What Happened?
To raise money, city council members in Plano, Texas, agreed to endorse a private company, and to allow the use of the city’s name on that company’s marketing materials.
The Background
Faced with a $13 million budget shortfall in the next two years, the city of Plano, which has a population of 279,000, began looking for innovative ways of generating money without raising taxes or fees.
It was approached by a company called Sewer Line Warranties of America, which sells warranties to homeowners that cover sewer line repairs; those repairs aren’t typically covered by municipalities. The company, based in Canonsburg, Penn., has entered into similar partnerships with more than 120 cities across the country.
The Deal
According to published reports, the city received a $63,730 up-front payment, and gets 12 percent of new revenue from residents who sign up for a new warranty plan. In return, Sewer Line gets to use the city’s name and logo in marketing materials. There is zero cost to the city, and the program kicked off with a letter from the City Manager announcing the endorsement to all residents.
The Downside
Many residents were reportedly confused after receiving marketing materials that appeared to be official correspondence from the city, according to media reports. “I thought it came from the City of Plano,” one resident told local television station WFAA-TV. This appearance of deception or official endorsement could be problematic for cities, if not communicated properly to residents.
Plano is looking at rolling out a similar endorsement program to attract other vendors, but the city acknowledges that it will raise the level of transparency so residents understand the exact relationship between city and vendor.
Other Models
Companies like Sewer Line also offer different endorsement models. One nearby town, Duncanville, agreed to let the company use its logo, but didn’t take any payment, and instead asked the company to pass savings onto residents.
Next Steps
The original coverage from WFAA-TV and related articles are available.
The city’s response to the TV segment is available, as is information about Sewer Line Warranties of America.
Here are other articles about cities that have sold their naming rights, or are considering similar options:
- Altoona, PA (to filmmaker)
- Cook County, IL
- Izumi-Sano, Japan
- LaCrosse, WI
- Newton, MA (parts of schools)
- Richmond, VA (roads)
A related article from 2010 in The Wall Street Journal provides additional information and insight.