Earlier this year, Detroit ignited controversy when the city government shut off water service to more than 4,000 residences who were late on utility bills. While the crackdown sparked negative press, a pilot program is using the same concept to help low-income residents in financial distress in five cities across the country.
The cities of Houston, Savannah, Ga; Louisville, Ky.; St. Petersburg, Fla. and Newark, N.J. have partnered with NLC to launch an initiative that uses utility bills to help residents with financial and economic stability, according to Governing. While each city’s pilot program is different, all five underscore the idea of supporting residents with outstanding bills in low-income communities.
Outstanding public utility bills are common in most large urban sprawls. In Detroit, half of its customers were past due this year with owing up to $90 million. Some argue that many customers have the money to pay but choose not to.
“I think it’s been common knowledge that the water bill has been placed on the back burner [by some customers], in part because we haven’t been aggressive enough,” said Gregory Eno, a spokesman for the Detroit Department of Water and Sewerage. He points out that after the city shut down services to 4,531 customers in May, 84 percent paid the bills to regain service within 48 hours.
But others contend that while people may prioritize paying off other bills before utility costs, cracking down could make the situation worse. Which is why LIFT-UP is using the process to educate truant customers.
Savannah, which launched a pilot last August, has signed up at least 50 residents allowing them to pay smaller amounts as well as extend the repayment time frame. To apply, residents must have had their water cut off at least once in the past two years, owing an amount ranging from $150 to $500. Customers can pay 25 percent of their bill rather than 50 percent of what’s owed.
Part of the southern city’s initiative, which is run by nonprofit Step-Up Savannah, also entails a one-on-one financial counseling session with a nonprofit provider to help residents budget for bills as well as help them find out if they’re eligible for public aid. After completion, participants receive a $50 credit to their next water bill, which is provided by private foundations partnering with the program. Savannah has seen 13 customers complete the program since its inception.
Detroit is also getting on board with reframing the conversation. The city has planned a financial assistance program through a $1.1 million fund — paid for by voluntary 50-cent donations from water — which will help match monthly payments from low-income customers who have had water services shut off or are at risk.