The Detroit water problem is familiar to all. The basic facts require no repetition. The purpose of this column is to reveal some items unknown to most. A lets look at the whole picture writing.
Detroit is in bankruptcy. A big deal. The first major U.S. city to have entered into bankruptcy. A lot of what is happening therefore is in uncharted waters. Everyone is doing the right thing as they see it.
Detroit's water company, the Detroit Water and Sewerage Department, is $5.7 billion in debt. Unpaid water bills are humongous. The due and owing bills are residential and corporate.
Michigan's Governor Snyder appointed Kevyn Orr as Emergency Manager of Detroit. It was Orr who decided to apply for bankruptcy protection. Orr calls all the shots on behalf of Detroit. Between the State law giving him his emergency authority and the Bankruptcy Law, his decisions are difficult to override. He is all powerful.
Orr decided the back water bills had to be collected. A water company/city cannot be run if the water it provides goes unpaid. He was confronted with the two classes of water debtors described, residents and corporate properties. He opted to pursue the residential water users.
He did it big time. He hired an outside firm to do the actual physical closing of the water boxes. The decision was made to close down the water supply to 3,000 residentials a week beginning in June. The actual June number turned out to be 7,210. Another 2,000 plus were shut down in early July.
Detroit in many respects resembles what a city would look like after a war has been waged there. Residents remaining are poor and generally African-American. Detroit is devoid of the many corporations that lined the streets during its hey days as the car manufacturing capital of the world.
All of a sudden and dramatically, Detroit's people of color found themselves without water. The United Nations took note. The United Nations declared the shut offs were a violation of the human right to water. Makes sense. A person cannot live without water. The United Nations further stated that the course of conduct implemented in the shut downs against African-Americans might be discriminatory.
The corporations owe in the hundreds of thousands, perhaps millions. No one is turning off their water. The argument presented as to why is two fold. It is much more complicated to turn off a company's water than it is a resident's. Detroit did not have a trained force to turn off the non paying corporations. They would have to be trained. It was complicated and would be expensive.
America today! Go after the little guys and leave the big guys alone. The big guys also happened to be white. Caucasian. Complaints of discrimination have become rampant.
Residents who owe more than $150 or are more than two months behind get their water turned off. The corporations owing hundreds of thousands of dollars in many instances, do not.
Examples of who owes corporate debt are revealing.
Vargo owns two golf courses. Palmer Park Golf Club and Chandler Road Golf Course. Palmer Park is a high end club. Vargo owes $431,710 in water bills. Joe Louis Arena (home of the Detroit Red Wings) $80,000. Ford Field $55,000.
Even the State of Michigan owes the water board. $80,890.
Mishandling of funds has also contributed to the debt. Whether improper, I cannot say. However in 2011 and 2012, Detroit sold $1.16 billion in City bonds The proceeds were to be used by the water company. Half the money never went where it was supposed to go. The water company. $547 million was paid to Wall Street banks for interest and termination fees owed by the City.
The resident shut down problem only surfaced two months ago. In that short time, the Bankruptcy Judge has been made aware, the United Nations has become involved, Detroit residents have formed a non-violent civil disobedience group, and people are protesting daily by the thousands in the streets. The civil disobedience group intends to form human chains when and where locking of water boxes is attempted.
Last week, a 15 day moratorium was declared. No more shut downs for 15 days. Whether it will help is questionable. Orr says it will give people an opportunity to pay or make arrangements to pay. Then a return to the turn offs. It could be nothing more than a 15 day armistice.
Kevin Orr is a recognized expert in the areas of restructuring and bankruptcy. A lawyer, he led Chrysler's successful restructuring in 2009. He is considered one of the best at what he does. He considers himself a benevolent dictator. Whether so with regard to the Detroit water problem is questionable.
Orr is African-American. There are those of his own race that perceive him an Uncle Tom. A participant in the oppression of his own people.
Detroit has become an American disgrace.
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