Now this is a black eye that the city of Detroit does not need. As regular readers know, I suspected that the Detroit Water and Sewerage Department would become a “hot potato” in the city’s reorganization efforts. It has, but not quite the way I expected. One of the big issues that Macomb and Oakland counties had raised was a concern that, if the system was regionalized, their residents would be paying for Detroiters who were not paying their water bills. Recent news reports seem to have confirmed this fear.
In March, it was reported that some 165,000 of the water department’s 323,900 business, school, and commercial accounts were overdue, and more than 154,000 of 296,000 residential accounts were delinquent. The department took the position that water bills that were more than 60 days behind, would be shut off. In April, DWSD sent 44,273 shut-off notices, and 3,025 customers were actually shut off for non-payment. There was also additional collections of $400,000 reported as compared to the same time in 2013.
These notices and shut-offs resulted in a flurry of activity including a number of organizations petitioning the United Nations to address the issue and challenging many aspects of the water system finances. The UN responded, saying that shutting off water was an affront to those who could not pay.
In May, DWSD reportedly sent out 46,000 shut-off notices. Of those, only 4,531 customers had water service shut off. The Detroit Free Press and some politicians have condemned the DWSD for what is reported to be a very poor implementation strategy. If the stories of lack of outreach or warning are true, as to the process by which the shutoffs were executed, the Free Press has a point. Clearly, shutting off water has serious health implications. Perhaps it would have been better had the water department started with businesses and put out the word more emphatically to residents that shut-offs were coming. However, I wonder about the Free Press’ apparent bent on treating clean water and sanitation services as free when they most certainly are not. These services have a significant cost and that cost has already begun to drive current and former paying customers to consider other options.
The UN representative stated “because of a high poverty rate and a high unemployment rate, relatively expensive water bills in Detroit are unaffordable for a significant portion of the population.” Contrast that to the water department’s report that, within 24 hours, 60 percent of the shut-off customers paid their accounts in full. The DWSD announced that, of the 4,500 customers who were shut off, some 76 percent of them had paid their bills and their water was back on within 48 hours. While the 24 percent remaining (some of them might be unoccupied buildings or businesses and so the number may actually be lower) is a significant number — and certainly need help and the DWSD should have been offering that help — 76 percent of the shut-off customers figured out a way to get their bills paid within 48 hours. The thought that some 50 percent of Detroiters simply do not pay for a service that they use daily and expect the other 50 percent and the rest of us to foot the bills is dismaying. Actually, it’s insulting.
Clean water and sewage treatment is not free and everyone who benefits from it should pay for it, to the extent that they can. I was equally surprised to learn that swaths of California have no water meters, everyone paid a flat rate regardless of usage. Not surprisingly, a newspaper reports that those “flat rate – no meter” communities use 39 percent more water per capita than the state average.
Asking people to pay for what they use gives them a stake in their usage and ensures that the costs are spread among every user. Water is a necessity for cleanliness and health, and we need to figure out a way to make sure people who truly cannot afford it are not forced to do without, but if 76 percent of those not paying are able to, and are choosing not to pay, it appears that the DWSD’s tougher approach makes more sense than the status quo. That seems particularly true at a time when the water department is asking its neighbors to help foot the bill for decades of deferred maintenance.
Arthur Siegal is a partner at Jaffe Raitt Heuer & Weiss, and is a regular contributor to DBusiness.com.
