Detroit Residents Drowning in Debt

Detroit

Detroit residents are drowning in debt and struggling to pay their bills, including mortgages, property taxes and even water. According to a report from NBC News, organizations are sending letters to the U.N. Human Rights Office of the High Commissioner in an effort to keep people who are at risk of losing their water service due to nonpayment from losing their water service.  In the U.S., this would be done by forcing the restoration of water service to those who are unable to pay, an action particularly necessary after Detroit’s notorious municipal bankruptcy filing in 2013.

In the report from NBC News, human rights and sanitation expert Catarina de Albuquerque reported that a statement was issued by the U.N. in Geneva indicating that the disconnection of water service to a resident who is unable to pay is a violation of a basic human right. Other than issuing the statement, there is little both de Albuquerque and the U.N. can do- particularly because, as de Albuquerque notes, “The U.S. has signed, but not ratified… relevant treaties on the right to safe water access.” The report from NBC News also notes that Detroit’s water department is responsible for about $6 billion out of the $18 billion total city debt contributed to Detroit’s bankruptcy.

In a similar report from the L.A. Times, the number of Detroit residents drowning in debt who saw their water and sewage service shut-off in May totaled more than 4,500 residents. The report further claims that “$90 million are owed by customers, and nearly half the city’s 300,000 accounts or so are past due.” The report indicates that Robert Colton, a specialist on the economics of utilities, had suggested that the city use a payment plan for customers which equaled a percentage of the customer’s income that was affordable. Though a program was implemented using Colton’s advice, the program stopped due to Detroit’s ongoing bankruptcy claims, and no plans were made to continue the program.

In a separate report, The New York Times claims  that what Detroit needs is more residents, but instead people  are packing up and leaving due to foreclosures and past due property taxes. The report states that Detroit has lost a quarter of its population since 2000, and since 2009, 70,000 foreclosures have taken place with another 43,000 foreclosures pending for this year alone. The loss of population is attributed to city government seizing property on which taxes are extremely past due.

There are residents who are trying to stay in their city, but dealing with a loss of income and then struggling not only with paying back taxes, but also interest and fees that can total up to 30 percent of the total bill, leaves them unable to remain in Detroit, according to The New York Times. Thousands of owners who are drowning in debt are trying to come up with enough money to pay off their debt, or at least qualify for a state program funded by the federal government, but that only leaves owners in a stipulated payment plan, or  provides them with a time extension to pay off the taxes owed. The only other option these residents have is letting the property go to auction, and trying to win the property back later.

By Liz Pimentel

Sources:
NBC News
L.A. Times
N.Y. Times

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