Austerity policies cause water crisis in Detroit

Water shutoffs ballooned during Detroit’s Emergency Management. Graphics by We the People of Detroit


By Julia Samar Kassem

Beginning with the Detroit municipal bankruptcy in 2013, more than 100,000 households were affected by water shutoffs in the city, a trend that has spiked and continued since in the post-emergency management period. Water “service interruptions” have continued periodically, with over 17,000 residential shutoffs scheduled in May 2018 and over 5,000 completed shutoffs through July 31, according to Freedom of Information Act data obtained from the Detroit Water and Sewerage Department. Homes with delinquent bills as low as $150 can be targeted for shutoff.

On August 11, 2014, just months after the city shut off water to over 33,000 residential homes, southeast Michigan experienced one of the most extreme weather events in many years. Record rainfall flooded streets, basements and businesses, causing $2 billion in damages and forcing thousands out of their homes, which were contaminated with raw sewage.

“It’s sewage, not water you can see through, so you know that this is sewage,” recalled Khalil Ligon of the Great Lakes Water Alliance, who faced four sewage backups since the first one affected her home following the August 2014 storm.

Contamination worsens

Residents waited years for compensation from the Federal Emergency Management Agency (FEMA), if they received it at all. Floods in subsequent years continued to damage Detroiters’ homes. Despite costs to Ligon in the “tens of thousands,” the homeowner received far less than the average compensation amount of $4,000. Many homeowners sustained tens to hundreds of thousands of dollars in damage.

“Anything happens at my house, I have to pay out of pocket — and it usually is a large expense. Next summer, it’s like I just want to fill up the basement with concrete and not have a basement anymore,” said Ligon.

Meanwhile, toxic mold and fecal contamination of homes continues to go untreated, compounding the public health issues caused by shutoffs and home demolitions. Michele, a small business owner and urban gardener from the Jefferson-Chalmers neighborhood, described great concern dealing with a basement that “floods so much, I have to be concerned with mold.”

The issue started for her and many others she knows following the great rainstorms in 2014. She affirms the problem is only spreading, telling this reporter, “Not only are people’s basements being flooded, but their streets are being flooded in areas where they never had it.”

Home floodings cause incredible damage and destruction, often resulting in permanent home damage, displacement and disease. Children risk being forcibly taken away from parents by Child Protective Services because of water shutoffs.

Blame it on the banks

For years, Detroiters have paid high water rates relative to their suburban neighbors in order to pay off post-bankruptcy deals.

Throughout the 2000s, the Detroit Water and Sewerage Department participated in reckless and illegal interest rate swaps with banks that owned its debt. The swaps were presented by the banks as a way for indebted municipalities to protect themselves against the possibility of rising interest rates (the water bonds were adjustable rate bonds, subject to the federal interest rate at that time).

The water department would pay the banks a fixed interest rate, and the banks would pay the adjustable rate. Whoever came out ahead had to pay the other party. Following the economic crash in 2008, interest rates fell dramatically as part of the bank bailout, remaining low to this day.  The DWSD went deep into debt as a result of these illegal swap agreements, which cost the water department approximately $30 million per year.

In 2011-2012 the DWSD sold a total of $1.15 billion dollars in bonds which were supposed to be intended for infrastructure repair. Instead, $537 million went to termination fees on interest rate swaps from the water system to the banks. The money intended to fix municipal infrastructure was expropriated by some of the leading financial institutions such as Chase Bank, UBS and Morgan Stanley. These are the same banks whose massive foreclosures led to the city’s 67,000 foreclosures from 2005 to 2009 and the expropriation of $1.3 billion in personal wealth from Detroiters.

Water rates increased over 120 percent in the last decade as the system paid down debts on swap termination fees, furthering the depopulation of the city in the aftermath of an engineered foreclosure crisis. Recurrent flooding, converting basements and neighborhood streets into sewage reservoirs, is also a byproduct of neglected and underfunded infrastructure, which currently demands an estimated $2 billion to rebuild stormwater and wastewater systems. The infrastructural neglect has failed to sweep drainage and flooding issues under the rug.

High water bills and human suffering

Valerie Jean, of Detroit’s North End, has fought against shutoffs since her home was first affected in 2014, when entire neighborhood blocks faced indiscriminate water cuts.

“Water’s not affordable in Detroit,” she said. “I was comparing my bill with my daughter’s bill. She lives on Nine Mile and Van Dyke in Warren, and her water bill for five months is what my bill is every month.

“If somebody can’t afford their water, they’re going to leave their house,” Jean added. “You have these [empty] houses and properties with constant running water and all that goes onto your bill.”

Homrich, the private contractor hired to shut off residential water, has raked in at least $13.4 million from this enterprise.

Despite all of the human suffering from predatory financial swaps, the money and water continue to flow through the casinos, ballparks and newly developed properties of Dan Gilbert and the Mike Ilitch family. Both of these businessmen took full advantage of the crisis, expanding their empires on the backs — and paychecks — of a suffering public.

