1. REQUIRED
Any improvement agreement, contract or act required or authorized by the Map Act, for which security is required, shall be secured pursuant to Map Act Section 66499.
2. GENERAL
A. 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 2 years from the date of execution of the contract, all improvements and land alteration(s) in compliance with approved plans.
B. SECURITY ARRANGEMENTS
1. The subdivider shall file security to guarantee completion of public and private improvements with the improvement agreement as follows:
a. A faithful performance security in an amount deemed sufficient by the City Engineer to cover up to 100% of the total estimated cost of all required improvements including bonding requirements for grading as outlined in Chapter 15.04 of the Municipal Code;
b. A labor and material security to cover up to 50% of the total estimated cost of all required improvements;
c. A grading security as required by Chapter 15.04 of the Municipal Code;
d. A monumentation security in an amount stipulated by the City Engineer to cover the cost of placing lot corners and other related monuments;
e. If the required subdivision improvements are financed and installed pursuant to 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 may reduce the improvement security of the subdivider by an amount corresponding to the amount of the security furnished by the contractor; and
f. Notwithstanding the above, the subdivider may satisfy the requirement for security of certain improvements by providing proof that same has been posted with another public agency subject to the approval of the City Engineer.
2. Security may be 1 of the following types subject to the approval of the City Attorney as to form:
a. Bonds. All bonds shall be executed by a surety company authorized to transact business as a surety, and have an agent for service in California, together with an "A" policy holder's rating and a financial rating of at least "V" in compliance with the current "Best's" ratings. The bond(s) shall contain the nearest street address of the institution providing the bond(s).
b. Cash Deposits. In lieu of the faithful performance and labor and material bonds, the subdivider may submit cash deposits or negotiable bonds of a kind approved for securing deposits of public monies under the conditions hereinafter described.
Disbursements from cash deposits shall be made in compliance with a separate agreement between the subdivider and the City. A bookkeeping fee of 1% of the total amount deposited with the City for each cash deposit shall be submitted with each security. Disbursements from a cash deposit in any instance shall not be permitted unless and until authorized in writing by the Director.
c. 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 and under the conditions hereinafter described. The letter of credit shall be issued by a financial institution organized and doing business in, and subject to regulation by, the State of California or federal government, in a form, content, and duration 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 secured trust funds for the purposes set forth in the instrument. The letter of credit shall contain the nearest street address of the institution providing the instrument.
3. The City Clerk shall not endorse or sign its certificate contained on the final map unless and until improvement security as hereinabove specified has been posted.
4. The requirements stipulated above are applicable to any parcel map for which the installation of any public improvements or grading is a condition of approval.
5. No final or parcel map shall be presented to the Council for acceptance until the requirements of this Section have been met and until all charges established by the Council and pertaining to the property being subdivided have been paid.
3. IMPROVEMENT AGREEMENT NOT REQUIRED WITH SPECIAL PERMIT
Should the subdivider desire to do certain work prior to entering into an agreement with the City to install and complete all subdivision improvements and alteration work, the subdivider may make an application to do so under a special permit. This application shall be accompanied by detailed plans, describing the work which is proposed. The Director and 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 insure the rehabilitation of the land, including grading and planting, in the event the subdivision map does not record. The security and contractor's qualifications shall be in compliance with this section. When the special permit is for all work required in connection with the subdivision and the work has been completed and inspected prior to map recordation, an improvement agreement will not be required.
4. AGREEMENT BETWEEN DEVELOPMENT DEPARTMENT AND CITY IN LIEU OF BOND
An agreement between the Development Department of the City and the City, approved by the City Attorney and unconditionally providing and guaranteeing that said Development Department shall provide any or all required improvements and pay the costs thereof pursuant to the provisions of this Chapter, and which pledges the full faith and credit of said Development Department, may be filed with the City Engineer as security in lieu of bond, cash, or certificate of deposit whenever the project is located in a redevelopment project area or the project is covered by a disposition and joint development agreement of which the City or Development Department is a party. The guarantee agreement shall recite that the improvements will be in compliance with the redevelopment plan, if any, for the area and in furtherance of the public interest in promoting public or private development.
5. RELEASE OF SECURITY
Security provided may not be released. In the case of a letter of credit, the issuing bank or association will receive a copy of the Notice of Completion.
A. 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; provided, however, that no progress payment shall be made for more than 90% of the value of any installment of work. No progress payments from cash deposits shall be made except upon certification by the City Engineer, and the subdivider that work covered thereby has been completed.
B. RELEASE OF SECURITY
Improvement bonds given for faithful performance of the agreement shall be released upon final inspection and acceptance by the City Engineer. The labor and material bond shall be retained to secure payment to the contractor, the subcontractors, and to persons renting equipment or furnishing labor or materials for 6 months after completion and acceptance of the work. Following the 6-month period, the labor and material security may be reduced to an amount not less than the total of all claims on which an action has been filed and notice given in writing to the City.
C. MAINTENANCE GUARANTY
The subdivider shall guarantee all public improvements for a period of 1 year from the date of final acceptance and shall correct any and all defects or deficiencies arising during that period of limitation outlined in Code of Civil Procedure Sections 337 and 337.15, as a result of the acts or omissions of the subdivider, its agents, or employees. The subdivision guaranty shall be backed by a bond or cash deposit in the amount of 25% of the surety posted for improvements. The City shall provide written notice of the defect or deficiency. In any instance where the subdivider fails to take action within the specified time, or when immediate action is required to protect the public health, safety and/or welfare, the City may cause the work to be performed and call on the surety for reimbursement. The maintenance security shall be submitted prior to final acceptance of the public improvements by the City.
D. FORFEITURE OF SURETY
In the event that subdivider fails to complete all improvement work in compliance with the provisions of this section and the improvement agreement, and the City shall have to complete the same, the City shall call on the security for funds necessary to complete the improvements as reimbursement or shall appropriate from any cash deposit funds for reimbursement. If the amount of any security shall be less than the cost and expense incurred by the City, the subdivider shall be liable to the City for such difference. Any cash remaining in the possession of the City after completion of the improvement, shall be returned to the originator minus normal administrative costs.