Detroit water shutoffs continue as city's decline into third-world status accelerates

(NaturalNews) The decline and fall of the once-great city of Detroit is continuing apace, as city officials have been given the green light by a U.S. bankruptcy judge to continue shutting off water service to residents chronically behind on their bills.

Judge Steven Rhodes ruled recently that the city can continue the process of shutting off water to any non-paying customers, Reuters reported. Rhodes added that his court does not have any jurisdiction over the issue, and that suspending the shut-offs for a period of six months would contribute to further depleting the city's finances.

"Detroit cannot afford any revenue slippages," Rhodes said in advance of continuing his ongoing hearing regarding the city's plan to finally exit the largest municipal bankruptcy in American history.

"As it prepares to show the court its plan is feasible... the last thing it needs is this hit to its revenues," the judge said, according to Reuters. Rhodes further stated that there was a very strong correlation between the disconnections of water service and city officials' ability to collect bills that are late.

Reuters reported further:

Detroit's bankruptcy plan includes a $4.5 million water affordability fund and a cap on rate increases. It also creates a regional water authority, which Rhodes said could be put in jeopardy by a revenue drop from unpaid bills.

One-month moratorium saw dramatic drop in bill collections

Residents, as well as political activists who believe that water service should remain regardless of whether or not the people using it are paying for it, asked the bankruptcy court to issue a six-month restraining order on the disconnections. During a break in the ongoing bankruptcy hearing in late September, Rhodes heard oral arguments regarding the financial and social impacts of shutting off water to hundreds of homes daily.

Some were questioning whether Rhodes had the authority to issue such an order, since his primary objective is deciding whether Detroit's overall bankruptcy plan is both feasible and fair -- not to act as chief over the city's daily operations.

During the recent hearing in which he ruled that the city could continue shutting off water services, Rhodes said the U.S. bankruptcy code does not permit a federal court to "interfere with the choices a municipality makes in the services it will provide."

Over the summer, Detroit city officials began what some said was a very "aggressive campaign" to cut some $90 million in overdue bills. After the city cut water service to about 19,000 homes, Americans from across the nation sent gallon jugs of water to Detroit, as city residents began to protest the disconnections.

In August, Detroit Mayor Mike Duggan ordered a one-month moratorium on the disconnections and began a plan to assist poor and lower-income residents in paying their bills -- a plan that Rhodes described as "bold, commendable and necessarily aggressive."

Nevertheless, the plaintiffs said that current water shut-offs, which have taken place at a clip of about 350 a day since the end of the moratorium, was at risk of harming public health, was hurting senior citizens on fixed incomes and was a disruption for families with children.

Threat of shutoff helped people find the money they owed

Reuters further reported:

They also said poor customers needed a more affordable plan than Duggan's, adding that the injunction would fall during freezing-cold winter months when the department already refrains from disconnecting pipes.

If the city does not collect its delinquent water bills, the water department would be forced to raise its rates, according to testimony by its chief financial officer, because the department relies nearly exclusively on its monthly billing for revenue. Meanwhile, the department is also dealing with $42 million in additional bad debt.

Darryl Latimer, customer service chief of the city's Department of Water and Sewerage, said that the disconnections were helping Detroit accomplish its goal of boosting collections. During peak months of shutoffs -- June and July -- the department managed to collect $1.7 million of what it was owed. During the moratorium month of August, however, collections fell to around $200,000.

At its peak in the 1950 Census, Detroit's population was 1.8 million. The city was home to the world's largest automobile manufacturing center, and tax revenues were flush. But a decline in U.S. domestic car manufacturing along with poor management and overly generous public pensions have left Detroit reeling economically. Entire neighborhoods have been abandoned, properties lie in waste, street lights don't work, and the city's police and fire services are declining as well.

Sources:

http://news.yahoo.com

http://www.hngn.com

http://www.theguardian.com