City, county negotiate fire escrow cash

April 28--SUNBURY -- City Council members have not solved why 20 percent of the insurance money from the Northumberland County Prison fire was never placed in an escrow account created by city officials more than a decade ago to keep a portion of insurance money in city hands until owners repair or raze damaged property.

City officials have, however, determined why insurance money from the Sun Re Cheese blaze was never put in the account.

The escrow account -- created by a city law 15 years ago -- was brought to light by officials at a public meeting earlier this year when they wondered why insurance money was not placed in the account following two major fires in the city last year. The county prison caught fire on Jan. 14, 2015, and Sun Re Cheese on Oct. 18.

On Monday, Mayor David Persing said city officials are discussing the problem with the county commissioners, who are expected Tuesday to accept the deed and insurance money for the property from the Northumberland County Authority. The insurance money totals $7.9 million, including $3.7 million that was released in March.

Sun Re Cheese, on the other hand, is in the clear over its insurance money, according to Councilman Rick Reichner, the city's director of public safety and codes.

Company officials cleaned up the fire-damaged property before the insurance company settled. As a result, there was no need to hold insurance money in an escrow account.

The Insurance Company Law of 1921, amended in 1994, allows municipalities to hold a percentage of insurance money until work is completed on a damaged property. City officials say the program has saved the city from property owners who might otherwise have abandoned a property after a fire, leaving a newly blighted building as an eyesore in the community, according to Reichner.

Northumberland, Danville, Shamokin Dam and Lewisburg have similar ordinances.

"It's a good thing for the city," Reichner said. "It's an incentive for the homeowners to get their building torn down or back up to code."

The law is working, said code and zoning officer Michael Rhoads.

"We've had devastating fires in town, and this caused them (property owners) to accelerate their work," he said. "The money is more valuable in their pockets than with us."

20% temporarily to city

On Feb. 12, 2001, council members adopted the Fire Escrow Ordinance, requiring property owners and insurance companies to provide approximately 20 percent of insurance money to the city. The money is placed in an account until the building is repaired or razed. Only properties with more than $7,500 in damage are required to set the money aside.

According to the law, the insurance company must transfer the money to the designated officer, currently city Treasurer Kevin Troup.

Rhoads said when a fire occurs, the code department secures the property owner's name and insurance information and contacts the insurance company to explain the ordinance. The insurance company sends the money to the treasurer's office to be put in the account. Once the city is satisfied with the repairs or demolition, the money is returned to the property owner.

"The main thing is to preserve the aesthetics of the neighborhood," Rhoads said.

One outstanding account

The only money in the Northumberland National Bank escrow account right now is $9,733 from Anthony Sanutti Jr., who is renovating the Brass Key at North Second and Reagan streets after the property was damaged by a fire in 2013, according to Troup.

The money is returned to property owners with interest, he said.

Sanutti only has a few small requirements to complete on the building before his money is released to him, Reichner said.

Sanutti, of Selinsgrove, said the city has been "pleasant to work with" and has released portions of the insurance money to help him as he continues the work. Reichner said the city will work with property owners when they see an effort.

"It's not a bad law. I understand what they're trying to do," Sanutti said. "But, I think the percentage is too high. I could do a lot more with that money than what they're doing."

In addition to the percentage, Sanutti said the code office should have clearer descriptions of the work they want completed.

"It's vague," he said. "It's open to interpretation."

On Jan. 10, 2013, an apparent light fixture in the basement of the Brass Key shorted out, igniting the blaze that destroyed the city bar and restaurant.

Sanutti said he has a lot of work that needs to be done inside the building as he renovates the bottom floor for the bar and restaurant and the second floor for apartments. He does not have a time frame for reopening the business.

Unfortunate but necessary

Robert Snyder Jr., former owner of the Peppermint Lounge, which burned in 2009, said the ordinance is "unfortunate" but he understands why he and others have been required to follow it.

"People were taking all their insurance money and spending it elsewhere and not cleaning up," Snyder said. "If you're a responsible person, you'll get your money back when your property is in order. I have no problem with it at all, and I really strongly support it."

The Peppermint Lounge, formerly at 700 Market St., caught fire on Feb. 21, 2009. An apparent electrical problem sparked the night fire, which caused $750,000 in damage to the prominent Sunbury eatery and nightclub, closing the business for good. Snyder eventually razed the fire-ravaged building and got his escrow money back from the city, sold the property and purchased the Squeeze In at 448 Market St.

"It's not fair for someone to just walk away," Snyder said.

Dave Phillips, public affairs officer for State Farm Insurance in Pennsylvania, said the company is aware of the ordinances and "complies with the laws and ordinances of the municipalities and states where we operate."

Email Justin Strawser at jstrawser@dailyitem.com. Follow him on Twitter @JustinLStrawser.

___

(c)2016 The Daily Item (Sunbury, Pa.)

Visit The Daily Item (Sunbury, Pa.) at www.dailyitem.com

Distributed by Tribune Content Agency, LLC.