Chapter 16.16
IMPROVEMENT AGREEMENTS AND ACCEPTANCE
Sections:
16.16.020 Subdivision improvement agreement.
16.16.030 Deferred improvement agreement.
16.16.040 Improvements reimbursement agreement.
16.16.050 Improvement security.
16.16.060 Installation of improvements.
16.16.070 Construction and inspection.
16.16.080 Certificate of occupancy.
16.16.090 Acceptance of improvements.
16.16.010 Purpose.
This chapter establishes requirements and procedures governing subdivision agreements and the installation, inspection and acceptance of subdivision improvements. (Ord. 25-01 § 1).
16.16.020 Subdivision improvement agreement.
A. Subdivision Improvement Agreement Required. Before any map is approved for recordation by the review authority, the subdivider shall submit a signed subdivision improvement agreement ensuring the completion of improvements within a specified time and payment for them.
B. Contents of Agreement. The agreement shall be based on the city’s standard form of subdivision improvement agreement and shall include (but not be limited to): the subdivider’s promise to complete certain improvements and to perform repairs or corrective work for 12 months following acceptance by the city; the time of completion; special conditions; insurance requirements and improvement security requirements for faithful performance, labor and materials and warranty period; and a promise to pay the city’s legal fees if the subdivision approval is challenged. (Government Code Sections 66462, 66474.9)
C. Occupancy. The subdivision improvement agreement may provide for a public improvement to be completed later than the certificate of occupancy subject the provisions of BMC 16.16.080 (Certificate of occupancy) and the city engineer’s findings that:
1. The incomplete improvement will not affect the public health or safety;
2. There is a legitimate reason to allow the particular improvement to be completed after the certificate of occupancy;
3. There is a specific date or defined time period within which the improvement will be completed; and
4. Adequate security is posted with the city for completion of the improvement in accordance with BMC 16.16.050 (Improvement security).
D. Approval. The agreement shall be subject to the approval as to form by the city attorney and approval by the subdivision review authority. The council’s delegation of authority to approve subdivision improvement agreements shall be reviewed periodically. (Government Code Section 66462)
E. Recordation. The executed improvement agreement shall be recorded in the office of the county recorder and shall bind the subdivider’s successor(s)-in-interest. (Ord. 25-01 § 1).
16.16.030 Deferred improvement agreement.
A. When improvements in association with a parcel map are to be deferred, the owner of the real property shall enter into an agreement with the city in a form acceptable to the city attorney and approved by the city engineer for the completion of improvements at a time in the future as specified by the city. The agreement shall provide for all of the following (Government Code Section 66411.1):
1. Timing. The owner shall begin construction of improvements within 90 days of the receipt of the notice to proceed from the city, or as mutually agreed upon in writing;
2. Security. Upon entering into a deferred improvement agreement with the city, the owner shall provide improvement security pursuant to BMC 16.16.050 (Improvement security);
3. Default. In the event of a default by the owner, the city is authorized to cause construction to be done and charge the entire cost and expense to the owner, including interest from the date of notice of the cost and expense until paid. The interest rate shall be consistent with the requirements of Article 15, Section 1 of the California State Constitution;
4. Recordation. The agreement shall be recorded with the county recorder at the expense of the owner and shall constitute notice to all successors and assigns of title to the real property of the obligations specified in the agreement and shall also constitute a lien in a sufficient amount necessary to fully reimburse the city, including interest as provided above, subject to foreclosure in the event of a default in payment. The obligations under the agreement shall run with the property and constitute a lien against it;
5. Indemnification. In the event of litigation challenging the subdivision approval or occasioned by default of the owner, the owner agrees to pay all costs involved, including attorneys’ fees of an attorney retained as counsel by the city. Those costs shall become a part of the lien against the real property; and
6. Conformance. The construction of deferred improvements shall conform to this title and all applicable provisions of this municipal code in effect at the time of construction.
B. Designated Remainder Parcels.
1. For a designated remainder parcel, the fulfillment of construction requirements for improvements shall not be required until the city is ready to issue a permit or other grant of approval for development of the designated remainder parcel, or until the construction of the improvements is required under an improvement agreement between the subdivider and the city.
2. In the absence of an improvement agreement, the city may require fulfillment of the construction requirements at the sole discretion of the city following approval of the final map and before the issuance of a permit or other grant of approval for the development of the designated remainder parcel upon a finding by the city that fulfillment of the construction requirements is necessary for any of the following reasons (Government Code Section 66424.6):
a. The public health and safety; or
b. The required construction is a necessary prerequisite to the orderly development of the surrounding area.
