Banks cause Detroit water crisis

The city of Detroit, under a right-wing, state-appointed “emergency manager” who has plunged the city into the largest municipal bankruptcy in United States history, has been on a vicious campaign since March to turn off the water of residential customers whom the city claims owe more than $150 on their water bills. These mass shutoffs brought national and international notoriety to the city. It wasn’t until July, when an activist with the Moratorium NOW! Coalition testified in court, that the issue was brought into the city’s bankruptcy case.

It has recently been uncovered that the vast majority of the $42.1 million in unpaid residential bills are a result of the Detroit Water and Sewerage Department’s (DWSD) negligence in allowing water to keep running in homes that have been abandoned due to foreclosure.

An article by Joel Kurth, published in the Detroit News on Sept. 12, exposed that there is a total of $21.5 million in unpaid water bills on the 11,600 homes slated for auction in October due to property tax foreclosure by Wayne County. The article noted that 112 of these homes have water bills of $10,000 or more and 484 have bills of at least $5,000, indicating they are abandoned homes with water faucets left on (an average yearly bill for a Detroit household is approximately $900). These figures do not account for unpaid water bills on homes abandoned due to tax foreclosures in previous years or those abandoned but not yet in tax foreclosure.

But instead of shutting off the torrential flood of water left running and wasted in these abandoned homes, emergency manager Kevyn Orr, Mayor Mike Duggan and the DWSD management are targeting occupied homes for shutoff for outstanding bills as low as $150.

From March until July 22, when a temporary moratorium on shutoffs was enacted due to mass outrage, some 19,471 Detroit homes had their water shut off. While 14,012 homes had water restored after entering into payment plans, that still leaves over 5,000 Detroit families without water service. The moratorium ended Aug. 25.

Mayor blames poor, not businesses

Mayor Duggan blamed water rate hikes in the city on the poor, stating that when some residents don’t pay bills the shortfall has to be paid by other Detroiters. (Detroit News, July 29)

In addition to abandoned, foreclosed homes, which account for the bulk of the $42 million in unpaid residential accounts, as of April 30 the DWSD had approximately $25 million in unpaid commercial, industrial and city-owned property accounts.

Between March and August this year, in contrast to 19,471 homeowners having their water cut off, only 157 commercial and industrial properties, out of the more than 11,000 with unpaid bills, were cut off. (Information from documents obtained through a Freedom of Information Act request in connection with court action to stop water shutoffs.) The adversary complaint filed in the city’s bankruptcy case on July 21 said that among the largest unpaid commercial water bills are the state of Michigan, owing $4.9 million; Vargo Golf, $437,714; Chrysler, $48,870; and the Metro Building Group, $48,256.

The actions by Mayor Duggan, DWSD management and emergency manager Orr (who actually runs Detroit) in diverting the blame for DWSD’s unpaid residential bills onto the poor instead of targeting the real cause — water continually running in abandoned, foreclosed properties, and unpaid commercial water accounts — amount to fraud or deliberate indifference by these officials.

The city of Detroit has paid out $126 million to lawyers and consultants since the bankruptcy was filed one year ago. (Wall Street Journal, Sept. 12) Why didn’t these consultants figure out the real cause of the DWSD’s unpaid residential water bills, considering the importance of the fate of the water department to the Detroit bankruptcy? Why didn’t the “blight taskforce” led by billionaire Dan Gilbert of Quicken Loans spot the running water in abandoned homes when they allegedly surveyed the city for their report?

Privatization is their goal

Their real motivation was to lay the basis for the regionalization and ultimate privatization of the DWSD, by showing racist suburban officials like Oakland County executive L. Brooks Patterson, that Detroit is ready to target and shut off water to its poorest residents. A “Memorandum of Understanding on Regionalization” was agreed to by Detroit, Oakland County, Macomb County and Wayne County officials on Sept. 9 and filed as Document 7357 in the Detroit bankruptcy case.

Pursuant to this memorandum, the DWSD will now be administered by a “Great Lakes Authority,” where city of Detroit representatives will constitute a minority. In exchange for gaining control of the DWSD, the new authority will pay $50 million a year for infrastructure repair. However, the memorandum is silent on the real cause for Detroit’s decaying infrastructure: the diversion of $537 million out of $1.1 billion in bonds floated for water repairs to Bank of America, United Bank of Switzerland, Citi, Chase, Morgan Stanley and Deutsche Bank to terminate interest rate swaps (swindles) attached to the bonds.

In addition, the memorandum of understanding brings in Veolia Corporation, the notorious union buster and internationally condemned human rights violator, as an advisor to the city of Detroit to “undertake an assessment of the water system and make recommendations on operating models.” Considering that Veolia is one of the top actors in the privatization of public systems worldwide, this can only set the stage for the ultimate privatization of the DWSD.

While the Michigan Constitution and the Detroit City Charter both state that a public utility like the DWSD can only be sold after a vote of the people, the Memorandum of Understanding on Regionalization provides that by a simple majority vote the new Great Lakes Authority board may privatize any aspect of the water system’s operations.

Stop the shutoffs against poor Detroiters! Water for the people, not for profit!