Unpaid Corporate Bills Weigh Heavily on Baltimore’s Looming Water Shutoffs

The Baltimore Sun’s Luke Broadwater discusses the details behind the city’s push to collect unpaid water bills, including his investigation into major corporate scofflaws

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Story Transcript

STEPHEN JANIS, PRODUCER, TRNN: Hello. My name is Stephen Janis, and I’m an investigative journalist for The Real News Network, reporting from Baltimore.

Water. It’s not a luxury, but a necessity. And soon thousands of Baltimore residents might have ot live without it. That’s if a plan by the city to shut off up to 25,000 accounts within the next ten days goes forward. City official say customers simply aren’t paying their bills to the tune of $40 million. But the real picture is more complicated. Some are renters, who have paid their rent but whose landlords have failed to pay the water bill, and the city’s billing system has been cited for making errors in the past, when the 2012 audit found the city overbilled roughly 65,000 customers. Customers many of whom received refunds.

But a large portion of the debt is actually not from residents, but corporations. In fact, $15 million of the total is owed by companies. And thanks to the reporting by our next guest, we now know that many of these corporate customers are not facing the same dilemma of many city residents: living without water.

Luke Broadwater is an award-winning reporter for the Baltimore Sun. He covers City Hall, and has broken numerous high-profile stories, among them inaccuracies with the city’s speed camera system, and a recent piece on council members who fail to show up to vote. He was also the first to report about the corporate water scofflaws.

Luke, thank you for joining us.

LUKE BROADWATER, JOURNALIST, THE BALTIMORE SUN: Thanks for having me.

JANIS: So just give us an overview of what the city’s trying to do here. How are they justifying this and what exactly is their plan?

BROADWATER: Well, as everybody knows, unpaid water bills are an issue, especially for a city that needs cash, right? I mean, Baltimore is not New York City or somewhere where there’s just tons of money. And so over the past couple of years, the amount of unpaid water bills has risen quite dramatically, by about $10 million. It used to be two years ago, I checked on this, there were about $30 million in unpaid water bills. Now we’re up to $40 million in unpaid water bills.

So they want people to start paying the bills. So starting this week, actually, they’re sending out letters — many of these letters have already gone out — to both residents and businesses saying if you do not pay within, basically within 10 days. They’ll give you a cutoff date. Then we’re shutting off your water. This is a step that they say will help stop them from taking people’s homes in tax liens, which has been a problem in the past which, as you know, the city council president has objected to. People losing their houses because of unpaid water bills.

Now, that presents some issues. Because commercial properties, there’s about two hundred-some … I don’t know if there’s twenty-five — go ahead.

JANIS: And you did some research. Well, you did some research on that, in terms of the large part of this money’s not just consumers or residential customers, but actually businesses, right?

BROADWATER: Right. So out of the $40 million that’s owed, right now $15 million is owed by 269 commercial properties. So that is, you know, a relatively small number, considering we’re talking about 25,000 accounts.

JANIS: Right. And you’ve found out that some of those are actually quite large, and some of them might not have to pay their bills, right? Could you talk about that a little bit?

BROADWATER: Yeah. So several years ago, I started researching this issue some, and we found out that many large businesses, nonprofits, and even government offices owed very large water bills. Hundreds of thousands of dollars, even millions of dollars. The largest account is about $7 million owed by RG Steel, which is the Bethlehem Steel plant in Baltimore County. And they were allowed for years and years and years to run up their water bill, while still getting their water service, until they finally filed for bankruptcy.

And now the city’s basically in a position where they’re in line with a bunch of creditors to try to get that money back, but they’re not going to be getting it any time soon.

JANIS: Now, you talked to some advocates who talked about a different kind of dilemma, which is people who are renting, who really aren’t allowed to have a water bill. So they are basically in no position to either pay it or not pay. So could you explain that a little bit?

BROADWATER: Yeah. I mean that’s a, that’s certainly a troubling situation, right? And we know that Baltimore is a city that has many renters. You know, it’s not a huge homeowner city. There’s a lot of renters in Baltimore. And the way the water bills work is the city links the water bill to the property. So it’s not to an individual. And only the owner of the property is empowered to sort of negotiate things.

So let’s say the owner has a problem with the water bill, says it’s too high, or there’s a leak, or something. It’s up to the owner to handle that dispute. So the renter, who was potentially subject to have their water turned off, might be sort of powerless to intervene in this process.

