A. Purpose. This section establishes specific criteria and prerequisites for accepting surety by the city in conjunction with developer agreements, contracts, development related improvements and any other contractual obligations.
B. Applicability. Wherever surety is required within the Boynton Beach Code of Ordinances (Part II) and/or Land Development Regulations (Part III), it shall be provided in the form and manner prescribed hereunder. The type of surety shall be determined by the administrator of the code section involved, and shall be acceptable to the Boynton Beach City Attorney. Required improvements shall include all those items stipulated in Chapter 4, Article VIII, including restoration of the lands distributed by such improvements. Surety for required utility system improvements shall be coordinated directly with the Utilities Department, whether they will remain private or conveyed to the city upon completion of their construction. It shall also include any off-site areas disturbed to install any improvements required by the project. Surety shall be required for improvements associated with all planned developments, to wit, PCDs, PIDs, IPUD, PUDs, etc. With respect to required landscaping, the applicant may provide surety to the city in instances when such landscape requirements have not been met prior to the issuance of a certificate of occupancy or certificate of completion.
1. Amount. The amount of surety shall be equal to or greater than one hundred ten percent (110%) of the total obligation whether it be for restoration, abatement, maintenance, guarantee, fees in lieu of land dedication, required improvements, landscaping, or any other purpose, based on the cost estimate of a duly licensed professional in the State of Florida.
2. Reduction. From time to time during progress of the work the developer may request a reduction in the dollar amount of the surety on the basis of work completed, but in every case the remaining funds shall be sufficient to cover one hundred ten percent (110%) of the cost to complete the obligation. In the case of surety for required improvements associated with subdivision development, five percent (5%) of the engineer's certified cost of required improvements shall be retained for one (1) year after acceptance of such improvements by the City Commission as a guarantee against defects in workmanship and material. Reduction of surety shall be approved by the City Manager without the necessity of City Commission approval. The final release of surety, when the surety is twenty thousand dollars ($20,000) or greater shall be approved by motion of the City Commission, with the written recommendation by the appropriate department and/or the City Engineer. Release of surety less than twenty thousand dollars ($20,000) shall be by the City Manager.
3. Default. In the event of default by the developer or failure of the developer to complete the obligations within prescribed time limits, the city, after thirty (30) days written notice to the developer, shall cash the surety to ensure satisfactory completion of the obligations.
C. Types of Surety.
1. Letters of Credit.
a. General. The face of the letter of credit must indicate the following:
(1) The letter of credit is "clean."
(2) The letter of credit is irrevocable and shall remain enforceable until released by a resolution adopted by the City Commission.
(3) The purpose or project for which the letter of credit is issued.
(4) The specific amount of the letter of credit, in U.S. dollars.
(5) The method of disbursement of draws against the letter of credit.
(6) The street address where draws against the letter of credit shall be made.
(7) The letter of credit is enforceable in a court of competent jurisdiction in Palm Beach County, Florida, and is to be interpreted by Florida Law.
(8) The name and street address of a designated agent within the State of Florida for acceptance of process.
b. Rating. At the time of issuance of the letter of credit, and at all times subsequent thereto and so long as the letter of credit is enforceable, the issuing financial institution must have a minimum "peer group" rating of fifty (50) in the latest Sheshunoff Quarterly Listing or a minimum rating of one hundred twenty-five (125) in the latest IDC Bank Financial Quarterly Listing. The city Finance Department shall periodically verify this information.
At any time during the life of the letter of credit, should the rating of the issuing financial institution fall below both of the minimum ratings indicated above, or should the financial institution merge with another financial institution or have a conservator or receiver appointed to supervise or control the operation of its business or become insolvent, the contractor/developer must, within sixty (60) calendar days after notification by the city:
(1) Replace the existing letter of credit with a replacement letter of credit from a financial institution with either of the minimum ratings as specified above; or
(2) At the city's option, the letter of credit may be replaced by other surety acceptable to the city in accordance with the city's existing surety policies.
c. Rating Noncompliance. Failure to comply with this provision may result in any or all of the following actions by the city:
(1) Suspension of the contractor/developer's right to pull building permits and schedule inspections;
(2) Issuance of a stop work order; and/or revocation of the land development permit.
