Public Health & Wealth in Post-Bankruptcy Detroit

Water and Well-Being

Water and Well-Being 

The Charter of the City of Detroit, Declaration of Rights, provides that “the people have a right to expect city government to provide for its residents safe drinking water and a sanitary, environmentally sound city.” DWSD, therefore, has a mandate to advance universal access to water and sewer services.

“Water should be a human right. You know, you can’t live without water. You have to worry about where you’re going to shower when you go to work. How can you cook your food if you don’t have water to rinse it off, or to wash your pots and pans? You can’t wash your clothes...and there are people being shut off who have children.”

MASS WATER SERVICE SHUT OFFS are not something new for Detroit city residents behind on or unable to pay their water bills (see Fig. 2). In 2005 alone, 42,000 Detroit households experienced shut offs. That same year members of the Michigan Welfare Rights Organization drafted a “Water Affordability Plan” (WAP) and presented it to the city council. This was accepted by the city council but was not implemented. Instead the city council came up its own “Detroit’s Residential Water Assistance Program (DRWAP).” 

The WAP proposal called for a payment plan that is income subsidized and determined by the ratio of household income to the utility bill. Proponents of this plan pointed out that many Detroiters pay more than 20% of their income on water bills and believe that the utility bill should not exceed more than 2% or 3% of household income and cover those at or below 175% FPL.12

DRWAP was aimed towards low-income residents, at or below 200% FPL, living in single-family households, whose water services was shut off or facing one. Critics of this policy pointed out that only 300 out of the 24,743 enrolled residents have not defaulted.

The WAP proposal resurfaced again in October 2014 by various coalitions, including the Detroit People’s Water Board and the Michigan Welfare Rights Organization, in response to more water shut offs,13 skepticism over sustainable assistance, a statement released by a visit by representatives of the United Nations,14 and a new plan implemented by Mayor Duggan and the Detroit Water & Sewerage Department (DWSD).15

The Mayor’s plan is referred to as the “10-Point Plan” or the “10/30/50 Plan” and was implemented in August 2014.16 Concurrently during this period was the creation of a new regional water authority (The Great Lakes Water Authority).

Kevyn Orr, the Emergency Manager, the Detroit City Council along with Mayor Duggan, and the State of Michigan under Governor Snyder, all negotiated the final bankruptcy-restructuring plan for the DWSD, which was approved by US bankruptcy Judge Steven Rhodes. Under this arrangement, also known as the “Grand Bargain,"17 the DSWD maintained the ownership of the water and sewage infrastructure and leases the water and sewage system to the newly created Great Lakes Water Authority, formally approved in October 2014. The GLWA controls the operations and the management of the forty-year leasing arrangement of the water and sewage system. The forty-year lease of the water and sewage infrastructure is to bring in $50 million per year to Detroit) with approximately $4.5 million set aside to help low ncome residents in the city to pay utility bills)—is to go towards the upgrade and maintenance of the aging infrastructure. 

This water and sewerage system provides services for eight counties, four million people and covers almost 1,100 square miles, with 75% of the customers living in the suburbs. The GLWA, which commenced operations on January 1 2016, is comprised of six appointees (two appointed by the Detroit Mayor; county executives from Oakland, Wayne and Macomb county; and one appointed by the Michigan governor) who then make key decisions about the budget, debt issuance, operations, pricing, rates, labor agreements and contracts, and decision-making regarding the water and sewage. The Governor’s appointee represents additional counties such as Genesee, Washtenaw and Monroe. 

It is hard not to ignore the post-bankruptcy reality of this “special purpose government” of the Authority where the residents and city of Detroit is saddled with the disproportionate cost burden of an oversized aging infrastructure (with upgrades, maintenance, and water main leakages), weakened representation, and decision-making power. And, to also wonder to what extent the most vulnerable members of Detroit shoulder the burden of aging oversized water and sewage infrastructure costs for the other wealthier counties and residents of SE Michigan. Costs that some believe are underestimated in the annual $50 million figure. Many of Detroit’s water pipes were laid in the early to mid 1900s and has been part of a system that was designed for a population over $1 million.

