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HomeMy WebLinkAbout2002-02-11 Council Special Meeting MINUTES OF THE SPECIAL MEETING OF THE EDINA CITY COUNCIL HELD AT CITY HALL FEBRUARY 11, 2002 6:00 P.M. ROLLCALL Answering rollcall were Members Housh, Hovland, and Mayor Pro Tern Kelly. Member Masica entered the meeting at 6:05 p.m. Mayor Pro Tern Kelly stated the purpose of the special meeting was for the Council to consider the resolution offering up to $10,000 in reimbursement for structural damage and sanitization to the homeowners who experienced damage from the January 6, 2002, watermain break that surcharged the sanitary sewer system. Manager Hughes noted that as directed by Council staff had prepared and sent a resolution allowing up to $10,000 in reimbursement for structural and sanitization repairs for the homeowners affected by the watermain break. Mr. Hughes reported he had met with an independent adjuster who was ready to start work just as soon as he was given the go ahead. Member Hovland asked if there was a need to address the type of adjustment standard used. Member Housh said that he thought it was clear that homeowners' coverage would be utilized first. The City would then reimburse losses up to $10,000 including homeowners' deductibles. Member Hovland asked the other members of the Council if they felt that $10,000 was adequate in light of the amount of loss some homeowners suffered. He added he felt it worrisome that some people had no coverage at all. Member Hovland said if a natural disaster happened FEMA would be available to assist people. However, in this tragic unfortunate accident that was no fault of either the City or homeowners, there was no place to go for help. Mayor Pro Tern Kelly agreed, but added that according to the City Attorney there was a fine line of what the city would be allowed to reimburse. He added that he would be worried that homeowners would not pursue their own option (insurance and litigation if necessary) if the City offered a dollar for dollar reimbursement. Mayor Pro Tern Kelly added it would be difficult to depart from the industry standard of $10,000 set by the League of Minnesota Cities Insurance Trust. Member Masica stated she would like to know if the proposed $10,000 would cover the cost of structural repair and sanitization. If not, then she said she would consider increasing that amount. Member Housh asked how many times this type of incident has happened. Mr. Hughes outlined the following occurrences: • 1987 after severe rains about 1000 homes were damaged; Minutes/Edina City Council/Special Meeting February 11,2002 • 1994 - 70th Street watermain break surcharged the sanitary sewer, 15 to 20 homes involved; litigation showed the city not to be negligent; • 1997 after severe rains caused surcharging of sanitary sewer approximately 75-100 homes were affected and none litigated. Mr. Hughes added that on an on-going basis between three and five homes are affected annually. Usually the cause is a service line plug, but sometimes there is a plug in the main. He noted that Mr. Gulbronsori s incident was a plug in the main. Member Housh said he was comfortable with the $10,000 reimbursement. However, he expressed concern with linkage of this occurrence with any future incidents. Member Housh said he knew authorizing the reimbursement could be brought up as a precedent. If a larger reimbursement were to be offered now, there would be a greater issue in the future. Member Kelly agreed with Member Housh, adding he was very concerned about adhering to the statutory authority as outlined by the City Attorney. Member Masica stated she felt the reimbursement met the public purpose test especially when restricted to sanitization and structural repairs. She stated the City must strongly market to our homeowners and businesses, the need for them to insure themselves against this type of damage. Member Hovland stated while he was mindful of the City Attorney's concern, he was still worried about the $10,000 cap on the proposed reimbursement. He said he viewed the Interlachen break as a unique incident. Member Hovland stated he felt that a communication campaign would keep the policy from being precedent setting. He said he would be comfortable with a $10,000 limit for any long-term policy, but at the current time he still felt the needs were greater. Member Masica suggested increasing the limit to $15,000 for this unique situation while still requiring the funds be spent on sanitization and structural repair. Public Comment LeeAnn Gustafson, 1 Cooper Avenue, stated she had been through the process of adjusting with her insurance company. Ms. Gustafson said that the adjuster used a software program that allowed so much for each damaged item based upon size, style, age, etc. Her contractors use the same program in estimating costs. Ms. Gustafson pointed out that $10,000 may be inadequate to cover structural and sanitization costs because the homes that have sustained damage are large. Karen Wermager, 3 Cooper Avenue, referred to the letter she had submitted offering an amendment to the proposed draft resolution prepared by the City Attorney. Ms. Wermager said her estimated clean up was approximately $24,000. She added as a homeowner she had done the best she could and urged the Council to consider a larger amount of reimbursement. 