A. Required. Any improvement agreement. contract, or act required or authorized by the subdivision map act, for which security is required, shall be secured in compliance with state law (Government Code Section 66499).
B. General.
1. Improvement Agreement. The subdivider shall enter into a contract with the city, acceptable to the city attorney, to make, install, and complete within the time fixed, but in no case more than two years from the date of execution of the contract, all improvements and land alteration(s) in compliance with the plans approved by the city.
2. Security Arrangements.
a. The subdivider shall file security to guarantee completion of public and private improvements in compliance with the improvement agreement as follows:
1) One hundred (100) percent of the total estimated cost of all required improvements including bonding requirements for grading as outlined in Section 16.108.070 (Erosion Control and Grading) and preservation/replacement of mature trees as outlined in Chapter 16.42 (Tree Preservation), conditioned upon the faithful performance of the act or agreement:
2) Fifty (50) percent of the total estimated cost of all required improvements, to secure payment to the contractor, subcontractor(s), and others furnishing labor, materials, or equipment for grading and/or other improvements;
3) Ten percent of the total estimated cost of the improvement or act to be performed to guarantee or warranty the work for a period of one year following completion or acceptance thereof against any defective work or labor done or defective materials furnished;
4) A monumentation security in an amount proposed by the subdivider's engineer to cover the cost of placing lot corners and other related monuments;
5) If the required subdivision improvements are financed and installed in compliance with special assessment proceedings, upon the furnishing by the contractor of the faithful performance and labor and material security required by the special assessment act being used, the city engineer may reduce the improvement security of the subdivider by an amount corresponding to the amount of the security furnished by the contractor; and
6) The subdivider may satisfy the requirement for security of certain improvements by providing proof that the required security has been posted with another public agency subject to the approval of the city engineer.
b. Security may be of the following types subject to the approval of the city engineer and city attorney as to form:
1) Bonds. All bonds shall be executed by a surety company authorized to transact business as a surety, and have an agent for service in the state, together with an "A" policy holder's rating and a financial rating of at least "V" in compliance with the current "Best's" ratings:
2) Cash Deposits. in lieu of the faithful performance and labor and material bonds, the subdivider may submit cash deposits under the following conditions:
a) Disbursements from cash deposits shall be made in compliance with a separate agreement between the subdivider and the city:
b) A bookkeeping fee of one percent of the total amount deposited with the city for each cash deposit shall be submitted with each security; and
c) Disbursements from a cash deposit shall not be allowed unless and until authorized in writing by the city engineer.
3) Letter of Credit. In lieu of faithful performance and labor and material bonds or cash deposits, the subdivider may submit a letter of credit subject to the California Commercial Code. The let-ter of credit shall be issued by a financial institution organized and doing business in, and subject to regulation by, the state. The letter shall be in a form and content as approved by the city attorney, and shall pledge that the funds necessary to meet the performance are on deposit and guaranteed for payment and agree that the funds designated by the instrument shall become trust funds for the purposes identified in the instrument.
c. The city clerk shall not endorse or sign its certificate contained on the final map unless and until an appropriate improvement security, as specified above, has been posted with the city;
d. The requirements outlined above are also applicable to a parcel map for which the installation of public improvements or grading is a condition of approval: and
e. Final or parcel maps shall not be presented to the council for acceptance until the requirements of this section have been met and until all charges and fees established by the council, and pertaining to the subject property, have been paid.
C. Improvement Agreement Not Required With Special Permit.
1. Special Permit. If the subdivider desires to do certain work before entering into an agreement with the city to install and complete all required subdivision improvements and alteration work, the subdivider may apply to the city engineer for a special permit to do so.
2. Application. The application shall be accompanied by detailed plans, clearly describing the work which is proposed for completion.
3. City Engineer's Action. The city engineer may issue a special permit to the subdivider upon submittal of an application, provided security has been posted in an amount which would ensure the rehabilitation of the land, including grading and planting. in the event the final subdivision map is not recorded.
4. Security. The security and contractor's qualifications shall be in compliance with this section.
5. Improvement Agreement Not Required . When the special permit is for all work required in connection with the subdivision and the work has been completed, inspected, and approved by the city engineer, an improvement agreement shall not be required.
D. Security Administration.
1. Letter of Credit. In the case of a letter of credit, the issuing bank or association shall receive a copy of the notice of completion.
