$200 deposit for city water is called bad for real estate business

1/17/2013

The city of Toledo has started requiring a $200 deposit for all new water accounts — a move some Realtors are decrying as bad for business.

Department of Public Utilities Director Dave Welch said before Oct. 1, 2012, the deposit was required for only some customers wanting water service, but now it’s required “across the board.”

Mr. Welch said he actually could charge up to twice the average quarterly water bill, which is $225.

“We are trying to protect and ensure that the utility is viable,” Mr. Welch said. “We are not going after everybody. We are only asking this for new accounts.”

Mr. Welch said the $200 is credited toward a customer’s final bill when the service is terminated.

Much of the reason for the deposit comes down to money. The city’s water and sewer systems are flush with repair expenses and low on cash.

“You have to ask what are the unrestricted reserves [that can be used] in case there is an emergency,” Mr. Welch said. “I have $39 million in the water fund but only $4 million in unrestricted cash.”

He also said the deposit is meant to mitigate delinquencies.

The city was supposed to demand the deposit for every new account beginning Oct. 1, 2012, Mr. Welch said.

“Are we perfect? No. There were some incidences of service people not asking for the deposit,” he said. “Before that time, we were doing it for LLCs, and some of the real estate groups, and people who have had bad accounts who we knew were risks.”

Megan Foos, chief executive of the Toledo Board of Realtors, said some of her members had heard about the deposit Tuesday for the first time.

“If they have been doing this since October, my guess is I would have heard about this by now,” she said.

Tony Bassett, a Realtor with Danberry Realtors, said the deposit hit home buyers and agents without warning.

“A lot of buyers are going to buy houses out there now that are $20,000-$50,000, and they still don’t have a lot of money, so that $200 is a lot of money,” Mr. Bassett said. “I guess what is irking a lot of Realtors is that no one communicated anything to the Toledo Board of Realtors. I have done 20 closings between Oct. 1 and Jan. 1 and never had a buyer say, ‘What is this?’ ”

Under the city policy, somebody buying a duplex will have to pay $200 for each unit.

“If they buy a four-plex, it’s $800,” Mr. Bassett said. “Apparently they will charge $200 for each unit up to a 10-unit building.”

Contact Ignazio Messina at:imessina@theblade.comor 419-724-6171.