Sarah Rahal|The Detroit News
Detroit — The Detroit Water and Sewerage Department will embark on a door-to-door outreach campaign in April, urging residents to pay their billor apply for assistance as the department expects to lose $38 million this year.
The average collection rate has dropped 20 percentage points from pre-COVID levels and each percentage point represents an annualized loss of $1.9 million, department officials told theBoard of Water Commissioners Wednesday.
The loss is attributable to a combination of a decrease in volume and the ongoing water shutoff moratorium that's in place through the end of the year.
"Collections are based on volume, how much water we sell, and obviously with all the buildings that are empty downtownthat would normally have people in there, utilizing water... volumes are down... On the residential side, we're not getting revenue that we would normally see," DWSD DirectorGary Brown told The Detroit News Thursday.
Detroit extended its residentialwater shutoff moratorium in December 2020through 2022. At the time, Mayor Mike Duggan and city officials said they wereworking on a plan that would end them permanently.
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Prior to the pandemic, DWSD's bill collection rate was 93%, but now the rate is 77% due, in part, to the unintended consequences of the moratorium on water service interruptions, Brown said.
Specifically, customers who have the ability to pay are choosing not to and are accruing large balances; and customers who do not have the ability to pay have not enrolled in multiple programs to reduce or eliminate their accruing balance with payment assistance going forward, he said.
DWSD data shows that the moratoriums make water service even less affordable because theuncollected $38 million in debt is put into water and sewer rates the next year.
"There will be a rate increase in order to cover the baddebt, which in Detroit, is simply passedin cost on to the people that can least afford it," Brown said. "We can account for people that can't afford to pay their bill. Specifically, the governor has provided $15 million to Wayne County, $10 million of which, goes to Detroit to help low-income customers pay their bill. That's not the issue...
"The issue is people that can afford to pay the bill are not paying and they're passing their debt to the whole in which 33% are below poverty. Ultimately, when you have bad debt and it gets passed in the rates, you're really hurting the very people you're trying to help," he added.
Brown said the department is in the process of working on a budget amendment that will be presented to the Detroit City Council later this month. They have already adjusted the budget once in the last year to account for $18 million to hire additional staff for maintenance.
At-large Councilman Coleman A. Young is sponsoring a resolution to extend the shutoff moratorium through 2023, but that vote has been pushed to November.
That time, Brown said, will give them an opportunity to improvethe existingmoratorium because "it's problematic," he said, adding it's not clear how many people can pay their bills but aren't.
"It has a negative effect on our ability to operate. We're not against the moratorium. We want the moratorium to be targeted towards those that are in assistance programs," Brown said. "No matter what your income is, we have an assistance program for every household in Detroit."
DemeekoWilliams, executive director ofHydrate Detroit, a groupwhich helps advocate and pay past-due water bills, said they're working with DWSD to determineincentives for residents to pay their bill. The group is also still pushing for water amnesty in the future.
"I vehemently disagree with the water department's claim that people are simply not paying because of the moratorium,"Williams said."People are suffering from financial hardships due to the pandemic and all of the resource avenues have dried up. A lot of people are afraid of getting on these programs and being chained to them. So we are exploring ways with DWSD for Detroiters to catch up on their bills."
Williams said first, payment plans need to be adjusted. Then, an incentive for people to zero out their existing bills should be created. For example, they could trade in their income tax refund or stimulus checks, he said.
"There needs to be a grace period. Right now, if you miss a payment, you're kicked off the payment plan. We need there to be two or three chances," he said. "Then, we need a water amnesty program because you can't keep raising the rates on water when it's already not affordable."
The potential debt from uncollectedrates comes as the Great Lakes Water Authority last weekapproved a 3.7% hike in wholesale water rates sold to cities like Detroit and a 2.4% increase in sewer rates for the 2023 fiscal year.
The six-member board's unanimous vote followed a public hearing on the proposal in which several Metro Detroit residents voiced concerns about the increases tied in part to $52 million in unpaid water and sewer bills from Highland Park.
Almost half or about 1.15% of the 2.4% sewage rate hike in 2023 owes to Highland Park's debt, officials said. The unpaid debts are passed on through rates to GLWA's remaining member communities. The rates go into effect July 1.
More than 21,000 Detroit residents have been assisted through the Water Residential Assistance Programto address arrearages, provide minor plumbing repairs, and receive a $25 monthly bill credit to help low-income households get to an average household water bill. At least $3 million is still available for new enrollees. The city also provided $21 million in bill payment assistance and/or plumbing repairs to 40,000 Detroit households through the CARES Act.
Households with a past due water bill and which arelow-income cancall Wayne Metropolitan Community Action Alliance at (313) 386-9727 to apply for assistance. In addition to WRAP, the following programs are available:
• COVID Emergency Rental Assistance for utility bills – $1,500 to$2,500 per household based on household size.
• Low Income Household Water Assistance Program, which is a new federally-funded pilot program – up to $650 per household.
• State Emergency Relief Fund – up to $350 per household.
• Michigan Homeowner Assistance Fund – up to $25,000 to homeowners for past due taxes and utility bills.
Staff Writer James Dickson contributed.
srahal@detroitnews.com
Twitter: @SarahRahal_
