5.3 ERMUSR 04-08-2025Elk River _ -
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson —General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
April 8, 2025
5.3
SUBJECT:
Water Service Line Ownership
ACTION REQUESTED:
Discuss possible policy changes to ERMU's water service line ownership
BACKGROUND:
At the February 2025 meeting, staff presented the results of a 50-city survey describing water
service line ownership policies. Selected cities created a diverse sample set including Minnesota
Municipal Power Association membership, Minnesota Municipal Utilities Association
membership, population, and regional proximity. Water service line breaks are relatively rare
(2-3 per year) but can be expensive. Such repairs typically cost anywhere from $3,000 to
$30,000+ depending on the amount of restoration work needed.
For ERMU's customers, property owners own their entire water service line, from the main to
their home or business. The same is true for the city's sanitary sewer service lines, although the
two do not have to match. Three other options were also discussed at the February meeting:
• The city owns the service line from the main through the curb stop valve
• The city offers a protection program (repair fund) to assist owners with repair costs
• The city differentiates between residential and commercial properties
Commission members asked several clarifying questions for each of the ownership options,
including the potential for insuring the service lines. After further discussion, the consensus was
to delay action and bring it back in 60 days so staff could research the insurance options.
DISCUSSION:
The League of Minnesota Cities Insurance Trust (LMCIT) will insure water service lines if ERMU:
1) Also insures all our water mains (they are currently not insured), and
2) Takes ownership of the water service lines.
LMCIT has estimated the cost to insure the water mains is $47,000 per year and the cost to
insure both the mains and the service lines is $61,350 per year. The deductible limits are
$20,000 per occurrence and $40,000 annual aggregate. Therefore, ERMU would need to incur
over $101,350 in water main/service line annual repair costs before breaking even. Based on
past years, it is unlikely we would experience annual totals over $100,000.
Page 1 of 3
W.
Possible Ownership Options:
The chart below summarizes the surveyed data for the typical ownership options for water
service lines. The advantages and disadvantages of each option are listed after the table.
1) Status Quo: The property owner owns the entire service line (24 cities/50 surveyed)
2) Modified Status Quo: No change to ownership, but ERMU implements a service line
protection program to cover repair costs (3/24).
3) ERMU owns from the main through the Curb Stop for all properties (26/50)
4) ERMU owns from the main through the Curb Stop for residential properties only (3/50)
Option
Overall
Metro
MMPA
MMUA
Size
Regional
Main Only (ERMU)*
24/50
9/28
3/5
9/16
18/33
6/12
Protection Program
3/24
0/9
0/3
3/9
3/18
1/6
Through Curb Stop
26/50
19/28
2/5
7/16
15/33
6/12
Residential Only*
3/50
1/28
0/5
2/16
2/33
1/12
*Includes those cities offering a protection program.
Option 1, Status Quo. The property owner owns the entire service line (ERMU's current policy,
24/50 surveyed cities use this policy).
Advantages: The simplest approach to managing service lines. Customers would have the
option to distribute their repair/replacement costs over 10 years by having their repair costs
assessed to their property.
Disadvantages: Can place a financial burden on customers that need to repair/replace their
water service line. Despite numerous "Who Owns What" communications, most customers
don't realize they are responsible for service line costs.
Option 2: Modified Status Quo. No change to ownership, but ERMU implements a service line
protection program to cover repair costs (3/24 cities).
Advantages: No change to City Ordinance/ERMU Water Rules. The implementation of a
protection program provides a funding source for water service line repairs without impacting
rates. Additionally, it can be crafted to control ERMU's liability while still easing the financial
burden on customers. The fee would be implemented similar to the City's current franchise fee.
It can also include an opt -out option if desired.
Disadvantage: Since it's a separate fee (not included in the water rates) some customers may
see it as a lack of transparency.
Option 3: ERMU owns from main through Curb Stop for all properties (26/50 cities).
