§ 87.07.040  Improvement Agreements, Lien Agreements and Securities.
   (a)   Improvement Agreements. If all required improvements and inspections are not satisfactorily completed before a Parcel or Final Map is approved, the owner(s) of the subdivision shall, before the approval of the Parcel or Final Map, enter as contractor into an Improvement Agreement with the Board whereby in consideration of the approval of the Parcel or Final Map and/or acceptance by the Board of any street, easement, and any other land offered for dedication, the contractor agrees to furnish the equipment, labor, and material necessary to complete the work within the time specified in the agreement.  Improvement Agreements and securities shall be initially approved and accepted by the Board.  Improvement Agreements shall be valid for a period specified in the Improvement Agreement, but the original term shall not exceed two years from the effective date of the Improvement Agreement.  Except as provided below, extensions of time may be granted at any time by the Board or the Chief Executive Officer, but only on forms and terms approved by the Board and determined acceptable as to legal form by County Counsel.  If an extension of time requires the owner of the subdivision to provide substitute or additional security, such extension of time may only be approved by the Board.  Each extension shall be for a period not to exceed one year.  A decision made by the Chief Executive Officer on a request to extend time may be appealed to the Board of Supervisors if an appeal is filed with the Clerk of the Board within ten days of the date that the Chief Executive Officer’s decision was mailed.
   (b)   Amount of Security Required. To ensure that the work will be completed, improvement security shall be furnished to guarantee the performance of any act or Improvement Agreement in the following amounts and for the following purposes:
      (1)   An amount equal to 100 percent of the total estimated cost of the improvement or of the act to be performed, as determined by the Board, conditioned upon the faithful performance of the required act or Improvement Agreement.
      (2)   An additional amount equal to 50 percent of the total estimated cost of the improvement or the performance of the required act, as determined by the Board, securing payment to the contractor, to the subcontractors, and to persons furnishing labor, materials, or equipment to them for the improvement or the performance of the required act.
      (3)   Whenever an entity required to furnish security in compliance with this Section is a California nonprofit corporation, funded by the United States of America or one of its agencies, or funded by this State or one of its agencies, the entity shall not be required to comply with Subdivisions (b)(1) and (b)(2), above, if the conditions described in the California Subdivision Map Act, currently in Government Code § 66499.3(c), are met.
      (4)   An amount equal to ten percent of the total estimated cost of improvements or performance of the required act, as determined by the Board, necessary for the guarantee and warranty of the improvement for 12 months following the completion and acceptance, against any defective work or labor done, or defective materials furnished.
      (5)   As part of the obligation guaranteed by the security and in addition to the face amount of the security, there shall be included costs and reasonable expenses and fees, including reasonable attorney’s fees incurred by the County in successfully enforcing the obligation secured.
   (c)   Type of Security Required.
      (1)   The furnishing of security in connection with the performance of any act or Improvement Agreement shall be one of the following, at the option of and subject to the approval of the Board:
         (A)   Bond or bonds by one or more duly authorized corporate sureties as prescribed in Government Code § 66499(a)(1);
         (B)   A deposit, either with the County or a responsible escrow agent or trust company, at the option of the County, of money or negotiable bonds of the kind approved for securing deposits of public monies as prescribed in Government Code § 66499(a)(2);
         (C)   A letter or other instrument of credit from one or more financial institutions subject to regulation by the State or Federal government, and pledging that the funds necessary to carry out the act or Improvement Agreement are on deposit and guaranteed for payment as prescribed in Government Code § 66499(a)(3); or
         (D)   Lien Agreement as described in § 87.07.040 (d) below.
      (2)   Bonds to secure faithful performance and for the benefit of laborers and material of any agreement, shall be in substantially the forms as shown in the California Subdivision Map Act (Government Code §§ 66499.1 and 66499.2).  The money, negotiable bond, or instrument of credit shall be a trust fund to guarantee performance and shall not be subject to enforcement of a money judgment by any creditors of the depositor until the obligation secured thereby is performed to the satisfaction of the County.
   (d)   Lien Agreement as Security.
      (1)   As authorized herein, the owner of a “subdivision” (defined for purposes of this Subdivision (d) as a residential subdivision with more than five lots up to a maximum lot size of two acres or a commercial or industrial subdivision) may, in lieu of posting the security described in Subdivision (c) of this Section, enter into an agreement with the County to construct the required improvements in the future, securing such performance by granting the County a lien on the property to be subdivided.  Such an agreement shall be known as a “Lien Agreement.”
      (2)   Where the Director of the Department of Public Works finds that it would not be in the public interest to require the installation of the required improvements sooner than two years after recordation of the map, the owner of the subdivision may execute a Lien Agreement with the County at the time the owner of the subdivision enters into an Improvement Agreement with the County to construct required improvements pursuant to this Section. A Lien Agreement may also be used to substitute existing security which was furnished under Subdivision (c) of this Section; provided, however, that use of a Lien Agreement as substitution for existing security shall be at the County's sole option.  Notwithstanding any provisions of the foregoing to the contrary, however, the County will not accept a Lien Agreement from any owner of a subdivision, either at the time of execution of the Improvement Agreement, or as a substitute for existing security, if any lots have been sold, if construction permits (including but not limited to building or grading permits), have been issued on any of the property, or if construction of any of the required improvements has begun.
