(A) The financial guarantee required as part of the subdivision agreement shall be 1 of the following:
(1) A cash escrow deposit may be made with the City Treasurer in a sum equal to 125% of the total costs, as estimated by the City Engineer, of all the improvements to be furnished and installed by the subdivider pursuant to the development agreement (major subdivision). The total costs shall include costs of inspection. The city shall be entitled to reimburse itself out of the deposit for any cost or expense incurred by the city for completion of the work in case of default by the subdivider or for any damage sustained on account of any breach thereof;
(2) The subdivider may furnish a performance bond and payment bond with corporate surety in a penal sum equal to 125% of the total cost, as estimated by the City Engineer, of all improvements to be furnished and installed by the subdivider pursuant to the subdivision agreement. The total costs shall include costs for inspection by the City Engineer. The bond shall be approved as to form by the City Attorney and filed with the city; or
(3) The subdivider may deposit an irrevocable letter of credit from a bank or other reputable institution or individual subject to the approval of the city. The letter of credit shall certify the following:
(a) The creditor does guarantee funds in an amount equal to 125% of the total cost, as estimated by the City Engineer, for completing all required improvements;
(b) In the case of failure on the part of the subdivider to complete the specified improvements within the required time period, the creditor shall pay to the city immediately, and without further action, such funds as are necessary to finance the completion of those improvements up to the limit of credit stated in the letter; and
(c) This letter of credit may not be withdrawn or reduced in amount until released by the city.
(B) In the event the city elects to become a party to the development agreement (major subdivision), any financial guarantee shall run to the benefit of the city.
(Prior Code, Ch. 401 § 1201.01)