The necessity for improvement security and the related requirements shall be governed by the following regulations:
A. Requirement for Improvement Security. If all required improvements, engineering and inspection are not satisfactorily completed before the final map is approved, the owner or owners of the subdivision shall, prior to the approval of the final map, enter as contractor into an agreement with the City Council whereby in consideration of the acceptance by the City Council of the streets, easements and any other land offered for dedication, the contractor agrees to furnish the equipment, labor and material necessary to complete the work within the time specified in the agreement.
B. Amount of Improvement Security Required. To assure the City that the work will be completed, improvement security shall be furnished to guarantee the performance of any act or agreement in the following amounts for the following purposes:
1. An amount, not less than one hundred percent (100%) of the total estimated cost of the improvement or of the act to be performed, conditioned upon the faithful performance of the act or agreement.
2. An additional amount, not less than fifty percent (50%) nor more than one hundred percent (100%) of the total estimated cost of the improvement or the performance of the required act, securing payment to the contractor, to the subcontractors, and to persons furnishing labor, materials or equipment to them for the improvement or the performance of the required act.
3. Whenever an entity required to furnish security in accordance with this Section is a California non-profit corporation, funded by the United States of America or one of its agencies, or funded by this State or one of its agencies, the entity shall not be required to comply with Subsections B.1. and B.2. of this Section, if the following conditions are met:
a. The contractor installing the improvements has bonded to the non-profit corporation and the City as co-obligee the amount of one hundred percent (100%) of the contract for the faithful performance of the work, and has further bonded to the non-profit corporation and the City as co-obligee an amount of not less than fifty percent (50%) of the contract for the payment of labor and materials, and those bonds comply with the provisions of this Chapter.
b. All moneys payable to the contractor by the non-profit corporation are deposited in a depository complying with the provisions of Subdivision Map Act and out of which moneys progress payments are conditioned upon:
(1) The contractor’s certification to the non-profit corporation that all labor performed in the work, and all materials furnished to and installed in the work, have been paid for in full to the date of the certification.
(2) The written approval of the non-profit corporation.
(3) Final payment to the contractor not being made until thirty-five (35) days shall have expired after the filing and recording of the notice of completion of the work acceptance of the work by the City in writing.
c. All certifications as to progress payments shall be delivered through the United States mail to the non-profit corporation. The term “progress payments” means payments made in compliance with the schedule of partial payments agreed upon in the contract for the work. No less than ten percent (10%) of the total contract price shall be retained for the thirty-five (35) days following the filing of the notice of completion.
d. An amount as determined by the City Engineer, but not more than twenty-five percent (25%) of the total estimated cost of improvements or performance of the required act necessary for the guarantee and warranty of the improvement for a period of one (1) year following the completion and acceptance thereof, against any defective work or labor done, or defective materials furnished.
As part of the obligation guaranteed by the security and in addition to the face amount of the security, there shall be included costs and reasonable expenses and fees, including reasonable attorney’s fees incurred by the City in successfully enforcing the obligation secured.
C. Type of Security Required. The furnishing of security in connection with the performance of any act or agreement shall be one (1) of the following, at the option of and subject to the approval of the City Council:
1. Bond or bonds by one (1) or more duly authorized corporate sureties.
2. A deposit, either with the City, responsible bank or trust company, at the option of the City, of money or negotiable bonds of the kind approved for securing deposits of public monies.
3. An instrument of credit from one (1) or more financial institutions subject to regulation by the state or federal government, and pledging that the funds necessary to carry out the act or agreement are on deposit and guaranteed for payment, or a letter of credit issued by such a financial institution.
4. Bonds to secure faithful performance and for the benefit of laborers and material men of any agreement, shall be in substantially the forms as shown in the Subdivision Map Act.
5. Such money, negotiable bond or instrument of credit shall be a trust fund to guarantee performance and shall not be subject to enforcement of a money judgment by any creditors of the depositor until the obligation secured thereby is performed to the satisfaction of the City.
D. Forfeiture on Failure to Complete. Upon the failure of a subdivider to complete any improvements and work within two (2) years of date agreement is executed, the City Council may, upon notice in writing served by registered mail addressed to the last known address of the person, firm or corporation signing such contract, determine that the improvement work or any part thereof is uncompleted and may cause to be forfeited to the City, such sum of money or bonds given for the faithful performance of the work as may be necessary to complete such work.
