High costs, few customers: Benton Harbor water woes loom for Michigan cities

Benton Harbor resident Bobbie Clay’s bills are steadily rising, for water she can’t drink.

Amid a three-year-long lead contamination crisis in the city’s water system, residents are still advised to drink only bottled water. But the water bills keep coming, and on a fast food worker’s budget, with kids to feed and rent to pay, 53-year-old Clay said it’s becoming financially untenable.

“It’s crazy,” she said. “We’ve been told not to even brush our teeth (with tap water). I've never had to deal with nothing like this. It’s crazy and scary and traumatizing.”

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Worse yet, the rising water rates in this impoverished southwest Michigan city of 9,100 people still haven’t been enough to cover the city’s cost to maintain its water system. 

It has left Benton Harbor with a water treatment plant in such disarray that regulators say it can’t reliably produce clean water, even before that water is shunted into a delivery system that includes pipes made of toxic metal.

So as Benton Harbor strives to replace thousands of lead service lines over the next year-and-a-half, it must reckon with a second existential problem: How will a shrinking community, where water rates are too high for many residents to afford, raise enough money to deliver consistently clean water to residents through those new pipes? 

And if the answer is that it can’t, what then? 

The quandary in Benton Harbor is an extreme example of a widespread problem in many Michigan cities, where shrinking populations and wealth have left many local governments unable to collect enough ratepayer revenue to cover long-term water system costs. 

“There’s, what, about 1,200-1,300 water systems in the state?” said John LaMacchia, assistant director of state and federal affairs for the Michigan Municipal League, which advocates on behalf of towns and cities. “Put them all on the hat, pull one out and I’ll bet you find one (that is showing signs of financial stress).”

A water plant’s descent 

Benton Harbor’s plant, built in the 1950s, was designed to deliver up to 12 million gallons a day to a community whose population was then at a high point of nearly 19,000 residents, plus a host of factories and businesses that required water of their own. 

But as the manufacturing plants shuttered and residents moved out, water deliveries have dwindled to about a tenth of that — much of it wasted water that’s lost in leaky pipes before it ever reaches residents’ homes. 

The massive and now aging infrastructure still needs to be maintained, however, and those left to share the bill are both fewer and poorer — a brutal imbalance made worse over the past decade, as neighboring Benton and St. Joseph townships broke away from the city’s water system to get their water elsewhere. 

That cut Benton Harbor’s water demand nearly in half, while Benton Township constructed a new plant right down the road. 

“It never should have been allowed to happen,” the Rev. Edward Pinkney, a local water activist who leads the Benton Harbor Community Water Council, said of the new plant. “They should have been penalized: If you want to go and do your own, then you have to pay the city of Benton Harbor (for the resulting financial hit).” 

But township residents contend the Benton Harbor system’s mismanagement, even back then, was among the reasons they opted to leave, along with frustration over the city’s refusal to give the township more say-so over the water system’s operations.

“People didn’t really know what they were doing,” said Benton Township Supervisor Cathy Yates. “The bills (weren’t) always accurate.”

And officials with the Michigan Department of Environment, Great Lakes and Energy (EGLE) say they were largely powerless to stop those departures, which came just as Benton Harbor officials had taken out millions of dollars in state loans to revamp their aging water plant under the assumption that their customer base would remain stable. 

With fewer customers, the city now had even less revenue, and despite a rate increase to offset the loss, the plant began to fall into such alarming disrepair that state regulators in 2018 directed the city to again raise rates on city residents to fund fixes.

The city did so, last year locking in a roughly 10 percent annual drinking water rate increase, plus 7 percent annually for sewer service, every year for five years. 

Benton Harbor’s rates were already nearly double that of neighboring St. Joseph. The average customer reported spending $80 to $160 per month on water and sewer services, according to a 2018 University of Michigan study.

The new increases that began last year and will continue through 2024 have so far added another $16 per month to the average resident’s water and sewer bill, according to city estimates developed before the rate increases.

The lead problems only created new expenses. And this fall, residents received more bad news: A joint inspection by EGLE and the U.S. Environmental Protection Agency flagged a host of new, alarming deficiencies.

Equipment used to monitor and maintain water quality was failing. Chemicals and water were pooling on the plant’s floor. Staff couldn’t keep up with operations and maintenance, and failed to properly notify residents, health officials and caregivers about the city’s lead problems.

State regulators and officials with Abonmarche Consultants, a company hired to help the city tackle its infrastructure needs, say it will cost millions more dollars to bring the water system back into compliance. And possibly more to properly operate and maintain the system after that.

But in an impoverished city whose residents are already weathering an ongoing rate increase, raising rates once more to generate new revenue may not be an option.

