The Philadelphia Water Department next month will launch a low-income assistance program that offers payments starting at $12 per month and is open even to those who haven't fallen behind on their bills. For those who have, that debt would be frozen indefinitely.
Officials are hoping to enroll upward of 50,000 households, five times those in the city's current program for low-income payers.
"A lot of assistance programs require people to be delinquent. This is innovative in that it's giving people an affordable rate so they're able to stay current," Revenue Commissioner Frank Breslin said. "We are really putting an affordable bill in their hands."
The expanded assistance program, estimated to cost $18 million annually, already has affected water rates. The program was factored into the rate increase that started in July 2016, which will total 10 percent over two years.
The program, which will be unveiled by Mayor Kenney's administration Tuesday and open for applications July 1, was more than two years in the making. It was developed out of a growing frustration with the city's options for those who struggle to pay their utility bills.
The pool is substantial; About 40 percent of payers are behind on their water bills, for a total delinquency of about $262 million, according to the Water Department. The department offers payment plans and some discounts, but customers must be past-due to apply.
Under the new model — a tiered-assistance program, thus the name TAP — payments will be tied to a household's income, not water usage. (Customers with unusually high usage, potentially a sign of a leaky pipe or running toilet, will be required to meet with a conservation specialist.) The program will be open to anyone with an income under 150 percent of the federal poverty level, or $36,900 for a family of four. The payments will range from 2 percent to 4 percent of household income.
Even those who don't meet the income threshold could qualify if they have a hardship, such as losing a job or being a victim of domestic violence.
"Any customer that's struggling to pay their bills, we want them to apply to the program," Deputy Revenue Commissioner Michelle Bethel said.
Any existing debt would be suspended, and the penalties and interest on it forgiven for customers who do not miss a payment for two years.
After July 1, applications will be taken online or by mail. At that time, those with questions can call 215-685-6300 for more information.
Officials said they were not aware of another water utility in the country that offers income-based bills.
"This is the most progressive collection strategy for water in the country," said Councilwoman Maria Quiñones-Sánchez, who in 2015 led the effort to pass enabling legislation for the program through City Council. "If we want to maintain our high home-ownership rate, this is one of those things that is hugely important. … It's the right thing to do."
As for the long-term impact on water rates, Water Department officials said it is difficult to know whether the program could lead to another rate increase after fiscal year 2018. They said it would depend on enrollment and whether the program surpasses its $18 million budget.
Officials added that the cost could be offset if offering more manageable bills leads to higher overall collections.
"Our current program, we keep accumulating interest and penalties, so you disincentivize people from becoming compliant," said Quiñones-Sánchez. "Now there's a pathway out that makes sense."
Update: This story has been corrected to accurately reflect the debt forgiveness portion of the program. Debt is indefinitely suspended upon entry to the program and the penalties and interest on that debt would be forgiven after two years of on-time payments.