2 Minutes/Edina City Council/Special Meeting February 11, 2002 Terrie Rose, 5001 Interlachen, said she appreciated the Council's sympathy and concern. She asked how the reimbursement would be delivered, meaning how would residents document their expenses. Continuing, Ms. Rose expressed her concern over damaged landscaping. She pointed out her home was only two years old. Mr. Hughes explained the City would hire an independent adjuster who would work with the homeowners. Member Housh suggested Ms. Rose provide the City with copies of her invoices. Ms. Rose concluded that when she previously asked for an emergency response team, that even a brochure handed out to residents telling them where to call to begin the clean-up process, should be available. Carl Gulbronson, 5 Cooper Avenue expressed concern that the language in the proposed resolution "Section 3" would exclude him from recovering the cost of his lost boiler. Council discussed the issue and directed City Attorney to amend Section 3 to reflect this area of concern. Tom Wesley, 5633 Interlachen Circle, explained he also supported increasing the maximum amount of reimbursement. Mr. Wesley stated he has a lift station in his front yard that was damaged and needed replacing and the current language in Section 3 would not help him with that expense. Council directed the City Attorney to include sanitary sewer systems in Section 3. Mayor Pro Tern Kelly declared the hearing closed at 6:40 p.m. Members Housh, Masica and Hovland all stated they would agree to increase the maximum reimbursement to $15,000. Mayor Pro Tern Kelly concurred with this suggestion. He told the residents he felt the Council was being extremely generous with them and noted that it probably would be rare to receive this same treatment in another city. Member Hovland introduced the following resolution and moved its adoption: RESOLUTION NO. 2002-15 PROVIDING FOR REIMBURSEMENT FOR DAMAGES TO RESIDENCES AS A RESULT OF BACKUP OF SANITARY SEWER SYSTEM BY A SURCHARGE FROM WATER MAIN BREAK BE IT RESOLVED by the City Council of the City of Edina, as follows: SECTION 1. RECITALS. The City owns and operates a water utility and a sanitary sewer utility. On January 6, 2002 a break in a water main located on Interlachen Boulevard in the vicinity of Cooper Avenue resulted in a backup in the sanitary sewer system in homes in the vicinity due to "surcharging" caused by the water main break (the "Event"). Owners of homes damaged by the Event have submitted claims to the City seeking reimbursement from the City for their damages. The City's liability insurance carrier has reviewed the Event and denied the claims because of an absence of showing of negligence on the part of the City. On January 15, 2002 and on February 5, 2002 the City Council took testimony concerning the Event and the damages to homes caused by the Event. Many of the homeowners damaged by the Event do not have insurance coverage for sewer backups or, if they have insurance coverage, have incurred damages in excess of coverage limits. 3 Minutes/Edina City Council/Special Meeting February 11,2002 SECTION 2. FINDINGS. The City Council believes that the Event is a unique event that has resulted in a hardship to the owners and residents of homes in which the sanitary sewer backup occurred, and that there is a potential public health and safety hazard to the City if the damaged homes are not properly cleaned, sanitized and repaired. Because of either a lack of insurance coverage or being underinsured, certain homeowners do not have the financial means to properly clean, sanitize and repair the damage. The City Council believes that because of the uniqueness of the Event and the potential health and safety hazard, some form of City assistance to the owners of the residences damaged by the Event is appropriate. SECTION 3. COSTS ELIGIBLE FOR REIMBURSEMENT. The City Council hereby approves reimbursement to homeowners for damages caused by the Event not covered by the homeowner's property insurance in the amount of up to $15,000 per home. Such reimbursement shall cover costs of clean up and sanitation of the home, costs of the disposal of damaged items, losses from damage to carpets, heating and air conditioning equipment, plumbing and sanitary sewer systems, hot water heaters and water softeners, and losses from damage to sheet rock, wall board and paneling. Costs of replacement or sanitizing of rugs and furniture and of other contents damaged by the Event shall not be reimbursed. Homeowners whose property insurance provided coverage for damages from the Event shall be eligible for reimbursement for any deductible amount paid by the homeowner subject to the conditions established herein. SECTION 4. ADJUSTMENT AND PAYMENT OF CLAIMS. The City Manager is authorized to retain an independent adjuster to evaluate claims to determine losses to be reimbursed by the City within the conditions set forth in Section 3 hereof using the same standards that would be used by an insurance company in adjusting claims for property damage. The costs of any reimbursement and of the independent adjuster shall be paid from City utility reserves. SECTION 5. REIMBURSEMENT PROVIDED ON NO FAULT BASIS• NO ADMISSION OF LIABILITY. The reimbursement for damages caused by the Event authorized to be paid is being provided on a "no fault" basis by the City and it shall not be a condition of such reimbursement that homeowners receiving reimbursement provide a release of liability to the City. Any reimbursement for damages caused by the Event paid by the City shall not in any manner constitute an admission of liability for such damages on behalf of the City and such reimbursement shall only apply to this Event and not to any other damage caused by other sanitary sewer backups in the City. Dated: February 11,2002. Member Housh seconded the motion. Rollcall: Ayes: Housh, Hovland, Masica, Kelly Resolution passed. There being no further business on the Council Agenda, Mayor Pro Tern Kelly declared the meeting adjourned at 6:45 P.M. City Clerk 4