiro announced the expansion of the Enterprise Zone Tax Credit program from just Chester’s waterfront to the entire city.

The program allows eligible for-profit industrial, manufacturing, research and agricultural businesses to receive credits equal to 25% of their investment up to $500K. Qualifying entities must already be located in the city, Gaffney said.

Some industrial players believe the city has a lot to offer regardless of incentives.

"Chester offers a tremendous strategic value proposition for industrial oriented users and given its logistics access to I-95, proximity to the ports and bridges to New Jersey,” Avison Young principal Jim Scott said in an emailed statement. 

The brokerage is marketing two warehouse properties in the city that could draw these types of users.

One is a 105K SF warehouse that Alliance HP built called the Commodore Logistics Center at 3000 W. Fourth St., which has capacity for freezer and cold storage uses.

The other is a 57,800 SF new building under construction on the Industrial Highway at 701 W. Second St. that's being built by an entity associated with Power Home Remodeling, a construction firm headquartered in Chester.

Spaces are also for lease at 800 W. Front St., a waterfront building owned by supply chain solution firm GWSI. The company bought the property from Industrial Investments in 2015.

That parcel was once a Ford manufacturing plant, which shut down in 1961. It eventually came under the control of the Delaware County Economic Development Corp. and was just 30% occupied when Industrial Investments bought it for $1.25M in 1995, partner Jay Bown said.

At the time, he said investors were still broadly skeptical about Chester, and Industrial Investments was an “early adopter” of the city. Perceptions in the industrial sector have changed since then.

“Much more so today, I think people are accepting of Chester as a potential location,” Bown said of industrial developers and investors.

“They need to deal with some of the challenges they have in terms of their money problems and their tax base, but new development will add to the tax base.”

Chester’s waterfront industrial sector has been in the news in recent weeks due to a controversial trash incineration plant that Reworld operates at 10 Highland Ave.

A coalition of Philadelphia City Council members sought to bar the city from sending its refuse there due to the alleged negative impact it has on Chester residents, who are disproportionately low-income and people of color. Roots would also like to see the plant shut down.

“Once that thing leaves the Chester waterfront, the Chester waterfront becomes more valuable,” the mayor said.

“If I could push the incinerator in the river, a hotel would go right there,” he added.

Reworld didn't respond to Bisnow's request for comment about the incinerator.

Avison Young Philadelphia Market Leader Brendan Kelley said industrial businesses can "serve as important catalysts for economic growth" in cities like Chester by creating jobs and attracting investment.

“Their presence often has a ripple effect on the local economy that supports the city’s long-term financial stability,” Kelley said in a statement.

Roots would rather see the waterfront become a mixed-use neighborhood with housing, retail and an expansion of the youth sports complex, which he said is thriving in the shadow of Subaru Park, where the Philadelphia Union professional soccer team plays.

The stadium was delivered in 2010 by the Buccini Pollin Group, which also redeveloped a defunct power plant at 2501 Seaport Drive into an office complex called the Wharf at Rivertown. Power Home Remodeling moved there in 2011 and expanded its lease to 250K SF last year.

When BPG’s waterfront projects first surfaced, there were plans for townhomes and another office building on nearby parcels that haven’t come to fruition.

Gaffney hopes new additions to the East Coast Greenway multi-use path connecting the waterfront to the Industrial Highway will foster a new wave of development along the river.

“It'll look more attractive than it looks today, and we're hoping that that will be a signal that Chester is looking to invest along its waterfront,” she said.

The Chester Economic Development Authority is in the early stages of procuring property and demolishing derelict buildings near the intersection of Welsh and Sixth streets downtown with the goal of putting out a request for proposals to build a transit-oriented development near the Chester Transit Center. 

Some of the $97M allocated earlier this month will go toward that work, which is being carried out with assistance from the Urban Land Institute, Gaffney said.

Chester has seen minimal multifamily construction for decades, and its rental market today is primarily defined by single-family homes and duplexes, said Daniel Woods Real Estate Co. owner Veronica Woods, whose office is just a few blocks from the potential TOD site.

The multifamily property manager with a footprint in both Chester and West Philadelphia said the smaller city is more affordable and presents a lower barrier to entry for new landlords.

Chester also doesn’t have the increasingly restrictive eviction protections that have been passed in Philly in recent years.

“It’s a little more landlord-friendly,” Woods said. “There’s a number of landlords who are able to manage the eviction process on their own without even having to get attorneys.”

She and Gaffney both highlighted Jumpstart Chester as an organization they hope will help chart the city’s future. The local branch of the regionwide nonprofit, which provides educational resources and funding to up-and-coming developers from the neighborhoods they are looking to invest in, expanded to Chester two years ago.

“That would be new, trying to shift the demographics of the typical investor from someone outside coming to rescue a neighborhood versus the people who live here,” Woods said.