August 25, 2014 at 11:44 am

Detroit water shut-offs to return

Residents who get notices still have time to arrange payments

Detroit suspended water service to nearly 17,000 residents from March to late July, when officials temporarily halted shut-offs. Many of those whose service was cut brought their accounts up to date quickly, and their water was restored. (Elizabeth Conley / The Detroit News)

Detroit can expect more controversy, and more people paying up, as a monthlong moratorium against shutting off water for those behind on their bills expires at the end of the day Monday.

Crews are set to resume water shutoffs Tuesday after weeks of promoting how residents behind on their bills can get on a payment plan or get help paying.

Other Metro Detroit cities, facing a financial pinch from unpaid bills, have gotten results by halting service to people who don’t pay. But that approach, which has produced some positive results, generated outrage among some people in Detroit and beyond, who say access to water should be a right.

“We’ve seen a lot more payments,” said Randall Blum, Eastpointe’s finance director. “They need that little kick in the pants to get in here and do it.”

The Macomb County city began issuing 30-day shut-off notices in fall 2011 to delinquent customers with the largest bills because its prior policy, rolling unpaid water charges onto property tax bills, wasn’t working. On average, about 2,500 of Eastpointe’s 13,000 water customers fail to pay on time each month.

“What we were finding, especially when people starting walking away from homes, we ended up getting these tax reversion properties back with delinquent water bills,” Blum said.

When Cathy Square became emergency manager of Hamtramck in 2013, she ordered water shut-offs for nonpayment to close a $350,000 deficit in the city’s water fund. The shortfall prevented the city from matching a federal grant to improve Hamtramck’s water infrastructure.

“Last summer, we shut it off for the first time ever,” Square said. Service was stopped to 150 homes, and 350 other customers paid up to avoid being cut off.

The result: Hamtramck’s water fund now has a $1.8 million surplus, Square said.

“It isn’t just a simplistic story of someone out to get someone else,” she said. “Folks have tried to make it into a political story, but I think it’s more about infrastructure and infrastructure maintenance and how that plays into administration of the service.”

Water industry experts say cities with high delinquency rates sometimes have few other effective options for getting customers to catch up on their bills. Roughly half of Detroit’s 170,000 customers were delinquent as of last spring.

The city held the last of its help sessions Saturday at Cobo Center, offering information and resources to Detroiters who still hadn’t made arrangements to get their accounts up to date.

“It’s not viable to let paying the water bill come to be seen as an option,” said Tom Curtis, deputy executive director of government affairs for the American Water Works Association, which represents more than 4,800 water systems nationwide.

“The utilities have an obligation to the broader city to make sure the utility is viable and sustainable to serve all the residents and business,” Curtis said. “You can’t let uncollected bills go on and on without a significant consequence.”

Utilities have fixed costs, and someone must help cover those expenses to maintain service, said Bob Raucher, who studies the economics of water for Stratus Consulting of Boulder, Colorado.

“There’s so much neglected infrastructure and so many regulatory requirements that the problems are compounding. If they aren’t selling water and people aren’t paying their bills, they still have these fixed obligations,” said Raucher. “It’s a real conundrum everywhere. Detroit is an extreme case.”

The Detroit Water and Sewerage Department runs persistent deficits and needs billions of dollars in infrastructure maintenance. Officials have said the department is owed $89 million in delinquent bills, including more than $43 million from an estimated 80,000 residential accounts.

In a release Monday, the department said about 24,400 residents are on payment plans.

Detroit suspended water service to nearly 17,000 residents from March to late July, when officials temporarily halted shut-offs.Many of those whose service was cut brought their accounts up to date quickly, and their water was restored.

City water officials faced fierce criticism for shutting off service for people who owed more than $150 or were at least two months behind on payments. The crackdown marked the first time in years the department had shut off service for nonpayment.

Collections up

While controversial, the shut-offs brought in millions of dollars. From April through July, the city collected $2.6 million from overdue water accounts, up from $503,000 for the same period in 2013.

Detroit’s average residential delinquency is $540 and the average monthly household bill is about $75.

City workers were out all last week placing signs on homes to notify owners their water will be shut off if they don’t get on a payment plan or pay off their outstanding bills.

“If someone gets a shut-off notice after (Monday) they can still come in and make payment arrangements,” said John Roach, spokesman for Mayor Mike Duggan.

In recent weeks, Duggan’s office has taken over handling the water issue from Emergency Manager Kevyn Orr. As part of its plan, the city has pledged to provide better notice of impending water shut-offs. Bills will clearly explain the shut-off status and employees will put handbills on doorknobs a week before shutting off the water.

'A last resort'

Janice Beecher, the director of the Institute of Public Utilities at Michigan State University, said cities and water authorities should exhaust other options before shutting off service for nonpayment.

“Utility disconnection is always considered a last resort, obviously because of consequences for households but also the cost to utilities,” said Beecher. “Most utilities would prefer to work with customers to establish an affordable payment plan.”

Alternatives include using advanced metering to help customers understand and regulate their water usage, getting them on payment plans based on tiered rates of use or, in rare cases, installing flow restrictors that provide only enough water for basic needs.

“We (want) to be careful about underpricing water and inducing wasteful use that only harms the environment and increases costs over the long run,” Beecher said. “That said, in the context of rising costs and prices for water services, we have to find pragmatic solutions that are equitable as well as efficient.”

Metering upgraded

In Taylor, officials decided to upgrade meter systems and roll overdue water bills into property taxes, instead of shutting off service to late-payers.

“We typically try to work with our residents and even try to get them on payment plans,” said Mayor Rick Sollars. “But we are using this whole conversations as a way to assess our process.”

The city invested more than $3 million in a new metering system that will allow for real-time monitoring, meaning residents don’t have to wait for a bill to see if they are using more water than normal or have a leak.

“The new technology will be able to monitor and advise residents when they are using more water than is their typical pattern,” Sollars said. “This technology is going to be beneficial not only for the city but for residents too.”

Cities across the country are trying creative approaches to deal with unpaid water bills.

'Trying to be fair'

In St. Paul, Minnesota, instead of letting bills pile up, the water authority prefers to get people on a payment plan as soon as they go beyond $150 in debt.

“Everybody needs water but we’re trying to be fair to all the customers,” said Steve Gleason, the business division manager for St. Paul Regional Water Services.

Still, the system resorts to closing the taps if necessary. “We end up shutting off probably 20 people a day,” Gleason said.

Citizens Energy Group, which provides gas, water and sewer utilities to around 800,000 customers in Indianapolis and the surrounding area, hasn’t done any mass water shutoffs.

“We give customers a certain amount of leniency in their bills,” said spokeswoman Sarah Holsapple.

“Of course, if they haven’t paid after a certain amount of time, we’d have to shut off their water. That’s our absolute last resort.”

lrazzaq@detroitnews.com
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