The hearing to help Judge Steven Rhodes decide whether to place a six-month moratorium on residential water shutoffs in Detroit is stretching into a second day. A group of welfare rights advocates, lawyers and 10 customers are asking the judge to order a halt to service interruptions.
Their witnesses testified yesterday about problems with customers getting on payment plans. A nurse described diseases that can thrive when people don’t have water, and a public utilities expert said Mayor Mike Duggan’s 10-point plan to help people pay water bills won’t work because it increases the amount of money customers owe if they miss a payment.
But the city’s first witness says the deal for the new regional water authority will fall apart if the shutoffs are halted. Consultant Eric Rothstein was paid by the state to help form the new Great Lakes Water Authority as part of the bankruptcy negotiations. The Chicago-based Rothstein says if people won’t have their service shut off, some just won’t pay their water bills. And he says if those funds are not coming in, the financial projections for the new authority won’t be accurate and the deal will “essentially collapse.”
We’ll have updates until the hearing ends.
After an afternoon of law school-like discussions, Judge Steven Rhodes says he’ll issue his ruling at 8:30 a.m. Monday when the city’s bankruptcy trial resumes.
From the testimony of Darryl Latimer,the deputy director and chief customer service officer at the Detroit Water and Sewerage Department.:
*The number of water service shutoffs this year is about the same as last. What’s the difference? “One of the biggest things is publicity. We always, year after year, always execute shutoffs and never really talked about it,” Latimer said. “This year there was a concerted effort to publicize and get work out to the public before we started. … We wanted customers to be proactive with their accounts … You’re hoping customers come in (and pay) so it decreases shutoffs.
*Latimer said there was an increase in bill collections after the publicity about the shutoffs began. “Once there was an awareness of what was actually going to take place and also customers started to get an understanding of if they receive a shutoff notice, now they’re actually coming out. In the past, they didn’t believe we would come,” he said.
*Of the roughly 24,000 shutoffs this year, as many as 15,000 have been restored, according to Latimer. City attorney Sonal Mithani, of the Miller Canfield firm, asked him why the remaining customers did not have service restored.
“It’s a combination of vacant homes, a combination of illegal usage. We have a high rate of illegal usage, and there’s possibly some folks that have chosen to not have their water restored. We don’t know exactly the numbers,” Latimer answered.
*Typically, Latimer said, about 60 percent of the city’s water and sewerage customers are paying bills on time and are not delinquent.
*Typically DWSD turns off service to between 70 and 90 homes each week.
* “The Mayor’s 10-Point Plan was designed to give a clear pathway and what you should if you’re having affordability issues, issues with contacting the department, and make a clear pathway for paying the department or getting assistance or getting your service restored,” Latimer said.
Current Witness: Darryl Latimer is the deputy director and chief customer service officer at the Detroit Water and Sewerage Department. The latter position he began this year.
Prior to the filing of this lawsuit to halt the shutoffs, Latimer said the policy was customers who were 60 days past due with bills of $150 or greater were given a 10-day warning prior to shutoff.
But the city couldn’t turn off service to all customers in that category, Latimer testified. “We had so many customers who were in shutoff status, you couldn’t go after all the accounts,” he said.
Since the lawsuit was filed, the city has implemented a payment plan: the 10-30-50 plan. “The plan today is to try to execute all shutoffs when any customer reaches shutoff status,” Latimer said. But customers are notified about the scheduled shutoff, including receiving a door hanger at their home.
The next witness for the city was Nicolette Bateson, the chief financial officer of the Detroit Water and Sewerage Department. City attorney Tom O’Brien, of the Miller Canfield law firm, questioned her about how the department’s rates are set (they’re based on revenue needs) and how expenditures are projected.
O’Brien asked Bateson about how customers who pay their water bills are funding those who aren’t.
“For every $100 they pay in their bill, it means $11 is going to bad debt expenses,” Bateson said. “I would like to close that gap so that everybody who is paying their bill is not going to something that is inefficient in the system.”
Bateson said she was familiar with the request for the six-month moratorium on shutoffs for past-due customers that Judge Rhodes is considering at this hearing.
“The impact is trying to understand the extent to which it creates more uncertainty in the ability to collect revenues going forward,” Bateson said. “Shutoffs is a tool in the collection tool box.”
O’Brien asked Bateson about what happened to bill paying during the roughly one-month halt on shutoffs last summer.
“For the short time there was a moratorium, there was a reduction in cash flow,” Bateson said.
When the attorneys finished questioning Detroit Chief of Staff Alexis Wiley, Judge Steven Rhodes had his own questions. Here are a few, with Wiley’s answers.
Judge Rhodes: How many customers did you speak to about their difficulty in paying their water bills?
Wiley: Me personally, probably about six or seven that I met at the centers.
Judge Rhodes: Among those customers, what were the two or three most prevalent reasons why these customers told you they were having difficulty paying their water bills?
Wiley: … I would say that they just, some hadn’t paid their bill, they maybe hadn’t received a bill. There were some who were like, “I’m on a tight budget and I wasn’t able to pay my bill.”
