INTEROFFICE MEMORANDUM

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1 INTEROFFICE MEMORANDUM DATE: November 25, 2011 TO: Public Works Commission FROM: Neal S. Oldemeyer, Director SUBJECT: No Fault Back-up Sewer Claims ISSUE Mayor and City Council have expressed a desire to implement a no-fault sewer backup claim program. Staff is seeking the commission s feedback on the details of the proposed program. Current Practice: BACKGROUND If sewer backs up into someone s home or business the situation typically results in a claim against the City. In a great number of instances, the claims are denied for two fundamental reasons: 1. The backup was due to a problem on the owner s property. Two common examples are roots in the owner s service line, or something was flushed down a toilet that plugged the line; or 2. The problem occurred in a City sewer line, but it could be shown that the regular maintenance had been performed on the line consistent with the City s planned maintenance program. Our legal staff feels that in this type of situation the City has no legal liability to pay a claim based on the Idaho Supreme Court ruling in Dorea Enterprises, Inc. v. City of Blackfoot Claims are paid, however, if it can be shown that maintenance had not been performed or that the City was directly at fault. A good example was the situation on Marcliffe Street 1

2 when ten homes were backed up because a City employee lifted a manhole cover to relieve flooding from a broken fire hydrant. The denial of claims often creates a contentious situation and numerous calls to the Mayor and Council Members. There is a strong public perception that if a backup occurs in the City s line, and the property owner is not at fault, then the City should pay the claim. Because of the numerous complaints resulting from the denial of claims, Mayor and Council have asked that staff research and develop a no-fault claim program. Research: Our Legal and Risk Management teams have called a number of communities to determine what is typically done by others. It turns out that our neighboring cities of Nampa and Meridian pay no-fault claims. Small communities insured by Idaho Counties Risk Management Program do the same. Staff also drew heavily upon information provided by Salt Lake City and Lewiston to develop the proposed Boise City program. Elements of the Proposed Program: 1. The property owner will submit a claim in the same way as they have in the past. Risk and Legal will determine whether it should be processed as a no- fault claim or as a tort claim. 2. A no-fault claim will be paid once up to $10,000 per building unless there has been a change in ownership. A claim will not be paid if someone else was found to be at fault for the backup. 3. Any amounts owed to the City will first be paid from the reimbursement amounts. 4. Once a no-fault claim is paid, the owner will be advised that a second claim will not be paid. They will be advised to purchase insurance and/or install a backflow preventer. 5. The program will be retroactive to the beginning of Fiscal Year 2011, which is October 1, Attached is a policy that incorporates these key program elements along with other numerous details. Financial Implications: Paid claims over the last six years, excluding the Marcliffe event, have averaged $19,682 per year. The total value of denied claims over the last six years was $253,946 resulting in an annual average of $42,324. We would now expect to pay a good portion of this amount 2

3 annually. Spread over 50,000 accounts we would anticipate the program to cost about seven cents per month per customer. If we are dissatisfied with the result after a one- or two-year trial period, we can cancel the program. RECOMMENDATION Staff is recommending approval of the attached no-fault sewer backup claim policy to be retroactively effective to October 1, MOTION I move to recommend to Mayor and City Council the adoption of the attached no-fault sewer backup claim policy to be retroactively effective to October 1, H:\msoffice\word\PWC\PWC-No Fault Back Up Claim doc 3

