Chapter 14.105
FINANCIAL GUARANTEES

Sections:

14.105.010    Purpose.

14.105.020    Repealed.

14.105.030    Applicability.

14.105.040    Rules.

14.105.050    Financial guarantee conditions.

14.105.060    Financial guarantees – Form and amount.

14.105.070    Performance guarantee reductions.

14.105.080    Release of financial guarantees.

14.105.090    Scheduling of final performance, maintenance, and defect inspections.

14.105.100    Financial guarantee waivers.

14.105.110    Status of current financial guarantees.

14.105.120    Performance guarantees authorized.

14.105.130    Maintenance and defect guarantees authorized.

14.105.140    Default.

14.105.150    Restoration and reclamation activities.

14.105.160    Site development and restoration.

14.105.170    Liability insurance.

14.105.180    Hold harmless.

14.105.010 Purpose.

The purpose of this chapter is to establish authority and procedures for accepting and enforcing financial guarantees, with the intent of assuring that development projects are completed and maintained in accordance with City approval conditions. (Ord. 20-07 § 80; Ord. 43-02 § 2 (27.50.010))

14.105.020 Provisions.

Repealed by Ord. 14-09. (Ord. 43-02 § 2 (27.50.020))

14.105.030 Applicability.

The provisions of this chapter shall apply to permits and approvals granted pursuant to CMC Titles 12, 13, 14, 15, 17, or 18 (or their successors). No permit shall be issued unless the developer or contractor posts and maintains a financial guarantee and liability insurance for the period of time the permit is in effect as required by this chapter. (Ord. 14-09 § 2; Ord. 43-02 § 2 (27.50.030))

14.105.040 Rules.

The Department is authorized to adopt such rules as are deemed appropriate to implement this division. The Director may prepare and require the use of such forms as are deemed appropriate for its administration. (Ord. 43-02 § 2 (27.50.040))

14.105.050 Financial guarantee conditions.

(1) The developer or contractor shall furnish a performance financial guarantee, which shall be conditioned upon faithful completion of that work performed pursuant to the conditions of approval for development or other permit and in accordance with CMC 14.105.120. All work on public and private roads, work within right-of-way or easements for public or private roads, and construction or modification of storm drainage facilities required as a condition of approval or associated with a City-issued permit, shall be guaranteed by a performance financial guarantee at the time of permit issuance.

(2) The developer or contractor shall guarantee the successful operation, maintenance, repair and replacement of the required improvements in accordance with CMC 14.105.130.

(3) Every financial guarantee shall obligate the applicant to comply with all of the provisions of the Covington Municipal Code and complete all conditions required by the permit or approval within the time limit specified by the financial guarantee.

(4) No financial guarantee shall be released by the City until the City’s inspector has inspected the site(s) and the developer’s engineer or appropriate technical professional has provided written confirmation that the performance, maintenance, mitigation or monitoring requirements have been met.

(5) The City may collect against the financial guarantee when work is not completed in a timely manner in accordance with conditions of the permit and/or approval granted pursuant to CMC Titles 12, 13, 14, 15, 17, or 18 (or their successors). It is in the Director’s sole reasonable discretion to determine whether the permit or approval conditions have been satisfied in a timely manner, and to determine whether the performance guarantee shall be collected to remedy the violation. The Director shall notify the applicant in writing of any such determination. (Ord. 14-09 § 3; Ord. 43-02 § 2 (27.50.050))

14.105.060 Financial guarantees – Form and amount.

(1) Financial guarantees shall be in a form approved by the Director, Finance Director, and City Attorney. All financial institutions identified on a guarantee shall be approved by the Finance Director.

(2) The amounts of the financial guarantees shall be based on the schedules appropriate to the required work, which are updated on a periodic and frequent basis to ensure that the amount fully captures likely costs. Financial guarantees shall also require a contingency in an amount to be determined by the Director. (Ord. 14-09 § 4; Ord. 43-02 § 2 (27.50.060))

14.105.070 Performance guarantee reductions.

The Director may allow reductions in performance guarantee amounts in accordance with the City’s cost estimate of the work remaining to be completed. No more than one reduction will be allowed except that two reductions may be allowed at the Director’s discretion for phased subdivisions. The reduction shall not exceed 70 percent of the initial guarantee value including contingency. The request for reduction shall be in writing, accompanied by a schedule for completion of remaining work. (Ord. 43-02 § 2 (27.50.070))

14.105.080 Release of financial guarantees.

The Department shall not release performance guarantees until all permit fees have been paid to date, maintenance guarantees and defect guarantees have been posted, if applicable, inspection of the development site has been performed, and the Director has determined that the conditions and requirements of the permit/approval otherwise specified in the financial guarantee have been met and granted final construction approval if applicable. (Ord. 43-02 § 2 (27.50.080))

