National City Municipal Code Ch. 17.09 Bonding and Improvement Security

Prior to the approval of the final subdivision map or of the parcel map the subdivider shall execute and file an agreement with the city, which shall specify the period within which he shall complete all improvement work to the satisfaction of the city engineer, and providing that if he shall fail to complete such work within such period, the city may complete the work and recover the full cost and expense thereof from the subdivider. This agreement shall also provide for inspection of all improvements by the city engineer. A fee as set by resolution of the city council, must be paid by the subdivider for the cost of such inspection. The agreement shall be prepared to the satisfaction of the city engineer and approved as to form by the city attorney.

(Ord. 1964 § 1 (part), 1988)

To guarantee the performance of any action or agreement with regard to the proposed subdivision, security shall be furnished as follows:

A. A faithful performance security for the purpose of subdivision improvement set at an amount determined by the city engineer equal to one hundred 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;

B. A labor and materials security furnished as an additional amount determined by the city engineer equal to fifty percent of the total estimated cost of the improvements or of the performance of the required act to guarantee payment to the contractor, his subcontractors, and to persons furnishing labor, materials, or equipment to them for completion of the improvements or of the performance of the required act;

C. The monumentation agreements shall be accomplished by a faithful performance security in a sum equal to the cost of setting such monuments, guaranteeing the faithful performance of all such work of setting monuments and furnishing notes;

D. Any changes, alterations or additions to the improvement plans and specifications or to the improvements, not exceeding ten percent of the original estimated cost of the improvement, which are mutually agreed upon by the city and the subdivider, shall not require an increase in the amount of the improvement security given for faithful performance of the improvement. In the event such changes, alterations or additions exceed ten percent of the original security for faithful performance as required by subsection A of this section for one hundred percent of the total estimated cost of the improvement as changed, altered or amended, minus any completed partial release thereof as allowed by Section 17.09.030 of this chapter.

(Ord. 1988 § 2, 1990; Ord. 1964 § 1 (part), 1988)

Ninety percent of the faithful performance subdivision improvement security shall be released upon completion and acceptance of the work required under the agreement for the guarantee and warranty of said work. The remaining ten percent of the faithful performance subdivision improvement security shall continue in effect for a period of one year following the completion and acceptance of said work.

The procedure for release shall be a written communication from the city clerk to the subdivider and the maker of the bond or holder of the surety. The city clerk shall make such a release letter only upon the recommendation of the city engineer. Prior to making such a recommendation, the city engineer shall ensure that all actions or improvements affecting other departments or agencies have been properly completed to the satisfaction of such departments or agencies including, but not limited the director of planning, and agencies handling water, sewer, electricity, gas, and street lighting.

The city engineer may release a portion of the security in conjunction with acceptance of the performance of this act or work as it progresses upon a written communication by the subdivider; provided, however, that no such release shall be for an amount less than twenty-five percent of the total improvement security given for faithful performance of the act or work, and that the security shall not be reduced to an amount less than fifty percent of the total improvement security given for faithful performance until final completion and acceptance of the act or work. In no event shall the city engineer authorize a release of the improvement security which would reduce such security to an amount below that required to guarantee the completion of the act or work and any other obligation imposed by the National City Municipal Code, or the Subdivision Map Act.

Security given to secure payment to the contractor, his subcontractors and to persons furnishing labor, materials or equipment shall, six months after the completion and acceptance of the act or work, 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 plus an amount reasonably determined by the city engineer to be required to assure the performance of any other obligation secured thereby. The balance of the security shall be released upon the settlement of all such claims and obligations for which the security was given.

No security given for the guarantee or warranty of work shall be released until the expiration of the period thereof and until any claim filed during said period has been settled.

In the event that the subdivider fails to perform any obligation hereunder, the subdivider authorizes the city to perform such obligations twenty days after mailing written notice of default to the subdivider and to the subdivider's surety, and agrees to pay the entire cost of such performance by the city.

The sums provided by the improvement security may be used by the city for the completion of the public improvements within the subdivision.

The city may take over the work and prosecute the same to completion, by contract or by any other method the city may deem advisable, at the expense of the subdivider, and the subdivider's surety shall be liable to the city for any excess cost or damages occasioned by the city thereby; and, in such event, the city, without liability for so doing, may take possession of, and utilize in completing the work, such materials, appliances, plant and other property belonging to the subdivider as may be on the site of the work and necessary therefor.

In the event that the subdivider fails to perform any obligation hereunder, the subdivider agrees to pay costs and expenses incurred by the city in securing performance of such obligations, including costs of the suit and reasonable attorney's fees.

The subdivider shall guarantee or warranty the work done for a period of one year after final acceptance of said work against any defective work or labor done or defective materials furnished. If within said period any structure or part of any structure furnished and/or installed or constructed, or caused to be installed or constructed by the subdivider, or any of the work done under this agreement, fails to fulfill any of the requirements of this agreement or the plans and specifications referred to herein, the subdivider shall without delay and without any cost to the city, repair or replace or reconstruct any defective or otherwise unsatisfactory part or parts of the work or structure. Should the subdivider fail to act promptly or in accordance with this requirement, the subdivider hereby authorizes city, at the city's option, to perform the work twenty days after mailing written notice of default to the subdivider and agrees to pay the cost of such work by the city. Should the urgent need of the case require repairs or replacements to be made before the subdivider can be notified, the city may, at its option, make the necessary work and the subdivider shall pay to the city the cost of such repairs.

(Ord. 1988 § 3, 1990: Ord. 1964 § 1 (part), 1988)

The form of security shall be one or a combination of the following at the option and subject to approval of the city:

A. A bond or bonds furnished by a surety company authorized to write the same in the state, subject to the approval and acceptance by the city attorney and the city council;

B. Cash or acceptable equivalent may be deposited in lieu of any faithful performance bond required by this section, where the subdivider may deposit with the city a sum of money equal to the required amount of such bond or security for the faithful performance thereof. No separate labor and material bond shall be required when cash surety is used; however, an amount equal to the required labor and material bond will not be released until six months following completion and acceptance of the improvements and then such release will be less any unsettled claims;

C. Other forms of security will be permitted when approved by the city attorney. These would include letters of credit, assignment bank or savings and loan pass book accounts, and completion of proceedings under one of the state assessment district acts.

(Ord. 1964 § 1 (part), 1988)