      (3)   Notwithstanding the above, the County may accept a Lien Agreement from any owner of a subdivision as a substitute for existing security if grading has commenced on the land to be divided so long as the grading is in strict accordance with a valid grading permit and all the following are met:
         (A)   There is no need for the County to construct the required improvements if the subdivision is abandoned or delayed for any period of time or for any other reason;
         (B)   The grading has no effect on the use, operation and maintenance of existing streets or highways, public or private;
         (C)   The grading has not caused the modification or closure of any public access points, existing streets or highways, public or private;
         (D)   Additional drainage improvement and/or erosion controls are not necessary and/or installed in the road right-of-way due to the grading;
         (E)   Delay of the construction of the required improvements for the subdivision does not affect or delay the improvements of an adjacent subdivision project upon which work on its required improvements has already commenced.
      (4)   Lien Agreements shall:
         (A)   Be used only when in the absence of this Subdivision, the owner of the subdivision would be required to construct or agree to construct the improvements required by the Director of the Department of Public Works.
         (B)   Be used to secure future improvements in easements, rights-of-way, rejected offers of dedication or irrevocable offers of dedication.
         (C)   Be in an approved form acceptable to County Counsel.
         (D)   Contain an itemization of the required improvements and an estimate of costs approved by the Director of the Department of Public Works, and shall specify that the obligation of the owner of the subdivision or any subsequent owner extends to the actual cost of construction if such costs exceed the estimate.
         (E)   Be recorded with the County Recorder and have the priority of a judgment lien as prescribed by Government Code § 66499(b) or its successor.  The recorded Lien Agreement shall be indexed in the Grantor Index to the names of all record owners of the real property as specified on the map and in the Grantee Index to the County.  From the time of the recordation of the Lien Agreement, a lien shall attach to the property in an amount necessary to complete the required improvements.  Under no circumstance shall the County agree to subordinate the lien.
         (F)   Be approved concurrently with the approval of the map with a note of the Lien Agreement’s existence placed on the map, except where the Lien Agreement is being substituted after map approval for other security already deposited, in which case the Lien Agreement shall be signed and acknowledged by all parties having any record title interest in the real property, as prescribed by Government Code § 66436 or its successor, consenting to the subordination of their interests to the Lien Agreement.
         (G)   Be allowed only where the owner of the subdivision provides a title insurance policy and current title report from a title company approved by the County that documents that the owner of the subdivision is the record owner of the real property to be divided, and the real property to be divided is not subject to any mortgages, deeds of trust, or judgment liens.  The title insurance policy and title report shall be submitted to the Department of Public Works within 90 days prior to the execution of the Lien Agreement.  In addition, an updated title insurance policy and title report shall be submitted to the Department of Public Works on the day of the recordation of the Lien Agreement.
      (5)   The Lien Agreement shall provide that the owner of the subdivision shall substitute acceptable security for the Lien Agreement and commence to construct the required improvements within two years following recordation of the map, or, in the case of a Lien Agreement which has been substituted for existing security, within two years following recordation of the Lien Agreement.
      (6)   For Lien Agreements executed at the time of recordation of the map, the time for substitution of acceptable security and commencement of construction of the required improvements may be extended up to two times, each extension for a period not to exceed one year, by the Director of the Department of Public Works.  The Director of the Department of Public Works may not grant such extensions if the owner of the subdivision has substituted a Lien Agreement for security originally furnished.  The Board of Supervisors, however, on its own motion or at the request of the owner of the subdivision, may grant additional time extensions, on a case-by-case basis, as it deems appropriate, for substitution of acceptable security and commencement of construction of the required improvements pursuant to agreements secured either by Lien Agreements executed at the time of recordation of the map, or Lien Agreements substituted for existing security.
      (7)   During the term of the Lien Agreement, legal ownership of the property to be subdivided shall be transferred to a title company approved by the Director of the Department of Public Works.  No individual lots may be sold while the Lien Agreement is in force.  Fee title to the entire property encumbered by the Lien Agreement, however, or to all lots designated on any individual final map which is encumbered by the Lien Agreement, may be sold in the aggregate to a single purchaser, provided that the proposed purchaser of the property must, prior to assuming title to the property, either execute a new Lien Agreement in a form acceptable to the County which will encumber the property to be conveyed, specifying the respective obligations of the owners of property subject to the original and such new Lien Agreement, or provide acceptable alternative security for the improvements the County requires be constructed as a condition to development of the property conveyed.  Any new Lien Agreement must require that acceptable security be substituted therefore, and the improvements secured thereby commenced by the same date provided in the Lien Agreement with the original owner, unless such date shall be extended as provided above.