3. If a designated remainder parcel is subsequently sold, the owner shall obtain a certificate of compliance or conditional certificate of compliance pursuant to BMC 16.40.020 before development occurs, including issuance of any construction permit pursuant to BMC Title 15 (Buildings and Construction). (Ord. 25-01 § 1).
16.16.040 Improvements reimbursement agreement.
A. The subdivider may request a reimbursement agreement. If the improvements required to be installed by the subdivider under the provisions of this title are greater than the maximum size required by the city and contain supplemental capacity, length, number or size for the benefit of property not within the subdivision and are to be dedicated to the public, the subdivider may request that the city enter into an improvements reimbursement agreement to reimburse that portion of the cost equal to the difference between the amount it would have cost the subdivider to install such improvements to serve the subdivision only and the actual cost of such improvements pursuant to this title.
B. Not Available Once Construction Begins. For improvements not covered by established mitigation funds, the city may not approve an improvements reimbursement agreement after the date construction begins on the improvements. (Government Code Sections 66475.4, 66485 – 66487) (Ord. 25-01 § 1).
16.16.050 Improvement security.
A. General. An improvement agreement, contract, or act required or authorized by the Map Act or this title for which security is required shall be secured in compliance with Government Code Section 66499 et seq. and as provided in this section, and subject to the approval of the city engineer.
B. Amount of Security.
1. The subdivider shall provide a bond or other approved security pursuant to subsection (C) of this section (Acceptable Forms of Security) in the amount of:
a. One hundred percent of the total estimated construction costs to guarantee the construction or installation of all improvements;
b. Fifty percent of the estimated construction cost to guarantee payment to subdivider’s contractor, and to subcontractors and to persons furnishing labor, materials, or equipment for the construction or installation of all improvements; and
c. Fifteen percent of the cost of the improvements to guarantee the improvements against any defective work or labor done, or defective materials used, in the performance of the improvements for the warranty period of 12 months following completion and acceptance of the improvements warranty security. The security for this warranty period may be provided either (i) at the time of signing the subdivision improvement agreement or (ii) when the construction is completed, before the city accepts the improvements or releases the performance security, at the subdivider’s option. (Government Code Section 66499.3(d))
2. As a part of the obligation guaranteed by the security, and in addition to the full amount of the security, there shall be included costs and reasonable expenses and fees, including attorneys’ fees, incurred by the city in enforcing the obligations secured. (Government Code Sections 66499.3, 66499.4)
3. The estimate of improvement costs shall be as approved by the city engineer and shall provide for all of the following:
a. Total construction costs;
b. Ten percent of the total construction cost for contingencies;
c. Increase for projected inflation computed to the estimated end of construction;
d. All utility installation costs or a certification acceptable to the city engineer from the utility company that adequate security has been deposited to ensure installation; and
e. Enforcement costs calculated as $25,000 or five percent of the estimated construction cost, whichever is greater. These enforcement costs are not added if the bond language includes enforcement costs in addition to the face amount of the bond.
C. Acceptable Forms of Security. The form of security shall be one or a combination of the following at the option of and subject to the approval of the city engineer:
1. A bond by an insurer admitted transacting surety insurance in California. The form of the bond(s) shall comply with Government Code Sections 66499.1, 66499.2, 66499.3, and 66499.4;
2. 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 moneys;
3. An irrevocable letter of credit from one or more financial institutions regulated by the state or federal government pledging that the funds necessary to carry out the act or agreement are on deposit and guaranteed for payment and will be released only upon receipt of written instructions from the city. The form of the letter shall be subject to the approval of the city attorney;
4. An instrument of credit from an agency of the state, federal, or local government when any agency of the state, federal, or local government provides at least 20 percent of the financing of the portion of the project requiring security (Government Code Section 66499(a));
5. 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(s) sooner than two years after the recordation of the map; the lien shall be in compliance with Government Code Section 66499(b);
6. A deed of trust which shall be recorded in the county recorder’s office, and which shall be in compliance with Government Code Section 66499(b) (Government Code Section 66449(a)(5)); or
7. Any other comparable form of security, acceptable to the city, as provided in Government Code Section 66499.
D. Release of Improvement Security.
1. Performance Security. The city shall release the faithful performance security upon final acceptance of all improvements by the city.
a. Consistent with the provisions of Government Code Sections 66499.7 and 66499.8, a subdivider may apply to the city for a partial release of the faithful performance security upon completion of at least 50 percent of the required work in compliance with the plans and specifications for the improvement(s).
b. All applications for partial release of faithful performance security shall include a list of work completed, state the amount of the security requested for release, list all remaining work to be completed, include a cost estimate to complete all remaining work, and obligate the subdivider to continue providing the unreleased amount of the faithful performance security.
