Amid criticism, Mount Dora scraps warranty partnership

The letter, signed “sincerely City of Mount Dora” on stationery bearing the city’s logo, looked funny to Aaron Miller.

For a monthly fee, it offered the truck driver financial protection if “you were unfortunate enough to suffer a break or burst” in a water or sewer line in the Hibiscus Mobile Home Community where he lives.

“It upset me from the jump,” said Miller, 63, who called City Hall for an explanation about the direct-mail solicitation sent by a Pennsylvania-based water- and sewer-line warranty company. “Were they legit or just trying to bogart my money using Mount Dora’s name?”

Amid criticism from Miller and other residents, Mount Dora City Council members decided unanimously Tuesday night to give 30 days notice to end its arrangement with Service Line Warranties of America. The heads up is required by the contract, which allowed the war-

ranty company to use Mount Dora’s seal and endorsement in its marketing campaign.

The city of 14,000 had a financial incentive — a cut of 50 cents a month for every warranty sold to Mount Dora utility customers.

Mount Dora struck the deal in May, citing an endorsement of the program by the National League of Cities and a belief that some residents might want to buy into a program that provided insurance against the high cost of repairs if a service line broke on private property. Mailings to utility customers — which were not previewed or approved by city officials as spelled out in the contract — went out in November advertising warranty plans that provided insurance protection for repair costs in water and sewer lines on private property.

Just nine property owners signed up before a flood of complaints led Mount Dora to reconsider. Sanford, which has a similar deal with the company, has collected about $12,000 in royalty payments since 2013 from 715 customers.

“In thinking about this since all this brouhaha started, I’m not really sure whether this is the right role for government to do this in the first place,” council member Laurie Tillett said. “I have sort of a philosophical problem with it. … I think we should just terminate it.”

Mount Dora was among more than 450 cities across the U.S. — including Eatonville, Longwood and Sanford in Central Florida — that have similar deals with the warranty company.

Critics say the marketing arrangements are improper and may cause some utility customers to believe they must buy a warranty.

The warrant company claims the policy offers homeowners “peace of mind” from service line breaks. The company offered a water-line warranty for $5.75 a month, a sewer-line warranty for $7.75 a month and an inhome plumbing warranty for $9.99 a month.

A company spokesman said the mailings were intended to educate homeowners and provide an affordable solution to help them avoid the often-high cost of repairs to private service lines connecting homes to city utilities.

“This program is voluntary for residents and provided at no cost to the city and no public funds are used to promote or administer the program,” said Myles Meehan, spokesman for HomeServe, Service Line Warranties of America’s parent company.

He said arrangements with cities serve “to let residents know the offering is legitimate, it is for the residents’ benefit and has the approval of the city.”

Mount Dora City Council member John Tucker said the warranty seemed like a reasonably priced option, but he hadn’t realized the company would use the city logo or language implying the city endorsed the warranties.

Apopka, which had signed a similar agreement in December 2015, decided in October that it would not renew its deal with the company.

Apopka Mayor Joe Kilsheimer cited an onslaught of “negative feedback” from water customers who complained about the company’s mail campaign.

The company sold about 1,000 warranties to Apopka residents.

In an email Wednesday, Meehan said the warranty company had not yet been notified of Mount Dora’s decision.

“All of our other Florida partners, with the exception of Apopka, have no plans to stop offering the optional service line coverage since the programs are working well for these communities,” he said.

But in Mount Dora, City Manager Robin Hayes said some residents were confused by the mailing.

“They felt the paperwork or the information was a scam,” she said.