4 DRAFT POLICY NO FAULT SEWER BACKUP DAMAGE REIMBURSEMENT POLICY This Policy is a result of, and authorized by, City of Boise City Council Resolution Number GENERAL 1.1 This Policy is intended to increase citizen awareness of the operational dynamics of wastewater collection systems and their responsibilities relative to maintenance and protection against potential property damage from sewer backups. In addition, this policy provides for limited assistance to individuals who have experienced property damage as a direct result of backup of the City s sanitary sewer system even if it is determined the City is not at fault. It is intended to cover isolated incidents and does not cover multiple claims from widespread damage as a result of forces of nature or other situations out of the City s control. 1.2 The City is responsible for maintaining sewer mains, manholes, pump stations, force mains, and all associated ancillary facilities that are in City rights-of-way and easements and on City property. Maintenance of sewer service lines from the City-owned system to the property owner s structure is the responsibility of the property owner. 1.3 The Public Works Department expends significant resources, through an extensive preventive maintenance program, to keep the sewer system in a good state of repair. Occasionally, however, forces of nature or conditions develop within the system, that may cause sewage to backup into a residence or business, which are beyond the City s control and for which the City bears no responsibility or legal liability. 1.4 For the purpose of this Policy, the term no fault means without legal liability on the part of the City and without any cause attributable to the property owner. The intent of this Policy is for the City to reimburse (a) property owner(s), up to the limit(s) established in this Policy, for cleanup costs, actual cash value for personal property that can t be cleaned, and repairs to buildings resulting from a City sanitary sewer backup originating in the City s sewer lines but irrespective of whether the City was legally liable for those damages under the controlling provisions of law. 1.5 For the purpose of this Policy the term sanitary sewer backup or sewer backup means any backup of sewage from the City owned and maintained sanitary sewer or sewer force main system. It does not include stormwater backups. 1.6 Overflowing drains and toilets as a result of water running in the house or business is not considered a backup from the City s sewer system, i.e., if there is a pipe blockage or a malfunctioning pumping system, and the resident continues to flush toilets and run water causing an overflow, it is not considered a sewer backup under the definitions of this policy. Page 1, REV112811

5 1.7 Any kind of damage caused by the potable water system within the structure, including overflows of sinks, toilets, tubs, showers, washing machines or broken water tanks and pipes are not considered sewer backups and are not covered by this policy. 2. PURPOSE 2.1 This Policy is intended to: A. Reduce health hazards by encouraging property owners to have sewer backups appropriately cleaned up as quickly as possible. B. Educate the public as to the City s limitation of liability and the responsibility and options of each as a resident to protect their own assets. 2.2 The City shall be the sole and exclusive judge of the claims submitted under this Policy. The payments made hereunder are not entitlements, and are made subject to fund availability and receipt of a full and final release of all claims from the appropriate parties. 3. COMMUNICATION 3.1 To enhance public education City Staff may develop an educational program designed to inform the public as to the inherent vulnerabilities of wastewater collection systems and what the public can do to protect their health and property from damage from potential sewer backups. This information may be disseminated through various methods available to the City including, but not limited to, web sites, newsletters, public speaking events, advertisements and utility bill inserts. 4. PROGRAM 4.1 As part of the contract for the provision of sewer services to the customers of the City, and in consideration of payment of sewer bills, the City agrees to reimburse its sanitary sewer customers for up to $10,000 of cleanup costs and property damages caused by a sanitary sewer backup, irrespective of whether the City is legally liable for those damages, subject to the following conditions: A. The backup must have resulted from a condition in the City s sanitary sewer system or lines and not from a condition in a private line. B. The backup must not have been caused by catastrophic weather or other event for which Federal Emergency Management Assistance is available. C. The backup must not have been caused by an interruption in electric power to the City s sewer system or to any other City lift station, which continues for more than 72 hours. Page 2, REV112811