Advantages: Simple and consistent implementation that mirrors majority of the 50 cities
surveyed. Offers protection to all customers, regardless of type, size, or location. The added risk
associated with covering all properties could be further controlled by using a tiered structure
based on service line size.
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199
Disadvantages: Likely represents the most expensive option as it represents the greatest
financial exposure. Rates would need to increase to cover the increased exposure. Since the
increased costs would be recovered through increased rates, there is no opt out option.
Option 4: ERMU owns from main through Curb Stop for residential properties only (3/50
cities).
Advantages: Offers protection to residential customers while avoiding the higher cost potential
associated with commercial properties. The majority of residential properties have one -inch or
smaller lines that connect to water mains located under low -volume residential roads.
Commercial/industrial properties can have service lines that are considerably longer and larger
that connect to water mains under higher -volume collector roads. Larger lines and connections
under higher -volume roads can significantly increase repair costs.
Disadvantages: Smaller business owners, with line sizes similar to residential properties, may be
upset over the lack of consistency with residential properties.
FINANCIAL:
Financial exposure will depend on what, if any, changes are made to our current policy. If ERMU
takes on the added responsibility of funding service line repairs/replacement from the main
through the curb stop valve, residential costs would increase by approximately $2.20/month.
Costs for commercial customers would increase by approximately $5.10/month. Depending on
the selected program, these amounts would be recovered through either a service fee or a rate
increase. These amounts could decrease if additional risk -limiting measures are implemented.
Calculating the final amounts would be part of our 2025 rate study, planned for the third
quarter of 2025.
DISCUSSION QUESTIONS:
1) Does the Commission wish to socialize water service line repair costs?
If yes, is there a preference for implementing a service line repair program or
revising the ordinance/water rules?
2) If the Commission desires to socialize repair costs, is there a desire to exclude
commercial properties?
• If yes, is there a preference to exclude all commercial properties, or only those
commercial properties exceeding a certain service line size?
3) If the Commission desires to socialize repair costs, is there a desire to limit ERMU's risk
by capping our exposure through additional limitations?
• If yes, staff will present risk mitigation options at a future commission meeting.
ATTACHMENTS:
• 2025-4 - 5.3a - Water Service Line Diagram
• 2025-4 - 5.3b - Feb 2025; Water Service Line Ownership, Report
• 2025-4 - 5.3c - Feb 2025; Water Service Line Ownership, Survey Results
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200
2025-4 - 5.3a - Water Service Line Diagram
'URB
WATER MAIN
201
Elk Rive
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
February 11, 2024
5.4
SUBJECT:
Water Service Line Ownership
ACTION REQUESTED:
Discuss possible policy changes to ERMU's water service line ownership
BACKGROUND:
At the December 2024 meeting, commission members directed staff to survey water service
line ownership policies of various cities. Staff selected 50 cities and identified their respective
ownership policies. Cities were selected based on a desire to get a diverse sample set while still
including cities with similar attributes such as Minnesota Municipal Power Association
membership, Minnesota Municipal Utilities Association membership, size, and regional
proximity.
For ERMU's customers, property owners own and are responsible for their entire water service
line, from the main to their home or business. Per city ordinance, the same is true for sanitary
sewer service lines. The surveyed cities, however, described four different types of ownership
for water service lines:
• The property owner owns the entire service line (current ERMU policy)
• The city owns the service line from the main through (including) the curb stop valve
• The city offers a protection program (repair fund) to assist owners with repair costs
• The city differentiates between residential and commercial properties
Water service line breaks are relatively rare but can be expensive. Such repairs typically cost
anywhere from $3,000 to $30,000+ depending on the amount of restoration work needed.
Water service line repairs often involve older homes/businesses with owners who may have
limited resources, making it difficult for them to absorb these unexpected costs.
DISCUSSION:
Frequencies and Costs of Service Line Breaks:
Based on historical averages over the last eight years, ERMU experiences roughly two water
service line breaks (leaks) per year. Most of the breaks occur at the curb stop valve. With
roughly 5,650 total water customers, repairing two service line breaks per year at an assumed
$8000 repair cost would average out to an increase of $0.25/month per account.
