Sec. 33-69. Improvement Security.
a. Required.Any improvement agreement, contract or act required or authorized by the Subdivision Map Act for which security is required, shall be secured in the manner provided for in Section 66499 of the Subdivision Map Act.
b. Amount.The subdivider shall file with the improvement agreement an improvement security in the amount and for the following purposes:
1.An amount equal to 100% 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.
2.An amount equal to 100% of the total estimated cost of the improvement or the 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 or the performance of the required act, or as otherwise provided in the subdivider’s agreement.
3.An amount determined by the City Council to be 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 defective materials furnished.
4.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.
5.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 10% of the original estimated cost of the improvement.
c. Type.Improvement security as used in this Section means one or more of the following:
1.A cash deposit made to the City.
2.A bond secured by one or more duly authorized corporate sureties.
3.An instrument of credit from a financial institution subject to state or federal regulations pledging that the funds necessary to meet the performance are on deposit and guaranteed for payment for the purposes set forth in the instrument.
4.A lien upon the property to be divided, created by contract between the owner and the City, if the City finds that it would not be in the public interest to require the installation of the required improvement sooner than two years after the recordation of the map.
5.Any form of security, including security interests in real property, which is acceptable to the City.
Any written contract or security interest in real property entered into as security for performance shall be recorded with the County Recorder. From the time of recordation of the written contract or document creating a security interest, a lien shall attach to the real property particularly described therein and shall have the priority of a judgment lien in an amount necessary to complete the agreed-to improvements. The recorded contract or security document shall be indexed in the Grantor Index to the names of all record owners of the real property as specified on the map in the Grantee Index to the City.
The City may at any time release all or any portion of the property subject to any lien or security interest created by this subdivision or subordinate the lien or security interest to other liens or encumbrances if it determines that security for performance is sufficiently secured by a lien on other property or that the release or subordination of the lien will not jeopardize the completion of agreed-upon improvements.
d. Special assessment proceeding -- reduction.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 faithful performance and labor and materials bonds 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 Chapter.
e. Release.The improvement security required hereunder shall be released in the following manner:
1.Security given for faithful performance of any act or agreement shall be released upon the final completion and acceptance of the act or work.
2.The City Council 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 thereafter by the subdivider. In no event shall the City Council 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 Chapter, the Subdivision Map Act or the improvement agreement.
3.No security given for the guarantee or warranty of work shall be released until the expiration of the period thereof.
f. Forfeiture.In the event that the subdivider fails to complete all improvement work agreed upon or required in accordance with the provisions of this Chapter and the City must complete said work, the City shall call on the surety company for reimbursement or shall appropriate funds for reimbursement from any cash deposits. If the amount of the surety bond or the cash deposit exceeds all costs and expenses incurred by said work, the City shall release the remainder of the bonds or of the cash deposit to the subdivider. If the amount of the surety bond or of the cash deposit is less than the costs and expenses incurred by the City for the work, the subdivider shall be liable to the City for the difference.