Many Detroit residents have a more immediate problem than their city’s tortured bankruptcy proceedings: their water is about to be shut off. After keeping the pipes open to everyone throughout the winter, the Detroit Water and Sewage Department is notifying thousands of residents that they’ll be cut off unless they pay their bills. Just under half of all customers are delinquent, and together they owe more than $100 million.At least in this case, the mountain of unpaid bills isn’t the city’s fault. But it certainly is to blame for leaving the agency in such dire financial straits. Despite annual revenues just south of $1 billion, its outstanding debt is six times that amount, and the system will need a number of expensive upgrades over the next few years. Like most other public agencies, the Water and Sewage Department is struggling with growing pension obligations. Perhaps more so than most, however, it has a long history of shoddy management, as the WSJ notes:
Until last year, it operated for decades under federal court oversight sparked by alleged violations under the Clean Water Act. A former department director pleaded guilty in 2012 to conspiracy as part of the corruption investigation into convicted ex-mayor Kwame Kilpatrick.
Meanwhile, the city is looking to sell the department, either to a regional agency or a private company, as part of an attempt to clear off some debt in bankruptcy.Detroit isn’t the only city facing problems like this, not by a long shot. But no major city has fallen so fast or so far. This is what decades of corruption, mismanagement, and reckless decisions look like.