(A) Requirement of bond or letter of credit. Prior to issuing a permit where the work under the permit will require restoration of the public rights-of-way, (as determined by the town), the town may require a construction bond or a letter of credit to secure the restoration of the public rights-of-way. The permitee shave have the option to either provide a bond or a letter of credit. The bond or letter of credit shall secure both payment and performance of permit requirements. The bond or letter of credit shall be maintained and in effect through the time set in the permit and for 24 months following the completion of construction within the public rights-of-way. The bond or letter of credit shall be 100% of the amount of restoration cost to restore the right-of-way to a condition equivalent to or better than prior to the commencement of work within the public right-of-way. In the event that a letter of credit is utilized, the registrant shall obtain and continuously maintain an unexpired, irrevocable letter of credit, which shall at all times be in the possession of the town during the same term as would have been required for the bond. The form and contents of such bond or letter of credit shall be acceptable to the Mayor and the Town Attorney. The letter of credit shall be released only upon expiration of the aforementioned time frame or upon the replacement of the letter of credit by a successor registrant. The town may elect not to require a bond where the town determines it is not necessary to secure restoration considering by way of example and not by way of limitation the ability of the provider to cover any claims without the need for additional security.
(B) Rights reserved in addition to other rights. The rights reserved to the town under this section are in addition to all other rights of the town, whether reserved in this chapter, or authorized by other law, or at law or in equity, and no action, proceeding or exercise of a right with respect to the construction bond or letter of credit will affect any other right the town may have.
(C) Conditions. The bond or letter of credit shall be issued upon the following conditions:
(1) Twenty-four months after the completion of the restoration in public rights-of-way in accordance with the bond or the letter of credit, the registrant may eliminate the bond or letter of credit. However, the town may subsequently require a new bond or letter of credit for any subsequent work in the public rights-of-way.
(2) The construction bond shall be issued by a surety having a rating reasonably acceptable to the town; shall be subject to the approval of the Town Engineer, Town Attorney, or their respective designees; and shall provide that: “For 24 months after issuance of this bond [or letter of credit], this bond [or letter of credit] may not be canceled, or allowed to lapse, until 60 days after receipt by the town, by certified mail, return receipt requested, of a written notice from the issuer of the bond [or letter of credit] of intent to cancel or not to renew.”
(3) The bond shall be issued by a surety, located within this state, and licensed and authorized by the state to do business as a surety in the state. The irrevocable letter of credit shall be issued by a bank or savings and loan association acceptable to the town (not on a lender “watch list” or other listing suggesting financial infirmity of the lending institution), located in this state, and authorized to do business in this state by either the State Comptroller/Chief Financial Officer or the United States government. The letter of credit shall name the town as the beneficiary.
(4) There shall be recoverable by the town jointly and severally from the principal and surety or the financial institution that has issued the letter of credit, any and all fines and liquidated damages due and owing to the town and any and all damages, losses, costs, fees, attorney fees and expenses suffered or incurred by the town resulting from the failure of the registrant, its or their contractors, subcontractors, materialmen, laborers, or agents to: faithfully comply with the provisions of this code or this chapter; comply with all orders, permits and directives of any town agency or body having jurisdiction over its acts or defaults; pay any claims, liens, fees, or taxes due and owing to the town which arise directly or indirectly by reason of the construction, operation, maintenance, removal, activation, deactivation, abandonment, or repair of the public right-of-way or a communications facilities. Such losses, costs and expenses shall include but not be limited to attorney’s and paralegal fees and other associated expenses.
(5) The total amount of the bond or letter of credit shall be forfeited as a liquidated damage paid to the town in the event:
(a) The registrant abandons portions of the communications facilities within the public right-of-way and without approval of the town or fails to complete construction of the communications facilities within the public right-of-way or fails to properly, completely, and timely restore the public right-of-way, or any part thereof;
(b) The registrant sells, assigns, or otherwise conveys the communications facilities without the issuance of a permit to the successor person; or
(c) The permit is terminated or otherwise revoked by reason of the default of the registrant.
(D) Reduction of bond or letter of credit. Upon written application by the registrant, the town may, at its sole option, permit the amount of the bond or letter of credit to be reduced or waived for the duration of the term of such letter of credit or bond or other periods of time, when it is determined by the Town Engineer to be in the public interest. Upon written application by the registrant, the town may, at its sole option, permit the terms of the requirements of the performance bond/letter of credit to be altered or waived for the remaining portions of the term of the permit or other periods of time, when it is determined by the town to be in the public interest to alter or waive the terms of the bond or letter of credit. For example, but not limited to, where such security is not necessary due to the amount of restoration that needs to be done or the ability of the registrant to cover any claims without the need for additional security.
(E) Use of bond or letter of credit. Prior to drawing upon the letter of credit or the bond for the purposes described in this section, the town shall notify the registrant in writing that payment is due, and the registrant shall have not more than 30 days from the receipt of such written notice to make a full and complete payment. If the registrant does not make the payment within 30 days or demonstrate reason acceptable to the town why such action should not be taken, the town may withdraw the amount thereof, with interest and penalties, from the letter of credit or the bond. Within three days of a withdrawal from the letter of credit or bond, the town shall send to the registrant, by certified mail, return receipt requested, written notification of the amount, date and purpose of such withdrawal.
(F) Replenishment of letter of credit or performance bond. No later than 30 days, after mailing to the registrant by certified mail notification of a withdrawal pursuant to division (E), the registrant shall replenish the letter of credit and/or bond in an amount equal to the amount so withdrawn. Failure to make timely replenishment of such amount to the letter of credit and/or bond shall constitute a failure of the registrant to faithfully comply with the provisions of this chapter and the registrant.
(G) Non-renewal, alteration, or cancellation of letter of credit or performance bond. The bond and letter of credit required herein shall require 30 days written notice of any non-renewal, alteration or cancellation to both the town and the registrant. The registrant shall, in the event of any such cancellation, alteration, or non-renewal notice, obtain, pay all premiums for, and file with the town, written evidence of the issuance of a replacement bond, policies, or letter of credit within 30 days following receipt by the town or the registrant of any notice of cancellation, alteration, or non-renewal.
(H) Inflation. To offset the effects of inflation the amount of the bond or letter of credit provided for herein, the same shall be subject to a reasonable increase at the end of every three-year period thereof, applicable to the next three-year period, at the sole discretion of the town.
(I) Default. The bond and letter of credit provided pursuant to this section shall become the property of the town in the event that the permit is canceled or terminated by reason of the default of the registrant.
(J) Right to require replacement of bonds or letter of credit. If the town becomes aware of the financial condition of any bonding or financial institution issuing a performance bond or letter of credit as required herein and the financial condition is deemed by the town to jeopardize the collateral posted with the town, the town may, at any time, require that any such bond or letter of credit be replaced with such other bond or letter of credit consistent with the requirements set forth in this section.
(K) Blanket bond. The registrant shall have the additional choice of providing the town with a blanket bond, in which case a construction bond or letter of credit may only be required for any work to the extent the cost of restoration exceeds the amount of the blanket bond.
(Ord. 2010-01, passed 1-26-2010)