These actions shall be in effect until a satisfactory replacement surety is accepted by the city.
d. Legal Sufficiency. No letter of credit shall be deemed accepted by the city until review and approval by the City Attorney's office for legal sufficiency, and by the Finance Department for the bank's rating.
e. Miscellaneous. Original letters of credit shall be maintained by the Finance Department and each shall be clearly identified as to the project or contract for which it is issued.
Letters of credit accepted prior to approval of this article shall continue through the current expiration date of the letter of credit provided however, renewal of these existing letters of credit shall be in accordance with this policy for accepting letters of credit.
The financial institution issuing any letter of credit must be authorized to do business in the State of Florida and shall show proof of same upon request of staff.
2. Cash, Certified Check, or Cashier's Check. Completion of the required improvements may be secured by cash deposited by the developer with the city or in an account subject to the control of the city in accordance with an agreement on such deposit or account. No interest shall be earned on such deposit or account. In lieu of a separate cash bond for each type of right-of-way permit that may be required for a given project, an applicant anticipating more than one (1) permit application may furnish one (1) cash bond in the amount of five thousand dollars ($5,000) to cover all right-of-way permits.
The applicant shall deposit the cash bond with the Finance Department, and such bond so deposited shall be kept in a separate account and shall stand as security for the full and complete performance by the applicant of the work covered by such permit, subject to the following provisions:
a. If any direct cost to the city of any loss, damage, work, claim or liability arises out of the breach by the applicant, or any contractor or representative of the applicant, in the performance of the applicant's obligations in connection with the work covered by such permit the applicant shall forfeit its bond.
b. Upon certification by the City Engineer of completion of the work covered by such permit, the balance of such cash bond shall be refunded by the City Clerk to the applicant upon request.
c. In the event that the City Engineer shall determine that additional bond in excess of five thousand dollars ($5,000) is required, the applicant shall furnish surety as noted herein in an amount equal to one hundred ten percent (110%) of the estimated value of the work. If a letter of credit is provided, it shall be dated on or before the date of the permit application and shall be for a term to expire one (1) year after receipt by the permittee of a certificate of final inspection.
3. Performance or Surety Bond. Completion of the required improvements may be secured by a performance or surety bond obtained from a company acceptable to the city in accordance with the city policy on performance bonds. It shall guarantee all work will be completed in full accordance with the approved land development permit.
4. Escrow (Agreement) Deposit. An executed escrow agreement between the developer, a bank approved by the city and the city as the third party beneficiary may be established for this surety. The escrow agreement shall require that release of the funds, or any part thereof, shall be subject to city approval. The agreement shall be in accordance with the city policy on such escrow agreements.
The Finance Department shall maintain an index of all surety, indicating at a minimum, the project name, the amount of surety, then names and contact information for all obligees of the surety, the date posted, the date reduced and the date released.
D. Acceptance and Maintenance of Required Improvements.
1. Workmanship. The developer shall execute and deliver to the city a cash bond or other acceptable surety in an amount determined by the City Engineer, guaranteeing the required improvements whether public or private, against defect in workmanship and material for one (1) year after acceptance of such improvements by the City Commission. Surety shall be as specified in this article and shall be delivered to the city simultaneously with the satisfactory delivery of the documents required in Section 3.D. above.
2. Dedication and Maintenance. The dedication of public space, parks, rights-of-way, easements or the like on the plat shall not constitute an acceptance of the dedication by the city. The acceptance of the dedication shall be indicated by a resolution of the City Commission adopted when all improvements meet or exceed the standards set forth by these Regulations. The City Engineer, upon satisfactory completion of all improvements, shall notify the City Commission that the developer has complied with all of the provisions of these Regulations and shall recommend acceptance of the dedications and, when applicable, the maintenance of the required improvements. Upon such recommendations the City Commission, by resolution, shall approve the development, the dedications on the plat and the maintenance responsibilities of the required improvements identified thereon.
3. Completion. When a plat has been recorded and the developer fails to complete the improvements required by these Regulations, the City Commission may, at it's option, complete the publicly or privately owned improvements or restore the site to its original condition under the guarantees provided by the developer. In such case, the City Commission shall direct the City Engineer to call upon the guarantees as outlined within this article.
(Ord. 10-025, passed 12-7-10)