Figure 2 includes a graph showcasing monthly water shutoffs and emergency management in Detroit.

To qualify for the 10 Point Plan residents with overdue bills and penalty fees, first have to pay upfront 10% of the overdue bill and the rest over a 24-month period. If one defaults, the water is shut off, one re-enrolls but now one has to pay 30% of the bill upfront and pay of the rest over 24-months. If you default for second time, the same process but one pays 50% of the remaining bill upfront. 

In March 2016, another plan, the Water Residential Plan (WRAP) was launched and administered by the Great Lakes Water Authority (GLWA). WRAP co-exists with Duggan’s earlier 10/30/50 Plan is offered in counties including Wayne, Oakland and Macomb. WRAP provides qualified low-income households with credits and freezes 12-month arrears and delinquencies. Critics of this plan have pointed out that ¾ of Detroit customers are behind in payments and around 3000 are on a waitlist to receive credits.

Some Detroiters observed that, “Indebtedness isn’t treated equally in our society.”18 In other words, they argued that the DWSD was being tough on low-income people’s crimes of indebtedness and whole lot more lenient on water and sewerage debts owed by large private and government owned businesses such as the Joe Louis Arena, the Ford Field or the Palmer Golf Club. The large businesses owed anywhere from $55,000 to $200,000 and still had their services, whereas the water was shut off for a low-income single mother who owed more than $150.19 In October 2015, this practiced was confirmed by Gary Brown the new Director of the Detroit Water and Sewerage Department. Additionally, a report also reiterated this point by identifying that in 2015, 1 out 9 the city’s 200,000 residential accounts were disconnected, compared to 1 in 37 of the city’s 25,000 non-residential accounts.”20

Figure 2 highlights the see-saw of shutoffs and reconnections pre-, during-, and post- bankruptcy. Another resident commented on the current shut offs, pre-and post-bankruptcy, by pointing out that, “the bankruptcy was about the water, the water was not about the bankruptcy.” She felt that the fee hikes and shut offs are part of making it more appealing to private investors. And that water and sewage shut offs directed at poor Detroiters is simply a way to clean out existing neighborhoods for proper development of the land of a “shrinking” city. 

Some have also observed that the DWSD passed on the increased costs of the water leakage (due to aging infrastructure costs, lack of reinvestments, and ineffective home plumbing) on to residents and made errors on bills. By raising their water rates by 8.7% the bills were unaffordable for communities and individuals living under the federal poverty levels and/or low-income people. And, billing errors by DWSD resulted in water shut offs. A resident that called into the water hotline for help mentioned that her water got shut off at the place she rents because the landlord did not pay the water bill (despite the fact that she had made arrangements to pay her landlord for water). Water and sewage rates have risen in the city by 8.7% in 2014. In 2015, the DWSD announced a rate increase of 3.4% for Detroiters, including a 16 percent increase for the sewerage portion of the bill.21

In Fall 2015, the city commissioned Blue Ribbon Panel Report, and the authors have identified these and many additional issues that speak to the “affordability dichotomy” where pricing increases due to aging and unmaintained infrastructure costs are borne on the backs of the remaining low-income and primarily African American residents.22 The authors point out that Detroit’s water and sewage plants were built in the 1940s to originally serve approximately four million residents. Additionally, the report highlighted that while Detroit represented 20% of the service area population a disproportionate amount of service debt (51%) is allocated to the city. The report also found that the service debt was even more acutely felt by a declining populace (now just below 700,000) through decade long water and sewage rate increases. 

