(a) Corporate Surety Bond. This surety shall be furnished by an insurance company licensed to transact fidelity and surety insurance in West Virginia and will guarantee the full amount of the bond estimate. The ability of the insurance company to provide satisfactory performance guarantee will be assessed by City Council in accordance with criteria reported in the most recent edition of the Best’s Key Rating Guide (Best’s) and the most recent annual revision of the U.S. Department of Treasury Fiscal Service Circular 570 (the Treasury Circular). Performance Bonds will be accepted only from sureties listed in Best’s:
(1) With a rating of Level A or better; and
(2) In a financial size category of Class VIII, or higher, unless otherwise agreed by the Planning Commission, and such bonds shall be in amounts not exceeding:
A. Those limitations identified in the Treasury Circular; or
B. One and one-half percent (1.5%) of the minimum Adjusted Policyholders’ Surplus for the financial size category as listed in Best’s.
Such ratings and other qualifications must be maintained for the life of the Bond or the Bond must be replaced by adequate replacement surety at the request of City Council.
(b) Cash Escrow.
(1) An amount equal to the approved bond estimate in the form of a cashier’s check or certified check, accompanied by a W-9 or Substitute W-9 form, shall be submitted to the City Engineer/Planning Director or designee, to be deposited with the City Financial Officer, in an interest bearing account with full financial accountability provided by the City Financial Officer through a separate Performance Bond Fund.
(2) All cash escrows held shall be maintained by individual bond as to principal and accumulated interest but may be pooled for investment purposes with accrued interest allocated to each bond in accordance with City allocation policies. The City Financial Officer shall be entitled to retain a reasonable amount, not exceeding five percent (5%) of the interest accrued, to cover the cost of administering the account. Upon approval for release of the bond as provided herein, the City Financial Officer shall be authorized to release the cash escrow (principal plus accrued interest less allowable cost of administration) and disburse the funds.
(c) Letter of Credit. A letter of credit meeting the following minimum conditions will be accepted:
(1) The lending institution must be insured by the Federal Deposit Insurance Corporation (FDIC) and shall have offices and license to practice banking in West Virginia with a Sheshunoff National rating of at least thirty-five (35) and with total letter of credit exposure of the City at the lending institution limited to no more than fifty percent (50%) of the institution’s equity capital, unless otherwise agreed to by City Council. City Council may, accept a letter of credit from an institution whose rating is lower than thirty-five (35) provided that such rating shall be no less than thirty (30) and shall be maintained at or above such lower level until such letter of credit has been completely released. Such ratings and other qualifications must be maintained for the life of the letter of credit, as amended, or the letter of credit must be replaced by adequate replacement surety at the request of City Council.
(2) The expiration date in the letter of credit shall be at least six (6) months after the date by which the Performance Agreement must be performed. For example, a twelve (12) month Performance Agreement requires an eighteen (18) month Letter of Credit. This six (6) month requirement is in addition to the six (6) month automatic extension that is required below.
(3) The letter of credit shall contain the conditions of automatic renewal providing that the letter of credit will automatically be extended for additional periods of six (6) months unless the City Engineer/Planning Director or designee is notified in writing, by certified mail, with return receipt requested, at least ninety (90) days in advance of the present or future expiration date, that the issuing bank does not intend to extend such letter of credit.
(4) All extensions of time of the Performance Agreement completion date will be granted only upon corresponding extension of the letter of credit expiration date.
(5) Any new letter of credit or letter of credit amendment is subject to all the minimum requirements outlined in this subsection (c).
(d) Multiple Sureties. Where two (2) or more sureties are provided in conjunction with one Performance Agreement, the agreement shall identify and incorporate each surety separately.
(e) Additions to Previously Bonded Improvements. When Improvements to be constructed under a proposed Final Subdivision and/or Land Development Application are extensions of Improvements to be constructed under a previously approved Final Subdivision and/or Land Development Application for which a Performance Agreement and surety have already been accepted, the construction of such proposed extension Improvements may be guaranteed under the previously existing surety in accordance with the following conditions:
(1) The surety instrument must be capable of being modified, and any modifications must be accepted as satisfactory by City Council upon recommendation of the City Engineer/Planning Director or designee before they shall become effective.
(2) Modifications to the surety must be in writing and must indicate that such surety covers both the Improvements to be constructed under the proposed Final Subdivision and/or Land Development Application and the Improvements to be constructed under the previously approved Final Subdivision and/or Land Development Application.
(3) A separate Performance Agreement covering such proposed extension Improvements and referencing the modified surety must be submitted.
(4) The City Engineer/Planning Director or designee may recommend an extension of the completion date under the Performance Agreement covering the previously approved Final Subdivision and/or Land Development Application in conjunction with the approval of the proposed Final Subdivision and/or Land Development Application, if requested by the owner/Developer, in order to establish a common date of completion under the Performance Agreements secured by the same surety; provided that, such extension of completion date shall not be for more than one (1) year and provided that the appropriate bond extension fee shall have been paid if such extension is for more than five (5) months.
(5) Such separate Performance Agreement and modified surety shall not be approved or accepted until the bonded Improvements have been inspected and found satisfactory and City Council has determined, in writing, that the amount of such surety, as modified, is adequate to guarantee completion of the Improvements to be constructed under both the previously approved Final Subdivision and/or Land Development Application and the proposed Final Subdivision and/or Land Development Application.
(f) Due to the varying ease or difficulty of collection and reliability of the various types of security, the City deems certain types of security as being more or less preferred for the protection of the public. Cash is deemed to be the most preferred security because of the ease of collection and immediate availability. Letters of credit are less preferred than cash, and surety bonds are less preferred than letters of credit. Once a bond, letter of credit or cash security has been approved and accepted by the City, only a more preferred or equally preferred form of security may thereafter be substituted in place of the current form of security.
(Ord. 2022-13. Passed 11-10-22.)