(A) Improvement security.
(1) The subdivider shall also file with the aforesaid agreement, two improvement securities, each to be in an amount based upon the total estimated cost of the improvements as determined by the City Engineer. One improvement security shall secure faithful performance of the agreement and shall be in an amount equal to 100% of the estimated cost of the improvement. The second improvement security shall secure the obligations set forth in Cal. Gov't Code § 66499.3(b), for payment of the contractor, his subcontractors and to persons renting equipment or furnishing labor or materials to them for the improvements, and shall be in an amount equal to 50% of the total estimated cost of the improvements. Such improvement securities shall be in one of the following forms:
(a) A cash deposit or deposits.
(b) A bond or bonds issued by one or more duly authorized corporate sureties.
(c) A savings and loan certificate and/or share.
(d) An instrument or instruments of credit from an agency of the state, federal, or local government when any such agency provides at least 20% of the financing for the portion of the act or agreement requiring security, or from one or more financial institutions subject to regulations by the state or federal government pledging that the funds necessary to meet the performance are on deposit and guaranteed for payments and agreeing that the funds designated by the instrument shall become trust funds for the purposes set forth in the instrument.
(e) Any other form of improvement security authorized by the Subdivision Map Act, including the deposit, with a responsible escrow agent or trust company approved by the Council, of money or negotiable bonds of the kind approved for security deposits of public money.
(2) The required security shall be in an amount determined by the City Engineer as sufficient to cover the cost of the improvements, engineering, inspection, fees and incidental expenses. The required improvements security shall be approved by the City Engineer as to sufficiency and by the City Attorney as to form.
(B) Forfeiture of improvement security. In the event the subdivider shall fail to complete all improvement work in accordance with the provisions of this chapter and the city shall have to complete same, or if the subdivider shall fail to reimburse the city for the cost of inspection, engineering, fees and incidental expense, the city shall call on the surety for reimbursement, or shall appropriate from any cash deposits, savings and loan certificates and shares, or instruments of credit, funds for reimbursement. In any case, if the amount of the surety bond, savings and loan certificate and shares, instrument of credit, or cash deposit shall exceed all cost and expenses incurred by the city, it shall release the remainder of such bond, savings and loan certificate or share of cash deposit. If the amount of the surety bond, savings and loan certificate and share, instrument of credit, or cash deposit shall be less than the cost and expense incurred by the city, the subdivider shall be liable to the city for such difference.
(C) Release of improvement security. Improvement securities may be released or reduced, in whole or in part, only in the time and manner prescribed in Cal. Gov't Code § 66499.7, as it now exists or is hereafter amended, and only after certification by the City Engineer that the work covered thereby has been satisfactorily completed and upon approval of the Council.
(D) Guarantee and warranty security. In addition to the improvement securities specified in division (A) of this section, the subdivider shall file with the subdivision agreement an amount as specified in the agreement to guarantee and warrant subdivision improvements for a period of one year following the completion and acceptance thereof against any defective work or labor done, or defective materials furnished. The City Engineer is authorized to release the security upon expiration of the guarantee and warranty period if it is determined that subdivision improvements so guaranteed and warranted are satisfactory.
(`67 Code, § 11-5-7)
Statutory reference:
Improvement security, see Cal. Gov't Code §§ 66499 et seq.