The city of Detroit, the state of Michigan and the US has experienced enormous regional variation and disparities in water and sewer services. So, for instance, in 2009, the average water and sewerage bill in Detroit was $62.75 and the same month it was $26.56 in its suburbs. In their study, Butts and Gasteyer found that higher rates are often associated with places with residents of “minority racial status,” “postindustrial divestment,” and depopulation. They argue that, in cities such as Detroit, the fixed costs of water infrastructure coupled with decreased demand for water/ sewage service due to fewer remaining people/ households contribute to rising water rates for an increasingly disenfranchised segregated population. This fixed cost burden, which is shifted onto a “shrinking” and vulnerable population, also has to contend with an aging infrastructure that has costs related to repairs and maintenance. In 2002, the DWSD estimated that it lost 35 billion gallons of water (about $25 million in cost) due to leakage associated with an aging water infrastructure.23

Wallace Turbeville has pointed out that a mixture of an acute city government revenue decline coupled with an escalation of financial expenses fast-tracked Detroit’s bankruptcy. The “financial expenses” refer to bond debt servicing payments and fees or expenses directly resulting from a buildup in risky bond debt with private banks that the city entered into since the early 2000s. Participation in these risky municipal bonds was directly linked to the downgrading of Detroit’s “credit worthiness” status.24 According to one report, the CFO of DWSD acknowledged the urgency of clearing Detroit’s “bad debt” through mass water shut offs to improve the city’s credit rating credit rating agencies.25 According to official estimates (determined under the Emergency Manager) the $5.8 billion debt owed by DWSD to the overall debt is a liability of the city of Detroit.26 Detroit residents comprise of about a quarter of the population served. This disproportionate amount many observers suggest, should not be the city’s liability.

Some local residents believe that the DWSD is a key public asset that is in the process of being “privatized” after it was restructured into a new regional government entity, The Great Lakes Water Authority—with unproven benefits to residents. And, that the organizational and political separation and transfer from city to authority and eventually private corporations was one of the key strategic goals of the Emergency Manager. Others residents believe that relieving a dysfunctional, inadequate and corrupt city government from functions such as water/sewerage or transportation services into quasi-public authorities is the way to restore needed services to all Detroiters. These quasi-public or private-public entities, some regional and others local, proponents argue would go beyond the inefficiencies of city government and the callousness of large auto corporations, actors who have both contributed to Detroit’s financial crisis. 

Several local residents and writers have raised the issue of “water as a life giving and sustaining” substance and the highly undemocratic nature of the shut offs. Biology teaches us how the lack of water negatively impacts the human body. Water is a major component of our bodies and lack of water consumption can interfere with temperature regulation, metabolism, the flushing of waste/toxins, hydration and many important functions. So, preventable issues such as dehydration, stroke, seizures, and the protection of organs, bones, muscle, and blood depends on regular intake of clean water. Such preventable conditions such as lack of clean and accessible water can add to one’s disease burden and mortality, especially if a person already has a chronic condition or disability.27

Water is also needed for a nebulizer machine for patients, like 12-year-old Aldontez, who had acute asthma, so that he could breathe. Water is also needed for oxygen tanks for patients like Nicole, who is fighting “… scarcoidosis, an autoimmune disease that affects the lungs and other organs.” The scarcoidosis was intensified by the mold in her Section 8 subsidized rental and she was trapped in this rental because she couldn’t transfer the subsidy to a new place due to her $3000 overdue water bill.28

Water, especially clean water, is needed to drink, cook, flush and clean toilets, clean bodies, clean human waste, external and internal wounds, clothes, food and homes. If water is not accessible for any one of these purposes individuals have to expend time to find them at the cost of not doing other activities (school, work, or taking care of loved ones). Detroit resident Rhonda raises these issues when she points out that “water should be a human right.” 

