In lieu of the actual completion and acceptance by the city council of the improvements required by this title and before approval of the final plat by the city council, the subdivider shall guarantee the installation and construction of the required improvements within two (2) years from the date of approval of the final plat and that the improvements shall be maintained in a state of good repair, free from defective material or workmanship, for a period of twelve (12) months from the date of completion by one or more of the following methods:
A. Bond: The subdivider shall furnish and file with the city recorder a bond with corporate surety in an amount equal to the cost of the improvements not previously installed, as estimated by the city’s public works director or his/her assigned designee, to assure the installation and construction of such improvements within twenty four (24) months immediately following the approval of the subdivision plat by the city council, which bond shall be approved by the city council and city attorney, and which bond shall guarantee that the improvements shall be maintained in a state of good repair, free from material and workmanship defects, for a period of twelve (12) months from the date of completion. After twelve (12) months following the completion of the improvements for which a surety or cash bond has been filed, the subdivider shall call for inspection by the public works director or his/her assigned designee, such inspection to be made within five (5) days from the date requested. If inspection shows that the standards and specifications have been met in completion of such improvements, the bonds therefore shall be released within fourteen (14) days from the time of inspection.
B. Escrow:
1. The subdivider shall deposit with any insurance company, bank or savings and loan institution in an escrow account and amount of money equal to at least one hundred twenty five percent (125%) of the costs of the improvements required by this title not previously accepted by the city. The costs of the improvements not accepted and not installed or constructed shall be determined by the city’s public works director or his/her assigned designee. The escrow agreement shall be subject to approval by the city attorney and shall be signed by the subdivider, the city and the escrow holder, and shall contain substantially the following language:
Agreement
The undersigned hereby promises and warrants that it has on deposit in an escrow account for the benefit of __________________ (name of municipality), the sum of $_____________ which represents at least 125% of the estimated costs of the improvements not accepted by the municipality and not constructed or installed by the developer of the ________________________ subdivision.
The undersigned hereby agrees that the foregoing sum of money shall be used exclusively for the purpose of paying for the costs of materials, and construction and installation of the improvements required by the municipality’s subdivision ordinances. The undersigned further agrees that the money held in an escrow account shall be paid out to the contractors installing and constructing the required improvements only upon an order executed by the subdivider and by an authorized officer of the municipality.
The subdivider shall not withdraw from the escrow account any amount in excess of 100% of the estimated cost of the improvements, but shall pay from other sources any costs for such improvements which exceed 100% of the costs estimated by the engineer.
A sum equal to 25% of the estimated costs of improvements shall remain with the escrow holder for a period of one year after all improvements are made and completed.
If after two years, all or any part of the required improvements are not installed, constructed and maintained, according to the standards required in the municipality’s subdivision ordinance, the municipality shall notify in writing the subdivider and the escrow holder of the defects and shall make demand on the subdivider that the defects be corrected. If the defects are nor corrected within 30 days, the municipality may correct the defects and charge to the escrow holder the costs of correcting the defects.
The escrow holder shall on receiving reasonable proof from the municipality of the defect and that the municipality has incurred the cost of correcting the defect, pay to the municipality from the escrow account the cost of correcting the defect and the escrow holder shall be held harmless by the parties by reason of the payment to the municipality.
If, after one year after the council has accepted the improvements required by its subdivision or finance, the required improvements remain substantially free from latent defects, the municipality shall certify such fact to the escrow holder and the escrow holder whall release to the subdivider any money still held in the escrow account and the escrow holder shall be discharged of its obligations to the municipality.
______________________________________
(Authorize Signature)
2. The escrow agreement may contain such additional provisions as the parties deem necessary.
C. Irrevocable Letter Of Credit:
1. The subdivider shall file with the city an irrevocable letter of credit from a duly chartered state or national bank or savings and loan institution which letter shall contain provisions substantially similar to the required in the escrow agreement.
2. The form of the irrevocable letter of credit shall be substantially as follows:
Name of Bank
Address
Irrevocable Letter Of Credit
To: Name of Municipality Date
Municipal Council Letter of Credit No.:
Gentlemen:
We hereby establish our irrevocable letter of credit in your favor for the account of _______________________ (insert name of subdivider, subdivider’s address) up to the aggregate amount of $____________ (insert amount available by your drafts) drawn at sight on __________________ (insert name of bank, address of bank) accompanied by _______________ (here insert terms which give municipality control over payments). The terms would ordinarily read:
A statement signed by an officer of _________________ (name of municipality) dated not later than ______________ (insert estimated completion date plus a couple of months leeway) as follows:
We certify that the on site improvements related to the ______________ (insert name of subdivision) have not been completed in accordance with municipal ordinances and that this drawing represents the amount necessary to complete those on site improvements.
We hereby agree with drawers, endorsers and bona fide holders that all drafts under and in compliance with the terms of this credit will be duly honored upon presentation and delivery of documents as specified to the drawee or drawn and presented for negotiation on or before __________________ (insert completion date above set forth) at our bank.
Very truly yours,
_______________________________
(Authorized Bank Officer Signature)
D. Deposit With City: The subdivider shall deposit with the city a sum equal to one hundred ten percent (110%) of the costs of the required improvements not installed, constructed or accepted by the city. The subdivider shall have the right to draw against the account with the city all sums to one one hundred percent (100%) of the total account, which shall be paid to the order of persons installing, constructing or maintaining the improvements. The city shall hold the additional ten percent (10%) to guarantee that the improvements are installed, constructed and maintained until acceptance by the city. The city may, after making written demand on the subdivider in a manner required above, install construct or repair the improvements and pay such costs from the subdivider’s account. The city shall refund any sums remaining in the subdivider’s account after the city council accepts the improvements. ()
E. Corporate Assurance:
1. In lieu of the methods outlined in subsection A through D of this section, the city may accept a corporate assurance accompanied by audited financial statements, from a subdivider, whose company’s net assets are worth a minimum of fifty million dollars ($50,000,000.00). The audited financial statements shall be reviewed by the city auditor prior to any acceptance by the city of the corporate assurance form. Acceptance of a corporate assurance in lieu of the other methods outlined shall be at the sole discretion of the city. The corporate assurance shall be in a form acceptable to the city.
2. In the event the city accepts the corporate assurance, the subdivider shall submit audited financial statements on an annual basis thereafter for approval by the city until the improvements are complete. If at any time the city deems itself insecure after review of the audited financial statements, the city shall send notice to the subdivider that the city has rejected the audited financial statements and require the subdivider to provide another method to guarantee the improvements pursuant to this section. (Ord. 80-4, 6-18-1980; amd. Ord. 93-27, 10-27-1993; Ord. 99-27, 10-20-1999; Ord. 2019-20, 11-13-2019)