July 9, 2014 at 10:17 am

Detroit water department to crack down on businesses with overdue bills

Chester Clemons, a water shut-off technician for Detroit, turns off water to a home in the Palmer Woods neighborhood on Tuesday. (Elizabeth Conley / The Detroit News)

After targeting delinquent homeowners for months, the Detroit Water and Sewerage Department is putting businesses on notice that they, too, will have their water shut off if they don’t pay their bills.

The department is sending warning letters this week to about 200 commercial and industrial customers whose accounts it alleges are more than 60 days overdue. They include the state of Michigan, Vargo Golf and Mount Olivet Cemetery.

The water department already has shut off water to about 15,000 Detroit residences since March, though many were restored quickly after payment plans were arranged.

Active commercial and industrial sites account for about one-third of the $90 million in past-due bills the utility says it is owed. The top 40 offenders, according to the department, have past-due accounts ranging from around $35,000 to more than $430,000.

The department isn’t targeting companies involved in payment plans or disputes. Accounts of companies that owe money because of stormwater runoff are a separate issue and those companies won’t receive notices, either.

It’s about collecting what the department is owed — a practice that hasn’t always been enforced, said Bill Johnson, a department spokesman.

“All we’re doing is taking enforcement action to protect the integrity of the system,” Johnson said. “We have not been very aggressive in cutting off water over the years. We admit that. The people will pay their bill when they’re forced to pay their bill. Part of it is our fault. We’ve never had a strict enforcement policy on paying the bills.”

The department announced in March it was starting a campaign aimed at collecting more of the millions owed by residents with delinquent accounts. As of June 30, the department had 176,879 active residential accounts. The more than 80,300 accounts delinquent by 60 days or more totaled $43.4 million. The department began cutting off water in the spring when the weather warmed. The bills may be disputed.

In many cases, water service is restored in less than two days. In June, for example, water was cut to 7,210 accounts. Of those accounts, 3,118 paid their past bills or became involved in a payment program and had their water turned back on, department officials said Tuesday. They suspect others who have services shut off have turned their water on illegally, a constant problem with shut-offs, officials said.

Some human rights groups upset by the residential shut-offs asked why the department wasn’t going after businesses. More than 22,735 accounts in the city are listed as commercial or industrial. Their overdue amounts total $33.8 million, according to the department.

Department officials said now they are taking action. The businesses notified will have 10 days to contact the department and work to settle past debts or risk shutoff.

One owner of a company listed as having a $80,729 delinquency told The Detroit News the problem with its account stems from a tenant.

Michael Samhat, president of Crown Enterprises Inc., a Warren real estate group, said the company is working with the tenant to come to terms with the department over the bill. Already, a payment close to $400,000 has been made for sewer runoff charges, Samhat said.

“The property doesn’t have active water on the site — not even a meter,” said Samhat, who declined to name the tenant. “We’re not sure how this bill got generated. Right now, we’re working with the tenant trying to help them and we want to work with the city of Detroit water department.”

Collections 'badly handled'

The department has been heavily criticized for its strategy of cutting off residents, many of whom are poor and most of whom are African-American. The issue made national news after some advocacy groups asked the United Nations to intervene. On June 25, U.N. experts responded, saying: “Disconnection of water services because of failure to pay due to lack of means constitutes a violation of the human right to water and other international human rights.”

U.S. Rep. John Conyers, D-Detroit, told a group gathered Monday that water is a fundamental human right. “We can ill afford the public health catastrophe that will result when people are denied access to clean water,” Conyers said.

Detroit Mayor Mike Duggan, following a Tuesday news conference at the city’s Public Safety headquarters, said the issue of delinquent water bills was “badly handled.”

“People need to pay their bills, but it could have been handled in a far more sensitive way,” Duggan told reporters, adding he’s been unhappy over the fact that he is not currently responsible for the water department.

“We should have had funds for those who genuinely can’t pay set up ahead of time. We should have had more rigorous notices before we saw people turning off water,” he added. “It was not handled the way I would have handled it. In a few months it won’t be a problem again.”

Duggan added, however, that he has been pleased with the willingness of the water board to structure payment plans. About 17,000 Detroiters are involved in some sort of payment plan.

Assistance increased

Some organizations have formed from the controversy. A new group called the Detroit Water Brigade is taking collections and donations and reported dropping off about 40 cases of water to the Dexter Elmhurst Community Center on the city’s west side for those who need clean drinking water.

On Tuesday, the water department announced a $1 million water assistance program for low-income residents. Customers can receive up to $1,500 toward their water bill. Those eligible must be under 200 percent of the poverty line, about $47,000 for a family of four, and their total bill can’t exceed $2,500. Anyone looking for assistance can call (877) 646-2831 or (313) 267-8000.

The water department has about 4 million customers in 127 communities in addition to Detroit. The suburban customers face a different pay structure than Detroiters. The overdue Detroit accounts don’t affect suburban rates, but they do affect Detroiters.

Rate increases in the suburbs tend to vary widely but last year averaged 4.6 percent. Detroit’s rate was 8.7 percent in part, officials said, because the overdue accounts of those who didn’t pay need to be absorbed by Detroit businesses and residents who are paying.

spardo@detroitnews.com
(313) 222-2112