Detroit businesses face water shut-offs

Christine Ferretti
The Detroit News

Detroit — The city’s water department this week plans to step up enforcement of overdue business accounts to collect tens of millions in lost revenue, but it won’t shut off residential water until a proven safety net is in place.

Although there are 26,000 residential accounts with outstanding balances, officials said they will target commercial accounts first.

The Detroit Water and Sewerage Department is seeking compliance from 2,044 delinquent commercial accounts to avoid shut-offs. Those customers owe DWSD about $20 million, said Bill Nowling, spokesman for a new regional water authority set to go into effect in July.

The department will also go after some 8,355 accounts that have been deemed illegal hookups — in which the water has been shut off at a meter but is still showing water usage. The water thefts account for about $13.6 million owed to DWSD, he said.

“We know where those properties are,” Nowling said . “We are going to start processing those.”

There will be a point when the department does have to resume shutting off water to delinquent residential accounts, Nowling said. But after the shut-offs caused a national uproar last year, the city wants to be certain all eligible residents know about — and take advantage of — payment assistance programs.

“There’s no plan currently to go after the residential (accounts) until we have gotten a handle on whether the Detroit Water Fund assistance program is working,” Nowling said. “We think it is working, but we think it could work better.”

The approach is in stark contrast to the widespread residential shut-offs that kicked off last March.

The aggressive campaign angered residents, activists and civic groups, spurring protests over the city’s treatment of delinquent water customers.

Soon after, former emergency manager Kevyn Orr gave Mayor Mike Duggan more control over the water department. Duggan vowed to help needy customers pay their water bills, while holding those who can afford to pay accountable.

He implemented a temporary moratorium and assistance fund for low-income residents in a 10-point plan to educate and expand assistance options for those struggling with delinquency.

“You can’t ramp up shut-offs without having an option for the people who truly need help,” said Alexis Wiley, Duggan’s chief of staff. “That’s why when we took over, we quickly put in a program to help people and now are determined to make sure we don’t do what was done last time.

“The key piece is that we want to make sure it’s done thoughtfully. There are a lot more systems in place to help our customers now than ever before.”

Wiley said about 18,000 residential customers were in registered payment plans before the mayor’s office stepped in. Since Aug. 1, that number has grown to 25,464, she said.

Duggan’s office established a streamlined payment plan and touted the creation of the $2 million Detroit Water Fund to help low-income residents, administered by the United Way for Southeastern Michigan.

To qualify, residents must have an outstanding balance of $300 to $1,000; maintain average water usage for household size; and have an income at or below 150 percent of the federal poverty level. In January, the outstanding balance parameters expanded to $2,000.

Since launching in August, the program has had about 3,800 applicants. About 1,800 have qualified and are receiving assistance from the fund, says Doug Plant, vice president of operations for the United Way.

Eligibility provides one year of assistance to residents and will account for about $700,000 of the money in the fund that officials believe is underutilized.

The United Way is now working alongside the mayor’s office and water department to evaluate ways to simplify the application process to make it even more “customer friendly.”

“There’s never been the influx yet that we anticipated,” he said. “We think it’s underutilized, so we’re looking at outreach to encourage people to apply.”

Collecting lost revenue is a priority as the water department transitions to the newly created Great Lakes Water Authority, set to go into effect July 1.

The authority, created as part of the city’s landmark bankruptcy, is designed to maintain Detroit’s ownership of the water system while giving suburbs more of a stake in its operations.

Under the agreement, the city will lease infrastructure to suburban communities for a 40-year, $50 million annual fee and an annual $4.5 million payment assistance fund. DWSD will still be responsible for Detroit billings, collections and debts. The authority will handle operations in outlying communities.

Mediated discussions over the details of the lease agreement are being overseen by U.S. District Judge Sean Cox.

For the lease agreement to be completely operational, bondholders of DWSD have to approve the plan.

“Making sure that DWSD itself in its current state is as sound fiscally as it can be is very important in the minds of creditors, which are ultimately going to approve a regional deal,” Nowling said.

Creditors have been pushing DWSD to up with not just a plan to collect, but a plan and processes that could change the mindset that the water bill is something tcitizens can let slide, Nowling said.

“People have become conditioned to say ‘well, I’m short tonight. I’m going to pay my water bill next month,’ ” he said.

Wiley noted Monday that a big difference between last year and today is the unified effort to get residents into plans on the front end, rather than waiting until it’s shut-off time.

“The key focus for all of us is looking at our overall payment plan and increasing our success rate,” she said.