ST. LOUIS – The May 16 tornado damaged but didn’t destroy Cheryl Walker’s property in The Ville neighborhood. 

She says she spoke with her insurance company, filed a claim and planned on using the payout for repairs.

Cheryl’s claims adjuster was referencing state statute and a complementary city ordinance.

According to the Missouri Legislative Library, the state statute dates back to 1969, but the original legislation did not include the withholding language. It wasn’t added until 1984 through Senate Bill 433. 

It set the amount a city or county was entitled to withhold from an insurance claim at 10%. Supporters said the measure took the profit out of arson and allowed cities to recoup money spent on building demolition. 

In 1994, the legislature increased the withholding amount to 25%. Amended through Senate Bill 513, proponents noted Kansas City had approximately 1500 abandoned buildings and the increase would help the city address the problem. 

In 1996, the St. Louis Board of Aldermen passed a bill that included Ordinance 63838. It set a 25% withholding amount on any insurance proceeds resulting from the damage or loss to a building or structure arising out of fire, explosion or other casualty loss.

“When an insurance company pays out to a property owner, the city holds 25% of that insurance payout in escrow. These laws have been very effective at essentially protecting the community from property owners who walk away from totaled properties, leaving the community to deal with the rubble,” Mayor Cara Spencer said.

In the mid-90s, FOX 2 reported on the very issue Spencer described. 

But when it comes to how the ordinance should be applied to storm-related insurance claims, on Monday, Spencer acknowledged it’s complicated.

“We do not intend to keep escrow monies from property owners, homeowners who’ve been victimized by the tornado; we just need to work through the legal questions about making sure we’re doing that in a thoughtful way that doesn’t jeopardize the program moving forward,” Spencer said.

Missouri Governor Mike Kehoe’s Office and the Missouri Department of Commerce and Insurance shared a joint statement with FOX 2 last week, saying:

“Director Nelson has advised the City of St. Louis to consider waiving the holdback on all owner-occupied residential property and keep it in place for rentals and commercial properties. If the City chooses to do so, DCI will work with insurance companies to ensure that these funds are available to residents working to recover and rebuild.”

Walker thinks the answer is easy.

“I am hopeful that they can understand something so simple. Just do it. Nike it. Just do it. Waive it. Get to it later,” Walker said.