Lack of water limits individual and community access to hygiene and sanitation. And much has been studied and written about both nationally and globally about the costs of lack of sanitation and hygiene. Lack of wastewater disposal and treatment and ability to maintain personal hygiene can negatively impact children’s experiences at school and adult experiences at work (or gaining employment). Furthermore, not having access to hygiene can increase personal stigma and powerlessness -- which exacerbates economic and health inequalities. Some residents have remarked that homes with blue marks imprinted on the front of their sidewalks indicating that water has been shut off in that home, highlights shame for the homeowner and targets the home for potential foreclosure and crime. Individuals have to contend with how to clean their own human waste, hands and how not to spread to others. Girls and women have to deal with additional stigma of how to deal with menstrual blood. Residents with physical disabilities or elders have more barriers added to their everyday lives accessing water.

Local residents have also indicated that if kids slipped up and revealed that they didn’t have water in their homes they would be picked up by child protective services. One Detroit resident talked about increasing number of middle school students who were showing up at school without clean clothes or bodies—who are now taking showers at school but not saying anything about water being shut off in their homes. 

Since 2005, Detroit has linked unpaid water and sewage bills to property taxes.29 (See Figures 3 and 4). When residents and homeowners are unable to pay their water bill and property taxes this then leads to foreclosures and “abandonment.” Sometimes overdue water bills are linked to absentee landlords and renters face the negative consequences. In other instances, reports have found that some of the foreclosed, abandoned and unoccupied homes continue to have running water (with water faucets left on) with bills owed to DWSD ranging from $5000 to $10, 000.30 One third of “DWSD water is unmetered from leaks and running water in abandoned buildings.”31 Researchers with a coalition of community members (We The People of Detroit Community Research Collective) have found that in 2014, 11,979 foreclosed properties had water bills added to property taxes.32

In February and March 2017, the Detroit Water and Sewerage Department (under the Great Lakes Water Authority) issued “boil water” advisories to two Detroit enclaves (Hamtramck and Highland Park) stating an “equipment malfunction” caused by water pressure. This “equipment malfunction” has the potential to result in bacterial contamination. A similar advisory regarding the use of tap water was made by the Detroit Medical Center (downtown Detroit) to its employees. As of March 3, 2017, this advisory has been lifted.33

Figures 3 & 4 include bar graphs showcasing the total foreclosed properties in 2014 with delinquent water bills added to property taxes

