TO: Honorable Mayor & Members of the North Port Commission
FROM: Peter D. Lear, CPA, CGMA, City Manager
TITLE: Discussion and Possible Action Regarding Utility Service Partners Private Label, Inc. d/b/a Service Line Warranties of America Marketing Agreement
Recommended Action
Discussion and Possible Action Regarding Marketing Agreement with Utility Service Partners Private Label, Inc. d/b/a Service Line Warranties of America.
Background Information
At their June 25, 2019, North Port City Commission heard a presentation from Mr. Lee Zell with Utility Service Partners Private Label, Inc. d/b/a Service Line Warranties of America regarding their Water and Sewer Service Line Warranty Program endorsed by the National League of Cities.
Per Commission Direction, staff from Utilities, Finance, and Neighborhood Development Services researched the program and evaluated pros and cons of City participation. Essentially, the City would be entering into an exclusive marketing agreement allowing the company to market their water and sewer line insurance as endorsed by the City, using the City’s seal, logo, and signature on marketing materials. For this exclusive use, the City receives $.50 from each monthly warranty payment made to the company from each property owner. The services marketed are for the repair of privately owned exterior water and sewer service lines and interior plumbing for private residences.
A Request for Legal Services was submitted to outside counsel on the matter to determine if City could legally authorize a private company to use City logos, seal and signature for exclusive marketing of their product. In its response, Counsel addressed a few concerns.
First, whether or not the licensing of the City’s logo is permitted under Article VII, Section 10 of the Florida Constitution which prohibits the use of public funds for private purposes. Courts have held that this provision acts to protect public funds and resources from being exploited in the promotion of private ventures when the general public would only be incidentally benefitted. While the licensing of the City’s logo is not expressly prohibited by this Article, counsel cautions that the City should consider whether its logo, which was created with public funds and is a public resource, is being exploited to assist or promote a private venture which does not benefit the general public. Additionally, Counsel reviewed the City Code on this point and found no ordinance specifically addressing the use of the City’s logo or seal. However, it has been the City’s policy that the City Seal and Logo are not to be used by private entities for purposes other than official City business or events.
Second was whether or not proceeding with this particular agreement is contradictory to the City’s established Procurement Code. Sec. 2-401(a) and (b) of Chapter 2, Article VIII of City Ordinances states that the City is required to follow procurement code when it is contracting with vendors for purchases of goods and services. While in this case, the City is not technically purchasing anything, arguably, the City is entering into a contract with a vendor to provide a service to residents without going through the competitive procurement process to determine if the company is providing the best terms to the City for the use of its logo. Further, as there are other such programs available to homeowners, if Commission directs to move forward to endorse such a program, staff recommends evaluating other programs for cost, coverage and quality of service to ensure that the program selected provides the most cost-effective option for residents. Also, when Procurement staff reviewed solicitations provided by the program, they did not meet the City requirements for piggybacking.
Finally, staff considered the effects of City participation in the program as it was presented and had concerns to include:
• Public perception that this is a City sponsored program
• Customers reaching out to the City for repair work
• City endorsing one warranty program when others exist
• City involvement in a private customer issue
• Customer reaction/perception when they contact City for assistance with the program and are informed this is not a City program
• Increased phone calls from customers looking for assistance with program
Based on all of the above concerns, it is staff recommendation that the City not enter into the agreement for this program.
Strategic Plan
N/A
Financial Impact
None based on the recommendation for the City not being involved in this private program. If Commission directs involvement in this program, this could increase the workload of customer service staff.
Procurement
Attachments: None
Prepared by: Pete Lear, City Manager
Department Director: Pete Lear, City Manager