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Detroit Water City

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Detroit Water City

If the city can’t even make customers pay their bills, how can it move forward? September 28, 2014

To understand why revitalizing Detroit will be difficult, consider the response to the Detroit Water and Sewerage Department’s (DWSD) recent plan to make overdue customers pay their bills. The DWSD serves more than 4 million customers across the Detroit region. The suburbs mostly buy water from the DWSD wholesale, so it’s mainly city residents and businesses who get billed directly, and over half of them—about 90,000 customers—haven’t paid up. Total past-due bills add up to nearly $90 million, with the average delinquent residential customer owing $540, or more than 7 months’ worth of service, based on an average bill of $75. No enterprise can survive if half its customers don’t pay their bills, so DWSD embarked on a program to make its customers pay or face disconnection of their service—the same requirement placed on every utility customer in America.

A constellation of the usual left-wing suspects denounced the cutoffs. The United Nations called them “an affront to human rights.” Michigan congressman John Conyers said they were “arbitrary and inhumane.” The Michigan Welfare Rights Organization defended those caught stealing water. “I’m certain if there are people who have resorted to this situation, they were forced to. They didn’t have a choice,” said Maureen Taylor, the organization’s state chairwoman. Even Detroit’s bankruptcy judge, Steven Rhodes, no left-winger, said that the “residential shutoff program has caused not only a lot of anger in the city and also a lot of hardship.” The shutoffs would disproportionately hurt minorities and the poor, these and other critics argued. But Detroit is overwhelmingly black and broadly poor, so that claim doesn’t mean much.

The critics ignore a key element of the social contract: we’re obligated to pay for the government services we consume. They also conveniently overlook numerous programs throughout the country—including several in Detroit—that help those struggling to pay their water bills. The DWSD alone has 17,000 customers enrolled in payment plans. In a city where nearly 100,000 water customers don’t pay, and where even a golf course was $438,000 in arrears, those trying to do the right thing are getting played for chumps. In May, DWSD sent out 46,000 shutoff notices but only disconnected service for 10 percent of those it notified. Of the 4,531 customers whose service was cut off, 60 percent had it restored within 24 hours, and 76 percent got their water back within 48 hours. This suggests that most customers can pay—they simply haven’t. As the Detroit News’s Nolan Finley observed, two-thirds of the city’s residents have cable or satellite TV and are presumably paying those bills. And Detroiters already stand to gain from a bankruptcy “grand bargain” that privileges residents and city retirees over out-of-town creditors. The city of Detroit—which actually generates more per-capita revenues than Chicago, Los Angeles, Portland, or Minneapolis— already receives 80 percent of its taxes and revenues from corporations, nonresident landlords, and suburban commuters, which doesn’t jibe with the exploitation narrative.

The DWSD certainly could have handled things better, starting with a clean-up of its commercial accounts. About 11,000 commercial accounts were overdue when the shutoffs began. The top 40 delinquent commercial accounts alone totaled $9.5 million. Starting their collections here—along with a campaign aimed at residential customers to make sure that they knew they were next—would have made sense. And the DWSD seemed ill-equipped to process customer requests for payment plans and hardship relief. This incompetence shouldn’t be too surprising, though, since the DWSD has been a shambles for decades. The department has posted cumulative operating losses of $1.5 billion in the last seven years, even as rates more than doubled over the past decade. A 2012 independent report found that the department, which operates under onerous work rules and 257 separate job classifications, was 80 percent overstaffed, costing taxpayers an extra $134 million per year.

The city called a temporary halt to shutoffs this summer to put better procedures in place and give customers a grace period. But shutoffs have since resumed, with the total reaching 20,000. Opponents filed a motion with Judge Rhodes asking him to issue a restraining order to stop the shutoffs. A ruling is expected soon.

What Detroit’s citizens need most from their government is well-functioning public services. A water utility with 50 percent delinquencies is a reflection of a city that has failed its basic responsibilities. Fixing DWSD is but one of the many changes necessary to restore Detroit—but if city officials don’t have the stomach to collect long-overdue water bills, how will they undertake tougher reforms?

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