All of this occurred as Detroit transitioned into emergency management under Kevyn Orr and his bankruptcy firm, Jones Day. This law firm worked for many of the same financial institutions that owned Detroit’s debt, such as Bank of America and JP Morgan Chase, and was instrumental in the creation of the predatory swaps.

Human toll of mass shutoffs

The mass water shutoffs began as the emergency manager sought to privatize or regionalize the water system as part of the 2013 Detroit bankruptcy. Since the bankruptcy, recurring flooding and drainage fees have compounded the issues of water shutoffs, expenses that comprise the bulk of rate increases. These drainage fees, newly tacked onto Detroiters’ already high water bills in July 2017, were allegedly to help “pay for sewage infrastructure,” facilities that, according to the city, would “reduce street flooding and basement backups.”

A significant reason for the increasing costs is the outdated combined sewage overflow system that mixes runoff and wastewater in large CSO reservoirs that overflow into the rivers when the system is turgid. During the 2014 storm, 10 billion gallons of sewage went into the river system. This design flaw caused a federal takeover via the 1977 Clean Water Act, with the mandate’s enforcement used to justify the tacked-on drainage fee.

Yet the drainage fees, which are separate from the rest of the bill, make up a disproportionately large addition to already over-inflated water bills. Urban farms, gardens and homes have still been affected by the fees, despite diverting water away from sewer systems, as proposed green infrastructure plans claim to do.

These fees are an illegal charge on Detroit residents.

Public health crisis in effect

Because of limited access to water, as well as exposure to flooding, the issues with water and infrastructure caused by austerity in Detroit have led to a public health crisis similar to what was seen in Flint.

A study by the We the People of Detroit Community Research Collective and Henry Ford Health System documented that since 2015, the rate of water-borne contamination in Detroit has skyrocketed, with cases of campylobacter, shigellosis, giardiasis and other gastrointestinal infections seeing a drastic increase in 2016 and 2017, the highest rates observed since 2012.

The study documented a clear and positive relationship between the water shutoffs and waterborne diseases, with patients in Detroit suffering from waterborne diseases 1.48 times more likely to be living on a block where water shutoffs have occurred. The report, citing research from an April 2017 study by the Henry Ford Global Health Initiative, coincided with earlier findings that had projected a 1.55 times greater likelihood of diagnosis of a water-related illness for neighborhoods that have faced shutoffs.

Children are particularly at fatal risk. The report, citing the American Public Health Association, highlighted that shigellosis deaths occur in the greatest frequency among children. A 2014 letter from George Gaines, former deputy director at the Detroit Health Department, to Vernice Davis Anthony, then director of the Detroit Department of Health and Wellness Promotion, confirmed the relationship of water shutoffs with the outbreak of hepatitis A in the City of Detroit.

In the letter, Gaines asserted that water shutoffs create unsanitary conditions in homes, increasing the risk for “the transmission of dangerous bacteria contributing to increased urinary tract infections; gastrointestinal problems; hepatitis A; influenza; and other diseases that are linked to unsafe water and poor sanitation.”

National Nurses United, echoing these concerns, declared a public health emergency that summer, forewarning that clean water was needed to “combat the growth and spread of pandemics.”

In hindsight, their concerns were validated with time, as illness and disease outbreaks related to sanitation became widespread.

A report based on morbidity data from Henry Ford Hospital and the Detroit Health Department from 2012 to 2017 tracked the trends between waterborne illnesses and year. The drastic increase in levels of waterborne diseases showed links between the lack of household water and access to sanitation caused by repeated water service interruptions and the risk of waterborne illness.

In 2017, the City of Detroit alone faced 171 cases of hepatitis A. This was more than all the rest of Wayne County with 142 cases, and topped any other county in Michigan. In total, over 500 cases were reported statewide in 2017, including 25 deaths.

Water is a human right

In 2014, when the water shutoffs first began in Detroit, the United Nations water rapporteur, Caterina de Albuquerque, visited Detroit. She declared the right to clean, safe and affordable water to be a human right under the Universal Declaration of Human Rights.

Unfortunately, the United States refuses to recognize this right.

The U.N. water rapporteur reported how she can understand the lack of clean water in a developing nation just building up its infrastructure. In contrast, she declared the lack of safe, affordable, accessible drinking water in the City of Detroit, in a state with the most freshwater in U.S., to be a retrograde crisis, the result of a capitalist system gone completely haywire and pushing humanity backward.

The fight for the most fundamental human right, the human right to water, continues.

1 Comment

  1. Thanks Friends. Your analysis always a great help.
    One note to add. The combined system is certainly a “design flaw” but it is entirely burdened by suburban sprawl which overrloads the sewage flow of out-county municipalites into the infrastructure that never got updated and improved because of the bank theft.

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