Jurupa Valley Municipal Code Ch. 7.65 Security for Improvements and Taxes

A. If the improvements are not completed prior to approval of the final map or parcel map, the land divider shall enter into an agreement with the city to complete the improvements and in connection therewith shall furnish to the city improvement security in the amounts required by subsection (D) of this section. Acceptable forms of security shall be limited to the following:

(1) A bond or bonds by one (1) or more duly authorized corporate sureties;

(2) A deposit with the city of cash;

(3) An irrevocable instrument of credit from one (1) or more financial institutions subject to regulation by the state or federal government pledging that the funds necessary to carry out the agreements are on deposit until released by the city;

(4) An irrevocable letter of credit issued by a financial institution subject to regulation by the state or federal government guaranteeing that all or any portion of the funds available pursuant to the letter of credit will be paid upon the written demand of the Public Works Director, and that such written demand need not present documentation of any type as a condition of payment, including proof of loss;

(5) An instrument of credit from an agency of the state, federal, or local government when any agency of the state, federal, or local government provides at least twenty (20) percent of the financing for the portion of the act or agreement requiring security;

(6) A lien upon the property to be divided, created by contract between the owner and the city, if the city finds that it would not be in the public interest to require the installation of the required improvement sooner than two (2) years after the recordation of the map in accordance with Section 7.69.030 of this chapter.

B. The agreement and the improvement security for Schedule "A," "B," "C," "D" and "E" maps shall be executed for the city by the Mayor only upon forms and terms approved by the City Council, which shall be checked by the Public Works Director. The Public Works Director shall be authorized to execute on behalf of the city agreements and improvement security in accordance with the provisions of this chapter for Schedule "F," "G," "H" and "I" maps. The agreement and improvement security for Schedule "F," "G," "H" and "I" maps shall be executed for the city by the Public Works Director only upon forms and terms approved by the City Council. If bonds are to be used, they shall be substantially in the form provided for in the Subdivision Map Act (Gov. Code Section 66410 et seq.).

C. The original period of the agreement and security shall be twenty-four (24) months. Extensions of time may be granted at any time by the Public Works Director only upon forms and terms approved by the City Council, either at its own option, with or without notice to the land divider and surety, or at the written request of the land divider, with or without notice to the surety. Each extension shall be for a period not to exceed one (1) year. In addition to the above, and as a further condition to granting an extension of time, the Public Works Director may require additional agreements or security be furnished as are necessary to guarantee the completion of the improvements.

D. Security to guarantee the performance of any act or agreement shall be in the following amounts:

(1) One hundred (100) percent of the total estimated cost of the improvement or of the act to be performed, conditioned upon the faithful performance of the act or agreement;

(2) Fifty (50) percent of the total estimated cost of the improvement or the performance of the required act, securing payment to the contractor, his or her subcontractors, and the persons furnishing labor, materials or equipment to them for the improvement or the performance of the required act;

(3) Ten (10) percent of the total estimated cost of the improvement or the performance of the required act for the guarantee and warranty of the work for a period of one (1) year following the completion and acceptance thereof against any defective work or labor done, or defective materials furnished. As a 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 attorneys' fees incurred by the city in successfully enforcing the obligation, all to be taxed as costs and included in any judgment.

E. Whenever an entity required to furnish security in accordance with subsections (D)(1) and (2) of 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 (1) of its agencies, the entity shall not be required to comply with subsections (D)(1) and (2) of this section if the following conditions are met:

(1) A letter or letters of credit are provided pursuant to Government Code Section 66499(a)(3) for one hundred (100) percent of the contract of improvements or the contractor installing the improvements has bonded to the nonprofit corporation and the city as co-obligee the amount of one hundred (100) percent of the contract for the faithful performance of the work, and has further bonded to the nonprofit corporation and the city as co-obligee an amount of not less than fifty (50) percent of the contract for the payment of labor and materials, and those bonds comply with the provisions of this chapter.

(2) All monies under the control of the nonprofit corporation and payable to the contractor by the nonprofit corporation are deposited in a depository complying with the provisions of Government Code Title 7, Division 2, Chapter 5 (Gov. Code Section 66499 et seq.), and out of which monies progress payments are conditioned upon:

(a) The contractor's certification to the nonprofit corporation that all labor performed in the work, and all materials furnished to and installed in the work, have been paid for in full to the date of the certification.

(b) The written approval of the nonprofit corporation.

