16.44.100 Improvement security.
A. General. Any improvement agreement, contract or act required or authorized by the State Subdivision Map Act or this chapter, for which security is required, shall be secured in accordance with Section 66499 et seq. of the State Subdivision Map Act and as provided below. No final map may be approved until all improvement securities required by this section have been received and approved or improvements completed.
B. Form of Security. The form of security shall be one or the combination of the following at the option and subject to the approval of the City:
1. Bond or bonds by one or more duly authorized corporate sureties. The form of the bond or bonds shall be in accordance with Sections 66499.1, 66499.2, 66499.3 and 66499.4 of the State Subdivision Map Act.
2. A deposit, either with the City or a responsible escrow agent or trust company, at the option of the City, of money or negotiable bonds of the kind approved for securing deposits of public moneys.
3. An instrument of credit or letter 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 agreement are on deposit and guaranteed for payment.
4. Any other form of security as provided in Section 66499 of the State Subdivision Map Act.
C. Amount of Security. A performance bond or other security in the amount of 100 percent of the total estimated construction cost to guarantee the construction or installation of all improvements, and a labor and materials bond or other security in the amount of 100 percent of the total estimated construction cost shall be required to guarantee payment to subdivider’s contractor, subcontractors and to persons furnishing labor, materials or equipment for the construction or installation of improvements.
The estimate of improvement costs shall be as approved by the City Engineer and shall provide for:
1. Not less than five percent nor more than 10 percent of the total construction cost for contingencies.
2. Increase for projected inflation computed to the estimated midpoint of construction.
3. In addition to the full amount of the security, there shall be included costs and reasonable expenses and fees, including attorney’s fees, incurred by the City in enforcing the obligations secured.
D. Cash Bond. The subdivider shall deposit with the City not less than $1,000 cash for subdivisions of four or fewer parcels, and $3,000 for other subdivisions, or an additional amount as required by the City Engineer, not to exceed one percent of the total estimated construction cost. The deposit may be used at the discretion of the City to correct deficiencies and conditions caused by the subdivider, contractor or subcontractors that may arise during or after the construction of the subdivision. Any unexpended amount will be returned to the subdivider at the time all bonds and other security are released.
E. Warranty Security. Upon acceptance of the subdivision improvements by the City, the subdivider shall provide security in the amount as required by the City Engineer to guarantee the improvements against any defective work or labor done or defective materials used in the performance of the improvements throughout the warranty period, which shall be the period of one year following the completion and acceptance of the improvements. The amount of the warranty security shall not be less than 20 percent of the cost of the construction of the improvements, including the cash bond, which shall be retained for the one-year warranty period.
F. Reduction in Performance Security. The City Engineer may authorize in writing the release of a portion of the security in conjunction with the acceptance of the satisfactory completion of a part of the improvements as the work progresses upon application by the subdivider, but in no case shall the security be reduced by less than 50 percent or more than 80 percent of the total improvement security given for faithful performance. The amount of reduction of the security shall be determined by the City Engineer; however, in no event shall the City Engineer authorize a release of the improvement security which would reduce security to an amount below that required to guarantee the completion of the improvements and any other obligation imposed by the State Subdivision Map Act, this code or the improvement agreement. In no case shall more than two reductions be made.
G. Release of Improvement Security.
1. Performance Security. The performance security shall be released only upon acceptance of the improvements by the City and when an approved warranty security has been filed with the City Engineer. If a warranty security is not submitted, performance security shall be released 12 months after acceptance of improvements and correction of all warranty deficiencies.
2. Material and Labor Security. Security given to secure payment to the contractor, subcontractors and to persons furnishing labor, materials or equipment may, 60 days after the completion and acceptance of the improvements by the City, be reduced to an amount equal to the amount of all claims therefor filed and of which notice has been given to the City Council. The balance of the security shall be released upon the settlement of all claims and obligations for which the security was given.
3. Warranty Security. The warranty security shall be released upon satisfactory completion of the warranty period, provided:
a. All deficiencies appearing on the warranty deficiency list for the subdivision have been corrected.
b. Not less than 12 months have elapsed since the acceptance of the improvements by the City.