Division 10-20.100:
Assurance of Performance for Construction


10-20.100.010    Purpose

10-20.100.020    Applicability

10-20.100.030    Assurances Required

10-20.100.040    Acceptable Forms of Assurance of Performance

10-20.100.010 Purpose

The purpose of this division is to comply with Arizona law regarding assurances of performance and to set forth the City’s expectations of developers regarding subdivision infrastructure.

(Ord. 2015-01, Amended, 03/03/2015)

10-20.100.020 Applicability

A.    The provisions of this division apply to the following:

1.    Public improvements within City public rights-of-way;

2.    Public improvements on private property within easements; and

3.    For subdivisions, private improvements on public and private property, including, but not limited to:

a.    Franchise utilities (such as electric, gas, phone, or cable);

b.    Drainage improvements;

c.    Landscaping as identified and approved by the preliminary plat;

d.    Private streets and alleys; and

e.    Other private amenities included in the subdivision plat such as clubhouses, pools, ramadas, etc.

(Ord. 2015-01, Amended, 03/03/2015)

10-20.100.030 Assurances Required

If the public and private subdivision infrastructure has not been constructed and accepted by the City Engineer, no final plat shall be recorded, nor shall a building permit be issued, until the applicant has posted an assurance of performance as set forth in Section 10-20.100.040, Acceptable Forms of Assurance of Performance. If the applicant or any of its successors or assigns obtains by any means a portion of the platted property before the improvements described in Section 10-20.100.020 have been accepted by the City Engineer in writing, then the new property owner must post a new assurance as set forth in Section 10-20.100.040 and sign a new Assurance of Performance Agreement. The City Engineer may require a new engineer’s estimate at this time, or may require reasonable increases in the amount of the assurance due to increased costs, inflation or other appropriate reason. Any remaining assurance posted by the applicant (or a successor) will not be released until the successor has posted the new assurance and signed the Assurance of Performance Agreement.

In lieu of the requirements above, a third-party trust agreement with the City that prohibits conveyance of title to the subdivision or any portion of the subdivision until after the infrastructure has been constructed and accepted by the City Engineer may replace the assurances required above if it is in a form of agreement acceptable to the City.

(Ord. 2015-01, Amended, 03/03/2015)

10-20.100.040 Acceptable Forms of Assurance of Performance

A.    The City Engineer may require the applicant to post separate assurances to cover portions of the improvements and may require the posting of an assurance to cover the costs of securing the site should the improvements remain incomplete as described in subsection (C)(1) of this section. The following forms of assurance may satisfy the requirements of Section 10-20.100.030, Assurances Required:

1.    Cash Deposit. The applicant may provide a cash deposit. The City Finance Division will maintain a separate accounting for the deposit; however, the applicant does not accrue interest on this type of assurance;

2.    Certificate of Deposit. The applicant may provide a certificate of deposit (automatically renewable). The certificate of deposit must be accompanied by an “Assignment of Certificate of Deposit and Acknowledgement by Issuer” form;

3.    Letter of Credit. The applicant may provide an irrevocable standby letter of credit from an approved bank or other approved financial institution authorized to do business in the State of Arizona. The irrevocable letter of credit shall provide that if all required improvements are not completed and accepted within the time allowed, the City may draw sufficient funds from the letter of credit to finance the construction of any remaining required improvements; or

4.    Performance Bond. The applicant may post a performance bond issued by a surety bonding company holding a certificate of authority to transact business in the State of Arizona. Bonds shall not be executed by an individual surety or sureties. The bond shall be made payable and be acceptable to the City, written and countersigned by an authorized representative of the surety who is either a resident of the State of Arizona or whose principal office is maintained in this State, and have attached thereto a certified copy of power of attorney of the signing official. In addition, said company shall be rated “A-” or better as required by the City, as currently listed in the most recent Best Key Rating Guide, published by the A. M. Best Company.

B.    Procedures for Assurance of Performance Options.

1.    All of the above assurance of performance options must be accompanied by a City “Assurance of Performance Agreement” for the required improvements. In addition, if the applicant is a legal entity, such as a corporation, limited liability company, partnership or trust, the assurance must also be accompanied by a City “Authorized Signature” form. In addition, the applicant shall provide an engineer’s estimate of probable construction cost prepared by a registered engineer licensed in Arizona, which itemizes all of the costs to design and construct the required improvements. The City Engineer or his or her designee may sign the Assurance of Performance Agreement on behalf of the City after approval as to form by the City Attorney or his or her designee.

2.    The applicant shall provide to the City Engineer an assurance in a form specified in subsection (A) of this section, and approved by the City Engineer and City Attorney, for performance of the required improvements in an amount not less than 120 percent of the cost as estimated by the applicant’s engineer for the construction and installation of the required improvements, or uncompleted portions thereof. At the discretion of the City Engineer, the assurance amount may be increased above 120 percent in situations which may include, but are not limited to, incomplete design construction plans or anticipated design or construction difficulties. The City may also require the applicant to post additional assurances in the course of the project if the estimate relating to franchise utilities is underestimated at the time the assurance is posted. The original amounts of the assurance option selected by the applicant, as provided in subsection (A) of this section, including cash deposits, letters of credit and performance bonds, but excluding certificates of deposit, may be reduced or drawn down upon acceptable completion of portions of the required improvements as determined by the City Engineer. The City Engineer may authorize releases of no less than 20 percent of the assurance. In no event, without prior approval of the City Engineer, shall the assurance be reduced below 20 percent of its original amount until the required improvements are completed and accepted and the one-year warranty period has expired. All sums of the assurance remaining, including interest where applicable, shall be returned or released to the applicant within 30 days after the one-year warranty period has expired.

C.    Term of Obligation.

1.    The period within which the required improvements must be completed shall be incorporated into the documents creating the assurance. If the improvements are not completed within the specified period as evidenced either by a lack of work on the improvements for a period of 60 consecutive calendar days (except for adverse weather conditions); or the improvements as constructed are not acceptable to the City and the applicant is unwilling or unable to make satisfactory corrections, the City may, upon written notice to the applicant thereof, draw from the applicable assurance funds the estimated amount necessary to complete the improvements.

2.    The applicable assurance, or applicable portion thereof, shall remain in full force and effect until the required improvements have been completed and accepted by the City Engineer by a letter of acceptance; or until the applicable assurance funds have been exhausted by the City. The City may deduct from the proceeds obtained from the assurance its reasonable attorneys’ fees, costs and administrative costs for enforcing and/or administrating the assurance. The City may reduce the amount of public or private improvements constructed from the proceeds of the assurance as a result of that deduction.

3.    An extension of the period within which the required improvements must be completed may be granted for sufficient cause for the improvements at the discretion of the City Engineer if requested in writing by the applicant; provided, that the term of the applicable assurance is extended for such period. At the time the extension is requested, the City Engineer may require additional assurances due to a change in circumstances such as increased costs, inflation, or for other appropriate reasons.

(Ord. 2015-01, Amended, 03/03/2015)