(c) Review and approval of progress payment billings by the city.

(d) Final payment to the contractor not being made until thirty (30) days shall have expired after the filing and recording of the notice of completion of the work and acceptance of the work by, and a waiver of lien rights provided by the contractor to, the city in writing.

(3) All certifications as to progress payments shall be delivered through the United States mail to the nonprofit corporation. The term "progress payments" means payments made in compliance with the schedule of partial payments agreed upon in the contract for the work. No less than ten (10) percent of the total contract price shall be retained for the sixty (60) days following the filing of the notice of completion.

(4) Security given for faithful performance of any act or agreement shall be released upon the performance of the act or final completion and acceptance of the required work. Once one-third (⅓) of the bonded work has been completed, a request for a partial release of securities may be submitted. The request shall be made in writing to the Public Works Director, and a fully detailed description of the bonded work completed shall be provided with the request. A maximum of three (3) partial releases of the security may be granted by written order of the Public Works Director upon a determination by the Public Works Director of the acceptable work that has been completed and the amount of security that is necessary to guarantee the completion of the remaining improvements. Requests for partial releases, setting forth in detail the amount of work completed, shall be made in writing to the Public Works Director. The security may be a surety bond, a cash deposit, a letter of credit, escrow account, or other form of performance guarantee required as security by the City Council that meets the requirements as acceptable security pursuant to law. If the security furnished by the subdivider is a documentary evidence of security such as a surety bond or a letter of credit, the City Council shall release the documentary evidence and return the original to the issuer upon performance of the act or final completion and acceptance of the required work. In the event that the City Council is unable to return the original documentary evidence to the issuer, the security shall be released by written notice sent by certified mail to the subdivider and issuer of the documentary evidence within thirty (30) days of the acceptance of the work. The written notice shall contain a statement that the work for which the security was furnished has been performed or completed and accepted by the City Council, a description of the project subject to the documentary evidence and the notarized signature of the authorized representative of the City Council.

(5) At the time that the subdivider believes that the obligation to perform the work for which security was required is complete, the subdivider may notify the city in writing of the completed work, including a list of work completed. Upon receipt of the written notice, the local agency shall have forty-five (45) days to review and comment or approve the completion of the required work. If the city does not agree that all work has been completed in accordance with the plans and specifications for the improvements, it shall supply a list of all remaining work to be completed.

(6) Within forty-five (45) days of receipt of the list of remaining work from the city, the subdivider may then provide cost estimates for all remaining work for review and approval by the local agency. Upon receipt of the cost estimates, the city shall then have forty-five (45) days to review, comment, and approve, modify, or disapprove those cost estimates. No city shall be required to engage in this process of partial release more than once between the start of work and completion and acceptance of all work; however, nothing in this subsection prohibits the city from allowing for a partial release as it otherwise deems appropriate.

(7) If the city approves the cost estimate, the city shall release all performance security except for security in an amount up to two hundred (200) percent of the cost estimate of the remaining work. The process allowing for a partial release of performance security shall occur when the cost estimate of the remaining work does not exceed twenty (20) percent of the total original performance security unless the city allows for a release at an earlier time. Substitute bonds or other security may be used as a replacement for the performance security, subject to the approval of the city. If substitute bonds or other security is used as a replacement for the performance security released, the release shall not be effective unless and until the city receives and approves that form of replacement security. A reduction in the performance security, authorized under this subsection, is not, and shall not be deemed to be, an acceptance by the city of the completed improvements, and the risk of loss or damage to the improvements and the obligation to maintain the improvements shall remain the sole responsibility of the subdivider until all required public improvements have been accepted by the city and all other required improvements have been fully completed in accordance with the plans and specifications for the improvements.

(8) The subdivider shall complete the works of improvement until all remaining items are accepted by the city.

(9) Upon the completion of the improvements, the subdivider, or his or her assigns, shall be notified in writing by the city within forty-five (45) days.

(10) Within forty-five (45) days of the issuance of the notification by the city, the release of any remaining performance security shall be placed upon the agenda of the City Council for approval of the release of any remaining performance security. If the City Council delegates authority for the release of performance security to a public official or other employee, any remaining performance security shall be released within sixty (60) days of the issuance of the written statement of completion.

(11) Security securing the payment to the contractor, his or her 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 pursuant to Civil Code, Division 4, Part 6, Title 2, Chapter 4 (Civ. Code Section 8410 et seq.) and after 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 City Council, and if no claims have been recorded, the security shall be released in full.