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202
The bigger financial impact, however, is the need to replace service lines from the main through
the curb stop when doing water main replacement projects. This is a common practice for
utilities that own the service line through the curb stop valve because it minimizes the potential
of having to cut into a freshly paved road to repair/replace a broken service line. These costs
are estimated at $3,000 per service line. On average, ERMU would replace approximately 45
service line connections per year as part of a water main replacement project, adding another
$2.00/month per account.
Differentiating the frequencies and costs described above by residential versus commercial
accounts yields the following averages:
Break Repair
Residential
Commercial
Customer Accounts
5,100
550
Breaks per Year
2
0.33
Average Cost per Break
$6,000
$12,000
Average Cost/Month/Account
$0.20
$0.60
Curb Stop to Main Replacement
Residential
Commercial
Customer Accounts
5,100
550
Services per Year
40
5
Average Cost per Break
$3,000
$6,000
Average Cost/Month/Account
$2.00
$4.50
Totals
Residential
Commercial
Monthly Break Cost
$0.20
$0.50
Monthly Replacement Cost
$2.00
$3.80
Total Monthly Cost/Account
$2.20
$5.10
Possible Ownership Options:
Listed below are the typical options for ownership/responsibility of water service lines. The
chart summarizes the surveyed data for each option. The advantages and disadvantages of
each option are listed after the table.
1) Status Quo: The property owner owns the entire service line (24 cities/50 surveyed)
2) Modified Status Quo: No change to ownership, but ERMU implements a service line
protection program to cover repair costs (3/24).
3) ERMU owns from the main through the Curb Stop for all properties (26/50)
4) ERMU owns from the main through the Curb Stop for residential properties only (3/50)
Option
Overall
Metro
MMPA
MMUA
Size
Regional
Main Only*
24/50
9/28
3/5
9/16
18/33
6/12
Protection Program
3/24
0/9
0/3
3/96
3/18
1/6
Through Curb Stop
26/50
19/28
2/5
7/16
15/33
6/12
Residential Only*
3/50
1/28
0/5
2/16
2/33
1/12
*Includes those cities offering a protection program.
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203
Option 1, Status Quo. The property owner owns the entire service line (24/50).
Advantages: The simplest approach to managing service lines. Customers would have the
option to distribute their repair/replacement costs over 10 years by having their repair costs
assessed to their property.
Disadvantages: Can place a financial burden on customers that need to repair/replace their
water service line. Despite numerous "Who Owns What" communications, most customers
don't realize they are responsible for service line costs.
Option 2: Modified Status Quo. No change to ownership, but ERMU implements a service line
protection program to cover repair costs (3/24).
Advantages: No change to City Ordinance/ERMU Water Rules (the property owner will still own
the entire service line). The implementation of a protection program provides a funding source
for water service line repairs without impacting rates. Additionally, it can be crafted to control
ERMU's liability while still easing the financial burden on customers. Whether to implement a
cap to limit/share repair responsibility, whether to include the entire service line or just
through the curb stop, and whether to limit eligible line size are all examples of how ERMU can
control its financial exposure. It can also include an opt -out option if desired. Allows for the
option to not include customers who are behind on their payments.
Disadvantage: Since it's a separate fee (not included in the water rates) some customers may
see it as a lack of transparency. For comparison, Austin Utilities charges $3.00/month for their
water service fund program. Owatonna Public Utilities charges $0.99/month for their service
line protection program. Information on both programs is attached. Austin's water service fund
covers service lines 100% up to two-inch and at 50% for service lines larger than two-inch.
Owatonna limits their program to residential customers only.
Option 3: ERMU owns from main through Curb Stop for all properties (26/50).
Advantages: Simple and consistent implementation that mirrors most of the 50 cities surveyed.
Offers protection to all customers, regardless of type, size, or location. The added risk
associated with covering all properties could be further controlled by using a tiered structure
based on service line size.