2. Progress Payments. Progress payments may be made to the subdivider from any deposit money or letter of credit which the subdivider may have made in-lieu of providing a security bond. Progress payment(s) shall not be made for more than ninety (90) percent of the value of any installment of work and the aggregate amount paid is not in excess of fifty (50) percent of the total amount posted as improvement security. Progress payment(s) from cash deposits shall not be made except upon certification by the city engineer, and the subdivider, that all required work has been completed.
3. Release, Retention, and Reduction of Security. The security may be released, in whole or in part, in the following manner:
a. Security given for faithful performance or any act or agreement shall be released upon the perfonnance of the act and final completion, and acceptance of the required work by the city engineer. A maximum of three partial releases of the security may be granted by written order of the city engineer upon determination by the city engineer that the work has been properly completed and that the remaining amount of security is adequate to guarantee the completion of the remaining improvements. Requests for partial releases, identifying in detail the amount of work completed, shall be made in writing to the city engineer.
b. Security guaranteeing the payment to the contractor, the subcontractors, and to persons furnishing labor, materials, or equipment may, after passage of the time within which claims of lien are required to be recorded in compliance with state law (Civil Code Article 3 (commencing with Section 3114) of Chapter 2 of Title 15 of Part 4 of Division 3), and after acceptance of the work, be reduced to an amount not less than the total claimed by all claimants for whom claims of lien have been recorded and notice thereof given in writing to the board. If no claims of lien have been recorded, the security may be released in full. Requests for release shall be made to the city engineer who may, before the release of any security under this subparagraph, require the subdivider to provide a title report or other form of evidence sufficient to show what claims of lien, if any, are of record on the subdivision.
c. The release of the security shall not apply to any required guarantee and warranty period, nor to costs and reasonable expenses and fees, including reasonable attorneys' fees. In any case where the performance of the obligation for which the security is required is subject to the approval of another agency, the security shall not be released until the obligation is performed to the satisfaction of the other agency. The city shall notify the servicing agency in writing and the agency shall have two months after completion of the performance of the obligation to register its satisfaction or dissatisfaction. If at the end of that period it has not registered its satisfaction or dissatisfaction, it shall be conclusively deemed that the performance of the obligation was done to its satisfaction.
d. The liability upon the security given for the faithful performance of any act or agreement shall be limited to:
1) The performance of the work covered by the agreement between the subdivider and the city for the performance of the required act;
2) The performance of any changes or alterations in the work, provided that all changes or alterations do not exceed ten (10) percent of the original estimated cost of the improvement;
3) The guarantee and warranty of the work for a period of one year following completion and acceptance thereof against any defective work or labor done or defective materials furnished in the performance of the agreement or the performance of the act; and
4) Costs and reasonable expenses and fees, including reasonable attorneys' fees.
e. If the estimated cost of completing the street/drainage improvements, water system improvements, sewer system improvements, or the setting of the monuments is less than five thousand dollars ($5,000.00), a cash bond shall be required for that specific improvement.
f. The city engineer is authorized to release or reduce the security in compliance with this Section.
4. Forfeiture of Surety. In the event that the subdivider fails to complete all improvement work in compliance with the provisions of this section and the improvement agreement, and the city has to complete the work, the city shall call on the security for funds necessary to complete the improvement work as reimbursement or shall appropriate from any cash deposit funds for reimbursement. If the amount of any surety is less than the cost and expense incurred by the city, the subdivider shall be liable to the city for the difference. Cash remaining in the possession of the city. after completion of the improvement work, shall be returned to the originator minus normal administrative costs.
E. Lien Contract for Improvement for Subdivisions of Four or Fewer Parcels.
1. In lieu of constructing or agreeing under Section 16.108.040 to construct any required improvements, the city engineer may require the subdivider to enter into an agreement with the city to construct the improvements in the future and require the subdivider to grant the city a lien on the land being divided, thereby securing completion of the future improvements.
2. The lien granted in compliance with subparagraph (E}(1) above may be used to secure future improvements in easements, rights-of-way, irrevocable offers of dedication, or any other improvements or conditions of the parcel map.
3. The city engineer is authorized to sign the agreement on behalf of the city.
(Ord. 182 § 2 (part), 1997)