5.3 ERMUSR 04-08-2025 - Laserfiche WebLink

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Elk River _ - Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Mark Hanson —General Manager MEETING DATE: AGENDA ITEM NUMBER: April 8, 2025 5.3 SUBJECT: Water Service Line Ownership ACTION REQUESTED: Discuss possible policy changes to ERMU's water service line ownership BACKGROUND: At the February 2025 meeting, staff presented the results of a 50-city survey describing water service line ownership policies. Selected cities created a diverse sample set including Minnesota Municipal Power Association membership, Minnesota Municipal Utilities Association membership, population, and regional proximity. Water service line breaks are relatively rare (2-3 per year) but can be expensive. Such repairs typically cost anywhere from $3,000 to $30,000+ depending on the amount of restoration work needed. For ERMU's customers, property owners own their entire water service line, from the main to their home or business. The same is true for the city's sanitary sewer service lines, although the two do not have to match. Three other options were also discussed at the February meeting: • The city owns the service line from the main through the curb stop valve • The city offers a protection program (repair fund) to assist owners with repair costs • The city differentiates between residential and commercial properties Commission members asked several clarifying questions for each of the ownership options, including the potential for insuring the service lines. After further discussion, the consensus was to delay action and bring it back in 60 days so staff could research the insurance options. DISCUSSION: The League of Minnesota Cities Insurance Trust (LMCIT) will insure water service lines if ERMU: 1) Also insures all our water mains (they are currently not insured), and 2) Takes ownership of the water service lines. LMCIT has estimated the cost to insure the water mains is $47,000 per year and the cost to insure both the mains and the service lines is $61,350 per year. The deductible limits are $20,000 per occurrence and $40,000 annual aggregate. Therefore, ERMU would need to incur over $101,350 in water main/service line annual repair costs before breaking even. Based on past years, it is unlikely we would experience annual totals over $100,000. Page 1 of 3 W.