Disadvantages: Likely represents the most expensive option as it represents the greatest
financial exposure. Rates would need to increase to cover the increased exposure. Since the
increased costs would be recovered through increased rates, there is no opt out option.
Option 4: ERMU owns from main through Curb Stop for residential properties only (3/50).
Advantages: Offers protection to residential customers while avoiding the higher cost potential
associated with commercial properties. The majority of residential properties have one -inch or
smaller lines that connect to water mains located under low -volume residential roads.
Commercial/industrial properties can have service lines that are considerably longer and larger
that connect to water mains under higher -volume collector roads. Larger lines and connections
under higher -volume roads can significantly increase repair costs.
Page 3 of 4
204
Disadvantages: Smaller business owners, with line sizes similar to residential properties, may be
upset over the lack of consistency with residential properties.
FINANCIAL:
Financial exposure will depend on what, if any, changes are made to our current policy. If ERMU
takes on the added responsibility of funding service line repairs/replacement from the main
through the curb stop valve, residential costs would increase by approximately $2.20/month.
Costs for commercial customers would increase by approximately $5.00/month. Depending on
the selected program, these amounts would be recovered through either a service fee or a rate
increase. Calculating the final amounts would be part of our 2025 rate study, planned for the
third quarter of 2025.
Note: The amounts presented are estimates only, they are not intended to cap our expenses. If
we adopt a plan that increases our financial responsibility, we will have to treat all eligible
customers the same, even if the total annual costs exceed our budget estimates.
NEXT STEPS:
Staff requires commission direction on which, if any, policy changes they would like to pursue
for approval at a future commission meeting.
ATTACHMENTS:
• City Survey — Water Service Line Ownership
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205
Service Line Ownership Table of Results
Columnl
City
Main Only
Main Thru Curbstop
Residential Only
Protection Program
Metro
Regional
Size
MMUA
MMPA
Source
Notes
9-2-7: The consumer or owner shall be responsible for maintaining the service pipe from the curb stop valve into the
1
Albertville
Yes
Yes
Yes
Code
building served.
2
Andover
Yes
Yes
Yes
Website
About Our System: The .... owner is responsible from the valve outside the home to the meter and everything after.
3
Anoka
Yes
Yes
Yes
Yes
Yes
Yes
Rules
RULES AND REGULATIONS, Section 2000
*Who Owns What: The customerwill retain ownership of water service lines from the corporation stop to the meter,
4
Austin*
Yes
Yes
Yes
Yes
Website
but Water Service Fund will cover costs of all repairs if account is current.
Section 800.09: All persons taking water shall keep their own service pipes, stop cocks, and apparatus in good repair
and protected from frost, at their own risk and expense, from the water main through the end of the service pipe inside
5
Big Lake
Yes
Yes
Yes
Code
the house or building.
Section 86-105a: The service pipe from the building to the curb stop and the connection thereto shall be the property
6
Blaine
Yes
Yes
Code
of the applicant and must be protected and maintained by the applicant.
Section 11.14: It shall be the responsibility of the owner to maintain the service pipe from the curb box into the
7
Bloomington
Yes
Yes
Code
house or building.
Section 4-201.7: After the initial connection to the curb stop, the property owner shall thereafter be liable for all repair
8
Brooklyn Center
Yes
Yes
Yes
Code
or grade adjustments to his water service line between the street main and the building being served.
Chapter 100, section 100.15: The stop cock, box and cover must be installed by the owner at the owner's expense,
9
Brooklyn Park
Yes
Yes
Code
becomes the property of the city, and must be maintained by the city so as to be safe and accessible at all times.
Section 48-257a: The consumer owns the service line to the curb box/gate valve, including the connections to such
10
Buffalo
Yes
Yes
Yes
Yes
Yes
devices on the owner's side.
