Council seeks exit from contract

Mayor upset that warranty company used his name

Mayor Doug Nicholls had a premonition back in May that a city marketing agreement with a warranty company would sour. Service Line Warranties of America sent a letter with the mayor’s name to Yuma residents last month offering warranty protection for sewer lines on private property. The clearly unhappy Nicholls asked at the Oct. 18 council meeting that the contract be put on the agenda for reconsideration.

On Wednesday, the council discussed the agreement and ultimately directed the city administrator to negotiate an exit from the contract.

In May the council first discussed the agreement with SLWA, which would allow it to offer homeowners the National League of Cities Service Line Warranty Program, which includes voluntary warranty plans for sewer lines. While Yuma maintains lines in the city’s right-of-way, homeowners are responsible for the lines on their own property up to the point of connection with the city’s system.

Under the agreement, the city was to receive a license fee of 50 cents for each resident that signed up for the warranty program, providing a new source of revenue. The agreement also allowed the company to pay for the use of the city logo on letterheads, advertising and marketing materials and a city official signature.

During the May 2 work session, Nicholls expressed “reservations” about “lending our name” to the company in exchange for “very little income.” He noted that most consumers might not be able to tell whether the offer came from city or the company and he guessed the city would be getting calls about claims for line breaks.

Then-Deputy City Administrator Ricky Rinehart told the mayor the company had been vetted through the city’s legal department and was endorsed by the League of Cities and Towns.

However, Nicholls still questioned the legal liability to the city and said he needed more information. He asked for contact information for mayors of cities who had contracts with the company “to see how happy they are with this.”

Councilman Bill Craft also expressed concerns about residents thinking the offer came from the city. “It makes it look like the city is going into the insurance business,” he said at that time.

The following day, at the May 3 council meeting, Nicholls asked to push the contract to the next meeting because he had not had time to call the mayors to inquire about the company. He said he would not be at the next meeting but he would convey his thoughts through staff. On May 17, the council voted 5-0 to approve the agreement.

During Wednesday’s meeting, Nicholls said the letter looked as though it came from him, something he clearly didn’t expect. He acknowledged that the city did enter into an agreement to allow the use of the city logo but the letter didn’t make it clear that it wasn’t from him or the city.

At the Oct. 18 meeting, Nicholls said he had been “accused of kickbacks, which is not the case.” That same day he also posted on Facebook: “I do NOT receive a personal benefit of any sort for the use of my name. And, as I stated, my name was NOT to be used, however was used.”

At Wednesday’s meeting, Nicholls said he wanted to be clear his intention was to make a motion to rescind the contract but he first wanted feedback from the council.

Councilman Mike Shelton agreed that the contract should be reconsidered because using the mayor’s name sounded like a “very conscious move.”

Deputy Mayor Gary Knight said he agreed the council should look at the contract again as soon as possible.

However, City Attorney Richard Files asked that the council adjourn into executive session to discuss the legal ramifications of rescinding the contract. Shelton asked the discussion be held in public but he was outvoted 5-1 and the council recessed into executive session.

After the council returned to the chambers, Nicholls made a motion directing City Administrator Greg Wilkinson to negotiate an exit from the contract. The council approved the motion with a 6-0 vote. Councilman Gary Wright was absent from the meeting.