A new Baltimore City water billing system will save the owners of vacant properties more than $2 million annually, and other customers will have to pick up the slack.
The windfall for those who own vacants—their water bills will be reduced by more than half—is a side-effect of Baltimore's new BaltiMeter Billing system, which public works officials tout as a modernization.
In addition to the now-standard rate increase (9.9 percent for water and 9.0 percent for sewer in each of the next three years), Baltimore's new water billing system makes two major changes. First, the bills will now come monthly, rather than every three months. This, the Department of Public Works says, is to better allow people on fixed incomes to avoid the shock of a large bill. Second, the new rate structure does away with the minimum usage fee, which until now has charged every customer for at least 7,400 gallons of water every quarter, whether they used it or not.
That put the minimum quarterly bill in the $100 range, an amount that some owners of vacant properties (and many regular homeowners who use much less water) have decried. The minimum charge folded in the fixed costs of the city's water works. The new billing system will break those out separately as an account management fee, an "infrastructure fee" that goes toward paying for all the new pipes the city has been spending billions of dollars to install (see "Sink Holes" cover story, page 9), and the Stormwater and Bay Remediation fee (aka "rain tax") that is dedicated to Chesapeake Bay cleanup efforts.
The department has posted a calculator that shows the results for various sized water meters and amounts of water used, under the old system and the new. A typical row home with a 5/8-inch service pipe is billed $106 per quarter, or $35.41 per month, under the current system. With the rate hike going into effect, that monthly bill goes up to $38.74. That would be the minimum under the current system of billing.
But under the new billing system, if no water is used, the bill drops to $17.94 per month. That's a 54 percent savings.
Multiplied by all the 8,400 non-water users DPW says there were last quarter, the $20.80 monthly savings for the owners of vacant properties totals just under $2.1 million a year.
DPW spokesman Kurt Kocher says not all 8,400 current bills with no usage are abandoned houses. "They could be buildings between tenants," he says. "Or on vacation."
Some are probably being rehabbed as well, but many others are not and, he acknowledges, very few Americans take a 90-day vacation coinciding with a water billing period.
There are 17,000 vacant structures in the city, by Baltimore Housing's count. Some owners have paid to have the meter removed, which ends water bills, but not the bay remediation fee and other charges.
Fair housing advocates have long-championed a tax structure that would punish speculators in vacant houses. Jody Landers, who served on former Mayor Sheila Dixon's Blue Ribbon Committee on tax reform, proposed a tiered property tax system that would have doubled or tripled the tax rate on abandoned houses in order to spur redevelopment and generate revenue for a tax cut for homeowners and residents. He proposed the plan when he ran for Mayor in 2011.
"It doesn't make sense to be rewarding people for maintaining a derelict property," he says. "On the other hand there are probably a lot of seniors, and small households, that were getting nailed under the old system."
Landers asks how many people would benefit, a number that Kocher could not readily supply. But he said that most current small users would probably pay less.
Most of those who pay more will be large water users, Kocher says—companies that benefited under a bulk purchase discount that is also being eliminated under the new billing system. That means that the reductions for slumlords will be financed primarily by city business owners.
The owners of abandoned buildings often don't pay their water bills anyway, mooting the subsidy to that class of water customers.
"The first thing is, it would be important to know how many of these larger [abandoned house] water bills are actually being paid," says City Councilman Bill Henry (4th District), who is planning to hold a hearing on water affordability in late October. "And if they're not being paid anyway, it's important that they be lowered. Because one of the impediments to redevelopment is that we have these high liens on them. And we're not good at getting the liens waived."
Indeed, many vacant Baltimore houses are saddled with water bills in the thousands of dollars, exceeding the value of the property. Henry says the city can waive the lien but doesn't do so as readily as it might. He suspects it's because DPW holds those unpaid bills as an asset in its books.
"I can't get anyone to confirm this in writing," Henry says, "but I suspect that a lot of these liens…are booked as accounts payable and the reticence to waiving them is that it makes the city look poorer to bond rating agencies."
"That's more of a question for finance," Kocher says.
Carol Ott, a west-side blogger and activist for fair and affordable housing, says not all owners of vacants skip their water bills.
"In Baltimore, there are three types of vacant property owners," she says: The first type are dead people and their heirs who don't know what to do. "I hold them blameless," she says, adding that they're about 30 percent of the vacant owners she deals with. The second type are "block-busters" who are waiting for an area to clear out and be redeveloped. These speculators comprise about half of the vacant building owners, in Ott's experience, and she fights them. The last group, owning about 20 percent of the city's vacants, are "the dummies who watched one too many HGTV show or [a] 'how-to-flip houses' seminar video," Ott says. "And they're the ones who pay. They don't want the city to take away their get-rich-quick scheme."
Going forward, the city is less likely to do so.