“The rates are already pretty high compared to neighboring municipalities,” said Christopher Cook, president of Abonmarche, and the idea of raising rates when many residents already can’t afford their bills is a sensitive topic.

Is consolidation the answer? 

One possible, but contentious, option: Getting another system to supply Benton Harbor’s water.

EPA officials have said the city must at least consider “consolidating, restructuring or regionalizing” its water system — a maneuver that could mean anything from transfering the system to another owner to closing the plant and buying water from a neighboring community, to merely sharing administration and management duties with a neighboring system.

Some drinking water experts see consolidation is an appealing solution to the financial hardships facing oversized, underfunded drinking water systems like Benton Harbor’s. By combining forces to deliver water more efficiently, communities can save money and improve quality.

“We're at a point for a lot of places where it could be a really effective strategy,” said Sara Hughs, an assistant professor at the University of Michigan School for Environment and Sustainability, who studies drinking water costs.

But it’s a touchy subject, and can lead to ideological fights, struggles for control, disputes over money and resistance from neighboring communities that are used to seeing one another as competitors, not collaborators.

The state forced Highland Park, another majority Black, low-income city surrounded by Detroit, to shut its decrepit water plant in 2012, in what was supposed to be a temporary move. Nearly a decade later, Highland Park still receives its water from the Great Lakes Water Authority, which is now suing the city and the state over unpaid bills.

While consolidation has its downsides, said Sri Vedachalam, director of water equity for the Environmental Policy Innovation Center, continuing to operate deficient systems is unjust to customers.

“When systems are not meeting their standards,” he said, “people are getting contaminated water.”

In Berrien County, home to Benton Harbor, extreme racial segregation further influences attitudes about possible consolidation. Benton Harbor is 85 percent Black. Neighboring St. Joseph is 84 percent white. 

Many residents of Benton Harbor still resent how an exodus of white residents in past decades crippled their town and are anxious that gentrification could soon begin displacing Black residents. 

“(Neighboring communities) don’t care about the citizens of Benton Harbor,” said Pinkney, the water activist. “So to ask them to provide our water? I have a major problem with that.”

Benton Harbor’s mayor, Marcus Muhammad, said he also finds consolidation unappealing. He fears the city could lose a revenue-generating asset or become reliant upon the very communities whose withdrawal helped create the city’s water budget crisis.

And he’s wary of losing local control in a city that spent years under the rule of state-appointed emergency managers, only regaining full control in 2016. Gov. Gretchen Whitmer’s 2019 attempt to close the city high school, which she later backed away from after an uproar, was seen as another threat to the city’s autonomy and pride.

“Benton Harbor, although it’s small, is too big to fail,” Muhammad said.

Neighboring communities would also need to agree to any consolidation arrangement, be it wholesale combining of systems or sharing of services. St. Joseph Water Plant Superintendent Greg Alimenti and Benton Charter Township Supervisor Cathy Yates both said neither community has begun seriously discussing such a possibility.

The results of an independent study to compare a range of options for the future of Benton Harbor’s water system is expected in February. State and federal regulators note they’re not yet recommending any particular course of action.

But consolidation could well be the most financially viable solution, and there are ways to do it while retaining Benton Harbor’s control over rate setting, said EGLE drinking water chief Eric Oswald.

“We've got St. Joe, we've got Benton Township, and we've got Benton Harbor all running very complex surface water treatment systems within about five miles of each other,” Oswald said. “So why should consumers be paying for all that overhead … when we could consolidate?”

EPA officials noted in an email to Bridge that the federal agency’s mandate to look at consolidation “does not imply that the City or EPA will select a specific option among the alternatives.”

Other solutions?

Local officials say they’re hoping the billions of dollars in federal infrastructure funds headed to Michigan could help cover the cost to rehab the city’s water system, making serious talk of consolidation unnecessary. 

And indeed, the money will be a boon for local governments across Michigan that struggle to maintain their water systems, said LaMacchia of the Michigan Municipal League.

Less clear is how Benton Harbor would generate enough revenue to maintain its plant if and when federal dollars arrive to fix it.

“There’s no room” for another rate increase, Pinkney said. 

While Benton Harbor considers its path forward, state water regulators are researching broader policy changes.

One option might be to make it harder for Michigan communities to ditch their system and build redundant infrastructure just down the road. 

As for Clay, the fast food worker? She said she doesn’t want Benton Harbor to lose ownership of its water system. But she can’t afford another rate hike, either. And she’s sick of drinking from plastic jugs.

“St. Joe’s got good clean water,” she said. “I wouldn’t mind it.”