City to review insurance denial for homeowner

Hillsboro City Admini­strator Larry Paine was directed by the city council to contact the city’s insurance company to find out why it rejected a damage claim submitted by a resident even though the company’s adjuster initially assured it should be covered.

Homeowner Randy Hagen, 903 E. C Street, presented his situation at the Jan. 24 council meeting, asking for $3,800 in compensation to cover the difference between a $5,000 cap provided by his homeowners insurance, and the actual cost to clean up the sewage that came into the basement while the city was routinely cleaning the sewer line that led to Hagen’s house.

In a memo to council members, Paine stated: “Hagen has reported to us that he has spoken with the adjuster and was told the adjuster felt we were at fault and recommended the claim be paid. He says the adjuster said his supervisors overruled him and denied the claim.”

Paine said the city’s broker for EMC Insurance stated the claim was rejected because: “The adjuster determined that our (city sewer) department was operating our equipment within the specifications.”

The broker also told Paine: “There does not appear to be a backflow prevention device installed on the Hagen lateral (sewer line). Whether there was no backflow prevention device installed, or that it was inoperable, could not be determined.”

Hagen said he wasn’t alleging the city or its staff did anything wrong during the actual cleaning. But he did say the city did not provide advance notification of the procedure, a practice that has been routine when an outside company was hired to clean the lines.

Such notifications report in advance the date of the procedure and recommend that homeowners take relatively simple steps that should limit or eliminate damage if backflow occurs.

“The biggest ‘wrong’ here is that we weren’t notified,” Hagen said.

Council members questioned the validity of EMC’s decision to reject the claim.

“It’s hard to think (the basement damage) is anything but cleaning the sewer line,” Councilor Bob Watson said.

Councilor Brent Drig­gers suggested that Paine ask the company what constitutes “reasonable responsibility,” and wouldn’t that include lack of notification?

Paine assured the council that city crews are now notifying all potentially affected homeowners in advance of such procedures.

He added, “We’ve been doing this (cleaning sewer lines) for years now and the type of damage described here is not reflected in the work we’ve been doing.”

Municipal tax exemption

The council voted 3-0 to authorize Mayor Delores Dalke to sign a letter at the request of Kansas Municipal Utilities in opposition to the elimination of municipal tax-exempt financing as a strategy for increasing tax revenue for the federal government.

The issue currently is circulating in Congress.

“Repealing the exemption would be a significant burden on local governments across the country because our financing costs would be significantly higher,” Paine said.

To illustrate the impact, Paine used a calculation tool to estimate the impact on a 20-year USDA bond the city wants to use to finance a series of water-line replacement projects in the city.

At 2.75 percent interest, the total debt service would be $321,792 over 20 years.

At 3.75 percent, debt service would increase to $352,614 and result in a total increase in interest payments of $616,456—an additional $30,823 per year.

At 4 percent, the total debt service would increase to $360,551 and a total increase in interest payments of $775,182—an additional $38,759 per year.

Other business

In other business, the council:

• appointed Brook Brad­ford, 18, to the city’s volunteer fire department. Fire Chief Ben Steketee stated: “Brook has met the requirements of membership, including six months of consecutive drills attended.”

Steketee said all but one of the department volunteers voted to add Bradford to the roster. He added the department still has two openings to fill.

• reappointed city employee Mike Duerksen as the city’s second general board member for the Kansas Municipal Energy Agency.

• approved the mayor’s appointments for two-year terms to the city’s Conven­tion and Visitors Bureau: Rod Hamm, Peggy Goertzen and Lola Unruh through Dec. 31, 2018; and Sue Wadkins, Doug Sisk Shana Stepanek and Sam Hall through Dec. 31, 2019.

• heard from Paine that the city has received resumes for staff openings as full-time economic development director and as part-time museums director.

Councilor Dave Loewen was absent.