(12) The release shall not apply to any required guarantee and warranty period required by Government Code Section 66499.9 for the guarantee or warranty nor to the amount of the security deemed necessary by the city for the guarantee and warranty period nor to costs and reasonable expenses and fees, including reasonable attorneys' fees.

F. In any case where the performance of the obligation for which the security is required is subject to the approval of another agency, the security shall not be released until the obligation is performed to the satisfaction of such other agency. The city shall notify the servicing agency in writing and such agency shall have two (2) months after completion of the performance of the obligation to register its satisfaction or dissatisfaction. If at the end of that period it has not registered its satisfaction or dissatisfaction, it shall be conclusively deemed that the performance of the obligation was done to its satisfaction.

G. The liability upon the security given for the faithful performance of any act or agreement shall be limited to:

(1) The performance of the work, covered by the agreement between the subdivider and the city for the performance of the required act;

(2) The performance of any changes or alterations in such work, provided that all such changes or alterations do not exceed ten (10) percent of the original estimated cost of the improvement;

(3) The guarantee and warranty of the work for a period of one (1) year following completion and acceptance thereof against any defective work or labor done or defective materials furnished in the performance of the agreement or the performance of the act;

(4) Costs and reasonable expenses and fees, including reasonable attorneys' fees.

H. If the estimated cost of completing the street/drainage improvements, water system improvements, sewer system improvements or the setting of the monuments is less than five thousand dollars ($5,000), a cash bond shall be required for that specific improvement.

I. The Public Works Director is authorized to release or reduce the security in accordance with the provisions of this section.

State Law reference— Similar provisions, Government Code § 66499 et seq.

A. Certificates for taxes and special assessments, as prepared by the Tax Collector, and security for unpaid taxes and special assessments, shall be furnished as required by the Subdivision Map Act (Gov. Code Section 66410 et seq.).

B. When a land division is located within the boundaries of a city:

(1) If the certificate shows that there are no liens against the land division or any part thereof for unpaid taxes or special assessments collected as taxes, the City Clerk shall certify that such certificates have been filed and shall transmit the final map or parcel map to the County Recorder without placing the matter on the agenda of the board.

(2) If the certificate shows that there are no liens against the land division or any part thereof for unpaid taxes or special assessments collected as taxes, except for taxes or special assessments that are not yet payable, the land divider shall file with the City Clerk acceptable security in the amount determined by the Tax Collector as necessary to pay the taxes and special assessments which are a lien but not yet payable. Upon approval of the security by City Clerk, the City Clerk shall certify that such certificates and security have been filed and shall transmit the final map or parcel map to the County Recorder without placing the matter on the agenda of the City Council.

C. Acceptable forms of security for taxes shall be as provided in Section 7.65.010(A) for security for improvement; provided, however, that a cash bond shall be required to guarantee the payment of taxes in amounts less than two thousand, five hundred dollars ($2,500). The forms of security offered shall not have an expiration date prior to that of the expiration of the map.

A. The land divider may, in lieu of posting a security described in Section 7.65.010, enter into an agreement with the city to construct the required improvements in the future, securing such performance by granting the city a lien on the real property to be divided. Such agreements shall be known as "lien agreements." The use of lien agreements shall only be allowed if all requirements of this section are satisfied.

B. Government Code Section 66499(a)(4) authorizes the city to enter into lien agreements if it is found by the city that it would not be in the public interest to require the installation of the required improvements sooner than two (2) years after the recordation of the map.

C. Where the city finds that it would not be in the public interest to require the installation of the required improvements sooner than two (2) years after recordation of the map, the land divider may execute a lien agreement with the city at the time the land divider enters into an agreement with the city to construct required improvements pursuant to Chapter 7.30.

D. A lien agreement may be used to substitute an existing security which was furnished under Section 7.65.010; provided, however, that use of a lien agreement as substitution for an existing security shall be at the city's sole discretion. The city will not accept a lien agreement from any land divider, either at the time of execution of the agreement to construct improvements, or as a substitute for existing security, if any individual lots have been sold, if any construction permits, including, but not limited to, any grading or building permits, have been issued on any of the property, or if construction of any of the required improvements has begun. Notwithstanding the above, the city may accept a lien agreement from any land divider 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:

(1) There is no need for the city to construct the required improvements if the land divider's project is abandoned or delayed for any period of time or for any other reason;

(2) The grading has no effect on the use, operation and maintenance of existing streets or highways, public or private;

(3) The grading has not caused the modification or closure of any public access points, existing streets or highways, public or private;

(4) Additional drainage improvement and/or erosion controls are not necessary and/or installed in the road right-of-way due to the grading;

(5) Delay of the construction of the land divider's required improvements do not affect or delay the improvements of an adjacent land divider who has already commenced work on his or her required improvements.