E. Exoneration of Improvement Security. For projects involving flood control or drainage works constructed within San Bernardino County drainage easements, it shall be the duty of the City Engineer and/or the County Director of Transportation/Flood Control/Airports to inspect or receive certificate of completion of all improvements installed as to their compliance with this Chapter and the City/County standards.
The security furnished by the subdivider may be released in the following manner:
1. Security given for faithful performance of any act or agreement may be released upon the performance of the act or final completion and acceptance of the required work.
2. Security securing the payment to the contractor, subcontractors and to persons furnishing labor, materials or equipment shall, after passage of the time within which claims of lien are required to be recorded pursuant to Article 3 (commencing with Section 3114) of Chapter 2 of Title 15 of Part 4 of Division 3 of the Civil Code and other acceptance of the work, be reduced to an amount equal to the total claimed by all claimants for whom claims of lien have been recorded and notice thereof given in writing to the Council or board, and if no such claims have been recorded, the security shall be released in full.
Such release shall not apply to any required guarantee and warranty period, nor to the amount of the security deemed necessary by the City or County for such guarantee and warranty period, nor to cost and reasonable expenses and fees, including, but not limited to, reasonable attorneys’ fees and costs of enforcement.
3. Maintenance security necessary for guarantee and warranty of the work for a period of one (1) year following completion and acceptance thereof against any defective work or labor completed, or defective materials furnished shall be released should no claims of such defective work be filed with the City or board of supervisors. In the event of such defective work, the security shall be held until all work is considered satisfactory and acceptable by the City or County.
F. Reimbursement for (Oversized) Supplemental Improvements. The planning agency may, at the request of a public agency (including the City, the Adelanto Public Utility Authority or other City departments or agencies), require that the improvements installed for the benefit of the subdivision contain supplemental size, capacity or number for the benefit of property not within the subdivision as a condition precedent to the approval of a subdivision or parcel map, and thereafter dedication of such improvements to the said public agency or authority. However, the subdivider shall be reimbursed by said public agency or authority for that portion of the cost of such improvements equal to the difference between actual cost and the amount it would have cost the subdivider to install such improvements pursuant to the provisions of the Subdivision Map Act. Standards and procedures for requiring such improvements and for reimbursement shall be contained in the operating rules and regulations of said public agencies and shall be made a public record.
G. Lien Agreements Permitted Only as Substitution for Existing Securities. A Lien Agreement which shall be recorded against all of the undeveloped lots in a subdivision, may be substituted only for an existing security which was furnished under Subsections 16.04.070(A) and (C) for required improvements under a subdivision improvement agreement, if: no activity for the subdivision has transpired, no inspections have occurred, and no permits for construction of improvements have been issued within one (1) year of the recordation of the subdivision map, and upon a finding by the City Council that it would not be in the public interest to require the installation of the required improvements sooner than two (2) years after the recordation of the map. The use of a Lien Agreement shall be at the sole discretion of the City. For the purposes of this subsection, "undeveloped lots" shall be defined as lots that have not passed a final inspection and for which all required associated improvements, as determined by the City Engineer, have not been completed.
1. The City will not accept a Lien Agreement if any of the properties against which the lien agreement is to be recorded are subject to any mortgages, deeds of trust, or liens as evidenced by a title insurance policy and title report issued forty-five (45) days prior to the execution of the Lien Agreement. The lien shall have priority of a judgment lien in an amount necessary to complete the required improvements. Under no circumstances shall the City be obligated to agree to subordinate the lien.
2. The City will not accept a Lien Agreement if the estimated costs for the remaining required improvements, as determined by the City Engineer, including, but not limited to, master planned or "missing link" streets, drainage and sewer improvements, community facilities, off-site improvements, fire access, fire flow and traffic signals, originally required by conditions of approval, exceeds the fair market value of the property based on a recent opinion of an independent, licensed real estate appraiser which appraisal shall be furnished to the City not fewer than forty-five (45) days prior to entering into any Lien Agreement.
3. Once the Lien Agreement is recorded, the City shall not issue any development or construction permits for the subdivided land until the Lien Agreement is substituted with acceptable security authorized by Subsections 16.04.070(A) and (C) and approved by the City Council.
4. The City will not accept a Lien Agreement as a substitute for existing security if any individual lots have been sold; if any construction permits, including but not limited to, any grading or building permits; have been issued for any of the property, or if construction of any of the required public improvements has begun.
