N4T Investigators: Private warranty company pays city to use Tuc - KVOA | KVOA.com | Tucson, Arizona

N4T Investigators: Private warranty company pays city to use Tucson logo

Posted: Updated:

It sounds like a good deal for Tucson homeowners worried about their water and sewer lines but it's the first and only time the city has endorsed a private company with the city name and emblem. Some local businesses say that's not fair.

The city entered into an agreement with Service Line Warranties of America, last year. Under this city corporate agreement, the city sold its name to the company, allowing it to advertise on official-looking city paperwork.

The advertising comes like this: A city of Tucson envelope bearing the seal of the city. The return address? City Hall.

A letter inside again bears the city's seal. Then specifics of what the warranty offers. Finally, it is signed: "Sincerely, city of Tucson."

Reminders to sign up or renew were sent out in August and again in September. In another payment envelope, the return address features the symbol for service line warranties and again, the city of Tucson. But the payment goes directly to the company in Pennsylvania.

The city defends its agreement with the company. A freeze busted water lines throughout the city in 2013.

"Some of those expenses could be over $7,000 for folks and they didn't have the money to do it.," said economic development specialist Andrew Squire.

"So the city entered into a 3 year marketing and licensing agreement with Service Line Warranties where we allow them to use the city logo on the letterhead. In the letter it makes it clear that it's a voluntary program. People can choose to use it or not."

According to city council archives, the city council voted 7-0 to approve the deal. According to a June 9 communication between the mayor and council, the licensing agreement will earn the city $225,000 over three years. In addition to a lump sum, the city earns fifty cents per contract per month.

"Those dollars are being set aside for parks improvements. We have a massive list of wants and needs in our parks system and with our budget issues that we've had for a long time this was a way that these dollars could be used in our community and its spread out among all six wards," Squire said.

More than 15,500 Tucsonans have signed up for the warranty. 605 claims have been filed as of June.

So was it worth it to sell the city's name and emblem to a private company? Some local businessmen say no.

Rudy Garcia, vice-president of RG and Sons Plumbing, said he received one of the advertising brochures last year.

"My wife had picked up the mail, she opened the letter, it looked like a very official letter and she read on that there is a company stating that we lived in a house that was built in the 1950s and that our domestic plumbing system was built in the 1950s and they were offering an insurance type program. I saw the city's official, city of Tucson stamp on there," he said. "I really don't know what the city of Tucson is doing getting involved in something like this. I really think it should be more of a private sector solution."

In a 2014 council meeting, the city attorney told the council it would not be liable if the warranty company were sued.

"When I see that, I'm basically thinking city of Tucson is behind it. And hey, I trust my city officials, I should be behind it as well. But in reality the city of Tucson is not culpable, it received a fee."

We asked Service Line Warranties of America for an interview. A spokeswoman declined to respond. The warranty company received more than 40 complaints with the Better Business Bureau, mostly about its contracts with cities in the country. But it maintained an A-plus rating after responding to each complaint. If you have a tip for the News 4 Tucson Investigators, email investigators@kvoa.com or call  955-4444.

Interactive Radar
Powered by Frankly

© KVOA.com 2018, KVOA.com
All rights reserved
Privacy Policy, | Terms of Service, and Ad Choices

Can't find something?