JANIS: Now of course two years ago, if you want to talk about this, and I think it’s interesting, the city’s water bill system itself was under a lot of scrutiny for errors. Can you talk a little bit about what happened back then?

BROADWATER: Right. Right. So there was a — look. You’ve been reporting on water bill errors for years, I’ve been reporting on water bill errors for years. And I believe it was 2012 there was an audit of 70,000 accounts. And they found 65,000 of the accounts had a water bill problem. And I believe it was something like $9 million were owed to people that had been overcharged.

I believe the city ended up refunding about 38,000 or 40,000 accounts over that water bill audit, but it showed you how widespread it was. I mean, that’s literally one out of every four accounts they had to do a refund on. And the audit that analyzed the 70,000 accounts found that of those, like, 90% were wrong. Of the ones they looked at. So …

JANIS: So also in terms of threshold, where is the city kind of on — you talk about the idea of not, like, foreclosure or on not selling your debt a tax lien. Where is the city drawing the line, saying you have to pay? Or is there any sort of outstanding amount you can have and still go forward with having water?

BROADWATER:They said, according to their announcement, which was I think about two weeks ago. They said they’re only going to send you a water shutoff notice if you owe $250 or more for two pay periods, which is about half a year.

Now, the city recently upped the tax sale amount to $500, so the idea is that if you’re in that $300-400 range, you won’t have water until you pay, but at least your house won’t be in tax sale. So I guess that’s sort of a compromise. Jack Young, the city council president, said that he prefers this method. I think for people who advocate for renters, they prefer the other method, because tax lien puts pressure on the land owner, otherwise they lose the property. Whereas water shutoff puts more pressure on the person who actually lives at the property.

JANIS: So what about the politics of this? I mean, we saw people comparing Baltimore City to Detroit because Detroit when through a very controversial shut down. What are the politics of this? How is this going to play out going forward for both the Administration and people like Jack Young, who seem to have switched sides on this story, on this issue?

BROADWATER: Well, that’s — it’s an interesting question, because in Detroit obviously, I think, I think like, the Amnesty International got involved. Human Rights Watch. Big, worldwide organizations started looking at Detroit’s water shutoffs. I think it would depend how Baltimore goes about implementing this, right? Right now what we have is a threat. 25,000, basically 25,000 threats. Pay up, or shut your water off.

Now if we start seeing thousands and thousands of people going without water, that could be a real issue. If all these people pay, if the landlords pay real quickly and the businesses pay, and they don’t shut off very much water, well, you know, that probably won’t have, I guess, worldwide interest and maybe no ramifications for the election. But if we have a lot of people without water come election time, that could be a problem.

JANIS: You did speak to an advocate who is offering a program where they’ll actually pay people’s bills just actually without, sort of a donor, and they’ll hook up a donor to pay the bills. Is that true?

BROADWATER: Yeah. So one thing we wrote about, as you’ve mentioned, was there was in Detroit there was a nonprofit called the Detroit Water Project. And what they did was, anybody who needed help with their water bill in Detroit would sign up to this website. They would — and anybody who wanted to volunteer would sign up for this website. And basically what they would do is they would match people up. So a donor would actually go on to the City of Detroit’s website and pay the bill of somebody who needed help.

Now, they’re doing the same thing in Baltimore. As, my understanding is, for the first couple of days it was less than $1,000 had been donated. But that, with the increased media attention given to this subject, that number’s starting to rise.

JANIS: Now, could you talk a little bit about — you have tried to get, you are in the process of attempting to get more information, because they’re about 300-400 accounts which represent the bulk. Could you talk a little bit about your further investigative reporting on this?

BROADWATER: Right. So as I said earlier, I think it’s 369 accounts that owe the $15 million. We know the one is $7 million from RG Steel. So we know about half. But what are the other accounts? I know from a few years ago we tracked down that the zoo owed money, that WR Grace owed money, that a big condominium owed money, on and on. That Fort McHenry owed money, things like that.

I don’t know what the current status is, so I filed an MPIA, public information act request. I think that’s been pending for about two weeks, so the city has two more weeks to respond. I don’t see why it’s taking so long, to be honest. I think that could be something that they could get to me within a day. But as soon as I get that information, I plan to publish it and let the, let the readers know which are the businesses that haven’t paid their bills.

JANIS: Well, Luke, we look forward to reading your report. And thank you for reporting on the issue, and thanks for coming in and talking to us.

BROADWATER: Thanks, Stephen.

JANIS: My name is Stephen Janis, I’m an investigative journalist for The Real News Network, reporting from Baltimore.

End

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