10-1.808 Improvement Security.

1. General. Any improvement agreement, contract or act required or authorized by the Subdivision Map Act or this chapter, for which security is required, shall be secured in accordance with §§66499 et seq. of the Subdivision Map Act and as provided below.

No final map or parcel map shall be signed by the City Engineer or recorded until all improvement securities required by this section have been received and approved.

2. 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.

a. Bond or bonds by one or more duly authorized corporate sureties;

The provisions of the bond or bonds shall be in accordance with Section 66499.1 and 66499.2 of the Subdivision Map Act.

b. An instrument of credit or certificate of deposit from one or more financial institutions subject to regulation by the State or Federal government with an office located in the nine Bay Area counties and pledging that the funds necessary to carry out the act or agreement are on deposit and guaranteed for payment.

c. 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 money.

3. Amount of Security. A performance bond or security in the amount of one hundred percent (100%) of the estimated construction cost to guarantee the construction or installation of all improvements shall be required of all subdivisions. An additional amount of fifty percent (50%) of the estimated construction cost shall be required to guarantee the payment to the subdivider's contractor, subcontractors and to persons furnishing labor, materials or equipment for the construction or installation of improvements. The foregoing shall not apply to a California nonprofit corporation which is funded by a government agency if the corporation complies with §66499.3(c) of the Subdivision Map Act.

The estimate of improvement costs shall be as approved by the City Engineer and shall provide for:

a. Not less than 5% nor more than 10% percent of the total construction cost for contingencies;

b. Increase for projected inflation computed to the estimated midpoint of construction;

c. All utility installation costs or a statement acceptable to the City Engineer from the utility company that adequate security has been deposited to ensure installation;

d. In addition to the full amount of the security, there shall be included estimated costs and reasonable expenses and fees, including attorney's fees, which may be incurred in enforcing the obligation secured.

4. Cash Bond. The subdivider shall deposit with the City not less than Three Thousand Dollars ($3,000.00) cash for subdivisions of four or fewer parcels, and Five Thousand Dollars ($5,000.00) for other subdivisions, or an additional amount as required by the City Engineer, not to exceed one percent of the construction cost. The deposit may be used at the discretion of the City to correct deficiencies and conditions caused by the subdivider or contractor 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 are released.

5. 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 throughout the warranty period of one year following completion and acceptance of the improvements. The amount of the warranty security shall be not less than 10% of the cost of the construction of the improvements, including the cash bond which shall be retained for the one year warranty period. In hillside areas, the warranty security shall be not less than 50% of the construction cost of improvements.

6. 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 to less than 10% 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 this ordinance, the Subdivision Map Act, or the improvement agreement.

7. Release of Improvement Securities.

a. Performance Security. The performance security shall be released only upon acceptance of the improvements by the City Council or City Engineer and when an approved warranty security has been filed with the City

Engineer. If warranty security is not submitted, performance security shall be released twelve (12) months after acceptance of improvements and correction of all warranty deficiencies.

b. Labor and Materials Security. Security given to secure payment to the contractor, subcontractors, and to persons furnishing labor, materials or equipment may, six (6) months after the completion and acceptance of the improvements by the City Council or City Engineer, be reduced to an amount equal to the amount of 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 such claims and obligations for which the security was given.

c. Warranty Security. The warranty security shall be released upon satisfactory completion of the warranty period provided:

(1) All deficiencies appearing on the final deficiency list for the subdivision have been corrected;

(2) Not less than twelve (12) months have elapsed since the acceptance of the improvements by the City Council.