Judge Rhodes: So some people for whatever reason had sufficient resources to pay but didn’t.
Wiley: That’s absolutely true.
Judge Rhodes: Some people just didn’t have other income or assets to pay the bills?
Wiley: That’s true.
Judge Rhodes: In that second group, were there some people for whom that inability was temporary and others for whom that inability was more long term?
Wiley: When I spoke with people what they reflected to me things like, “I lost my job,” or “I’m going to start a new job really soon,” or “I was sick.” They all pointed to a temporary situation but they may have been more long term but the pointed to things like that.
Attorney Alice Jennings cross examined Alexis Wiley, the chief of staff for Mayor Mike Duggan who helped craft the 10-point Plan to improve payment rates for the city’s water customers. Jennings represents the group asking for the six-month moratorium on shutoffs to past due customers.
Here’s a portion of their exchange:
Attorney Alice Jennings: How many people are living in Detroit without water in their homes, Ms. Wiley?
Alexis Wiley: I couldn’t say exactly.
Jennings: You don’t know do you?
Wiley: I don’t know the number
Jennings: And you don’t know how many people are children, do you, that are living in homes without water?
Jennings: There’s been no assessment by the mayor or DWSD to make that determination has there?
Wiley: Not directly.
Jennings: Or indirectly?
Wiley: We rely on our partners who do their own analysis of the community who are social service agencies.
Jennings: How many future shutoffs are planned in the next year?
Wiley: That’s all based on how many people pay their bills and how many homes are vacated.
Jennings also asked about the proposed six-month moratorium on shutoffs for past-due customers, beyond the roughly one-month halt to the shutoffs last summer.
Wiley: We would not consider an extension. Considering Detroiters are the ones who have to pay for the ones who are not paying their bills, we can’t saddle them with that.
After receiving about 1,000 calls in August, a United Way assistance telephone line has had about 300 calls this month, according to Alexis Wiley, chief of staff for Mayor Mike Duggan.
“That means that we’re reaching people, that they understand that there’s assistance and that we changed our model so that we have system in place to really help our citizens. … and keep their water on. That’s all we’ve wanted to do since the beginning,” Wiley said.
She also testified that after the city developed, unveiled and promoted its “10-point” plan to assist customers enter payment plans for their water bills, about 30,000 customers enrolled. More than 300 people have received assistance through the Detroit Water Fund, according to Wiley.
In a meeting with the People’s Water Board, Wiley asked that a group of people come to the water fair in August to get assistance and she offered to organize “enough staff” at a customer service center to assist a group the Board would bring.
“I never got anything,” Wiley said. “We need our customers to come forward: tell us that you have a situation. Tell us that you have a problem. We need our advocacy groups to actually bring people.”
City attorneys are questioning Alexis Wiley, Mayor Mike Duggan’s chief of staff, who helped design the Detroit Water and Sewerage Department’s new “10-point plan” to address payment problems and assist customers. The plan has been posted online, distributed at customer service centers and sent to customers, Wiley said.
In developing the plan, Wiley described how the city team first did some research, talking to customers about what problems they were having getting bills paid.
Some said they were trying to pay and couldn’t. “You often need more than just an ID. You needed more documentation,” Wiley said, adding sometimes family members wanted to make payments for elderly relatives and couldn’t because of the rules.
“We took everything that we learned and used that to formulate a plan,” Wiley said. “We built the 10-point plan. We said if you want to come in and pay responsibility for a bill, all you need to do is bring in a valid ID. Then we said we were really cutting red tape and we expanded hours at our service centers.”
The department hired staff as clerks and put more experienced DWSD staff in position to deal directly with the customers.
“We knew there were complicated situations,” Wiley said. “And people didn’t have a clear understanding of what it took to enter into a payment plan.”
The city was asking for 30 percent down, but found that was too much for many people, Wiley testified, so the plan dropped it to 10 percent.
“We really did some analysis in terms of the financial data and we figured out the average arrearage is about $550. We knew that 10 percent was more approachable for people,” Wiley said. Staff talked with customers in the services centers and heard 10 percent was do-able.
The city also worked with social service agencies and Wayne County to inform the plan and build the Detroit Water Fund, which currently has about $1.7 million available, funded by multiple sources including the United Way, the General Motors Foundation and the Michigan Health Endowment Fund.
“The end goal is to really help the customer,” Wiley said.
Under cross examination by attorney Kurt Thornbladh, Rothstein continued his assertions that a moratorium on shutoffs for past due customers “would cause more problems than it would solve.”
Here is one of his responses to a question about halting service.
“In some cases a pause or deferral is one option to look at. I think there are others. While you’re still providing for shutoffs that are to customers that are demonstrably in a position to pay and thereby don’t have a systemwide moratorium, I think you could look toward trying to address some of those logistical challenges and making it easier for those custom who do face affordability concerns to be able to enroll and access assistance without necessary declaring a systemwide moratorium on shutoffs,” Thornbladh said.