City of Culver City, California
Agenda Item Report
Meeting Date: 03/09/2015 Item Number: A-1
CITY COUNCIL AGENDA ITEM: (1) Consideration of an Optional Provision in the
Proposed Agreement to Authorize the City to Receive a $9 per Policy
Administrative Fee; and (2) Approval of a Three Year Agreement with Service Line
Warranties of America to Offer Service Line Insurance Policies to Residential
Property Owners for Water and Sanitary Sewer Service Lines.
Contact Person/Dept.:
Joe Susca/Public Works-Administration
Phone Number:
310-253-5636
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: []
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Agenda and Meetings – City Council (03/03/15)
Department Approval:
Charles D. Herbertson (03/02/15)
City Attorney Approval:
Carol Schwab (by L. Vidra 03/02/15)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (03/03/15)
City Manager Approval:
John M. Nachbar (03/03/15)
RECOMMENDATION:
Staff recommends the City Council (1) consider an optional provision in the
Proposed Agreement to authorize the City to receive a $9 per policy Administrative
Fee; and (2) approve a three year agreement with Service Line Warranties of
America to offer Service Line Insurance Policies to residential property owners for
Water and Sanitary Sewer Service Lines.
BACKGROUND:
A service line is the water pipe or sanitary sewer lateral pipe that connects from a
building to the main that serves an area. Service line pipes are buried and are
typically located outside a building. Many residential property owners are unaware
that repair or replacement of their utility service lines are their responsibility.
As a sewer lateral ages, the mortar used to bind its joints loosens, becomes brittle,
and may flake away inviting dirt and tree roots to enter the pipe and create
blockages. Water pipes are continuously under pressure and may leak or fail over
time due to their age.
Formed in 1996, Service Line Warranties of America Inc. (SLWA), a subsidiary of
Utility Service Partners, Inc., offers an insurance policy to residential property
owners that covers the cost to repair or replace their utility service lines, primarily to
single family houses and some multi-family dwellings (the “Program”).|1010| SLWA was City of Culver City, California
Agenda Item Report
endorsed by the National League of Cities in 2010 and through this partnership, the
Program has been implemented in 200 cities located in 31 states. SLWA maintains
an A+ rating from the Better Business Bureau and, in 2013, received their Torch
Award for Ethics in Pennsylvania, which is where SLWA is headquartered.
In September 2014, the City Council received a presentation from SLWA highlighting
the details of the Program.
In California, the cities of San Diego, Daly City, Palmdale, Lemon Grove, and
Cathedral City have SLWA Programs in place. Staff contacted the cities of
Palmdale, San Diego, and Daly City, all of which provided favorable references and
reported that their participating residents were pleased with the Program. The cities
also report that SLWA’s marketing campaign was an important educational outreach
that notified residents that they were responsible for their utility service lines and
offered them the opportunity to participate in the voluntary program from a reputable
company.
DISCUSSION:
During the workshops which were part of the City’s development of its Urban Forest
Plan, some residents voiced concerns about tree root intrusion into their sewer
lateral, resulting in costly repairs or replacement. City Council approval of the
Agreement will provide residential property owners the option to participate in the
Program to repair or replace their utility service lines, which work costs $2,000 to
$4,000 per incident. Once enrolled, a customer calls the SLWA toll free number,
and a plumber or contractor is typically dispatched to the property within 2 hours.
Local contractors and plumbers are selected by SLWA and dispatched on a
rotational basis. If the next plumber in line is unavailable to respond within the 2-
hour window, then the next plumber in line is dispatched.
SLWA Agreement -- Terms and Conditions:
? A three year Agreement with automatic one-year renewals thereafter. After
the third year anniversary however, either party may terminate the Agreement
with 90-days’ written notice.
? Only Culver City-based contractors and plumbers are hired by SLWA to
perform the repairs. All work is performed to code and with appropriate
permitting.
? SLWA continually monitors each plumber’s performance to ensure minimum
service levels are maintained.
? Those who voluntarily sign up for the Program receive up to $4,000 per
covered incident with no deductible and, if necessary, an additional $500 is
provided to cover sidewalk or street repairs.
? Customers may terminate their policy at any time and receive a pro rata
refund of their prepaid premium. City of Culver City, California
Agenda Item Report
? The City agrees to provide SLWA limited use of the City’s seal and logo when
marketing the Program to residential property owners. Such marketing
materials are subject to the City’s prior review and approval.
? During the term of the Agreement, the City agrees not to enter into similar
agreements with SLWA competitors. However, SLWA competitors are not
precluded from offering similar services to City residents.
? SLWA agrees to maintain insurance policies whose coverage adheres to the
City’s requirements and to indemnify and hold harmless the City from any
claims for damages, losses, or personal injuries resulting from the Program.
? The Program’s annual costs are $81 for water coverage and $117 for sewer
coverage. In years two and three, SLWA may increase each annual premium
by up to $9.00 in each year.
Optional Term:
? Revenue Sharing: The City Council may elect to receive a stipend of $9.00
per policy to cover the cost of staff time dedicated to implement and oversee
administration of the Program. If the City Council does not elect to receive
the stipend, SLWA agrees to reduce their policy holders’ premium by an
amount equivalent to the stipend.
Next Steps:
If approved, SLWA will conduct bi-annual marketing campaigns to promote the
Program. All marketing materials will be subject to the City’s review and approval
prior to their release. To avoid confusion about the Program, SLWA has agreed to
cover the cost to distribute an inaugural mailing from the City that answers
Frequently Asked Questions about the Program.
FISCAL ANALYSIS:
SLWA anticipates 9% of residential property owners will participate in the Program.|1010|
If the City Council elects to receive the $9.00 per policy stipend, staff estimates it will
generate approximately $16,200 annually in revenue in the General Fund.|1010|
MOTIONS:
That the City Council:
1A. Determine to ACCEPT the optional provision which authorizes the City to
receive a $9 per policy administrative fee to offset its costs in administering
the Program;
OR City of Culver City, California
Agenda Item Report
1B. Determine to DECLINE the optional provision which authorizes the City to
receive a $9 per policy administrative fee to offset its costs in administering
the Program;
AND
2. Approve a three year agreement with Service Line Warranties of America Inc.
to offer utility service line insurance policies to residential property owners in
Culver City; and,
3. Authorize the City Attorney to review/prepare the necessary documents; and,
4. Authorize the City Manager to execute such documents on behalf of the City.
NOTES:
|1010|The SLWA policy for external water and external sewer line products cover the consumer owned portion of
the primary water and sewer line from the public utility’s portion up to the point of entry into the residential
home, including small multi-family dwellings. In the event that the property has separately owned attached or
semi-attached residential homes that are considered multi-family dwellings, the SLWA service line warranty
external water and external sewer line products will be available to those property owners of multi-family
dwellings where there are separate primary water and separate primary service lines for each dwelling. In no
instance will shared lines or branch lines be eligible.
|1010|4% of residential property owners in Palmdale and 8% in Daly City participate in the Program, though SLWA
reports that up to 20% have participated in other cities they serve. 10% of Palmdale residents are served by
septic tanks and do not qualify to participate in the sewer portion of the Program. On average, SLWA reports
that 9% of the property owners participate in the Program nationwide.
|1010|Culver City has 10,003 residential properties X 9% participation = 900 properties X $18 per customer ($9
water and $9 sewer) = $16,200.