[HISTORY: Adopted by the Council of the City of Schenectady 3-16-1981 by L.L. No. 1-1981. Amendments noted where applicable.]
GENERAL REFERENCES
Fire prevention and protection — See Ch. 156.
As used in this chapter, any inconsistent provisions of law notwithstanding, the following terms shall have the following meanings:
DIRECTOR
The City's Director of Finance.
LIEN
Any unpaid tax, special ad valorem levy, special assessment or other charge imposed upon real property by or on behalf of the City or special district, which is an encumbrance on real property and which has remained undischarged for a period of one year or more.
REAL PROPERTY
Any property upon which there is erected any residential, commercial or industrial building or structure except a one- or two-family residential structure.
SPECIAL LIEN
A lien upon fire insurance proceeds pursuant to this chapter and § 22 of the General Municipal Law.
The Director of Finance shall file a notice of intention to claim against the proceeds of fire insurance policies with the State Superintendent of Insurance for entry in the Index of Tax Districts in accordance with § 22 of the General Municipal Law, the New York State Insurance Law and all rules and regulations promulgated by the New York State Department of Insurance with respect to this procedure.
Prior to the payment of any proceeds of a policy of insurance for damages caused by fire to real property, which policy insures the interest of an owner and is issued on real property located within the City and following notification to the Director by an insurer of the filing of a claim for payment of such proceeds, the Director shall claim, by serving a certificate of lien, against such proceeds to the extent of any lien, including interest and penalties to the date of the claim, thereon, which claims, when made and perfected in the manner provided for in § 22 of the General Municipal Law and § 33-a of the Insurance Law, shall constitute a special lien against such proceeds and shall, as to such proceeds, be prior to all other liens and claims except the claim of a mortgagee or record name in such policy. Notice of the service of the certificate of the special lien shall be given to the insured by certified mail.
Whenever the proceeds of a policy of fire insurance which will be or has been paid to the City instead of an insured, all or part of such proceeds may be paid or released to the insured if the insured satisfies the Director that the affected premises have been or will be repaired or restored, that such repairs or restoration are in the public interest and that the insured is issued and complies with an agreement entered into pursuant to this article. To secure such payment or release of proceeds, the insured must notify the Department of Finance within 45 days after the mailing by the insured of a notice of the service of the certificate of special lien pursuant to § 155-3 of this chapter of the intention to restore or repair the affected premises and must file with the Director a completed application with all required supporting documentation pursuant to § 155-6 of this chapter within 60 days thereafter, unless the Director grants an extension for a stated period of time.
The release or return to the insured of any amounts to which he or it would otherwise be entitled to claim shall be subject to the following conditions:
A. 
Such release or return shall be subject to the repair or restoration of the affected premises, in accordance with applicable building laws, to the condition it was in prior to the time the lien of the City arose or to an improved condition.
B. 
The insured shall file with the Director an application in affidavit form, with such supporting documentation as the Director shall require, containing the following:
(1) 
A complete description of the nature and extent of the damage to the insured premises and of the condition of the premises prior to the time the lien of the City arose.
(2) 
A complete description of the nature of the repairs or restoration to be undertaken and the cost thereof.
(3) 
A statement as to the source of funds needed to complete such repairs or restoration if the insurance proceeds are not sufficient therefor.
(4) 
The name and address of each contractor who will effect such repairs or restoration.
(5) 
An estimated time schedule showing how long the repairs or restoration, and each phase thereof, will take.
(6) 
Such other information as may be required by the Director to enable him to determine whether the repairs or restoration are in the public interest and will be or have been timely and properly made.
C. 
Upon preliminary approval of an application by the Director and the Building Inspector, the Director may enter into a written agreement with the insured, which shall set forth the terms and conditions for the release and return of all or part of the proceeds, and the Director is hereby authorized to enter into such agreement on behalf of the City.
D. 
The repairs or restoration required by the Director shall be completed in compliance with the terms and conditions of the agreement prior to the release or return of any part of the insurance proceeds; provided, however, that the Director may, upon the written request of the insured and in its sole discretion, approve a prior release of such proceeds or a portion thereof in a lump sum or in installments, where the insured certifies and demonstrates that such release is required to permit such repairs or restoration to go forward. Any such insurance proceeds released or returned prior to the completion of the repairs or restoration required by the Director may be paid directly to the contractor or contractors responsible for making such repairs or restoration. Such payment shall, to the extent thereof, release the Director from further liability to the insured.
E. 
Whenever the Director releases the entire amount of the proceeds prior to compliance with the terms and conditions of the agreement, the insured shall post an undertaking in an amount sufficient to assume the restoration or improvement of the property.
If the insured fails to notify the City of his or its intention to repair or restore the affected premises as required in § 155-5 of this chapter or fails to file a completed application pursuant to this chapter or fails to enter an agreement with the Director or comply therewith within the time set forth, the right of the insured to assert a claim against the insurance proceeds, except to the extent they exceed the amount of the lien, shall terminate.
There shall be established in the office of the Director a fund for the deposit of fire insurance proceeds to be held and applied in accordance with this chapter. Such funds shall not be held together with the general tax levies in the general fund.
Until such termination, any insurance proceeds received by the City shall be deposited in a special fund and shall be retained therein. Upon termination of the insured's right to claim against the proceeds, the proceeds and any interest accrued thereon shall be applied to the liens affecting the premises in a manner to be determined by the Director and may be transferred to the general fund.
Any agreement entered into by the Director pursuant to this chapter shall be for the purpose of preserving and evidencing the right of release of the special lien created by this chapter and shall be subject solely to the provisions of this chapter. Any repair or restoration performed in anticipation of a release of insurance proceeds shall not be deemed to be a public work or municipal project nor to have been done pursuant to a municipal contract.