Water FAQs: The City owns the water shutoff in your yard within the right of way, typically located about 10 feet
behind the City -owned curb. The City also owns the water service line between the shutoff and the water main in the
11
Burnsville
Yes
Yes
Website
street
Water FAQs: It is the responsibility of the homeowner to maintain the service line to the structure being served,
12
Chanhassen
Yes
Yes
Yes
Website
including the curb box.
Section 7.12.010Q: It shall be the responsibility of the consumer or owner to maintain the service pipe from the
13
Chaska
Yes
Yes
Yes
Yes
Yes
Code
structure side of the curb box or service valve into the house or building.
Section 13-211: The stop box and cover at the watermain and boulevard or street are the property of the City and must
be readily accessible. Section 13-212: The service pipe to the watermain and the connections thereto are the
14
Coon Rapids
Yes
Yes
Code
property of the user, and must be protected and maintained by the user.
Section 715.17: The consumer or owner must maintain the service pipe from the building side of the curb stop or
15
Crystal
Yes
Yes
Yes
Code
building side of the building gate valve into the house or building.
Section 52.014a: It shall be the responsibility of the owner or other account holder to maintain the service pipe from
16
Dayton
Yes
Yes
Yes
Code
the curb box into the house or building.
Water Service Issues: Water service lines are owned and maintained by the property owner, from and including the
17
Delano
Yes
Yes
Yes
Yes
Website
home or business's connection to the water main.
Water Ordiance, 403.09: The Water Department will maintain water services from the main to, and including the curb
18
Detroit Lakes
Yes
Yes
Yes
Website
stop, or the property line, whichever is the closest to the main, free of charge to the customer.
19
Duluth
Yes
Code
Section 48-120: Services to be maintained by department to curb stop only
Section 3.20-2: It is the responsibility of the consumer or owner to maintain the service pipe from the curbstop into
20
Eagan
Yes
Yes
Code
the house or other building.
21
East Grand Forks
Yes
Yes
Yes
Website
Water Lines: The "curb stop" is the property and responsibility of the property owner.
Water FAQs: Property owners are responsible for all water piping located on their property. This includes all the
22
Eden Prairie
Yes
Yes
Website
water piping inside the building and the underground water service to the property line.
Section 28-91: The water service line from the curb stop .... is owned by and shall be maintained by the owner of the
23
Edina
Yes
Yes
Code
property serviced by such service line.
Section: 402.06: The occupant or user of such premises shall be liable for all repairs required to any water line or any
24
Fridley
Yes
Yes
Yes
Code
sewer lines necessary for connection of the premises from the main to the premises.
Section 203.04: All persons taking water shall keep their own service pipes, curb stops, stop cocks and apparatus in
good repair and protected from frost, at their own risk and expense. Section 203.07: No claim shall be made against
the City by reason of breaking or freezing of any service pipe or service cock; nor if from any cause the supply of water
25
Glencoe
Yes
Yes
Yes
Code
shallfail.
Section 28-29b: It is the responsibility of the consumer or owner to maintain the service pipe from the curb stop into
26
Golden Valley
Yes
Yes
Yes
Code
the house or other building.
Water & Sewer/Mtce and Repairs: Property owners are responsible for the water service from the house or structure to
27
Hopkins
Yes
Yes
Yes
Website
the water main in the street, including the corporation stop at the water main and curb stop at the right -of way line.
Water FAQs: the property owner is responsible for the water service line from the water main in the street up to the
28
Hutchinson
Yes
Yes
Yes
Website
water meter in the property.
29
Mankato
Yes
Yes
Website
Water Main Repairs: The homeowner is responsible for their water service line from the City water main to their home.
Section 34-41: The stop box and cover at the water main and boulevard are the property of the city, and all persons
are forbidden to interfere with them. Section 34-42a: The service pipe to the water main and the connections thereto
30
Maple Grove
Yes
Yes
Code
shall be the property of the user.
