Baltimore's top elected officials are battling over whether the city should seize homes because of unpaid water bills after a recent audit found widespread billing errors.
MayorStephanie Rawlings-Blakesays eliminating the threat of liens could endanger the city's bond rating. No moratorium is needed, she says, because only those residents who have ignored a year's worth of bills could lose their homes.
"At the end of the day, when you reach the tax sale list, it's because you've made no attempt — not a payment plan, not a contact, nothing," the mayor said.
"We cannot say that we're not going to collect, especially on the water bills. It's a self-sustaining fund, and we have to get the revenue to maintain the water system," she said.
But City Council PresidentBernard C. "Jack" Young, who is pushing for a moratorium on homes going to tax sale for unpaid water bills, called the administration's stance "a weak response."
"I think the prudent thing to do ... is to protect our citizens and fix the system," Young said. "I'm more worried about people's lives and people losing their homes than about the bond rating."
About 3,000 properties have been flagged for tax sale in May for unpaid water bills, finance officials say. Owners have until the end of next month to bring their accounts current to prevent their properties from being included in the sale, officials said.
The council unanimously passed a resolution late last month calling on the administration to stop seizing homes over unpaid water bills. The resolution does not carry the force of law, but Young said he plans to introduce legislation in coming weeks that would force a two-year moratorium on homes going to tax sale due to water bills.
The debate comes after the city auditor released a highly critical audit of the billing system. In response to the audit, the city is issuing $4.2 million in refunds to 38,000 of the system's 410,000 customers.
The Baltimore Sun reported Sunday on the ordeals of customers who have fought to correct inaccurate bills, including a woman who for seven years was charged for her neighbor's water use. The article also described an erroneous $100,000 bill to Cockeysville Middle School that went undetected for months. Both cases were corrected only after inquiries by the newspaper.
Rawlings-Blake's administration released three reports Monday that warned that the city could face $10 million in lost revenue, lawsuits from bondholders and a lowered bond rating if it does not pursue tax sales over unpaid water bills. In the reports, the departments of finance, law and public works opposed Young's proposal.
The mayor stressed that the Department of Public Works has increased the number of employees who answer phones, read meters and inspect for errors. The department also plans to spend more than $100 million over the next three to five years to replace water meters and the billing program.
"I don't think any of us take this lightly," Rawlings-Blake said. "And that's why we're working so hard to improve the accuracy of the water readings."
Young, however, argued that that the city must prove it has reformed its billing system before threatening to seize homes over the bills.
"The system is still broken. If they recognize we have a problem, what's the problem with fixing it?" Young said. "This should not even be a big issue. It's the right thing to do for our citizens."
He said his office has been "inundated" with calls from residents seeking aid with inaccurate bills. And he said some residents wind up on the tax sale list after being unable to get help from the water and wastewater division.
"People get frustrated with being on hold for two or three hours and then hang up and say they're not going to pay their bill," he said. "These are our seniors and some of our hard-working people in the city. They can't say that all of these are scofflaws."
Anirban Basu, the chairman and CEO of Sage Policy Group, said he believes the City Council president is in the right — even though Basu works under contract for the mayor.
"They've put themselves in a bind, but the City Council is correct that it's improper to threaten to take property from people for something that they didn't use," he said.
Basu said it would be "reckless" to take homes over bills for water and sewer services the customers had not consumed.
"If the city thought it was so important financially, it probably should have invested in more resources and hired smarter people in billing and collection," he said.
In reports released by the administration Monday, Stephen M. Kraus, chief of the Bureau of Treasury Management, wrote that the threat of tax sales helps the city ensure repayment for holders of hundreds of millions of dollars of capital improvement bonds.
If the city imposes a moratorium, he wrote, bondholders could sue.
Assistant City Solicitor Victor K. Tervala wrote that the city recovers about $10 million in delinquent payments annually after property owners are threatened with tax sale.
"The law department notes that a breach of any of the covenants might weaken the city's credit rating and result in higher user rates for city services," he wrote.
The administration says tax sales are sought only for customers who are more than $350 in debt and have not contacted the city for at least a year. The Department of Public Works also offers payment plans and other aid for those who have problems paying their bills, provided they reach out to the city, officials say.
"Providing enforcement amnesty to property owners who refuse to make any effort to pay long-overdue utility bills is not an appropriate response to fixing billing errors," Kraus wrote. "If a customer has a billing concern, DPW has pledged to investigate and correct the problem account."
Councilwoman Mary Pat Clarke, who has fielded hundreds of calls about water bills from residents of her North Baltimore district, said residents who lose their homes to tax sales suffer "an expensive and complicated ordeal" to retrieve them.
"I think it is justified to request the moratorium," she said. "It would be adding insult to injury to be sending a house to tax sale because of an inaccurate water bill."