It is no secret that the infrastructure of the city-owned and -operated Philadelphia Water Department is old and in need of repair. What may come as a surprise to many Philadelphians is who is responsible for the underground pipes connecting homes to city water and sewer mains. Unlike the Philadelphia Gas Works, which repairs underground pipes, the Water Department makes homeowners responsible for those unseen pipes.
Many of the city’s old pipes leak and can be further damaged when water from broken mains and underground streams erodes the soil supporting the connecting pipes. There can be little doubt that fewer connecting pipes would break if the Water Department’s infrastructure were in better shape.
The city administration, apparently, has decided not to order the Water Department to pay for the connecting pipes to be replaced when they break, no matter what caused the failure. Instead, the administration is allowing a private company to sell “warranties” to homeowners that would cover the cost to replace underground pipes if they break — no matter what caused the break. This amounts to another charge in addition to present water, sewer, and service charges.
It would be easier to understand Mayor Jim Kenney’s decision to increase the burden on homeowners if the Water Department lacked the funds to pay for repairs. But that is not the case. The Water Department is sitting on tens of millions of dollars.
A hearing examiner hired by the city to review the Water Department’s 2018 requested rate hike found the department had a surplus of more than $200 million. Those funds are kept in what the department euphemistically calls a “rate stabilization fund."
The hearing examiner’s decision stated: “As demonstrated on the record, the Philadelphia Water Department ended FY 2017 with RSF funds totaling $201 million — approximately $48 million in excess of the projections submitted with its 2016 rate case and more than $90 million in excess of the projections of the $110 million target balance. … Historically, the department has accumulated reserves well in excess of its current target.”
The Water Department, then, has, at minimum, an extra $90 million that could be used to repair broken pipes. Instead, it is keeping the money in the US Bank, a bank that has no local branches and is not tied to any economic development plan to help city residents.
The Water Department has, in effect made a policy decision to lower the burdens on business by placing a greater burden on homeowners, who have to shoulder pipe repair costs alone.
Much like the failure to fully publicize the school income tax, which requires stock- and bond-holders and real estate speculators to pay a share of the school expenses, the decision to offer Amazon billions to build a headquarters in Philadelphia while offering much less to small businesses, and the attempt to raise the real estate tax on longtime homeowners while lowering businesses' taxes and keeping the 10-year tax abatement in place, the decision to place the burden of the Water Department’s aging infrastructure on individual homeowners tears at the social fabric.
The policy to charge homeowners to repair city infrastructure isn’t much different than President Donald Trump’s economic approach of cutting taxes for business and championing privatization that increases economic burdens for working people.
City leaders rightly condemn Trump’s economic policies. Yet they remain silent as the city allows a private company to make a profit selling home warranties to protect Philadelphians from the department’s failing infrastructure. What would those same leaders say if the federal government announced that instead of fixing roads, it would help a for-profit insurance company sell insurance to protect car owners from crumbling roads and bridges?
It is easier to make progressive statements than it is to implement progressive policies. Saying that everyone should pay a fair share is easier than requiring everyone to do so. But shouldn’t we ask the city to both talk the talk and walk the walk?