Water shut-offs loom despite aid

More than a half-million Californians struggling to pay their water bills during the pandemic will probably have their debt paid off by the state.

The major debt-relief program, which closed to new applicants this week, is slated to dole out $303 million, according to state records. About 7,700 households and businesses in San Francisco are expected to get their unpaid bills covered, while about 10,900 customers of the East Bay Municipal Utility District can anticipate a credit.

Still, even with the windfall of cash, hundreds of thousands of people are likely to continue carrying burdensome water debt — and at a particularly bad time. A California law preventing utilities from shutting off water to delinquent customers, put in place because of COVID, expires at the end of the month. It’s not expected to be renewed.

The large number of people who remain at risk of a shutoff is partly because of water agencies not applying for the state relief and partly because of the narrow window the funding covers. Debt from outside the period of March 4, 2020, to June 15, 2021, remains on the books.

“Any time you can get a source (of funding) like this, we welcome it,” said Andrew Lee, manager of customer and community services for the East Bay Municipal Utility District. “But we’re still in the pandemic. We’re not out of it. Debt is still being accrued.”

The relief program was started by the State Water Resources Control Board with federal stimulus money allocated in Gov. Gavin Newsom’s budget in June. Surveys by state water officials show that as many as 1 in 8 California households fell behind on water payments because of financial hardship early in the pandemic.

While the amount of water debt has dropped significantly in recent months as the economy has improved, unpaid bills continue to haunt not only those who hold them, but water agencies that have less revenue coming in as a result. Some smaller water agencies have warned they may not have enough cash to maintain operations. The community of Port Costa in Contra Costa-County and Lake County’s Clearlake are among the spots with the most missed payments.

Of the $985 million allocated to the aid program, water agencies, which were responsible for seeking out the funds to pay the outstanding bills of their residential and commercial customers, applied for slightly more than $303 million by Monday’s deadline, according to state records.

The total request, records show, will cover the bills of 534,292 delinquent accounts representing as much as 90% of all outstanding water debt accrued during the worst of the pandemic.

The State Water Board began sending checks to the water agencies in late October, with the remainder due out in the coming weeks. The water agencies must notify customers of their cleared debt within 60 days of receiving the money. The average amount being cleared is $567, records show.

“We’re really happy with what we’ve done,” said Darrin Polhemus, a deputy director for the State Water Board, noting that such a program would normally take years to implement. “Hopefully this helps get some people back on their feet.”

Still, Polhemus added, “We’re not pretending like we’re covering everybody’s debts.”

While state officials reached out to more than 2,000 water agencies to encourage them to apply for relief, 650 sought out the money, according to state records. The participants include all of the Bay Area’s big suppliers.

Those that sat out, the records show, were mostly small agencies that cumulatively serve only a fraction of the population. Some of these suppliers, however, provide for California’s most vulnerable residents in places like the San Joaquin Valley, said Uriel Saldivar, senior policy advocate for the Community Water Center, a group that advocates for safe and affordable drinking water for disadvantaged people.

“It’s disappointing to see so many fail to apply for what is by all intents and purposes free money for families,” Saldivar said. “All of the households within these service areas are going to have to front the bill or seek outside help. We’re expecting a lot of shut-off notices.”

The reason agencies didn’t apply, say community activists and water managers, include not knowing about the program, insufficient staff to do the paperwork and being able to shift debt to county payrolls. Some suppliers, Saldivar said, may have even wanted to keep their debt to make money off late fees. As a condition of receiving state aid, water agencies had to forgive penalties on existing overdue bills.

Sean Geivet, general manager of the Terra Bella Irrigation District in Tulare County, said he didn’t seek out the money simply because his agency hasn’t seen much change in the level of delinquency. The district serves a relatively poor area with about 5,000 people.

“There’s no need for us to access those funds,” Geivet said. “People continue to pay.”

But in most places, that isn’t the case. At the East Bay Municipal Utility District, which serves much of Alameda and Contra Costa counties, the debt load has increased from an average $2 million carried by the agency before the pandemic to the current $16.7 million. The San Francisco Public Utilities Commission, which serves San Francisco, reports a similar debt increase.

“It’s a significant impact on us. But we are working with customers” on payment plans, said Lee, at the East Bay Municipal Utility District. “Maybe the state comes through with another pot of money. If not, that’s a concern.”

An additional debt assistance program for water bills is being set up by the California Department of Community Services and Development, but the level of federal funding, and the program’s reach, is much smaller.

The balance of the State Water Board’s relief fund, called the California Water and Wastewater Arrearage Payment Program, will be directed to wastewater agencies that are seeing more customer debt during the pandemic.

Water agencies and community activists have long pushed for a more permanent way of helping low-income Californians pay their water bills. Legislation introduced this year by state Sen. Bill Dodd of Napa would have created a water rate assistance program, similar to assistance programs for power and phone services, but the bill was tabled.

“There’s a real need for more significant action on the issue,” said Michael Claiborne, directing attorney for the Leadership Counsel for Justice and Accountability, a nonprofit that advocates for Californians in poor, rural areas. “This state really needs to do a better job of making sure everyone has access to drinking water regardless of their ability to pay.”

Kurtis Alexander is a San Francisco Chronicle staff writer. Email: kalexander@sfchronicle.com Twitter: @kurtisalexander