Delinquent Merced water bills have been piling since COVID began. What’s being done?

More than a year after the COVID-19 pandemic prompted state and local leaders to cut residents a break on their water bills, Merced’s delinquent payments have piled up to the tune of more than a half million dollars.

The ongoing moratorium was discussed by the City Council during their regular Monday meeting, and it’s still unclear what action the city will take — and when it will be taken.

By a vote of 6-1, the council Monday punted on making a decision on the issue until Dec. 20. The total is estimated at $587,408 in unpaid water bills, city officials said.

Mayor Matt Serratto cast the lone dissenting vote, advocating for a definite timeline to shut off water for those who aren’t paying their bills.

“Obviously, you don’t want to shut anybody’s water off, but it’s just not sustainable,” Serratto said during the meeting. “There are people who genuinely have a need, but there are certain people who are just taking advantage. So we help everybody we can, but at the same time, it’s simply not sustainable.”

Impacts of Newsom executive order

The council considered four proposed timelines for reinstating water service billing and shut-offs for Merced customers, with the earliest timeline designating a water shut-off date of Dec. 1 and the latest being March 2 next year.

In normal times, the city shuts off water service to households and certain businesses that don’t pay their water bill.

However, after COVID-19 broke out in March 2020, city officials were mandated to stop shutting off water for delinquent water customers.

That’s because Gov. Gavin Newsom issued an executive order stating that water and sewer service could not be discontinued for non-paying households.

Newsom issued the order to ensure water services statewide continued providing safe, clean drinking water to all non-paying customers who couldn’t pay because of the economic effects of the COVID-19 pandemic.

“This was based on the right to safe, clean, affordable and accessible water adequate for human consumption, cooking and sanitary purposes,” said Venus Rodriguez, Merced’s finance director.

“It was also thought it would limit the spread of COVID-19 by washing hands regularly. It was assumed residents would lose work hours or wages or potentially be laid off, and small businesses would have reductions to income.”

Newsom’s order was supposed to expire Sept. 30, which would have allowed cities like Merced to start collecting on delinquent water bills again.

But Senate Bill 155 and Assembly Bill 148, both passed this year, allow money from the State Water Resources Control Board water and wastewater arrearages program to help community water systems statewide make up for the loss of income due to unpaid water bills.

The program would only cover delinquent water bills issued between March 4, 2020 and June 15, 2021.

Together, both bills stop cities like Merced from suspending water services until the end of this year.

Others on council want to extend moratorium

Abiding by Newsom’s executive order and state law, Merced leaders haven’t shut off water service to any household or business critical to the city’s infrastructure if those ratepayers don’t pay their water bill in full or on time.

Because of the lower-than-normal amount of water bills being paid in Merced, Rodriguez said the city has 18% delinquency. Normally, delinquent water bill accounts hover around 1%.

The city now has about 300 separate late water accounts. Finance department officials are allowing partial payments on household and business water accounts and haven’t levied late fees, fines or penalties for late or unpaid water bills since February 2020.

Rodriguez said most accounts have between $1,000 and $3,000 of unpaid utility bills. Normally, late fees charged to late or unpaid water bills is 10% of the unpaid balance.

City officials plan to apply for the state’s arrearages program, which would provide city officials the funds to pay for those unpaid water bills, Rodriguez said.

The state could open up the arrearages program to wastewater as well. Rodriguez said she expects to find out if the city gets arrearages program money for late wastewater bills by February.

The State Water Resources Control Board will let Merced leaders know in December if the city qualifies for water arrearages. “Because there’s so much up in the air, I would wait to start this reinstatement of water shut-offs probably in February or March,” Rodriguez said.

American Rescue Plan Act money can also be used to pay off late water and wastewater bills in the city, as well, an option City Council members can pursue when they take up the conversation again in December.

Part of the arrearages program from the State Water Resources Control Board requires cities to not impose late fees or penalties on late water bills, as well as allow late bill payers to pay off the balance of their unpaid water bill over the course of one year.

Some leaders like Councilmember Bertha Perez, who represents District 3, voiced support for extending the water shut-off moratorium.

“I think we should extend it, because I’m not going to vote to do that to some of our residents,” Perez said during the Monday meeting. “Those ARPA (American Rescue Plan Act) dollars are for things like this, and we should think really hard and bring members of the community that are in the red current with the ARPA fund.”

To give residents enough time to pay late water bills, Serratto suggested going with a timeline that gives late water bill payers until March 2, 2022 to pay their water bills issued Jan. 1, 2022.

Under that timeline, new water bills issued on Jan. 1 of next year would be due on Jan. 20. A penalty would be applied on Jan. 21 for unpaid bills, and the initial late notice would be sent on Jan. 22. The final notice and courtesy call would go out on Feb. 18, and water would be shut off on March 2, 2022.

It’s unclear what would happen to the households and businesses that have outstanding water bills, however, city officials can use ARPA funds or the State Water Resources Control Board arrearages program to pay delinquent water and sewer bills.

Still, that timeline met with some resistance from other members of the City Council. Councilmember Delray Shelton, who represents District 6, said because COVID isn’t over, water shut-offs should not be reinstated.

“It’s still very much a real thing,” Shelton said of COVID. “Applying late fees, if they’re struggling now, I don’t think they’re ever going to be collectible. There’s a large amount of people that truly cannot afford this, so don’t penalize them, especially the families with children.”

This story was originally published October 21, 2021 at 5:00 AM.