Can Cities Make Water Affordable? Detroit Offers Hope, and Disappointment

Since the UN got involved, the city has taken steps to make utility bills more affordable. But 17,000 customers still could lose their service next month.
by | April 24, 2018
People protesting the water shutoffs in Detroit in 2014. (AP)

Almost four years ago, Detroit shut off water for more than 30,000 households who were months late on their water bills.

The United Nations got involved, saying the shutoffs were "contrary to human rights" because they deprived poor people of access to clean, running water.

The current director of Detroit's Water and Sewerage Department, Gary Brown, agrees. And yet, the same scenario is likely to happen again next month.

"The United Nations was in Detroit protesting, rightfully so, the way Detroiters were being treated with these shutoffs," says Brown, who joined the water department in 2016. "We’re not a private company that’s here to make a profit. We have a social responsibility to make sure that water is affordable."

The city has spent the last few years trying to help people afford their water bills but has had limited success.

It established an assistance program that reduces the monthly water bill for low-income households and helps them pay off their water debt. In exchange, people in the program have to keep up with their current, reduced payments. More than 4,000 households participate.

For people who make too much to qualify for the program, the department offers six- to 24-month payment plans for getting rid of their water debt. The city also started offering free services that are likely to lower monthly water bills, such as replacing leaky pipes and installing a smaller toilet that uses less water.

"I can make a strong argument with data that when you make water affordable, you will collect more," says Brown. "When it’s unaffordable, people just check out and they don’t pay anything.”

Despite these new policies and the city's progress, at the beginning of next month, more than 17,000 residential customers will be notified that they're at risk of losing their water.

No one who takes part in the assistance programs will experience an interruption, but Brown says they need to do a better job of getting the word out about these services. The city plans to issue four notices before moving forward with shutoffs. In the past, about 90 percent of customers have contacted the city and avoided disruption after receiving notices, Brown says. But a couple thousand households probably will lose service.

These ongoing challenges in Detroit serve as a reminder of a problem that plagues many cities and low-income people.

According to a recent report from the Urban Institute, more than two-thirds of poor families are "housing burdened," meaning they spend more than 30 percent of their annual income on housing. When so much of families' paychecks go to rent or a mortgage, they struggle to cover other expenses.

“Water and other utilities are often one of the last bills paid," says Heidi Goldberg, director of economic and financial empowerment programs at the National League of Cities. "A lot of families end up delinquent as a result."

Water shutoffs aren't unique to Detroit. According to BuzzFeed, Los Angeles, Houston, Philadelphia, and San Diego shut off between 14,000 (Los Angeles) and 26,000 (San Diego) properties in 2014. New York City reportedly does not cut off service for failure to pay.

At least one city, Philadelphia, is testing out the idea of setting water rates based on people's ability to pay. Other places, such as Baltimore, are studying similar proposals. But that may not be possible in Detroit, where there is disagreement over whether state law prevents cities from setting income-based water rates.

Meanwhile, the National League of Cities has used late water bills as an early warning sign of financial distress. When detected, they intervene with financial counselors and restructured payment plans, and promising outcomes, such as lower water bill balances in Newark, N.J., and fewer late fees in St. Petersburg, Fla., have resulted. (None of the participating cities went so far as to forgive debt or tailor bills to people's income.)

Under Detroit's water assistance program, customers at or below 150 percent of the federal poverty line can get their water debt frozen and their monthly water bill reduced by roughly 33 percent for one year. The city will also pay up to $700 in water debt (the average is $663.).

Reducing water rates doesn't just benefit the residents, says Brown, Detroit's water department director.

Since the water assistance program launched in 2016, the monthly collection rate has increased from 77 percent to 92 percent. Each percentage point increase means an additional $4.5 million in revenue for the city.

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*This story has been updated to clarify that it is unclear whether state law prevents cities from setting income-based water rates.