      (8)   At the time of the approval of a Lien Agreement by the Board of Supervisors, the owner of the subdivision shall provide a cash deposit in the amount of $15,000.00 to the Department of Public Works for the purpose of reverting the property to acreage if the owner of the subdivision breaches the terms of the Lien Agreement.  In addition, at such time as title to any property subject to a Lien Agreement shall be conveyed, the transferee thereof, if such transferee executes a new Lien Agreement to secure construction of the improvements imposed upon such property as described above, shall also provide a cash deposit in the amount of $15,000.00 to the Department of Public Works for the purpose of reverting the property to acreage if the owner of the subdivision breaches the terms of the Lien Agreement.  The effect of these requirements shall be that each owner of property which is encumbered by a Lien Agreement shall at all times have $15,000.00 per Lien Agreement encumbering such owner's property on deposit with the County for the purpose described herein.  Any unused portion of any such deposit shall be refunded to the owner of the subdivision following completion of such reversion.  If the costs of reverting the property to acreage exceed $15,000.00, the owner of the subdivision shall pay such additional costs to County prior to recordation of the reversion to acreage map.
      (9)   When a Lien Agreement is utilized as security upon approval of the map, offers of dedication for street purposes will not be accepted until the Lien Agreement is released following substitution of acceptable alternative security and the required improvements are completed to the satisfaction of the Director of the Department of Public Works.
      (10)   The Lien Agreement shall be released upon substitution by the owner of the subdivision of acceptable security for the Lien Agreement in order to begin construction of the required improvements, or recordation of a reversion to acreage map.
      (11)   The property to be subdivided must have sufficient equity to cover the estimated delayed infrastructure cost at the time the Lien Agreement is processed.  The total estimate of delayed infrastructure costs shall not exceed 50 percent of the appraised value.  The County shall obtain a state certified general real estate appraiser, at the developer’s expense, to determine the property’s value, equity, and conditions of title.
      (12)   Prior to the approval of any time extension of the Lien Agreement, the Director of the Department Public Works, in his or her sole discretion, may require re-evaluation of the property’s value at the developer’s expense.  If the lien amount exceeds 50 percent of the appraised value, the County may elect to revert the property to acreage utilizing the cash deposit.
      (13)   In no instance shall the Lien Agreement compel the County to construct the required improvements.
   (e)   Forfeiture on Failure to Complete.  Upon the failure of the owner of the subdivision to complete any improvements and work within two years from the date the Improvement Agreement is executed, the Board may, upon notice in writing served by registered mail addressed to the last known address of the person, firm, or corporation signing the contract, determine that the improvement work or any part of the work is incomplete and may cause to be forfeited to the County or Flood Control District, the sum of money or bonds given for the faithful performance of the work as may be necessary to complete the work.
   (f)   Exoneration of Improvement Security. With the exception of flood control or drainage works inspected by the Flood Control Engineer, it shall be the duty of the Director of the Department of Public Works to inspect or receive certificates of completion of all improvements installed as to their compliance with this Chapter and County standards.  The security furnished by the owner of the subdivision may be released by the Board or by the Chief Executive Officer as follows:
      (1)   Security given for faithful performance of any act or Improvement Agreement shall be released upon the performance of the act or final completion and acceptance of the required work.  The Board delegates to the Chief Executive Officer the authority to accept the completed work.
      (2)   Security guaranteeing the payment to the contractor, subcontractors, and to persons furnishing labor, materials, or equipment shall, after passage of the time within which claims of lien are required to be recorded in compliance with Civil Code Article 3 (commencing with § 8410) of Chapter 4 of Title 2 of Part 6 of Division 4 and other acceptance of the work, be reduced to an amount equal to the total claimed by all claimants for whom claims of lien have been recorded and notice thereof given in writing to the Board, and if no claims have been recorded, the security shall be released in full.  Requests for a release shall be made to the Land Use Services Department, Land Development Division, which may, prior to the release of any security under this subsection, require the owner of the subdivision 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.
      (3)   The release shall not apply to any cost and reasonable expenses and fees, including reasonable attorney’s fees, nor to any required guarantee and warranty period, nor to the amount of the security deemed necessary by the County for the guarantee and warranty period.
      (4)   Maintenance security necessary for guarantee and warranty of the work for a period of 12 months following completion and acceptance thereof against any defective work or labor completed, or defective materials furnished shall be released if no claims of defective work have been filed with the Board in that time period.  In the event of the defective work, the security shall be held until all work is considered satisfactory and acceptable by the County.
   (g)   Partial Release of Performance Security.  A partial release of performance security may be requested by filing an application, on a form created by the Land Use Services Department, with the Land Use Services Department in accordance with the California Subdivision Map Act, Government Code § 66499.7.  A portion of the performance security may be released upon the approval of the Board.  The following conditions shall be applied to applications submitted requesting partial release of the performance security.
      (1)   The cost estimate of the remaining work shall not exceed 20 percent of the total original performance security.
      (2)   The substitute security (or the remaining security) shall be 100 percent of the revised total cost estimate of the remaining work, as determined by the Board.
   (h)   Review. The Board shall review the delegation of authority provided to the Chief Executive Officer under this Section at least once by June 30, 2016, and at least once every two years thereafter.
(Ord. 4011, passed - -2007; Am. Ord. 4116, passed - -2010; Am. Ord. 4243, passed - -2014; Am. Ord. 4393, passed - -2020)