14.105.090 Scheduling of final performance, maintenance, and defect inspections.

The Department shall be responsible for scheduling final performance, and maintenance and defects inspections. The Department should schedule such inspections approximately 45 days prior to expiration of the performance or maintenance period. If necessary to determine completion of performance, additional inspections should also be made after the expiration of the performance period. Periodic inspections may also be made at the discretion of the Director. (Ord. 43-02 § 2 (27.50.090))

14.105.100 Financial guarantee waivers.

Consistent with Chapter 36.32 RCW, the City shall not require any State agency, unit of local government, or gas company or electrical company (as those terms are defined in RCW 80.04.010) to secure the performance of a permit requirement with a financial guarantee as a condition of issuing a permit or approval for a building construction project. The Director, however, may require such State agency or unit of local government, gas company or electric company to sign an agreement to complete required improvements and protect the City’s rights and duty to remedy unsatisfactory performance. (Ord. 43-02 § 2 (27.50.100))

14.105.110 Status of current financial guarantees.

All financial guarantees required by the Department and posted by the applicant prior to the effective date of the ordinance codified in this chapter shall continue to be in force until released by the Director following satisfactory compliance with financial guarantee conditions. (Ord. 43-02 § 2 (27.50.110))

14.105.120 Performance guarantees authorized.

(1) The Department is authorized to require all applicants constructing improvements pursuant to any permits and approvals granted pursuant to CMC Titles 12, 13, 14, 15, 17, or 18 (or their successors) to post performance guarantees with the Director to guarantee completion of required improvements and compliance with this code.

(2) If more than one such guarantee is required, the applicant may, with the permission of the Director, and to the extent allowable by law, combine guarantees; provided, that at no time shall the guaranteed amount be less than the total amount which would have been required in the form of separate financial guarantees; and provided further, that such guarantee shall on its face clearly delineate those separate additional financial guarantees which it is intended in lieu of.

(3) Unless otherwise specifically indicated in this code, or as a condition of permit approval, performance guarantees shall require actual construction and installation of required improvements within one year after recording for final subdivision, one year after recording for short subdivision, one year after right-of-way permit issuance or six months after temporary building occupancy issued for a building permit. The time limit for performance guarantee compliance may be extended by six months at the Director’s discretion, if circumstances beyond the control of the applicant warrant an extension. The request for an extension shall be in writing, accompanied by a schedule for completion of remaining work and an estimate of the cost to complete the required improvements. The bond amount shall be increased, as determined by the Director, if the delay will cause an increase in construction costs. The City of Covington must approve the release of all financial guarantees. No agent shall release a financial guarantee without City approval. (Ord. 14-09 § 5; Ord. 43-02 § 2 (27.50.120))

14.105.130 Maintenance and defect guarantees authorized.

(1) The Department is authorized to require all applicants to post a maintenance guarantee and/or defect guarantee warranting the successful operation and maintenance of improvements, and guaranteeing the workmanship, materials, and design used in construction of improvements required by the conditions of any permits or approvals issued pursuant to CMC Titles 12, 13, 14, 15, 17, or 18 (or their successors) and assuring compliance with the City of Covington Municipal Code.

(2) Unless otherwise specifically indicated in the City of Covington Municipal Code, all maintenance guarantees and defect guarantees shall guarantee successful operation, workmanship, materials, and design of required facilities for a period of two years following final inspection and approval of improvements.

(3) Inspections of facilities required pursuant to CMC Titles 12, 13, 14, 15, 17, or 18 (or their successors) should be scheduled by the appropriate Department approximately 45 days prior to the end of the two-year maintenance and/or defect period. (Ord. 43-02 § 2 (27.50.130))

14.105.140 Default.

(1) Determination of default shall be made by the Department after an inspection has indicated that improvements need to be corrected or completed. In the event of failure to comply with any of the conditions and terms of the permits and/or approvals covered by this division, the Director shall notify the applicant and guarantor in writing of the default. If satisfactory assurance is not received by the Department within a time period determined by the Director, that conditions will be appropriately corrected, the Department may:

(a) Order the applicant to perform all necessary corrective work; and/or

(b) Demand payment on the financial guarantee(s). Nothing in this division shall limit the ability of the City to enforce or otherwise compel compliance with conditions of any City permit or approval in accordance with any enforcement provision set forth in Chapter 1.30 CMC.

