The Williamston City Council on Feb. 25 discussed a new fire insurance withholding program that affects Williamston residents who suffer from a building fire.
“If there was a fire in town, to a commercial building, this would allow the city to escrow (a bond, deed, or other document kept in the custody of a third party and taking effect only when a specified condition has been fulfilled – Google) up to 25 percent of the insurance settlement to be sure that the work that needs to be done actually gets done,” said Corey Schmidt, the city manager.
Schmidt said that it’s a common resolution that many other communities utilize, however Williamston do not. The issue was brought to his attention by building officials who handle code enforcement complaints for the attorney’s office.
“For example if there was an insurance settlement, then the property owner walked, there would be a nuisance building at that location,” said Schmidt. “The city then could use the 25 percent escrow funds to make improvements to that structure.”
Council members needed more information as there was confusion on intricacies of the residential side of the program.
“People are going to need that money to rebuild,” said Daniel Rhines, a Williamston council member. “At what point, do we decide that the person is showing good faith and effort to rebuild? When do we give them their 25 percent?”
Council member, Daniel Rhines, was the only one to not approve the resolution during the vote.
“I need to know more about the mechanisms before I’m comfortable voting for it,” said Rhines.
The mayor of Williamston, Tammy Gilroy, also wanted to know more information about the program.
“I could see this becoming a problem with vacating a residential building, because you would have homeowners insurance if you had a mortgage,” said Gilroy.
Council Member John Bisard agreed with the program because he liked the safety aspect of it.
“If we have another restaurant fire or something like that, and the owner were to take the money and run, we are left with a dilapidated building downtown,” said Bisard. “That’s a safety hazard.”
Council Member Jeffrey Weiss thought that no one would abandonan a building as they would lose money.
“The vast majority of people are not going to leave a building that they own,” said Weiss. “If anything they will sell the building so someone else can have it.”
Timothy Perrone, the city attorney, explained that the program is to get rid of nuisance buildings, and the property owner could object the escrow.
“There is an opportunity for the property owner to object to the retention of the escrow amount, there’s that protection if the owner needs it,” said Perrone.”The money is held in escrow, so they get the money if they show they are working on it. If they don’t do anything for 120 days then we are going to have to use the money to bring the building back to compliance so it is not left in a nuisance manner.”
Mayor Gilroy said that she wants to look further into it.
“I definitely would like to see the full resolution and how it affects residential building” said Gilroy. “I think residential is a bigger concern.”