Pismo Beach Municipal Code Ch. 16.36 Improvement Security

Whenever this chapter authorizes or requires the furnishing of security in connection with the performance of any act or agreement, such security shall be one of the following at the option of, and subject to the approval of the city:

A. A bond or bonds by one or more duly authorized corporated sureties;

B. 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; or

C. An instrument of credit from one or more financial institutions subject to regulation by the state or federal government, pledging that the funds necessary to carry out the act or agreement are on deposit and guaranteed for payment. (Ord. 299 § 1 (part), 1982)

A bond or bonds by one or more duly authorized corporate securities to secure the faithful performance or for the security of laborers and material men shall be in substantially the form prescribed by Sections 66499.1 and 66499.2 of the Subdivision Map Act. (Ord. 299 § 1 (part), 1982)

The improvement security shall be in the amounts set forth as follows:

A. An amount which equals 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. An additional amount which equals fifty percent of the total estimated cost of the improvement or performance of the required act, securing payment to the contractor, his subcontractors and to persons furnishing labor, materials or equipment to them for the improvement of the performance of the required act;

C. An amount determined by the director of public services necessary for the guarantee and warranty of the work for a period of one year following the completion and acceptance thereof against any defective work or labor done or materials furnished. (Ord. 345 § 1, 1984; Ord. 299 § 1 (part), 1982)

If the improvement security is other than a bond or bonds furnished by duly authorized corporate surety, an additional amount shall be included as determined by the City Council as necessary to cover the cost and reasonable expenses and fees, including reasonable attorney's fees, which may be incurred by the city in successfully enforcing the obligation secured. (Ord. 299 § 1 (part), 1982)

The improvement security shall also secure the faithful performance of any changes or alterations in the work to the extent that such changes or alterations do not exceed ten percent of the original estimated cost of the improvement. (Ord. 299 § 1 (part), 1982)

In the event the required subdivision improvements are financed and installed pursuant to special assessment proceedings, the subdivider may apply to the city council for a reduction in the amount of the improvement security required hereunder up to an amount corresponding to the amount of a faithful performance and labor and material bond required by the special assessment act being used. The city council may grant such reduction if it finds that such bonds have been in fact provided and that the obligations secured thereby are substantially equivalent to that required by this title. (Ord. 299 § 1 (part), 1982)

The improvement security required hereunder shall be released in the following manner:

A. Security given for faithful performance of any act or agreement shall be released upon the final completion and acceptance of the act or work subject to the provisions of subsection B of this section.

B. The director of public works may release a portion of the security in conjunction with the acceptance of the performance of the act or work as it progresses upon application therefor 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 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 director of public works 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 this title, the Subdivision Map Act or the improvement agreement.

C. Security given to secure payment to the contractor, his subcontractors and to persons furnishing labor, materials or equipment, may, after the completion and acceptance of the act or work, and after recordation of a notice of completion or notice of cessation by the original subdivider or developer in compliance with California Mechanics Lien Law, be reduced to an amount equal to the amount of all claims therefor filed and of which notice has been given to the legislative body, plus an amount reasonably determined by the director of public works to be required to assure the performance of any other obligations for which the security was given.

D. Security given for the guaranty or warranty of work shall be released upon the expiration of the period for which it is given. The city council shall have two 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. (Ord. 86-2 § 7, 1986; Ord. 299 § 1 (part), 1982)