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O’Fallon sewer lateral insurance program faces funding challenge

Inside a damaged sewer lateral pipe [O’Fallon public works photo]

At the O’Fallon City Council workshop on June 27, Ben Von Harz, water sewer assistant superintendent, presented an update on the city’s sewer lateral insurance program and asked for guidance about funding. A key point was a currently estimated shortfall of about $153,000 compared to the budgeted amount.

The council listened to the update, then clarified that, for 2019, the program must be operated as currently defined and as previously communicated to residents. If program reserves need to be used to cover the shortfall in 2019, that should be done.

For 2020, the council asked the staff to identify all options for the program and estimate the financial impact of each, then bring that information back to the council for additional discussion and decision.

The current program covers repairs to defective portions of private residential sewer lateral pipes from a home’s exterior foundation wall to public sewer pipes; all required street, sidewalk and/or driveway replacement associated with repair; and sod or seed for yard repair. On Jan. 1, the program also began covering root intrusion.

In April 2009, O’Fallon residents voted to set the maximum charge for the insurance program as an up to $30 annual fee per household. The program was implemented in August 2009. It was last revised in February 2017 to raise the maximum coverage to $10,000 [with an appeal process for extreme cases]. The current annual fee per household is $29, which is collected with property taxes; however, participation in the program is not mandatory.

Well received by residents, the program has continued to expand, with significant growth in both 2018 and 2019. To date, 67 applications have been received. Of those, eight were denied, 31 repairs were made due to root intrusion, and 28 repairs were due to other lateral sewer line defects.

The program’s estimated funding need, based on current trends, is $857,424. Current funding available is about $704,302, forecasting a shortfall of $153,122. The shortfall could be worse in 2020 if the program remains as is. The program’s current reserve balance is $698,000.

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