City’s partnership with home repair service raises questions

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MEMPHIS, Tenn. — It seems a deal between the city of Memphis and a company that provides home repair plans is causing some serious confusion.

Charles Mckelroy is one of the thousands of Memphis residents who recently received one of these post cards.

"My initial thoughts when I saw something like that was 'hmm, maybe this is a scam," Mckelroy said.

The notification says "Important Announced for City of Memphis sewer customers."

It continues with language about aging piping and infrastructure, then leads to a pitch for a home warranty plan.

"It's got the cit of Memphis logo on it," he said.

Mckelroy isn't alone.

One viewer asked, 'Is it real?" Another said, she too 'thought it was a scam."

Public works director Robert Knecht confirmed it's legit.

"I appreciate your efforts to help me educate them that this is something we have partnered with them on," Knecht said.

Records show the city signed a five year contract with HomeServe.

It allows the company to use the city's logo and market it's home repair plans.

"We were able to work through an agreement with HomeService to offer, basically, a specialized type of home warranty service to our citizens," Knecht said.

Plans range from around $6 to $12 a month.

They're marketed as coverage for repairs to pipes and lines that people often think are the city's responsibility, but in reality, fall on the homeowner.

"It can be a very expensive proposition if you don't know about it. This insurance is basically, based on our research, a very cost effective way to mitigate that cost," Knecht said.

They are costs Mckelroy says he's often considered.

"Living in an older Midtown home, you do think about those things. You think about pipes deteriorating and breaking, and you have visions of a $10,000 clean up bill," Mckelroy said.

On the other hand, the retired banker says "I often saw people with home warranties. But when it's time to pay, they didn't pay so well," he said.

One viewer told WREG, after getting the post card, she checked into HomeService and saw more than 200 BBB complaints despite them having a high grade.

She set it aside.

Another viewer said she was concerned it was a "money making scheme by the city."

The contract shows the city gets a 12-percent cut of the payments, plus $100,000 off top.

Knecht says that'll be used to offset operating costs, plus "The other thing we intend to do with part of that money is develop a fund to help pay for expenses for those citizens who otherwise can't afford to pay for cost of their sewer repair."

He says the city wants residents to get as much information as possible.

That is exactly what Mckelroy plans to do.

"If the city's behind it, then it's probably something I`ll go ahead and look into," Mckelroy said.

If you got one of those post cards, expect to see a second and third round of notifications with more details in the coming weeks.

Again, with any product like this it's important to do your homework before making a decision.