(a) One or more of the following types of financial guarantees shall be provided by the developer to the city to guarantee the developer's obligations under the CFA:
(1) Development bond. A development bond in the amount of 100% of the total amount of the developer's share of the construction costs in the CFA. The development bond shall be executed by the developer and guarantee that the developer will construct the community facilities and pay all contractors, material suppliers, and equipment suppliers for the project. The development bond must meet the requirements of Tex. Local Government Code Chapter 2253, and the Texas Insurance Code. The development bond may be required to cover the city's participation in the CFA if the construction contracts are not publicly bid;
(2) Cash deposit. A cash deposit with the city in the amount of 125% of the total amount of the developer's share of construction costs in the CFA. The additional 25% above the developer's share of the construction costs shall cover charge orders to the CFA. The city will not pay any interest on cash deposits made with the city;
(3) Letter of credit. A letter of credit in the amount of 125% of the total amount of the developer's share of the construction costs in the CFA. The additional 25% above the developer's share of the construction costs shall cover change orders to the CFA. The expiration date of a letter of credit shall be no less than 90 days after the term of the CFA expires;
(4) Escrow agreement. An escrow agreement between the city, the developer and a financial institution or escrow agent in the amount of 125% of the developer's share of the construction costs in the CFA. The additional 25% above the developer's share of the construction costs shall cover change orders to the community facilities agreement;
(5) Completion agreement. The completion agreement provides that the plat will not be filed until the community facilities are accepted by the city and the developer has submitted proof to the city that the developer has paid all contractors and material suppliers. Completion agreements will not be allowed:
a. For community facilities being constructed outside the boundaries of a plat;
b. For community facilities constructed inside the boundaries of a plat, when the plat is only conveying right-of-way or an easement;
c. When there is city participation in a CFA; or
d. for a primary project if there is a concurrent CFA; and
(6) Statement of appropriated funds. At the discretion of the city, written proof from a governmental entity that sufficient funding for the costs associated with the community facilities has been approved, appropriated, and set aside may be used as a financial guarantee. Only a governmental entity shall be allowed to use a statement of appropriated funds as a financial guarantee for a CFA.
(b) All financial guarantees must be on forms prescribed by or acceptable to the city.
(Ord. 23656-05-2019, § 1, passed 5-7-2019, eff. 6-1-2019)