Chapter 27.24 — BONDS, INSURANCE AND INDEMNITY

A.

Except as provided in Subsection B, this Chapter 27.24 sets forth payment bond, performance bond, insurance and indemnity requirements for Public Works Contracts.

B.

Notwithstanding Subsection A, this Chapter 27.24 does not apply to bond, insurance or indemnity requirements governed by a different Title of the San José Municipal Code, including subdivision improvement agreements governed by Title 19 and encroachment permits issued pursuant to Titles 13 or 15.

(Ord. 30308.)

In accordance with California Civil Code Section 9550, as it may be amended, the Director will require a Contractor that is awarded a Public Works Contract involving an expenditure of over $25,000 to provide a payment bond meeting the requirements of this Part 1 of this Chapter 27.24.

(Ord. 30308.)

A.

The payment bond amount cannot be less than 100 percent of the total amount payable under the Public Works Contract.

B.

The Contractor must provide an acceptable payment bond within the time set forth in the Public Works Contract, provided that under no circumstances can the Contractor start construction work until the required payment bond has been provided to the Director and approved by the City.

C.

An acceptable payment bond is one that:

Is executed by the Contractor as principal;

Is executed as surety by a corporate surety authorized to be a corporate surety under the laws of California;

Otherwise complies with all California laws applicable to such bonds, including California Civil Code Sections 9550 through 9566, inclusive, as those sections may be amended; and

Complies with all other requirements reasonably required by the Director.

(Ord. 30308.)

A.

The Director will require a Contractor to provide a performance bond whenever a payment bond is required.

B.

Only the Council can waive the performance bond requirement.

C.

A performance bond must meet the same requirements as set forth for payment bonds in Section 27.24.030 of this Chapter 27.24.

(Ord. 30308.)

The bond requirements in Sections 27.24.020 through 27.24.040 also apply to each Person performing construction work on any Public Property pursuant to a permit, except for any work that is done by the owner or occupier of property abutting upon a public street pursuant to a permit and that has a reasonable value of one hundred dollars or less.

(Ord. 30308.)

For any construction project in which a payment and performance bond is not otherwise required under this Chapter 27.24, the Director has the discretion to require such bonds if the Director determines they would protect the City from non-performance by the Contractor or Persons working on the project from non-payment by the Contractor.

(Ord. 30308.)

The Contractor can satisfy its performance and payment bond obligations by submitting multiple bonds from multiple sureties provided each bond meets the requirements of this Chapter 27.24.

(Ord. 30308.)

In addition to payment and performance bonds, the Director may require any other kinds of bond(s) and may fix the amount of such bond(s) as part of a Public Works Contract.

(Ord. 30308.)

A.

The Director cannot accept any alternative form of security for a payment bond.

B.

For all bonds other than a payment bond, the Director may accept an alternative form of security, such as a certificate of deposit or a letter of credit, if the Director, after coordinating with the Office of the City Attorney, determines that the alternative form of security adequately protects the City against the risk being covered.

(Ord. 30308.)

A Person required to provide bonds in accordance with this Part 1 of this Chapter 27.24 must do so at that Person's sole cost.

(Ord. 30308.)