6 D. The backup must not have been caused by a rainfall or precipitation event. E. The City will not reimburse any costs which have been or are eligible to be covered under the property owner s own homeowners or other property insurance. F. The maximum amount that the City will reimburse is a one-time amount of up to $10,000 per building, provided there has been no change in ownership since the last paid claim. In this regard, a structure or group of structures served by a single connection to the City s sewer system is considered a single building. G. Coverage under said policy shall only be extended to those customers of the City of Boise wastewater collection system. Properties in the City of Boise served by a Sewer District or private central collection system shall not be eligible. H. The Mayor, or his designee, may establish regulations sufficient to provide for the handling of such claims and disbursement of those funds which are set aside for payment of claims under this Policy. I. All claims for reimbursement under this Policy must be submitted to the City Clerk within one hundred eighty (180) days after the incident occurs. J. The City Clerk shall refer all claims for reimbursement to Risk Management for investigation, recommendation, and compensability determination. K. The determination as to whether to make payment for loss under this Policy shall be based on the following criteria: 1. Whether an eligible claimant suffered an otherwise uninsured property loss, caused by breach or backup of a City-owned sanitary sewer line, under circumstances where the claimant acted responsibly to avoid the loss; and 2. If so, whether the extent of the loss has been adequately substantiated. 3. The following shall result in the denial of an claim: (a) Claim not timely submitted; (b) Loss fully covered by private insurance; (c) Claimant ineligible under the terms of this policy; (d) Loss caused by an irresponsible act of the claimant, claimant s agent, or member of claimant s business or household; (e) A sewer plug was intentionally placed in the property sewer line by the City or its agents for non-payment or other cause; (f) (g) Loss eligibility unsubstantiated; Any other conditions or criteria determined as appropriate by the City. 4. A filing pursuant to this Policy will be treated as both a request for reimbursement under the No Fault Policy as well as a Notice of Tort Claim pursuant to the Idaho Tort Claims Act. 5. The following shall result in reduction of payment: Page 3, REV112811

7 (a) (b) (c) (d) (e) (f) (g) (h) Loss partially covered by private insurance; Loss exceeds funding limits of this Policy/Resolution; Verification of loss inadequate or incomplete; Claimant did not cause the problem but failed to act responsibly to minimize the loss; Property sewer bills are not current; There exist outstanding amounts owed to the City associated with the property or property owner (any payment by the City will be reduced by outstanding amounts owed); Loss for an occurrence exceeds financial parameters established by the City Council; Any other conditions or criteria determined as appropriate by the City. 4.2 Cleanup of Real and Personal Property: A. Upon discovering a break, leak, backup or other failure of City facilities, or any damage resulting from the same, a property owner shall immediately notify the Public Works Department Utility Maintenance of such event. B. Upon notification of the occurrence of the event, Public Works will respond as determined appropriate and as resources allow. C. To request reimbursement for damaged property or other loss, related to a sewer backup, the property owner must complete a Sewer Backup Damage Claim and file it with the City Clerk. Once the claim is filed, City staff and the City s agents will review, investigate and determine compensability. D. In the event the property owner engages the services of a cleanup/mitigation contractor the City may reimburse the property owner for actual expenses incurred by the property owner, but only up to the amount the City or its agents determine is reasonable and appropriate. All documentation of loss, damage, and mitigation expenses must be provided to the City or its agents in a media and format requested by the City or its agents. E. In the event the damaged real or personal property cannot, in the judgment of the City and its agents, be reasonably restored to its pre-event condition, in accordance with the cleanup criteria, the City may pay to the property owner the estimated actual cash value, at the time of the event, of such property. Such value shall be determined by a property adjustor or professional appraiser engaged by the City for such purpose. All documentation of loss, damage, repair expenses, and other values or estimates must be provided to the City or its agents in a media and format requested by the City or its agents. Page 4, REV112811

8 F. This Policy does not cover alleged damages for personal injury. G. In no event shall the reimbursement total exceed $10,000 per building for cleanup, other mitigation services, repair, and damaged real or personal property This is a one-time sewer backup reimbursement. This reimbursement applies to a building and the property owner(s) at the time of the event. Subsequent sewer backups at building, while owned by the same property owner(s), will not be eligible for reimbursement. 4.4 Payment does not imply liability. A. Any payment made under this Policy shall not be construed as an admission of nor does it imply any negligence or responsibility on the part of the City for such damage. Any payment made under this Policy is strictly voluntary on the part of the City. B. This Policy/Resolution shall not in any way supersede, change or abrogate any provision of the Idaho Tort Claims Act and its application to the City, or establish in a person a right to sue the City under this Policy. C. Any payment made under this Policy and accepted shall constitute a full and complete release of any and all claims against the City, its officers, employees and agents arising from the incident. No payments shall be made unless the appropriate parties sign a release of all claims against the City Notwithstanding any other provisions of this Policy, no claim shall be accepted from the United States or any of its departments or agencies, the state or any political subdivision. Page 5, REV112811

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