206
Service Line Ownership Table of Results
Columnl
City
Main Only
Main Thru Curbstop
Residential Only
Protection Program
Metro
Regional
Size
MMUA
MMPA
Source
Notes
Section 509.410b: The water service line shall be owned by the property it serves, and each piece of the water service
31
Minneapolis
Yes
Yes
Code
line shall be maintained and kept in good operating condition by the property owner.
Section 1200.060: The stop cock at main and property or curb line, together with box and cover, are the property of the
city. Section 1200.075/3: The service pipe to the watermain beginning at the corporation connection belongs to the
32
Minnetonka
Yes
Yes
Code
owner of the premises and must be protected and maintained by the owner.
Water Service Line Responsibility: Customer is responsible for the water service line from the home to the
33
Monticello
Yes
Yes
Yes
Website
corporation stop.
Section 2045.1.2: MPS owns .... allwater service materials that include, but are not limited to, service pipingto the
34
Moorhead
Yes
Yes
Yes
Rules
curb stop, curb stops.
Water meters, valves, service lines, stop boxes, and corporation stops are the sole responsibility of the property
35
New Hope
Yes
Yes
Yes
Website
owner.
Title V, Section 57.05b: Sewer and water service from a building to the connection at the main are owned by the
36
North St. Paul
Yes
Yes
Yes
Yes
Yes
Code
property owners and they are responsible for all repairs and maintenance except for the operation of the curbstop.
Section 51.20a: It shall be the responsibility of the user or owner to maintain the service pipe from the curb shut-off
37
Osseo
Yes
Yes
Yes
Code
into the house or structure.
FAQs: It is the responsibility of the homeowner to maintain the service line from the street water main into and
38
Otsego
Yes
Yes
Yes
Website
including plumbing within the structure being served.
39
Owattona*
Yes
Yes
Yes
Yes
Yes
Website
Water Service Line Protection Program
Section 720.25: It is the responsibility of the owner or occupant to maintain the service pipe from the curb box into
40
Plymouth
Yes
Yes
Code
the house or building.
Section 104: The property owner owns the water service and it is the responsibility of the property owner to maintain.
Beginning January 1, 2018, PPU has a Service Line Protection policy in force and will begin charging a monthly fee for
41
Princeton*
Yes
Yes
Yes
Yes
Yes
Yes
Rules
the protection.
Section 58-117: The service pipe to the stop box (curb stop) and the connection thereto shall be the property of the
42
Ramsey
Yes
Yes
Yes
Code
customer and must be protected and maintained by the customer.
Section 401: The property owner owns the water service, and is responsible for its repair, maintenance or
43
Rochester
Yes
Yes
Rules
replacement.
Chapter 46-II-2, Section 46-48: The service pipe from the building to the curb stop and the connections to the curb
44
Rogers
Yes
Yes
Yes
Yes
Code
stop shall be the responsibility of the property owner.
Water Service Information: The homeowner's responsibility for the water service line is everything in the home out to
45
Shakopee
Yes
Yes
Yes
Yes
Yes
Website
and including the connection to the water main out in the street.
WATER SERVICE RESPONSIBILITY: Homeowners are responsible for their service lines. A service line is provided to
46
St. Cloud
Yes
Website
each home for drinking water supply. Repair of any service leak is the responsibility of the property owner.
Sec. 32-202.: The property owner shall be responsible for repairing any leaks in the service pipeline to the property,
except that the city shall be responsible for leaks in the service line to a single-family dwelling between the main and
47
St. Louis Park
Yes
Yes
Yes
Code
the shutoff.
Title V, Section 50.07: The water service line from the curb stop is owned by and shall be maintained by the owner of
48
St. Michael
Yes
Yes
Yes
Code
the property serviced by such service line.
Title A Section 87.03e: The water utility will, in accordance with its standards and without cost to the property
49
St. Paul
Yes
Yes
Code
owner, repair and maintain the street service connections which it has installed.
F-50
Willmar
Yes
Yes
Yes
Website
Website search produced service line of america brochure stating property owner owns from building to main.
24 26 3 3 28 12 33 16 5
207