Senate File 563 - Introduced SENATE FILE 563 BY COMMITTEE ON LOCAL GOVERNMENT (SUCCESSOR TO SSB 1168) A BILL FOR An Act relating to demolition reserves on fire and casualty 1 claims on real property located within a city and requesting 2 an interim study on such reserves. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2126SV (2) 89 ko/rn

S.F. 563 Section 1. Section 515.139, subsection 1, unnumbered 1 paragraph 1, Code 2021, is amended to read as follows: 2 An insurer shall reserve ten twenty thousand dollars or 3 ten percent, whichever amount is greater, of the payment for 4 damages to the property excluding personal property on which 5 the insurer has issued a fire and casualty insurance policy as 6 demolition cost reserve if the following are applicable: 7 Sec. 2. Section 515.139, Code 2021, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 5A. a. In addition to any remedy provided 10 in section 364.12, if the city is required to demolish the 11 damaged property at city expense and the expense exceeds 12 the amount that the city recovers from the demolition cost 13 reserve, to recover the difference the city may file a civil 14 action against the insured for failure to complete repairs 15 to the property or to complete demolition of the property in 16 compliance with applicable statutes and local ordinances. 17 b. (1) If the city prevails in a civil action under 18 paragraph “a” , the court may award damages to the city that may 19 include any or all of the following: 20 (a) Reasonable attorney fees and expenses. 21 (b) Engineering costs related to the demolition of the 22 damaged property. 23 (c) Demolition costs related directly to the enforcement of 24 any local ordinance. 25 (d) The amount of any fines or penalties imposed on the 26 insured by the city for failure to complete repairs to the 27 property or to complete demolition of the property, if the 28 insured has failed to pay such fines or penalties to the city. 29 (2) Damages awarded pursuant to subparagraph (1), 30 subparagraph division (b) or (c), shall be reduced by the court 31 in the amount recovered by the city from the demolition cost 32 reserve. 33 Sec. 3. DEMOLITION RESERVE ON FIRE AND CASUALTY CLAIMS 34 ON PROPERTY —— STUDY REQUEST. The legislative council is 35 -1- LSB 2126SV (2) 89 ko/rn 1/ 3

S.F. 563 requested to establish an interim study committee for the 1 purpose of reviewing section 515.139 to consider whether the 2 statute adequately meets the needs of cities of various sizes 3 and geographic locations within the state, and reporting its 4 findings and recommendations, if any, to the general assembly. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill provides that an insurer that has issued a fire 9 and casualty insurance policy for the payment of damages to 10 real property located in a city must reserve an amount equal to 11 $20,000 or 10 percent of the payment for damages, whichever is 12 greater, as a demolition cost reserve. Currently, the required 13 amount is $10,000 or 10 percent of the payment, whichever is 14 greater. 15 A city can claim proceeds from the reserve if the city incurs 16 costs to demolish a building where the damage to the property 17 renders it uninhabitable or unfit for its purpose, without 18 repair, and proof of loss indicates that damage to the insured 19 structure or building exceeds 75 percent of the face value of 20 the policy covering the building or structure. 21 The bill provides that in addition to any other remedies 22 provided by law, if a city is required to demolish a damaged 23 property at city expense and the expense exceeds the amount 24 that the city recovers from the reserve, to recover the 25 difference the city may file a civil action against the insured 26 for failure to complete repairs to the property or to complete 27 demolition of the property in compliance with applicable 28 statutes and local ordinances. If the city prevails in a civil 29 action, the damages that the court may award the city are 30 detailed in the bill. 31 The bill also includes a request that the legislative 32 council establish an interim study committee for the purpose of 33 reviewing the demolition reserve statute to consider whether 34 the statute adequately meets the needs of cities of various 35 -2- LSB 2126SV (2) 89 ko/rn 2/ 3

S.F. 563 sizes and geographic locations within the state. 1 -3- LSB 2126SV (2) 89 ko/rn 3/ 3