Boyn07 Chapter 7
SURETY
Art. I. In General
ARTICLE I. IN GENERAL
Sec. 1. Purpose.
This policy delineates specific criteria and prerequisites for accepting surety by the city in conjunction with developer agreements, contracts, development related improvements and
any other contractual obligations.
(Ord. No. 04-040, § 2, 6-15-04
Sec. 2. Applicability.
A. When required.
Wherever surety is required within the Boynton Beach Code of Ordinances and/or Land Development Regulations it shall be provided in the form and manner prescribed in Section 3 hereinafter.
The type of surety shall be determined by the administrator of the code section involved, and shall be acceptable to the Boynton Beach City Attorney. Required improvements shall include
all those items stipulated in Chapter 6, Article III of the LDR including restoration of the lands disturbed by said improvements. Surety for required utility system improvements shall
be coordinated directly with the Utilities Department, whether they will remain private or conveyed to the city upon completion of their construction. It shall also include any off-site
areas disturbed to install any improvements required by the project. Surety shall be required for improvements associated with all planned developments, to wit, PCDs, PIDs, PUDs, etc.
B. Amount.
The amount of surety shall be equal to or greater than 110% of the total obligation whether it be for restoration, abatement, maintenance, guarantee, fees in lieu of land dedication,
required improvements or any other purpose.
C. Periodic reduction of surety.
From time to time during progress of the work the developer may request a reduction in the dollar amount of the surety on the basis of work completed, but in every case the remaining
funds shall be sufficient to cover 110% of the cost to complete the obligation. In the case of surety for required improvements associated with subdivision development, five (5) per
cent of the engineer's certified cost of required improvements shall be retained for one (1) year after acceptance of such improvements by the City Commission as a guarantee against
defects in workmanship and material. Reduction of surety shall be approved by the City Manager without the necessity of Commission approval. The final release of surety, when the surety
is $20,000 or greater, shall be approved by motion of the City Commission, with the written recommendation by the appropriate department and/or the City Engineer. Release of surety
less than $20,000 shall be by the City Manager.
D. Default.
In the event of default by the developer or failure of the developer to complete the obligations within prescribed time limits, the city, after thirty (30) days written notice to the
developer, shall cash the surety to insure satisfactory completion of the obligations.
(Ord. No. 02-033, §§ 3, 4, 8-20-02; Ord. No. 04-040, § 2, 6-15-04; Ord. No. 06-086, § 2, 11-21-06; Ord. No. 07-005, § 2, 3-5-07)
Sec. 3. Types of surety.
A. Letters of Credit.
1. The face of the letter of credit must indicate the following:
a. The letter of credit is "clean".
b. The letter of credit is irrevocable and shall remain enforceable until released by a resolution adopted by the City Commission.
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c. The purpose or project for which the letter of credit is issued.
d. The specific amount of the letter of credit, in U.S. Dollars.
e. The method of disbursement of draws against the letter of credit.
f. The street address where draws against the letter of credit shall be made.
g. The letter of credit is enforceable in a court of competent jurisdiction in Palm Beach County, Florida, and is to be interpreted by Florida Law.
h. The name and street address of a designated agent within the State of Florida for acceptance of process.
2. At the time of issuance of the letter of credit, and at all times subsequent thereto and so long as the letter of credit is enforceable, the issuing financial institution must have
a minimum "peer group" rating of fifty (50) in the latest Sheshunoff Quarterly Listing or a minimum rating of one hundred twenty-five (125) in the latest IDC Bank Financial Quarterly
Listing. The city Finance Department shall periodically verify this information.
3. At any time during the life of the letter of credit, should the rating of the issuing financial institution fall below both of the minimum ratings indicated in Section 2 above,
or should the financial institution merge with another financial institution or have a conservator or receiver appointed to supervise or control the operation of its business or become
insolvent, the contractor/developer must, within sixty (60) calendar days after notification by the city:
a. Replace the existing letter of credit with a replacement letter of credit from a financial institution with either of the minimum ratings as specified in Item 2 above; or
b. At the city's option, the letter of credit may be replaced by other surety acceptable to the city in accordance with the city's existing surety policies.
4. Failure to comply with this provision may result in any or all of the following actions by the city:
suspension of the contractor/developer's right to pull building permits and schedule inspections; issuance of a stop work order; and/or revocation of the land development permit. These
actions shall be in effect until a satisfactory replacement surety is accepted by the city.
5. No letter of credit shall be deemed accepted by the city until review and approval by the City Attorney's office for legal sufficiency, and by the Finance Department for the bank's
rating.
6. Original letters of credit shall be maintained by the finance department and each shall be clearly identified as to the project or contract for which it is issued.
7. Letters of credit accepted prior to approval of this article shall continue through the current expiration date of the letter of credit provided however, renewal of these existing
letters of credit shall be in accordance with this policy for accepting letters of credit.
8. The financial institution issuing any letter of credit must be authorized to do business in the State of Florida and shall show proof of same upon request of city staff.
B. Cash, certified check, cashier's check. Completion of the required improvements may be secured by cash deposited by the developer with the city or in an account subject to the control
of the city in accordance with an agreement on such deposit or account. No interest shall be earned on such deposit or account.
C. Performance or surety bond. Completion of the required improvements may be secured by a performance or surety bond obtained from a company acceptable to the city in accordance with
the city policy on performance bonds. It shall guarantee all work will be completed in full accordance with the approved land development permit.
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D. Escrow (Agreement) deposit. An executed escrow agreement between the developer, a bank approved by the city and the city as the third party beneficiary may be established for this
surety. The escrow agreement shall require that release of the funds, or any part thereof, shall be subject to city approval. The agreement shall be in accordance with the city policy
on such escrow agreements.
E. The Finance Department shall maintain an index of all surety, indicating at a minimum, the project name, the amount of surety, then names and contact information for all obligees
of the surety, the date posted, the date reduced and the date released.
(Am. Ord. 98-08, § 1, 2-2-98; Ord. No. 02-033, § 4, 8-20-02; Ord. No. 03-018, §§ 1-3, 6-3-03; Ord. No. 04-040, § 2, 6-15-04)
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