When John Brown received a letter under the city’s logo trying to sell him insurance for his water and sewer lines, he thought it couldn’t be true.
“I thought it was a scam,” Brown said.
Then he reached out to city officials and learned it was legitimate, which frustrated him even more.
“How can someone from out of state be using the city’s logo?” Brown said. “It didn’t pass the smell test to me.”
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After contacting city officials, Brown learned the city has a contract with Service Line Warranties of America that allows it to send mailers with the city’s logo to Arlington residents three times a year.
Arlington Water Utilities Director Walter J. “Buzz” Pishkur sees nothing wrong with the agreement and said the company has been saving the city money on sewer line repairs in right-of-ways.
But three other North Texas cities have backed out of similar agreements after receiving complaints from residents. And other large cities in Tarrant County say they have opted not to lend their name to the private company.
Pishkur insists the agreement with Service Line Warranties, which is based in Canonsburg, Pa., is a good deal for Arlington because it set a fixed amount of $600,000 for right-of-way work on the city’s sewer lines. The city has a monthly surcharge of 57 cents on customer’s water/sewer bill to pay for the work in the area near the street where the city line connects to pipes leading to homes.
It didn’t pass the smell test to me.
Arlington resident John Brown
During the last year before that agreement was reached, the city spent $1.3 million on that right-of-way sewer line work.
“We saved the city $700,000 a year and we have provided a stable below-market warranty,” Pishkur said.
Pishkur said he has received calls or emails questioning the program but most are satisfied when he explains that he has saved Arlington money on sewer repairs.
Under the agreement, approved by the City Council on June 22, 2015, Service Line Warranties is paid 50 cents per month for each of the city’s 106,165 sewer connections — or about $53,000 a month. That can increase to 60 cents per month in the fourth year of the contract — or about $63,000 a month.
The company then pays for any work required “on the portion of the sewer lateral pipe that runs between the city’s sewer main and the resident’s property line. This is termed public right of way (ROW) coverage,” said Myles Meehan, a company spokesman.
The company also gained the right to offer a warranty to city residents, who can opt to pay $3.99 a month and receive up to $4,000 per covered incident. So far, about 18,500 residents have signed up for plans and Service Line Warranties touts nearly $2 million in repairs since its inception.
The warranty program allows residents to buy coverage “for the portion of the sewer lateral from the property line to their home for needed repairs to this section of pipe. Additionally, there is optional coverage available for the water lines on the property and for in-home plumbing,” Meehan said.
As part of the agreement, Service Line Warranties paid $75,000 to the city’s Care & Share assistance program, which is administered by Catholic Charities, in the first year and $50,000 for each subsequent year.
Despite his name appearing on the warranty letter, Pishkur said he’s not trying to compel anyone to buy a warranty.
“I have no opinion on that,” Pishkur said. “That’s a decision you have to make.”
Other cities canceled agreements
While Arlington touts the success of the program, Dallas, Carrollton and Plano have canceled agreements with Service Line Warranties.
The city of Dallas drew attention for allowing the use of its letterhead in mailers from Service Line Warranties in June 2015. But the Dallas City Council quickly reversed course and canceled the deal two months later.
An Aug.12, 2015, Dallas City Council resolution said many residents “expressed concerns with the use of the City’s name and logo by outside vendors for advertising and marketing purposes; and whereas, the City Council finds that use of the City’s name and logo by Service Line Warranties of America has created unnecessary confusion that outweighs the benefits to the City and its residents in entering into the license agreement. ...”
Carrollton canceled an agreement in April 2012 after residents became confused about the city’s relationship with the company, said City Manager Erin Rinehart, who was not city manager at the time.
“The City received a significant number of calls from citizens who thought the program was mandatory due to the fact that the letter contained the City’s logo,” Rinehart said in an email. “It was not a mandatory program. It is my understanding that the City dropped the program shortly after that.”
Plano also “amicably” canceled its agreement with Service Line Warranties in May 2016, said city spokesman Steve Stoler, after city officials “determined it no longer served the city.”
Nationally, Service Line Warranties has agreements with more than 400 cities, including 39 in Texas. Other Texas cities include Midland, Lewisville, Odessa, San Angelo and Bryan.
‘Do their due diligence’
Tarrant County cities such as Fort Worth, Mansfield, North Richland Hills and Grapevine all said they have no third-party agreements with vendors.
Earlier this month the Fort Worth Water Department posted a statement on the city’s website, urging residents to conduct “due diligence” before signing with one of these companies.
“The Water Department is not endorsing any of these companies because the service line is private plumbing,” the post said. “Like with any insurance or warranty program, individuals should do their due diligence to learn what is and is not covered and what exceptions apply in order to make the best decision for their situation.”
Mansfield Deputy City Manager Joe Smolinski said licensed plumbers or even the city can often determine if a homeowner has a leak. And Mansfield officials won’t sign any agreements with these companies.
“We’ve elected not to do that,” Smolinski said. “The city has chosen not to participate. Anything that comes with the city’s letterhead is from the city.”
I tell my customers all of the time to get it. It’s better to pay three or four dollars a month and hope nothing happens than to get stuck with a huge plumbing bill.
Arlington plumber Edgar Rangel
Most area plumbers contacted by the Star-Telegram thought the private insurance was unnecessary but said replacing a water line can run $2,000 or higher.
“It can be fairly common depending on the part of town where you live,” said Mike Joyner of Joyner Plumbing in Fort Worth. “I’ve only had two instances where somebody had this type of insurance and it didn’t cover for some reason. One had a leak and nobody came.”
But Arlington plumber Edgar Rangel of Precise H2O Plumbing said there are still homes in Arlington that have leak problems due to having polybutylene pipes, also known as Qest, in their homes. It was installed in up to 10 million homes from the late ’70s to mid-’90s and was the subject of a class-action lawsuit in the 1990s.
“I tell my customers all of the time to get it,” Rangel said. “It’s better to pay three or four dollars a month and hope nothing happens, than to get stuck with a huge plumbing bill.”
But Brown, the 78-year-old Arlington resident who has lived in the city for 33 years, said he believes most homes with Qest pipe issues have already had them replaced. Brown worries that elderly residents will believe the city is recommending the warranty since it contains the city’s letterhead.
“The main issue is with using the city’s logo,” Brown said. “If it hadn’t been on the envelope, that letter would have gone straight in the trash like all of the other junk mail I receive. They use the city logo to get you to open the letter.”