Ex-Sparrows Point owner has largest overdue water bill

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The former owner of Sparrows Point has the largest outstanding water bill owed Baltimore, but the city must wait for bankruptcy proceedings to play out before it can even hope to collect.

On Friday, the city announced plans to crack down on commercial properties with overdue water bills next month by threatening to turn off their water. The city is owed around $15 million in overdue water bills from commercial properties in Baltimore and Baltimore County, and the largest offender remains the former owner of Sparrows Point, which owes the city about $7.3 million. Including residential properties there are about $40 million in overdue water bills in Baltimore.

“There is always a policy out there in terms of shutting off a commercial if they got behind, but it has just not — from a resource perspective — we didn’t have sufficient resources to do both commercial and residential, and we’ll be stepping up in terms of our resources, we’ve strengthened our programs,” Department of Public Works Director Rudolph S. Chow said. “Even though commercial account is small in terms of quantity it’s large in dollars.”

Chow said the city is sorting through its list of the most delinquent commercial properties, but he declined to disclose which properties were the most behind in their bills. According to the Department of Public Works, there are currently 369 commercial accounts that are eligible for shut off. Delinquent accounts, especially those that are two payment cycles overdue with a balance of more than $250, will be eligible for shutoff starting Wednesday.

By far the single largest amount owed by any one customer is RG Steel LLC, the former owners of Sparrows Point. That company is still in bankruptcy, and the city has to wait for that process to unfold before it can collect the debt. Chow said the overdue water bill does not impact the former steel mill site’s new owner, Sparrows Point Terminal LLC. The new owners purchased the 3,100-acre property from St. Louis-based Environmental Liability Transfer Inc. and Hilco SP LLC, which bought the property at auction in 2012. The new owners are in the process of redeveloping the site as manufacturing hub.

“We’re going through the bankruptcy proceedings,” Chow said, “and that is being handled by the law department. As far as the current owners, we are in good standing with them, or they are in good standing with their account. We are working with them. Of course, the amount of water that is being used at Sparrows is a lot different now versus before.”

Lawrence D. Coppel, attorney and chairman of Gordon Feinblatt LLC’s Bankruptcy and Restructuring Practice Group, said whether a municipality is able to collect on debts from a company in bankruptcy depends largely on what the city’s rights are, such as liens attached to property. He said cities in bankruptcy cases are treated the same as any other unsecured creditor.

“It really depends on the fact of the situation, and without the protection of a lien, a first lien, if the lien has no value it has no value if there’s other secured debt in front of it. Unless you have that type of protection a municipality has no particular priority in terms of payment,” Copple said.

City Solicitor George Nilson was not available for comment.