(a) Upon approval of the preliminary plat by the City Council, the subdivider may proceed with the preparation of the final plat, and the installation of or arrangement for required improvements in accordance with the approved preliminary plat and the requirements of this chapter. Prior to approval of a final plat, the subdivider shall have installed the improvements specified in this chapter or guaranteed their installation as provided herein. No final plat will be accepted for review by the Planning Board or City Council unless accompanied by written notice by the City Manager and/or City Engineer acknowledging compliance with the improvement and guarantee standards of this chapter. The final plat shall constitute only that portion of the preliminary plat which the subdivider proposes to record and develop at that time; such portion shall conform to all requirements of this chapter.
(b) Type - In lieu of requiring the completion, installation and dedication of all improvements prior to final plat approval, the city may enter into an agreement with the subdivider whereby the subdivider shall agree to complete all required improvements. The type of performance guarantee shall be at the election of the developer. Once said agreement is signed by both parties and the security required herein is provided, the final plat may be approved by City Council, if all other requirements of this chapter are met. To secure this agreement, the subdivider shall provide, subject to the approval of City Council, either one, or a combination of the following guarantees not exceeding 125% of the entire cost as provided herein (G.S. 160D-804.1):
(1) Surety performance bond(s). The subdivider shall obtain a performance bond(s) from a surety bonding company authorized to do business in North Carolina. The bonds shall be payable to the city and shall be in an amount equal to 125% of the entire cost, as estimated by the subdivider and approved by City Council, of installing all required improvements. The duration of the bond(s) shall be until such time as the improvements are accepted by City Council.
(2) Cash or equivalent security. The subdivider shall deposit cash, an irrevocable letter of credit or other instrument readily convertible into cash at face value, either with the city or in escrow with a financial institution designated as an official depository of the city. The use of any instrument other than cash shall be subject to the approval of City Council. The amount of deposit shall be equal to 125% of the cost, as estimated by the subdivider and approved by City Council, of installing all required improvements.
If cash or other instrument is deposited in escrow with a financial institution as provided above, then the subdivider shall file with City Council an agreement between the financial institution and himself guaranteeing the following:
a. That the escrow account shall be held in trust until released by the City Council and may not be used or pledged by the subdivider in any other matter during the term of the escrow; and
b. That in case of a failure on the part of the subdivider to complete said improvements, the financial institution shall, upon notification by the City Council, and submission by City Council to the financial institution of an engineer’s estimate of the amount needed to complete the improvements, immediately either pay to the city the funds estimated to complete the improvements, up to the full balance of the escrow account, or deliver to the city any other instruments fully endorsed or otherwise made payable in full to the city.
(3) Other form of guarantee that provides equivalent security to a surety bond or letter of credit.
(c) Duration - The duration of the performance guarantee shall initially be one year, unless the developer determines that the scope of work for the required improvements necessitates a longer duration. In the case of a bonded obligation, the completion date shall be set one year from the date the bond is issued, unless the developer determines that the scope of work for the required improvements necessitates a longer duration.
(d) Upon default, meaning failure on the part of the subdivider to complete the required improvements in a timely manner as spelled out in the performance bond or escrow agreement, then the surety, or the financial institution holding the escrow account shall, if requested by the City Council, pay all or any portion of the bond or escrow fund to the city up to the amount needed to complete the improvements based on an engineering estimate. Upon payment, the City Council, in its discretion, may expend such portion of said funds as it deems necessary to complete all or any portion of the required improvements. The city shall return to the subdivider any funds not spent in completing the improvements.
(e) Release - The City Council may release a portion of any security posted as the improvements are completed. If the City Council approves said improvements, then it shall immediately release any security posted. The city shall return letters of credit or escrowed funds upon completion of the required improvements to its specifications or upon acceptance of the required improvements, if the required improvements are subject to city acceptance. When required improvements that are secured by a bond are completed to the specifications of the city, or are accepted by the city, if subject to its acceptance, upon request by the developer, the city shall timely provide written acknowledgment that the required improvements have been completed.
(f) The City Council shall require a bond guaranteeing utility taps, curbs, gutters, street pavement, sidewalks, drainage facilities, water and sewer lines, and other improvements against defects for one year. The bond shall be determined by the city manager or consulting engineer and shall be in cash or made by a surety company authorized to do business in North Carolina.
(g) The City Council shall require the subdivider to submit a letter to the City Clerk in which he agrees to maintain all improvements and any ditch which has been dug in connection with the installation of such improvements. The letter shall be binding to the subdivider for a period of one year following acceptance of the improvements by the city.
(h) Amount. - The amount of the performance guarantee shall not exceed one hundred twenty-five percent (125%) of the reasonably estimated cost of completion at the time the performance guarantee is issued. The city may determine the amount of the performance guarantee or use a cost estimate determined by the developer. The reasonably estimated cost of completion shall include one hundred percent (100%) of the costs for labor and materials necessary for completion of the required improvements. Where applicable, the costs shall be based on unit pricing. The additional twenty-five percent (25%) allowed under this subdivision includes inflation and all costs of administration regardless of how such fees or charges are denominated. The amount of any extension of any performance guarantee shall be determined according to the procedures for determining the initial guarantee and shall not exceed one hundred twenty-five percent (125%) of the reasonably estimated cost of completion of the remaining incomplete improvements still outstanding at the time the extension is obtained.
(i) Timing. - The city, at its discretion, may require the performance guarantee to be posted either at the time the plat is recorded or at a time subsequent to plat recordation.
(j) Coverage. - The performance guarantee shall only be used for completion of the required improvements and not for repairs or maintenance after completion.
(k) Legal responsibilities. - No person shall have or may claim any rights under or to any performance guarantee provided pursuant to this subsection or in the proceeds of any such performance guarantee other than the following:
(1) The city to whom the performance guarantee is provided.
(2) The developer at whose request or for whose benefit the performance guarantee is given.
(3) The person or entity issuing or providing the performance guarantee at the request of or for the benefit of the developer.
(l) Multiple guarantees. - The developer shall have the option to post one type of a performance guarantee as provided for in subdivision (b) of this section, in lieu of multiple bonds, letters of credit, or other equivalent security, for all development matters related to the same project requiring performance guarantees.
(m) Exclusion. - Performance guarantees associated with erosion control and stormwater control measures are not subject to the provisions of this section.