Getting Hosed: Chicago Property Owners Paying For Water They Never Used
CHICAGO (CBS) -- The City of Chicago is going after residents for millions of dollars, attempting to collect bills for water they never used.
An investigation by CBS 2's Brad Edwards raises some alarming questions about a system ripe for human error and stacked against taxpayers.
This is the story of three of them. In one case a simple phone call by Edwards cut a bill by 80 percent, saving that landowner more than $7,000.
Kerry and Helene Kohn owed $58,733.27. Pastor Darryl Hickman owed $9,212.22. Tareq Khan owed $42,539.57.
Water is a big business for the city, which bills residents nearly a half billion dollars. However, 26,729 account holders owe more than $500 and are in line for collection. Many weren't even aware what they owe.
Kerry Kohn rented his business and thought his tenant was paying for his water. Kohn was wrong. Kohn is now responsible for his tenant's $58,733.27 bill.
Kohn's grandfather started his laundry and dry-cleaning business 110 years ago. Once a multi-million-dollar company, the business supported the Kohn family through two World Wars and the Great Depression. That business is now worthless.
"We're trying to donate it, but nobody will even take it because there's a $60,000 water bill," says Kohn in a small voice as he stands, tortured, in the basement by a water meter.
Pastor Darryl Hickman owed $9,212.22. That started with a $257.68 water bill. His sister moved out of their childhood home in 2011, leaving behind the $257.68 debt to Water Management. No one informed Hickman of the balance until interest and penalties inflated the debt to $9,212.22.
"You could have found me earlier. You could have found me in 2013, 2014, 2015, 2016, 2017," said Hickman. "You wait nearly six years to come along and say I owe you $9,000."
Hickman's childhood home was one of the first black-owned houses in the neighborhood. Hickman's father paid it off in only five years. He purchased the home for $13,500 in 1957 – a price Pastor Hickman would be lucky to sell it for today.
Tareq Khan was on the hook for the $42,539.57 worth of water his tenants used. He says his tenants went a year without paying their bill.
"Why was the city waiting when the water bill was racking up to almost 40 plus thousand dollars?" asks Khan.
There are 7,143 properties in Chicago that owe more than $10,000 for water. CBS called the owners of those properties to see whether they were aware of their debt. After just two calls, CBS 2 found an owner who hadn't a clue. Neither did the fourth person called. We then stopped calling.
The tenants who are not paying for their water, are not breaking any laws. According to Chicago Municipal Code, water bills are the responsibility of the property owner, not the tenant.
"A lot of these tenants, they know that these water bills are attached to the landlord, so if they don't pay it, there's no action being taken against them," says Khan.
The city claims it is easy for landlords to keep track of the water usage at their properties.
It said in a statement, "… the property owner should monitor the water account's payment history. For convenience, this can be done online ... to ensure that the account remains current."
Helene Kohn tells a different story. When she tried to use the web page, Kohn was told that only the account owner, her tenant, could log in. She couldn't even register the property as her own commercial property because her tenants already had an account at that address.
"The only workaround is to try to obtain the account number by calling the department and then getting them to send you a copy of the bill through their duplicate document portal. And you have to convince the representative that you are entitled to the information," Kohn said.
The Kohns' renter, American Ideal 1, amassed a $6,213.84 water bill in their first five months renting the business in 2014. According to the Department of Water Management's own rules, the property was eligible for shutoff after 93 days of non-payment.
Animation: How the Kohns ended up with a massive water bill, how their tenant collected city contract cash but never paid the bill, and how a city-hired collection company stood to profit.
The renters were well beyond that. But, the city kept the water flowing. They claimed they couldn't find the shut-off valve in 2014. Water crews also declared the property vacant even though it was clearly using an industrial amount of water 2014. The city caught its failure in 2018 and finally turned off water
While the renter wasn't paying the city for water, the city was paying the renter $504,627.71 in contracts for cleaning services. This is despite the fact that the tenant was unlicensed as of early 2016.
The city sent the Kohns' bill to its collection firm – Talan and Ktsanes. The firm gets 25 percent of the debt it collects. Per city records, it's made $12,091,315.92 from its cut of the collections since 2010.
None of the city departments involved – Finance, Water, or Procurement – would talk with CBS 2 Investigator Brad Edwards on camera.
VIDEO: Here was CBS 2 Investigator Brad Edwards' experience as he tried to get answers on this story.
Since Edwards got involved, Pastor Hickman's bill dropped – drastically.
"This morning they told me that had been reduced to $2,012.19 (from $9,212.22)," said Hickman. "It should not have taken an investigative reporter to make the numbers right."
The Kohns are still getting hosed.
"The city is still billing us even though the water meter hasn't moved and there's no water being used!" says Kerry Kohn.
Being the third generation owner of his family's business used to bring Kohn joy. Now it's become torture just to stand inside its walls.
"Now it's just destroyed. It's completely gone," says Kerry Kohn, his voice wavering. "It breaks my heart to come here."
