Baltimore City

Some big businesses owe millions in city water bills

In Sparrows Point, bankrupt RG Steel's delinquent city water bills have risen from about $3.5 million in 2009 to nearly $7 million today, according to city records.

Chemical giant W.R.Grace & Co. owes almost $500,000 — even after recently agreeing to pay $2.2 million on a long-overdue bill.

And the Maryland Zoo in Baltimore — a nonprofit that gets funding from the city and state — has an unpaid bill of more than $135,000.

As Baltimore moved to take the homes of hundreds of city residents for unpaid water bills as small as $350, the city water system allowed some big businesses, nonprofits and government offices to run up delinquent accounts totaling more than $10 million, a review by The Baltimore Sun has found.

The amount is enough to cover a quarter of the money the city will get next year from a 9 percent rate increase on its 410,000 water customers.

Officials at the city's Department of Public Works say they are working to collect the unpaid bills — some of which are disputed by the businesses as inaccurate. One agency, the Veterans Administration Medical Center, says it actually paid its bill long ago and can't get the water system to adjust the account — echoing widespread residential complaints about the troubled water-billing system.

But the amount of the debt — and the perception that small residential customers are treated more harshly — has sparked criticism at City Hall and beyond.

"What we have is a mess, obviously," said City Councilman Carl Stokes. "It's unfair to subject some users to one standard and other users to another standard."

Stokes said he takes particular issue with RG Steel's bill, because the company has asked a bankruptcy judge to let it give $20 million in bonuses to 10 top executives.

"Of course it's ridiculous," Stokes said. "We should demand that the utility bill be paid before there are bonuses for the upper management."

Economic consultant Anirban Basu said the overdue commercial bills are detrimental to the city's image. "This is disastrous on multiple dimensions. People should be treated fairly."

The Sun reviewed public records of the bills of 100 of the city's largest water customers. It found a dozen with bills of at least $15,000, totaling more than $10.5 million, that were overdue by at least six months. Some dated back several years. According to the city records:

•RG Steel owes more than $6.7 million on three accounts, including the Sparrow's Point steel mill sold last week to a joint venture that includes a liquidation firm. Two of those accounts have not been paid since 2009.

•W.R. Grace owed $2.6 million for its Curtis Bay chemical plant for more than a year. The company recently paid $2.2 million of that.

•The VA Medical Center on Greene Street is listed at about $800,000. The center says it paid the bill long ago but nonetheless keeps getting turn-off notices from the city.

•One University Condominiums in Charles Village owes the water system nearly $200,000 — an overdue balance that has doubled since 2008.

•The Maryland Zoo owes more than $130,000, a bill that dates back to 2011; it says it has set up a payment plan.

•Baltimore Marine Centers, a collection of five Inner Harbor Marinas, owes nearly $75,000 on two accounts. One of those has not been paid since 2004.

•The Broadway Market on Aliceanna Street in Fells Point owes more than $30,000. Its bill has not been paid since 1987.

•Fort McHenry — a focal point of the city's War of 1812 commemorative events — owes $35,000, a balance that has grown steadily since 2006.

These and other bills from big, non-residential customers went uncollected for months or longer even as the city was taking steps to seize hundreds of residential properties for unpaid water bills — 851 of them in 2010 alone, records show.

The delinquent commercial bills come as the water system has been grappling to resolve problems identified in a city audit released this year. City officials acknowledged that they had overcharged 38,000 mostly residential customers by at least $4.2 million and issued refunds. The auditor has called for another $5 million in refunds.

A spokesman for the Department of Public Works acknowledged the existence of the overdue commercial bills as shown in public records reviewed by The Sun, but declined to discuss specific accounts. He also refused to say how much is owed in total by area businesses.

"DPW is aware of this matter and we have been addressing these cases individually," agency spokesman Kurt Kocher wrote in an email. "It is our intention to make sure that the utility collects what it is owed."

Kocher said the agency wants to be sensitive to customers' issues, such as legal proceedings and third-party debts.

"In some cases we have to deal with the legal issue of bankruptcy," Kocher said. "We also understand that there are third-parties involved — employees, tenants, tourists and even animals [in the case of the Zoo], and we are sensitive to these issues as we deal with the outstanding bills."

Those who have large delinquent bills listed on city records offered a variety of explanations.

Greg Euston, a spokesman for W.R. Grace, said the company began having concerns about unusually high bills in 2009 and started "negotiating with the city over the true amount owed." W.R. Grace recently agreed to pay $2.2 million, he said, and its balance is now $475,000.

He pointed out that the city had agreed to replace the Curtis Bay plant's water meter.

Whitney Burger, energy engineer at the Baltimore VA Medical Center, said she has been disputing the city's bills for more than five years. She says the center's wastewater bill, listed at about $800,000 on records, has multiplied over time — despite being paid.

Since 2006, she said, the city has not credited the federal hospital's account for 15 of its payments, and she provided documents of the payments for The Sun to review. The city frequently sends the center turn-off notices, but never acts on them, she said.

"It's frustrating," Burger said. "I'd like to get it resolved. It's stressful when we receive turn-off notices. We want to work with the right person to get this taken care of."

Lawyers for RG Steel did not respond to requests for comment. City Solicitor George Nilson said the city filed as a creditor against the bankrupt former steel giant on June 12 and hired the law firm Venable LLC to attempt to recoup the funds. The steel company has acknowledged in court documents owing about $2 million to the city's Department of Public Works.

At the zoo, executive vice president Nancy Hinds said the nonprofit has entered into a payment plan. She said zoo officials first contacted City Hall over the winter about their spiking water bills and adjustments were made to the zoo's account.

"We were concerned with how high the water bills were," Hinds said. "We have been working with the city and the Department of Public Works. They couldn't have been nicer and more cooperative."

Officials at Fort McHenry, University One Condominiums and Baltimore Marine Centers did not respond to repeated requests for comment. The executive director of Broadway Market declined to comment.

City auditor Robert McCarty said his office analyzed specific complaints about the water-billing system and did not look at the issue of overdue commercial accounts.

He noted that the audit found that nearly one-third of homes in Baltimore and Baltimore County with new meters had not received any bills over a three-year period. Of the 3,406 households that received new meters during 2008-2010, nearly a third did not receive bills, according to the audit.

"We're aware that not everyone is paying timely," McCarty said.

City officials have outlined a broad, long-term effort to address billing problems attributed to faulty water meters, an outdated computer system, human error and, in some neighborhoods, meter readings allegedly fabricated by two employees who no longer work for the city.

Councilman Bill Henry said businesses are going through the same ordeal of inaccurate water bills that residents have been experiencing — and many suffer from higher-than-normal water bills. "It's just on a magnified scale," he said.

Stokes said he believes a more wide-ranging audit of the water-billing system is needed, noting that the auditor analyzed about 70,000 out of the city's 410,000 accounts.

"How can a citizen on a fixed income who owes $400 on a bogus bill be threatened with her house being taken from her, while a business is allowed to owe $6.7 million?" he asked. "We need to open this up and do a full comprehensive audit."

City Councilwoman Mary Pat Clarke took issue with the uncollected funds from large businesses, saying the money could have been used to offset some of the water rate hike.

"We've been through very hard times and worked with the water department through a nightmare of inaccurate billing, spiked billing," Clarke said. "I'd like to see this money collected before we raise anyone's rates again."