c. A partial release of the faithful performance security is subject to the city engineer’s approval, issued upon the city engineer’s investigation and determination that the subdivider has satisfied all of the following conditions:
i. Not less than 50 percent of the required work shall have been completed in full compliance with the plans and specifications for the improvement(s);
ii. All of the work requested for release has been completed in compliance with the plans and specifications for the improvement(s);
iii. The amount of faithful performance security requested for release is commensurate with the amount of work completed;
iv. The cost estimated for all remaining work is acceptable; and
v. The subdivider has continued to provide for the unreleased amount of the faithful performance security.
d. Following the city engineer’s determination that the subdivider has satisfied the conditions above, the city engineer is authorized to partially release the faithful performance security in an amount commensurate with the work completed, except that if less than all the work has been completed, the city engineer shall not release or otherwise reduce the amount of the faithful performance security to an amount less than 10 percent of the total original faithful performance security, or 200 percent of the cost estimate for completion of all remaining work, whichever is less.
e. The city engineer is not authorized to accept the public improvements. A partial release of the faithful performance security is not, and shall not be deemed, an acceptance by the city of the completed improvements, and the risk of loss or damage to the improvements and the obligation to maintain the improvements shall remain the sole responsibility of the subdivider until all of the improvements are accepted by the city.
2. Material and Labor Security.
a. The city shall reduce security given to secure payment to the contractor, subcontractors, and to persons furnishing labor, materials or equipment, 180 days after the completion and acceptance of improvements by the city, to an amount equal to the amount of all claims filed and of which notice has been given to the city.
b. The city shall release the balance of the security upon the settlement of all claims and obligations for which the security was given. (Government Code Section 66499.7(b))
3. Warranty Security. The city shall release the warranty security upon satisfactory completion of all warranty work required to be completed by the subdivider; provided:
a. All deficiencies appearing on the warranty deficiency list for the subdivision have been corrected to the satisfaction of the city engineer; and
b. Not less than 12 months have elapsed since the acceptance of the improvements by the city. (Government Code Sections 66499.3(d), 66499.7, 66499.9) (Ord. 25-01 § 1).
16.16.060 Installation of improvements.
A. Time of Completion.
1. Final Maps.
a. The subdivider shall complete the improvements within 12 months from the recording of the final map, unless an extension is granted by the review authority.
b. If the subdivider fails to complete the improvements within the specified time, the city may, by council resolution, cause the uncompleted improvements to be completed, and the parties executing the performance security shall be firmly bound for the payment of all costs.
2. Parcel Maps.
a. The completion of improvements is not required until a permit or other grant of approval for the development of a parcel within the subdivision is applied for.
b. The city may require completion of the improvements within 12 months from the recording of the parcel map when it finds that the completion of the improvements is necessary for public health or safety or for the orderly development of the surrounding area.
c. The review authority may make this finding at the time of map approval.
d. The specified date, when required, shall be stated in any applicable improvement agreement.
B. Subdivision Improvement Agreement Extensions.
1. The city council may, in its sole discretion, extend the completion date upon prior written request by the subdivider and the submittal of adequate evidence to justify the extension.
a. The request shall be made not less than 30 days prior to expiration of the current subdivision improvement agreement.
b. No extension shall be granted if any parcel within the subdivision has been sold.
2. The subdivider shall enter into a subdivision improvement agreement extension with the city. The agreement shall be prepared by the city engineer, approved as to form by the city attorney, executed by the subdivider and surety.
3. In acting upon a request for a subdivision improvement agreement extension, the city may require the following:
a. Revision of improvement plans to provide for current design and construction standards when required by the city engineer;
b. Revised improvement construction estimates to reflect current improvement costs as approved by the city engineer;
c. Increase of improvement securities in compliance with revised construction estimates;
d. Increase of inspection fees to reflect current construction costs; however, inspection fees are not subject to decrease or refund; and
e. The council, as a condition to approving a time extension for the completion of improvements, may impose additional requirements relating to the physical improvements, considered necessary to bring the project into compliance with current ordinances, policies, and standards.
4. The subdivider shall pay the costs incurred by the city in processing the extension request and extension agreement. (Ord. 25-01 § 1).
16.16.070 Construction and inspection.
A. Conformance Required. The construction methods and materials for all improvements shall conform to the conditions of approval and standard engineering specifications, and are subject to inspection and approval by the city engineer.
B. Final Report Required.
1. Except for grading, construction shall not begin until all required improvement plans are approved by signature of the city engineer. Grading plans shall conform to submitted improvement plans and any applicable approval issued pursuant to BMC Title 15 (Buildings and Construction).
