The MDC is balancing the need to collect the water bill with the economic realities of Hartford
April 14, 2010
The Metropolitan District Commission, providers of sewer and water service to Hartford and seven surrounding towns, is owed $5.4 million by some 14,000 households in its service area, according to records provided to the Advocate by the MDC.
John Zinzarella, chief financial officer of MDC, says the delinquent bills, which are at least 60 days old or older and date from the period of Jan. 1, 2007 through Dec. 31 2009, represent just 3.6 percent of the total revenue collected during that period of $151.3 million. But he says the MDC is working to lower that percentage even further.
“Ultimately we will get to a figure as low as 1 percent,” says Zinzarella.
Yet while the MDC, with annual billings of about $50 million, is carrying a debt of $5.4 million that is 60 days old or older, the water and sewer utility in Washington, D.C., which is six times larger with billings averaging about $300 million annually, has only $4 million in delinquent bills 90 days past due or more.
General Manager George Hawkins says the Washington, D.C., utility is “very aggressive” about getting paid.
“We keep very close track of who’s getting what and who’s paying,” says Hawkins. “We have real-time information about who is using the water and how much they’re using.”
Hawkins says his board of directors wants to know every month where the utility stands on delinquent bills.
“We have a bright-line performance standard,” he says.
The MDC is also owed $3.4 million on district water and sewer bills for the period from Jan. 1, 2000 to Dec. 31, 2006, making those bills delinquent by years, not months. While Zinzarella still holds out hope to collect that debt, Hawkins says he has written off a similar amount of debt that was years old.
“They’re not going to get that [$3.4 million],” says Hawkins.
Like most utilities, the Water and Sewer Authority in Washington, D.C., will not cut off the water when temperatures fall below freezing. But Hawkins says they will consider drastic steps against those who fall months behind on their bills.
“Ultimately we are prepared to shut off someone’s water and even take out a lien against them,” says Hawkins. “We’ll do almost anything we can to get someone in the fold and paying the money rather than cutting them off, but if you don’t have that tool in your toolbox, you’re in trouble.”
Before hiring Zinzarella from the private sector in April 2007, the MDC did not track its billings very closely. Zinzarella says the MDC only started in 2008 to “initiate metrics and financial analysis to key accounts such as revenue accounts, accounts receivable and expenses.” Baseline data prior to 2008 is either “non-existent,” or “difficult to validate and evaluate.”
“I bring a different approach to the MDC,” says Zinzarella. “I come from a for-profit background where everything is metric driven. The MDC was a little more passive in the finance area, let’s put it that way.”
Further complicating the MDC’s efforts to collect its money, says Zinzarella, is the restriction placed on the utility by the legislature, which formed the MDC in 1929, against shutting off the water to multi-family dwellings. Zinzarella agrees with Hawkins that without the ability to shut off water, collection efforts are handicapped.
“The most effective collection activity for seriously delinquent accounts who do not respond to payment plans is the shutting off of water service,” he wrote in an e-mail to the Advocate. “The MDC is prohibited statutorily from shutting off water service to multi-family dwellings. I do not believe that this limitation exists for either private water companies nor other utilities.”
In addition to Hartford, the MDC serves the towns of West Hartford, East Hartford, Bloomfield, Newington, Rocky Hill, Wethersfield and Windsor. But Zinzarella says the most difficult challenge to collection efforts comes in Hartford, where unemployment can run as high as 20 percent in certain areas.
“If we had a real aggressive shut-off policy, large sections of those areas would be without water services,” says Zinzarella. “We’re trying to take a little softer approach.”
As a quasi-municipal corporation, the MDC does not have an in-house collection group, says Zinzarella, “in an effort to minimize infrastructure costs which results in cost-effective rates.” The MDC’s base water rate is $2.12 per 100 cubic feet, “significantly lower” than the rates charged by other water companies providing service in Connecticut, according to Zinzarella.
“The other water companies charge base rates which carry a premium of anywhere from 20% to 124% of the MDC base water rate of $2.12,” wrote Zinzarella in an e-mail.
The MDC has, however, begun imposing a Special Sewer Service Surcharge, which went into effect Jan. 1, 2008, to pay for a massive overhaul of the sewer and stormwater drainage system known as the Clean Water Project.
Chief Administrative Officer Bob Moore says the MDC has authorized more than $220 million of work out of the initial $800 million authorized by voters for the project in November 2006. The project, resulting from enforcement actions by both the Environmental Protection Agency and the state Department of Environmental Protection to stop overflows of billions of gallons of raw sewage into the Connecticut River during storms, will ultimately cost an estimated $2.1 billion.
The Clean Water Project will require about 140 individual construction projects ranging from replacing pipes and adding pipes to upgrading the water treatment plant, to building a massive $280 million underground storage tunnel far beneath the surface of South Hartford. It will also ultimately add some $455 annually to the average household sewer and water bill as a result of the special surcharge to pay for the project.
Doesn’t that make it even more important to make sure everyone is paying their bills so the burden of the sewer system overhaul is spread over the widest possible population of customers? Yes and no, says Zinzarella.
“As we go down the path on the Special Sewer Service Charge, every dollar does count more and we will be more aggressive than we used to be,” says Zinzarella. “But we have to be cognizant of who we are and why we are here. We’re here to serve the municipalities, unlike a for-profit [water and sewer company], which is there to serve shareholders.”