(2) The guarantor shall be responsible, up to the limits of the financial guarantee, for the payment of any and all necessary costs and expenses that have been or will be incurred or expended by the City in causing any and all such required work to be done. In the event that total costs associated with the required work exceed the guarantee amount, the applicant shall remain responsible to the City of Covington for the payment of any remaining amount.

(3) In the event of default, the City may contract with a third party to complete work required pursuant to this division. (Ord. 10-07 § 7; Ord. 43-02 § 2 (27.50.140))

14.105.150 Restoration and reclamation activities.

(1) Financial guarantees for restoration and reclamation activities required pursuant to CMC Titles 14, 15 and 18 shall be sufficient to cover the cost of conformance with conditions of the permit, including corrective work necessary to provide drainage consistent with approved plans and conditions, to remove geologic hazards, and to protect water quality and the public health, safety, and welfare. The financial guarantee may be reduced proportionately for phased projects as work is complete and subsequent reclamation and/or restoration on each phase is completed. The request for reduction shall be in writing.

(2) Financial guarantees may be waived for activities pursuant to CMC Title 14, 15 or 18:

(a) Projects of less than 500 cubic yards of excavation, fill, or a combination thereof unless associated with a development application for short plat, subdivision binding site plan, or commercial site development permit;

(b) City of Covington Department projects; and

(c) Reclamation projects with financial guarantees posted with the State of Washington Department of Natural Resources or with the Federal Office of Surface Mining. (Ord. 08-13 § 3 (Exh. A); Ord. 14-09 § 7; Ord. 20-07 § 82; Ord. 43-02 § 2 (27.70.030). Formerly 14.110.030)

14.105.160 Site development and restoration.

(1) Financial guarantees for any improvement required pursuant to CMC Titles 14, 15, 17, or 18 (or their successors) shall be sufficient to cover the cost of complying with conditions of the permit or approval, including corrective work necessary to provide drainage consistent with approved plans and conditions, to remove geologic hazards, and to protect water quality and the public health, safety, and welfare. Such financial guarantees shall include site restoration and stabilization requirements.

(2) No temporary certificate of occupancy shall be issued until:

(a) Drainage facility improvements are functional;

(b) Required parking is provided; and

(c) Safe access is provided.

(3) The Director may allow a performance guarantee to be posted for some or all of the improvements required by subsection (2) of this section if no life safety hazard exists. The request shall be made in writing, accompanied by a schedule for completion of required improvements. (Ord. 08-13 § 3 (Exh. A); Ord. 20-07 § 82; Ord. 43-02 § 2 (27.70.050). Formerly 14.110.050)

14.105.170 Liability insurance.

(1) The developer of record shall carry comprehensive general and automobile insurance in an amount not less than $2,000,000. The liability insurance shall be maintained in its original amount by the developer during the period the permit and approval are in effect. The insurance shall include the city as an additional named insured and shall protect the city from any liability up to those amounts for any accident, negligence, or any other liability whatsoever, relating to the construction or maintenance of the development. Liability insurance can be waived for projects less than 500 cubic yards of excavation, fill, or a combination thereof unless associated with a development application for short plat, subdivision binding site plan, or commercial site development permit.

(2) The developer shall not commence work until he has furnished evidence (in duplicate copy) of liability insurance, and such insurance has been approved by the city; nor shall the developer allow any contractor or subcontractor to commence work on his contract or subcontract until the same insurance requirements have been complied with by such contractor or subcontractor. Approval of the insurance by the city shall not relieve or decrease the liability of the developer thereby. Companies writing the insurance under this section shall be authorized to do business in the State of Washington. (Ord. 08-13 § 3 (Exh. A); Ord. 14-09 § 7)

14.105.180 Hold harmless.

The developer or contractor shall indemnify and hold harmless the city and the city engineer, and their agents, employees, and volunteers from and against all claims, damages, losses, and expenses for bodily injury, sickness, disease, or death, or for injury or destruction of tangible property (other than the work itself), including the loss of use resulting therefrom, and including attorney’s fees, arising out of or resulting from the performance of the work and shall, after reasonable notice, defend and pay the expense of defending any suit and pay any judgment resulting from any such suit; provided, that any such claim, damage, loss, or expense is caused in whole or in part by any negligent act or omission or by any other action giving rise to strict liability of the developer, any subcontractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnified hereunder.

(1) In any and all claims against the city or city engineer, or any of their agents, employees, or volunteers by any employee of the developer, any subcontractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable, the indemnification obligation under this section shall not be limited in any way by any limitation on the amount or type of damages or compensation under workman’s compensation acts, disability benefit acts, or other employee’s benefit acts.

(2) The obligations of the developer under this section shall not include the sole negligence of the city or city engineer. (Ord. 14-09 § 8)