5. Notwithstanding Subsection 4. above, the City may accept a Lien Agreement from the owner of the subdivision as a substitute for existing security if: any individual lots have been sold, grading has commenced or if construction of any of the required public improvements has begun on the subdivided land; provided that the grading is in strict accordance with a valid grading permit, the construction of required improvements is in strict accordance with plans approved by the City Engineer, the required improvements have been accepted by the City, and all the following conditions are met:
a. There is no need for the City to construct the required improvements if the owner's project is abandoned or delayed for any period of time;
b. The grading has no effect on the use, operation and maintenance of existing streets or highways, public or private;
c. The grading has not caused the modification or closure of any public access points, existing streets or highways, public or private;
d. Additional drainage improvement and/or erosion controls are not necessary and/or installed in the road right-of-way due to the grading;
e. Delay of the construction of the owner's required improvements do not affect or delay the improvements of an adjacent owner who has already commenced work on his or her required improvements;
f. The completion of any public improvements are not required by the City's General Plan Circulation Element, Master Plan of Drainage, Master Sewer Plan or Master Water Plan or for any other reason for the purposes of preserving public health, safety or welfare;
g. The owner provides a separate security as specified by Subsection 16.04.070(C)(2) for the maintenance of the graded land, including without limitation, dust control, erosion control, fencing, and any other maintenance as required by the City;
h. In the case that any individual lots have been sold, at the discretion of the City and only after the City has performed a comprehensive review of the development which may include approval of a construction phasing plan, completion of required improvements to serve the individual lots as determined by the City Engineer and other requirements and conditions to be met prior to acceptance of the Lien Agreement.
6. The Lien Agreement shall:
a. Be in a form acceptable to and approved by City Council, the City Attorney and the City's Risk Manager.
b. Be executed by the Mayor on behalf of the City, and by all current record owner(s) of the properties against which the lien agreement is be recorded as evidenced by a title insurance policy and title report issued within forty-five (45) days prior to the execution of the Lien Agreement.
c. Be recorded with the San Bernardino County Recorder against the entire subdivided property that is subject to the substituted security.
d. Contain a detailed itemization of the remaining required improvements and an estimate of costs approved by the City Engineer and shall specify that the obligation of the owner or the owner's successors in interest shall extend to the actual cost of construction of the required improvements if such costs exceed the estimate.
e. Be attached to all of the undeveloped lots set forth in the lien agreement and shall be indexed in the Grantor index to the names of all record owners of the real property as specified above and on the map, and in the Grantee Index to the City.
f. Contain a legal description of the entire subdivided property which is the subject of the Lien Agreement.
g. State that the applicant must pay a fee, pursuant to Section 3.60.030 for all costs reasonable born for the processing of the Lien Agreement.
7. The owner shall agree that no individual lots shall be sold while the Lien Agreement is in effect. However, fee title to the entire property encumbered by the Lien Agreement or to all lots designated on any individual final map which is encumbered by the Lien Agreement, may be sold in the aggregate to a single purchaser, provided that the proposed purchaser must, prior to or concurrent with assuming title to the property, either:
a. Execute a new Lien Agreement in a form acceptable to the City which will encumber the property to be conveyed, specifying the respective obligations of the owners of property subject to the original and new Lien Agreement, or
b. Provide acceptable alternative security in one of the forms set forth in Subsections 16.04.070(A) and (C) for the required improvements to be constructed as a condition to development of the property conveyed.
8. The owner shall also be required to provide a cash deposit in the amount of twelve thousand dollars ($12,000.00) to the City for the purpose of reverting the property to acreage if the owner breaches or is in default of the terms of the Lien Agreement. Any unused portion of any such deposit shall be refunded to the owner, which deposited the amount of twele thousand dollars ($12,000.00), following completion of such reversion. If the cost of the reversion to acreage exceeds twelve thousand dollars ($12,000.00), the owner shall pay such additional costs to the City prior to recordation of the reversion to acreage map.
9. The owner shall substitute a security as provided for by Subsections 16.04.070(A) and (C) prior to the issuance of any development or construction permit to construct the improvements required pursuant to this Chapter 16.04.
10. The Lien Agreement shall only be released upon substitution of acceptable security for the Lien Agreement under Subsections 16.04.070(A) and (C) in order to begin construction of the required improvements, to facilitate subsection 7., or upon recordation of a reversion to acreage map.
11. Under no circumstances shall the Lien Agreement compel the City to construct the required improvements.
[Ord. No. 506, Section 2, 10/12/11.]