The Receivership Transition Advisory Board voted against the move put in place by the council on May 17, 2017 during a special Flint City Council meeting in hopes of stopping overdue utility bills from being placed on property tax rolls in Flint.
Flint’s Chief Financial Officer David Sabuda said Flint could face millions of dollars in debt if the moratorium was kept in place.
“What would happen is if this moratorium is not lifted what would happen is the $2.3 million would stay on the applicable subsidiary account or the customers accout it would be there for five years…We would hope that the customers would pay that balance that is due but…after five years state law says I cant go after that any longer… We would lose approximately $2.350 million…in the beginning of the sixth year. Then the fund balance would take a hit. We lose the opportunity to collect…I we’re collecting those dollars…we’re able to pay bills.”
So far, Sabuda said the city had $5.8 million in overdue utility accounts.
Last October, city officials launched an aggressive effort including issuing shut-off notices to collect on overdue bills. Since then, Sabuda said Flint has collected $710,000 of the $5.8 million. Of that debt an estimated $2.3 million is from the water portion of the utility bills.
“The fact that at least in combination the moratorium plus extending the temporary water source contract with the Great Lakes Water Authority would have a somewhat profound impact upon the condition of the water fund to the approximate tune of about…$12 million,” said RTAB Chairman, Frederick Headen. “It’s important to view the water lien moratorium…not in isolation but in the context of others issues including the budget.”
In addition to the moratorium, Flint City Council members have also voted during a June 26, 2017 council meeting to continue using GLWA under a three-month contract extension instead of moving forward with Mayor Karen Weaver’s recommendation to sign a 30-year contract – A move that Weaver’s administration along with RTAB members say would put Flint into further debt.
Flint City Council President, Kerry Nelson says the moratorium would only be in place for a year while council members reviewed Flint’s ordinance regarding property liens.
“We are looking trying to do what’s best for this community,” Nelson said to RTAB members on June 27. “They are already going through hardship…
Nelson, who represents Flint’s 3rd ward, said 505 of the lien letters were sent to property owners in his ward.”
“This city and the citizens of this city (are) already in hardships,” Nelson said. “Already strapped for cash and for someone to push us into something and say you have to do (it), we’ve down this road before and that road lead us to poison water.”
Under the moratorium liens would not be placed on properties for at least one year for delinquent bills stemming back to 2014.
Weaver announced in a May 3, 2017 statement that the city was obligated to follow the law regarding the city’s ordinance on tax liens for nonpayment of utility bills. The move gained national attention as Flint City Council members worked behind the scenes to figure out how to stop the lien process.
Weaver was not at the June 27 RTAB meeting but City Administrator Sylvester Jones spoke on her behalf.
“I think it’s important to know, while the mayor is certainly recommending the water source recommendation the mayor is not opposing the moratorium,” Jones said. “She is not opposing this moratorium at all.”
The lien process is typically done annually but it was not done in July 2016 because of water relief credits provided by the state covering some of the cost of water bills for both residential and commercial water customers in Flint, said Weaver’s May 3 statement.
According to the city’s ordinance, the lien process goes into effect when payments are missed on water and sewer accounts for longer than six months.
If liens are placed on properties, the outstanding utility bill balance would be forwarded to the property owner’s tax bill. If that bill is not paid the property could then go to the Genesee County Land Band. Flint would not get a reimbursement on the properties or the overdue utility accounts.