(Steve Pardo) The Detroit Water and Sewerage Department has a message for Detroit residents and companies more than 60 days late on their water bills: We’re coming for you.
With more than half of the city’s customers behind on payments, the department is gearing up for an aggressive campaign to shut off service to 1,500-3,000 delinquent accounts weekly, said Darryl Latimer, the department’s deputy director.
Including businesses, schools and commercial buildings, there are 323,900 Detroit water and sewerage accounts; 164,938 were overdue for a total of $175 million as of March 6. Residential accounts total 296,115; 154,229 were delinquent for a total of $91.7 million.
The department halts cutoffs through the winter because of complications associated with freezing temperatures, such as damaged pipes. But this spring, a new contractor has been hired to target those who are more than two months behind or who owe more than $150 — twice the average monthly bill of $75.
The department says it’s now ready to “catch up” with cutoffs halted because of the unusually harsh winter weather. DWSD is looking to show there are consequences associated with not paying water bills, Latimer said.
“Not everyone is in the situation where they can’t afford to pay,” he said. “It’s just that the utility bill is the last bill people choose to pay because there isn’t any threat of being out of service.”
People pay up more when they see the department out cutting off water to neighbors, and the statistics bear that out, officials said. In July, for example, before contractors started on the shutoffs, the department cut off 1,566 customers. That month, it collected $149,000 in water bills.
Extra contractors started working on cutoffs last summer. Attheir peak in October — before cold weather caused a halt to the disconnects — 3,700 cutoffs occurred. The department collected more than $350,000 in overdue bills that month. That number of cutoffs translated to more than double for warm weather months compared to last year.
“We’re trying to shift the behavioral payment patterns of our customer base right now,” said Constance Williams-Levye, DWSD commercial operations specialist. “And so aggressively we’ll have a team of contractors coming in, in addition to our field teams.”
Up to 20 additional contractor crews are expected to be employed working on the cutoffs, DWSD officials said.
The department bills monthly and sends out notices when bills are overdue. When an account is more than 60 days late, a notice goes out saying service could be cut, Latimer said.
Residents don’t necessarily have to move out but Latimer said there were instances, in the case of households with children, where the department of social services will come in and say the kids will be removed from the home if water is not restored.
“Usually folks will then come in and make some kind of arrangement,” Latimer said.
Department officials say the initiative is unrelated to Detroit’s bankruptcy restructuring and is simply a renewed effort to remedy a longstanding problem. The fear of being stuck with Detroit’s delinquencies, however, has kept suburban leaders from embracing a regional water authority proposed by Emergency Manager Kevyn Orr.
Macomb County Executive Mark Hackel said the department should have started being more assertive in its collections years ago.
“It’s all about the management responsibility,” Hackel said. “If they’re just getting around to it now, what were they doing before? Collections are just part of a system that’s been neglected for years.”
On Monday, the department is scheduled to send mailings to thousands of customers warning if their overdue water balances aren’t paid, the bill would be considered a property tax lien and could result in foreclosure.
Communities pay a combination of a fixed amount per month as well as an amount for every thousand cubic feet of water — or every 7,480 gallons. Detroit residents, on average, pay about 25 percent less than suburban water customers.
The department also is tightening a policy that allows customers to make multiple partial payments on overdue accounts. That creates a situation in which some go in and out of delinquency status, Latimer said. Plans call for allowing an overdue customer only one payment arrangement per year.
Suburbs remain reluctant
Orr has been trying to convince suburban officials — without success — to buy into the concept of a regional authority that would take over operations and responsibilities of the utility.
In return for greater control of operations, the authority would pay $47 million a year to the city.
Wayne County Executive Robert Ficano has supported the concept of a regional authority. But Hackel and Oakland County Executive L. Brooks Patterson have balked at the proposal, in part over concerns that their customers would end up taking on the cost of Detroit’s widespread delinquencies.
This month, Orr sent notices to the three counties on ending negotiations until the suburban leaders gain a consensus on a regional authority creation.
Orr said he is actively moving ahead with a second plan — selling the city-owned system or leasing it to a private management firm. Orr told The Detroit News on Wednesday he will send out requests for information in a couple of weeks or sooner gauging interest from private operators.
He says the regional authority plan was a good deal for everyone — including suburban customers — but recognizes that it isn’t going to happen.
Orr said the regional plan would benefit Detroit by generating about $47 million a year in lease payments to the city. The second plan would generate some $72 million a year through lower interest rates, but that money would go only to the water system, not the city.
Improved collections of delinquent Detroit accounts would be helpful, said Robert Daddow, Oakland County’s deputy county executive.
But far too many questions remain over issues including pension liabilities, cash flow and infrastructure and capital improvements, he said.
“Shutting of the water certainly sends a message,” Daddow said. “But this certainly isn’t just the people who will not pay; it’s the people who cannot pay because they don’t have the income level that would enable them to do so.”
In talks regarding the authority, some have asked whether the state could help low-income individuals with water bills. There are statewide programs to help people with their heating bills, for example, including The Heat and Warmth Fund (THAW), a Detroit-basednonprofit that helps people pay heating bills.
“Why not have something equivalent for water and sewer?” Daddow said. But no such program is currently on the table.
Customers end up paying higher rates on bills for those from whom the utility can’t collect. Detroit residents and businesses — retail customers of the department — pay for negligent accounts in Detroit. Suburban customers pay for noncollectable accounts in the suburbs, Latimer explained.
Suburban communities add charges for their customers in addition to the wholesale rate billed by the Detroit water department to cover infrastructure and operating costs.
The department has been working with Detroit Public Schools for years over delinquent accounts. DPS has a current overdue balance of $2.2 million, department officials say, down from a high of $12 million in 2012.
DPS disputes that number, but has been making monthly payments of nearly $1 million under a payment plan approved in October.
The department also continues to work collecting from suburban communities with delinquent accounts.
The department filed a federal lawsuit in November against Highland Park. The city has racked up $17.4 million in sewerage bills and an additional $1.6 million in water bills, according to DWSD. Last month the city removed the case from the federal courts and filed in state court “where it may be a faster process to gain relief,” according to the department.
The city of Inkster has an outstanding balance of nearly $1.2 million as of this month. But the city is paying on the current bill and making additional monthly payments, said Mathew Kannanthanam, a commercial operations specialist with DWSD. The city entered into a payment plan in April to pay the balance off by June of 2016, according to DWSD.
Melvindale also has an outstanding balance of nearly $1.1 million in water and sewerage bills.
The department is also owed more $670,000 from companies in Redford, Dearborn and Macomb Township for pollutant surcharges related to food and other processing disposals. Detroit-based Uncle Ray’s Snacks owes more than $676,000 in pollutant surcharges.
The company has agreed to a payment plan, according to DWSD records