UtilityService

Municipalities find new revenue sources with USP

Mayors from coast-to-coast are increasingly concerned about the effects of the recession on their incoming revenues. The impact of the financial crisis may be especially severe this year, given that a city’s finances are typically affected 18-24 months after changes in the economic cycle (according to the Brookings Institution). That means even when the recession is technically over, municipalities may still be dealing with the after-effects for years to come. “We treat this financial crisis as something we’re not going to get out of,” noted Scott Smith, mayor of Mesa, Arizona.

Revenues are clearly on the decline, due to shrinking tax bases, decreased consumer spending and other factors. So, how can cities, towns and villages balance their budgets and continue to provide vital services?

At USP, we’ve seen increased interest in our warranty program, which offers homeowners peace of mind while creating an ongoing royalty stream for municipalities.

Here’s how it works: USP offers homeowners a warranty on their outside buried water and sewer lines, for a small monthly fee. If a line breaks or is blocked, the customer calls the 24/7 toll-free customer service number, and a local contractor is dispatched. Typically, repairs are completed within 24-48 hours, giving the homeowner guaranteed coverage without service fees or a deductible.

“An unexpected repair can easily cost more than $1,000,” stated Brad Carmichael from USP. “With today’s economy – including tighter restrictions on credit – that can be devastating to a family budget. We provide a service that the city can offer to their customers, a service that can help people in a very severe time of need.”

Many municipalities appreciate the fact that the warranty program does not cost them anything. “Plus, we use local contractors – which is good for the economy,” added Carmichael. “And, by fixing water and sewer lines promptly, we help conserve precious water resources, and minimize wastewater pollution.”

USP offers a turnkey program for municipalities who want the warranty program in their community. The municipality is asked to send out a letter to its citizens, endorsing USP. When people sign up for the program, USP handles the billing. Municipalities – which get a royalty payment – can typically expect the revenue stream to grow for the first 4-5 years, and then provide a steady source of income.

The program also helps reduce the number of calls from agitated homeowners, who often believe that the local government is responsible for a water or sewer line break or blockage on their property. Many citizens have an expectation that the city will fix a water or sewer line for them. But if the problem is on private property, the city can only turn off the water to the house, and tell the homeowner to call a contractor. With the warranty program, homeowners call the toll-free number, rather than take out their frustration at local politicians.

Already, five cities in West Virginia have contracted with USP to provide this service for their citizens, and many others are in discussions with the company. USP is also talking with a number of cities in Oklahoma, Texas and Illinois, among other states.

Carmichael understands that this type of warranty program is a new concept for governments. “I spend a lot of my time just showing cities and towns exactly how it works – and how much they can expect to receive in new revenue,” he added.

Municipalities interested in this new revenue stream can learn more by contacting Michael Chambers – Account Executive, toll-free at (866) 974-4801, or by email at mchambers@Utilitysp.net.