19.12.05 Performance and Warranty Assurances

1. Performance Assurances. a. In General. Completion of i) infrastructure improvements, as defined in Utah Code Section 10-20-102, and ii) required public landscaping improvements shall be guaranteed by one of the methods listed below. A separate assurance shall be required for each phase of the development identified in the development agreement or subdivision approvals. A bond agreement approved by the City Attorney shall accompany each assurance. A performance assurance shall be required for all such infrastructure improvements and public landscaping improvements prior to subdivision plat recordation or construction on a site plan, except if the project is a commercial project a performance assurance shall only be required for public improvements and public landscaping improvements. b. Types of Assurances. The developer shall guarantee installation of required improvements in subsection a. by posting a bond to guarantee the successful and timely completion of improvements. A separate assurance shall be required for each plat of the development. Each assurance shall be accompanied by, or included as part of, a bond agreement on a form approved and provided by the City Attorney. An assurance may be in any of the following forms: i. Escrow account; ii. Irrevocable standby letter of credit; or iii. Cash deposited with City. c. Amount of Assurance. Each assurance shall be in an amount equal to 100 percent of the City Engineer’s estimated costs of the improvements. The bond amount may only be released after the City has inspected and accepted the required improvements in writing as meeting all City ordinances, regulations, standards, development agreements, and approvals. d. Use of Bond Proceeds; Release. If required improvements are not completed as provided in the bond agreement, the City shall use as much as necessary of the bond amount to complete those improvements including reimbursement of any administrative or legal costs incurred by the City. A development agreement or bond agreement may provide for up to four phased releases of portions of the bond proceeds as work proceeds, but at least twenty percent of the total shall be retained until all required improvements are installed, inspected, and accepted by the City in writing. Once all required improvements are installed, inspected, and accepted by the City in writing, the bond proceeds may be released so long as an amount equal to 10 percent of the City Engineer’s estimated cost of improvements for the warranty bond as specified in subsection 3. below is provided separately as part of a warranty bond. The developer and City may agree in the bond agreement that the warranty bond and performance bond will be combined in one agreement. e. Guarantor/Obligor. Other than for cash bonds deposited with the City, each guarantor or obligor of a bond must be licensed and regulated by the Department of Financial Institutions of the State of Utah or its successor, have an office in the State of Utah, and be insured by the Federal Depository Insurance Corporation or National Credit Union Share Insurance Fund. 2. Inspection and Acceptance of Improvements. Required improvements shall be inspected by the City before acceptance. Such acceptance shall be in writing and shall be approved by way of a bond release by the City Manager, following submission of the developer’s written request for acceptance and receipt of the City’s report that all improvements have been inspected and are in compliance with City ordinances, regulations, standards, bond agreements, development agreements, and approvals. Fees for the inspection of required improvements shall be set in the City’s adopted fee schedule. 3. Warranty of Improvements. Infrastructure improvements, as defined in Utah Code § 10-20-102, and public landscaping improvements shall also be guaranteed by the developer for materials and workmanship for one year, or longer as allowed by the Utah Code. Such warranty bond shall be required prior to subdivision plat recordation or construction on a site plan, except if the project is a commercial project a warranty bond shall only be required for public improvements and public landscaping improvements. a. Such a warranty provision shall be included in all development agreements and bond agreements. b. A warranty bond agreement shall be submitted for approval by the City Manager and the City Attorney, unless equivalent warranty provisions have been included in a performance assurance bond agreement. c. Enforcement of the warranty shall be assured by one of the following: i. Retention of ten percent of the total cost of all required improvements to be placed in an escrow account for the duration of the warranty period; ii. An irrevocable standby letter of credit for no less than ten percent of the cost of all required improvements for the duration of the warranty period; or iii. An escrow account in an amount no less than ten percent of the cost of all required improvements that shall be released upon expiration of the warranty period. d. At the conclusion of the warranty period, the City must issue a Certificate of Final Acceptance before the retained ten percent can be released. 4. Default. In the event that the owner, developer, or contractor is in default or fails or neglects to satisfactorily install the required improvements within two years from the date of posting the performance bond (or other period of time as specified per agreement with the City), or fails to correct, repair, or replace the defective improvements during the warranty period, the City may declare the bond proceeds forfeited and may, in its sole discretion, install or cause the required improvements to be installed, repaired, or replaced using the bond proceeds. The City may also use the bond proceeds to pay for administrative and legal costs incurred and may take any other action legally available.