2. A final report, stamped and signed by a professional geotechnical engineer licensed by the state of California, acceptable to the city engineer and building official shall be prepared for each preliminary soil engineering report and for each preliminary engineering geology report.
3. Each final report shall be submitted at the completion of the grading work, before the release of grading bonds, and before issuance of any building permits.
4. Each final report shall contain complete field data to indicate full compliance with the preliminary report and subsequent recommendations based on new information acquired during construction.
5. The geotechnical engineer shall provide written approval as to the adequacy of the site for the intended use based on soil engineering factors.
6. The engineering geologist shall provide written approval as to the adequacy of the site for the intended use as affected by geologic factors. (Government Code Sections 66490, 66491)
C. Inspection of Work by City Engineer.
1. The subdivider shall notify the city engineer at least 10 working days prior to beginning any work.
2. All work done in constructing the improvements and all materials furnished shall be subject to the inspection of the city engineer.
3. The city engineer shall have access to the work at all times during construction and shall be furnished with every reasonable facility for ascertaining that the materials used and the workmanship are in compliance with the requirements of this title.
4. If any of the improvement work is covered prior to inspection of the improvements as required by the city engineer, the city engineer may reject that work, and it shall be deemed to have been done at the sole risk of the subdivider.
D. Completion Without Undue Delay.
1. The subdivider shall prosecute the work to completion without undue delay.
2. If there is a delay in completion of the work beyond the period stated in the subdivision agreement, unless an extension is approved by the council and the surety company, the council may take appropriate steps to use the security to complete the work.
E. Inspection of Private Streets and Utility Systems Improvements. The city engineer shall inspect private streets and the utility systems improvements for conformance with this municipal code and the standard engineering specifications. (Ord. 25-01 § 1).
16.16.080 Certificate of occupancy.
A. Issuance. The city shall not issue any certificate of occupancy prior to completion of public improvements, unless one of the following exceptions applies. In this section, “completion of public improvements” shall mean all subdivision improvements have been completed, are acceptable to the city engineer, and are in a condition to be accepted for maintenance by city council.
B. Exceptions.
1. Phased Final Maps. A certificate of occupancy for a particular phase of a final map may be issued when the subdivider has completed all of the public improvements for that phase.
2. Subdivision Improvement Agreement. A subdivision improvement agreement may provide for a public improvement to be completed later than the certificate of occupancy in accordance with BMC 16.16.020 (Subdivision improvement agreement).
3. Minor Improvements. If neither subsection (B)(1) (Phased Final Maps) nor (B)(2) (Subdivision Improvement Agreement) of this section applies, the director may authorize the release of a certificate of occupancy if the incomplete items are minor in nature, have an estimated completion cost of less than $10,000 and all of the following conditions are met:
a. The city engineer makes a finding that the incomplete improvement will not affect the public health or safety;
b. The subdivider enters into a written agreement with the city, agreeing to complete the improvement by a date certain. The city attorney shall review such agreement as to form and the city engineer is authorized to sign this agreement; and
c. The subdivider posts a cash deposit which the city may use to complete the improvement if the subdivider fails to do so. The deposit shall be in an amount sufficient to pay for the design and installation or construction of the improvement.
4. Off-Site Improvements. If subsections (B)(1) through (B)(3) of this section (exceptions) do not apply, the council may authorize the release of a certificate of occupancy before completion of an off-site improvement if all of the following conditions are met:
a. The council makes a finding that the incomplete item will not affect the public health or safety;
b. The subdivider enters into a written agreement with the city, agreeing to complete the improvement by a date certain or defined time period;
c. The subdivider provides evidence that the subdivider has all necessary legal rights to the property on which the off-site improvements will be constructed;
d. The subdivider posts a cash deposit which the city may use to complete the improvement if the subdivider fails to do so. The deposit shall be in an amount sufficient to pay for the design and installation or construction of the improvement; and
e. The council approves the new agreement and the certificate of occupancy by resolution, and findings in the resolution show that these conditions have been met. (Ord. 25-01 § 1).
16.16.090 Acceptance of improvements.
A. Action to Accept Improvements.
1. When the subdivider has completed all improvements, corrected all deficiencies, and submitted record drawings of the improvements, to the sole satisfaction of the city engineer, the city may consider the subdivision improvements for acceptance.
2. The council may act by resolution to accept the improvements for maintenance and also accept irrevocable offers of dedication for public streets and easements.
B. Filing of Notice. When irrevocable offers of dedication for rights-of-way, easements, or improvements are accepted by the city for public purposes, the city clerk shall file a notice with the county recorder. (Ord. 25-01 § 1).