E. Lien agreements shall:

(1) Be allowed only for Schedule "A", "B" and "E" maps.

(2) Be allowed only where the land divider provides a title insurance policy and current title report from a title company approved by the city that documents that the land divider 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 issued within the sixty (60) days prior to the execution of the lien agreement.

(3) Be in a form acceptable to and approved by City Attorney.

(4) Be used to secure future improvements that would be required for Schedule "A", "B" and "E" maps.

(5) Be used only when a land divider would be required by Chapter 7.30 to construct or agree to construct the required improvements.

(6) Contain an itemization of the required improvements and an estimate of costs approved by the Public Works Director and shall specify that the land divider's or subsequent owner's obligation extends to the actual cost of construction of the required improvements if such costs exceed the estimate.

(7) Be recorded with the County Recorder. 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 city.

(8) Be approved concurrently with the approval of the final map with a note of the lien agreement's existence placed on the map, except where the lien agreement is being substituted after final map approval for other security previously deposited pursuant to Section 7.65.010, in which case the lien agreement shall be signed and acknowledged by all parties having any record title interest in the property, as prescribed by Government Code Section 66436, consenting to the subordination of their interests to the lien agreement.

F. From the time of recordation of the lien agreement, a lien shall attach to the property and shall have the priority of a judgment lien in an amount necessary to complete the required improvements. Under no circumstances shall the city agree to subordinate the lien.

G. The lien agreement shall provide that the land divider shall substitute acceptable security for the lien agreement and commence to construct the improvements required pursuant to Chapter 7.30 within three (3) years following recordation of the map, or in the case of a lien agreement which has been substituted for existing security pursuant to Section 7.65.010 within three (3) years following recordation of the lien agreement.

H. The time for substitution of acceptable security and commencement of construction of the required improvements in subsection (G) of this section, may be extended up to three (3) times, by the Public Works Director only upon forms and terms approved by the City Council. Each extension shall be for a period not to exceed one (1) year. However, the City Council may grant additional time extensions, as it deems appropriate, for substitution of acceptable security and commencement of construction of the required improvements pursuant to agreements secured either by:

(1) Lien agreements executed at the time of recordation of the map; or

(2) Lien agreements substituted for an existing security furnished under Section 7.65.010.

For each extension of time under this subsection, the land divider shall provide a title insurance policy and current title report from a title company approved by the city that documents that the land divider 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 issued within the sixty (60) days prior to request for an extension of time.

I. No individual lots may be sold while the lien agreement is in place. However, fee title to the entire property encumbered by the lien agreement 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, provide that the proposed purchaser must, prior to assuming title to the property, either:

(1) Execute a new lien agreement in a form acceptable to the city which will encumber the property to be conveyed, specifying the respective obligations of the owners of property subject to the original and new lien agreement; or

(2) Provide acceptable alternative security for the required improvements to be constructed as a condition to development of the property conveyed, pursuant to Section 7.65.010.

Any new lien agreement must require that acceptable security be substituted therefor, 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 by the City Council as provided in subsection (H) of this section.

J. At the time the City Council approves a lien agreement, the land divider shall provide a cash deposit in the amount of twelve thousand dollars ($12,000) or as modified by resolution to the city for the purpose of reverting the property to acreage if the land divider 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 in subsection (I) of this section, shall provide a substitute cash deposit in the amount of twelve thousand dollars ($12,000) established or as modified by resolution to the city for the purpose of reverting the property to acreage if the land divider breaches the terms of the lien agreement. Any unused portion of any such deposit shall be refunded to the land divider following completion of such reversion. If the costs of reverting the property to acreage exceed twelve thousand dollars ($12,000) or as modified by resolution, the land divider shall pay such additional costs to the city prior to recordation of the reversion to acreage map.

K. The lien agreement shall only be released upon substitution of acceptable security for the lien agreement under Section 7.65.010 in order begin construction of the required improvements, or upon recordation of a reversion to acreage map.

L. In no instances shall the lien agreement compel the city to construct the required improvements.