(A) Applicability. If an adequate public or non-public water system or sewerage facility is not available from a retail public utility, or are not constructed by the subdivider, to serve lots intended for residential purposes of five acres or less at the time final plat approval is sought, then the city shall require the owner of the subdivided tract to execute an agreement with the city in substantially the form attached to the ordinance codified herein (in App. 2A) secured by a bond, irrevocable letter of credit or other alternative financial guarantee such as a cash deposit which meet the requirements set forth below.
(B) Bonds. A bond that is submitted in compliance with division (A) above shall meet the following requirements.
(1) The bond or financial guarantee shall be payable to the Mayor of the city, in his or her official capacity, or the Mayor’s successor in office.
(2) The bond or financial guarantee shall be in an amount determined by the city to be adequate to ensure proper construction or installation of the public or non-public water facilities, and wastewater facilities to service the subdivision, including reasonable contingencies, but in no event shall the amount of the bond be less than the total amount needed to serve the subdivision as established by the engineer who certifies the plat.
(3) The bond shall be executed with sureties as may be approved by the city. The city shall establish criteria for acceptability of the surety companies issuing bonds that include, but are not limited to:
(a) Registration with the Secretary of State and be authorized to do business in state;
(b) Authorization to issue bonds in the amount required by the city; and
(c) Rating of at least “B” from Best’s Key Rating Guide; or if the surety company does not have any such rating due to the length of time it has been a surety company, the surety company must demonstrate eligibility to participate in the surety bond guarantee program of the Small Business Administration and must be an approved surety company listed in the current United States Department of Treasury Circular 570. Such bonds shall meet the criteria contained, in the rules and regulations promulgated by the United States Department of Treasury.
(4) The bond shall be conditioned upon construction or installation of water and wastewater facilities meeting the criteria established by §§ 155.20 through 155.26 of this chapter and upon construction of facilities within the time stated on the plat, or on the document attached to the plat for the subdivision, or within any extension of time granted by the city.
(C) Letter of credit. A letter of credit that is submitted in compliance with division (A) above shall meet the following requirements.
(1) Any letter of credit submitted as a financial guarantee for combined amounts greater than $10,000 and less than $250,000 must be from financial institutions which meet the following qualifications:
(a) Bank qualifications:
1. Must be federally insured;
2. Sheshunoff rating must be “10” or better and primary capital must be at least 6% of total assets; and
3. Total assets must be at least $25 million.
(b) Savings and loan association qualifications:
1. Must be federally insured;
2. Tangible capital must be at least 1.5% of total assets and total assets must be greater than $25 million or tangible capital must be at least 3% of total assets if total assets are less than $25 million; and
3. Sheshunoff rating must be “30” or better.
(c) Other financial institutions qualifications:
1. The letter of credit must be 110% collateralized by an investment instrument that would meet the qualifications for a city investment; and
2. The investment instrument must be registered in the city’s name and the city must receive safekeeping receipts for all collateral before the letter of credit is accepted.
(2) Any letter of credit submitted as a financial guarantee for combined amounts greater than $250,000 must be from financial institutions which meet the following qualifications:
(a) Bank qualifications:
1. Must be federally insured;
2. Sheshunoff rating must be “30” or better and primary capital must be at least 7% of total assets; and
3. Total assets must be at least $75 million.
(b) Savings and loan association qualifications:
1. Must be federally insured;
2. Tangible capital must be at least 3.0% of total assets and total assets must be greater than $75 million, or tangible capital must be at least 5% of total assets if total assets are less than $75 million; and
3. Sheshunoff rating must be “30” or better.
(c) Other financial institutions qualifications:
1. The letter of credit must be 110% collateralized by an investment instrument that would meet the qualifications for a city investment; and
2. The investment instrument must be registered in the city’s name and the city must receive safekeeping receipts for all collateral before the letter of credit is accepted.
(3) The letter of credit shall list as sole beneficiary the Mayor of the city, in his or her official capacity, or the Mayor’s successor in office, and must be approved by the city. The form of the letter of credit shall be modeled after the form attached to the ordinance codified herein (in Appendix 2B).
(4) The letter of credit shall be conditioned upon installation or construction of water and wastewater facilities meeting the criteria established under §§ 155.20 through 155.26 of this chapter and upon construction of facilities within the time stated or the plat, or on the document attached to the plat for the subdivision, or within any extension of time granted by the city.
(D) Financial guarantee. The city will determine the amount of the bond, letter of credit or cash deposit required to ensure proper construction of adequate water and wastewater facilities in the subdivision.
(E) Alternative to city accepting a financial guarantee. The city may approve a final plat under this section without receiving a financial guarantee in the name of the city if:
(1) The property being subdivided lies wholly within the extraterritoral jurisdiction of a municipality; and
(2) The city has executed an interlocal agreement with the county that imposes the obligation on the county to:
(a) Accept the bonds, letters of credit or other financial guarantees, that meet the requirements of this section;
(b) Execute the construction agreement with the subdivides; and
(c) Assume the obligations to enforce the terms of the financial guarantee under the conditions set forth therein and complete construction of the facilities identified in the construction agreement.
(Ord. 2001-05, passed - -2001; Ord. 2001-07, passed 12-10-2001)