  • 12. Shea Howell: “Thinking for Ourselves: Council Resolves on Water,” Detroiters Resisting Emergency Management, May 16, 2015.
  • 13. Reports indicate that from Jan. 1, 2014 to Jan. 31, 2015—35,000 households and 96,000 individuals had lost water and sewage services for nonpayment. As of February 2015, approximately 147,000 residential customers were at risk for losing water and sewerage services for nonpayment. They were 60 days past due and owed an average of $664 on their bills (Food and Water Watch: “Detroit Needs a Water Affordability Plan,” May 2015). Under the Emergency Manager the Detroit Water and Sewerage Department (DWSD) had moved to shut off water to 150, 000 households. Private contractors, such as Homrich Wrecking subcontracted with the DWSD to turn off water—often at the rate of 3000 households/week (Dean, 17 July, 2014).
  • 14. In 2014, the Detroit People’s Water Board organized to get the United Nations, the National Nurse’s United and the Netroots Conference to shine a light on mass water shutoffs in Detroit. A statement released by the United Nations (20 October, 2014) reported that after they spoke with individuals with chronic illness and disabilities, low-income single mothers and older persons, that in 2014 at least 27, 000 households had water and sewerage services disconnected. Access to clean water as a basic human right, demanded by many Detroit residents and resolutions from the United Nations General Assembly, placed a symbolic political responsibility on Detroit’s City Council not to restrict access to affordable clean water to residents. UN resolutions are not legally enforceable and similar to the UN recognized issue of the right to sanitation. The Detroit People’s Water Board is a coalition of organizations (unions, community groups, religious groups) “representing issues pertaining to labor, the environment, social justice and conservation.”
  • 15. The Detroit Water and Sewerage Department (DWSD) played (and continues to play) a central role during and after the bankruptcy process. The DWSD serves more than 3 million people or roughly 40% of Michigan’s population (including the city and SE Michigan). In 2014, DSWD began mass water shut offs of 30,064 accounts. But despite the 15-day moratorium in July 2014 (due to media attention, community outrage and litigation), another round of water shut offs followed -- 15,461 in in 2015 and 30, 496 in 2016. This information is discussed in The Detroit News here http://www.detroitnews.com/story/news/local/detroit-city/2017/07/26/detr....
  • 16. On Tuesday May 25, 2015, the Detroit Water & Sewerage Department (DWSD) shut off water for another 1,000 Detroit households with an additional 25,000 homes slated for future shut offs. The DWSD considered these accounts to be delinquent and went ahead with the shut offs despite a May 12 resolution passed by the Detroit City Council calling for a moratorium. City Council agreed to a moratorium until the DWSD could evaluate the existing plan and consider implementing the “Water Affordability Plan”
  • 17. The Grand Bargain was negotiated between the Emergency Manager, federal bankruptcy judge, the Michigan Legislature and Governor, private foundations, city officials, creditors, bond insurers, current employee and retiree unions and representatives (in regards to pensions, retirement and healthcare benefits and union contracts).
  • 18. Rick Cohen: “Water Crisis in Detroit: Who’s Being Shut Off and Who’s Not,” Nonprofit Quarterly, 30 June, 2014.
  • 19. Ibid.
  • 20. Joel Kurth: “Detroit Hits Residents with water shut offs as businesses slide,” The Detroit News, April 1, 2016.20 Tyler Van Dyke: “Detroit to resume Water Shutoffs this month,” May 9, 2015, www.wsws.org.
  • 21. The City of Detroit Blue Ribbon Panel on Affordability, Final Report,” Prepared by Galardi Rothstein Group, Pg. 28, Feb. 3, 2016; Karen Bouffard, The Detroit News, Sept.17, 2015.
  • 22. Rachel Butts and Stephen Gasteyer: “More Cost Per Drop: Water Rates, Structural Inequality, and Race in the United States—The Case of Michigan,” Environmental Practice, 13(4), Dec. 2011.
  • 23. Wallace C. Turbeville, “The Detroit Bankruptcy,” pg.5, Demos, November, 2013. Turbeville’s analysis states that the healthcare expenses accounted for annual increases of 3.25%, which falls below 4% increases in healthcare costs experienced nationwide. Furthermore, Turbeville adds that “healthcare costs may be relatively lower as a result of the ACA.” (25)
  • 24. Jerry White, “Detroit Officials Defend Water Shut Offs,” wsws.org, Sept. 25, 2014.
  • 25. Another report, DWSD Equity Analysis prepared by The Foster Group (May 1, 2015) estimates this figure to be $6.4 billion.
  • 26. Lack of clean water, hygiene and sanitation, can increase communicable diseases such as: diarrhea, trachoma, malaria, asthma, gastroenteritis, hookworm, salmonella, and infective hepatitis—often diseases associated with unsafe water.
  • 27. Laura Gottesdiener: “Detroit Is Ground Zero in the New Fight for Water Rights,” The Nation, July 15, 2015
  • 28. FAQs regarding the Detroit Water and Sewerage Department Tax Roll Program.
  • 29. Joel Kurth, “Detroit’s blight tied to unpaid water bills,” The Detroit News, Sept. 12, 2014.
  • 30. Detroiters Resisting Emergency Management (DREM) website.
  • 31. https://wethepeopleofdetroit.com/communityresearch/water/
  • 32. http://www.freep.com/story/news/local/michigan/detroit/2017/03/02/boil-w...
  • 33. In the 1940s and 1950s, the Federal Housing Authority (FHA), and to some degree private “loan sharks” and private banks (aided by the property insurance industry underwriting), structured patterns of lending and housing discrimination whereby low-income/ applicants of color were either denied credit or steered into economically, racial and ethnically homogeneous neighborhoods and lower quality housing.