(A) Subsequent to execution of the development agreement, but prior to approval of a signed final plat for recording, the subdivider shall provide the city with a financial guarantee in the form of a letter of credit from a bank, cash escrow or other form of security acceptable to the city. A letter of credit or cash escrow shall be in an amount as determined by the City Engineer.
(B) It shall be the responsibility of the subdivider to ensure that a submitted financial guarantee shall continue in full force and effect until the City Engineer has approved and the City Council has accepted all of the required improvements. The City Engineer thereby is authorized to release the guarantee or reduce the amount of the guarantee as provided in § 153.034, Approval and Acceptance of Basic Improvements.
(C) When any instrument submitted as a financial guarantee contains provision for an expiration date, after which the instrument may not be drawn upon, notwithstanding the status of the development agreement or of the required improvements, the expiration date shall be December 31 or the closest business day in the case of weekends and legal holidays.
(1) Further, the financial guarantee shall be deemed automatically extended without change for six months from the expiration date unless 60 days prior to the expiration date the financial institution notifies the city in writing by certified mail that it does not elect to renew the financial guarantee for an additional period.
(2) If the instrument is not to be renewed and has not been released by the City Engineer, another acceptable financial guarantee in the appropriate amount shall be submitted at least 60 days prior to the expiration.
(3) The term of any extension shall be approved by the City Engineer and subject to the requirements of this section.
(4) Upon receipt of an acceptable substitute financial guarantee, the City Engineer may release the original guarantee.
(D) Forms of financial guarantees.
(1) Letter of credit. If the subdivider posts a letter of credit as a guarantee, the credit shall:
(a) Be irrevocable;
(b) Be from a bank approved by the city;
(c) Be in a form approved by the city;
(d) Be for a term sufficient to cover the completion, maintenance and warranty periods identified in this section; and
(e) Require only that the city present the credit with a sight draft and an affidavit signed by the City Administrator or the City Administrator's designee attesting to the city's right to draw funds under the credit.
(2) Cash escrow. If the subdivider posts a cash escrow as a guarantee, the escrow instructions approved by the city shall provide that:
(a) The subdivider will have no right to a return of any of the funds except as provided in § 153.034, Approval and Acceptance of Basic Improvements; and
(b) The escrow agent shall have a legal duty to deliver the funds to the city whenever the City Administrator presents an affidavit to the agent attesting to the city's right to receive funds whether or not the subdivider protests that right.
(3) Cash. A cash deposit made with the city finance department may be used as part of the required financial guarantee in those instances where the subdivider elects to have the city install some or all of the public improvements.
(E) Amounts of financial guarantees. The subdivider shall submit either a financial guarantee in one of the forms listed in division (D), for an amount determined by the City Engineer in accordance with the following:
(1) Subdivider installed improvements. For basic improvements to be installed by the subdivider, the required financial guarantee shall include all of the following fixed or estimated costs:
(a) Costs of the basic improvements identified in division (B)(1);
(b) Engineering, to include subdivider's design, construction management, surveying, inspection and drafting;
(c) Twenty-five percent contingency or add-on to the costs in divisions (E)(1)(a) and (E)(1)(b) above; and
(d) Estimated cost of energy for street lights for the first two years of operation.
(2) City installed improvements. For basic improvements to be installed by the city, the required financial guarantee shall be the sum of the following fixed or estimated costs:
(a) A cash deposit in an amount equal to 25% of the estimated cost of installing the specified public improvements as determined by the City Engineer, which costs would include charges incurred by the city for legal, planning, engineering and administration associated with the installation project(s). The deposit shall be applied to the costs of such installations, with the remainder of the costs specially assessed, in the manner provided by Minnesota State Statutes, over a period of five years together with interest thereon.
(b) In lieu of the cash deposit, the subdivider may elect to have the city provide 100% of the cost of such installations, which costs shall be assessed over a period of five years. In such event, the subdivider shall post a letter of credit for 60% of the cost of assessments, which letter of credit shall be released after the subdivider pays the principal and interest on said assessments for two years and which letter of credit shall be separate from any other letters of credit associated with the subdivider's project.
(F) Other cash requirements. The subdivider will be responsible for additional cash requirements which must be furnished to the city at the time of final plat approval. The subdivider shall not proceed with any improvements until these cash requirements have been paid to the city. The cash requirements may include:
(2) Utility charges and fees. This may include sewer availability charges (SAC), water availability charges (WAC) and trunk fees;
(3) Special assessments including interest;
(4) The city's legal, engineering administration and construction observation fees;
(5) Costs associated with traffic control and street signs to be installed in the plat by the city;
(6) Map upgrade fee; and
(7) Other charges or fees as determined by the city.
(Ord. 879, passed 10-28-2020)