In Detroit, water affordability may hit a hurdle

Detroit — The city’s blue ribbon panel on water affordability met for the first time in a daylong session on Tuesday to discuss the practicalities of offering affordability plans to customers of Detroit’s water system.

In focus, the Detroit Water and Sewerage Department faces a logistical problem of its own making: DWSD, which addresses its bills to the “resident” of the home, doesn’t actually know who its customers are.

“When you call Comcast, you give them the last four (digits) of your Social Security number and they pull up your account. Right now, we don’t have that,” DWSD director Gary Brown said.

Having no user information also means the department has no data on how much money its customers make and whether they can afford the bill they’ve been sent.

And because of poor collections efforts in the past, some customers have built up arrearages they can’t pay. System users have about $68 million in arrearages, according to Brown.

But arrearages in the thousands of dollars for a customer is a problem that likely won’t exist in the future. Because of the department’s newly aggressive collections efforts, service will be cut off before the bill can get that high.

The blue ribbon panel, convened by Detroit City Council, is bringing together local leaders and experts in water affordability matters. It plans to meet several times before the end of the year and will present its findings and recommendations to City Council early in the new year. Tuesday’s meeting was meant to introduce panelists to one another and to discuss the legal climate Detroit would face in any affordability plan it offers.

Future meetings will go into more specifics on how to balance the law of the land with the needs of the poor. The panelists were united in their consensus that Detroit should make water, a human need, universally affordable. How to get there is the question.

Consistency in collections efforts, said panelist Bob Miller, deputy director of the Sewerage and Water Board of New Orleans, is important. The New Orleans system has a 98.5 percent collection rate. It enforces a 10 percent penalty for late payments. People who don’t pay their bill get service cut off promptly.

“Whatever you say the process is, that’s what it needs to be,” Miller said.

Some arrearages are from delinquent users who took advantage of an old rule that DWSD couldn’t shut off water service from November through March. When April 1 came, there would be a backlog in delinquent accounts, a backlog too large for the department to manage. That would give the user more time with running water, but their bill would also be running until DWSD cut service, according to Brown.

And some owe to people who simply do not have the money.

The average monthly residential water bill is about $76 per month, Brown said. Rate hikes of 8 to 10 percent per year are likely, according to Brown. For Detroiters, 40 percent of which live below the poverty line, and an estimated one-fourth of which are unemployed, that can amount to a hardship, he said.

While the department now has the capability to offer payment plans — including a 10-30-50 option that allows delinquent users to pay 10 percent of their arrearage and make monthly payments (then 30 percent for backsliders, then 50 percent for those who backslide again) — it can only offer that to users who make in-person visits to payment centers to discuss their situation, Brown said.

“There is no single way to (achieve affordability),” Miller said. “The best way is what works for Detroit.”

The best way also needs to fit within the law, several panelists noted.

Solon Phillips, chief administrative corporation counsel for the city of Detroit, gave a presentation on Bolt vs. Lansing, a 1998 Michigan Supreme Court ruling that may present a roadblock to affordability efforts.

The court ruled in Bolt, in short, that utilities can only price their product on a cost basis. Anything else would be a tax, not a user fee, and would require a public vote. This means, Phillips said, that offering lower rates to lower income users is not allowed.

A number of panelists referred to Detroit as “ground zero” for the water affordability movement, and noted that the nation would be watching. But Phillips warned that any effort that doesn’t address the standard set in Bolt might not survive a lawsuit. Not even a legislative solution could overrule the state Supreme Court’s interpretation of the law.

Panelist Scott Rubin, an attorney who has been working in the utility industry for 30-plus years, said his goal was to give the city “a path to safe, reliable, affordable water service,” but admitted “it’s hard to see where to get there from here” given the legal climate.

One idea that has been tried in other cities is an “inclining block rate structure,” which means customers would pay a low rate for the first few thousands of gallons of water they use, and higher rates as they use more water.

This would allow people enough water to survive on, but not enough to water the front yard. The Northeast Ohio Regional Sewer District, which serves the Cleveland area, already does this, said panelist Julius Ciaccia Jr., CEO of the system.

Phillips said he did not know if Bolt would allow such a thing.

The discussion will continue in about two weeks, said Eric Rothstein, who organized the panel. Now that the panelists know each other and the legal lay of the land, future discussions will dig deeper into the practicalities, they say.

But as Rubin said before the discussion heated up, “if it’s not legal, it’s not worth anything.”

jdickson@detroitnews.com