HomeMy WebLinkAbout2009/07/14 Item 11CITY COUNCIL
AGENDA STATEMENT
~~~/~ CITY OF
'~"~ CHULA VISTA
7/14/09, Item
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
ORDINANCE OF THE CITY OF CIIULA VISTA AMENDING CHAPTER
15.04, SECTION 15.04.225, AND CHAPT R 18.16, SECTION 18.16.310, OF
THE CHULA VISTA MUNICIPAL C
DIRECTOR OF PUBLIC WORKS
CITY MANAGE ~
ASSISTANT CIT ANAGER ~j~
4/STHS VOTE: YES
® NO ^
SUMMARY
Currently, the City's Municipal Code requires retention of surety bonds associated with land development
projects until all work has been completed and a notice of completion is filed with the County Recorder. If
approved, this Ordinance would allow the Director of Public Works to reduce grading, landscape and
irrigation and faithful performance bonds up to 75% of the original bond amount if the work is deemed
substantially complete.
ENVIRONMENTAL REVIEW
The Envirorunental Review Coordinator has reviewed the proposed activity for compliance with the
California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as
defined under Section 15378 (b)(4) of the State CEQA Guidelines; therefore, pursuant to Section
15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental
review is necessary.
RECOMMENDATION
Council adopt the ordinance.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Builders typically post a surety bond with the City to guarantee the unperformed improvement work
associated with the subdivision of land. The recent downturn in economic activity has created a climate
where builders are trying to lower costs to remain competitive. To this end, several builders have requested
a reduction in the amount of their bond to a level that corresponds to the amount of outstanding work. The
Municipal Code as currently written does not allow the City to process partial bond reductions. The
Municipal Code stipulates that bonds will be released after all required work has been completed and a
notice of completion has been filed with the County Recorder.
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7/14/09, Item
Page 2 of 2
Many of the City's major developments in the eastern territories require very large bonds securing millions
of dollars of public improvements, grading and landscaping. Since the downturn in the economy, several
major projects have been placed on hold. Some of these projects were very close to completion and City
acceptance but were unable to be completed due to a lack of funding. Instead of maintaining the full bond
during this down time and paying thousands of dollars in bond premiums, developers have asked that the
bonds be reduced to secure only the unfinished portions of the work.
Public Works staff and the City Attorney's office have worked to craft a policy that will respond to the
builder's needs while protecting the City from the liability of unfinished public works. The proposed
ordinance sets up a process where the builder could request bond reductions after the work is completed pet
approved plans. The Director of Public Works, after inspecting the facility, could deem the facility
"substantially complete". Projects that are deemed substantially complete would then be eligible for a bond
reduction of up to 75% so that the City would still have a 25% bond remaining to ensure that the punch-list
items such as paperwork, as-built drawings and final reports will be processed in a timely manner. The
proposed amendment will allow the following faithful performance bonds to be reduced to a minimum of
25% of the original bond amount if the work is deemed substantially complete:
• Grading Bonds
• Landscape and hrigation Bonds
• Faithful Performance Bonds
In all cases the remaining bond balance must be enough to secure 100% of the remaining work to be done.
Fina] acceptance of public improvements would not occur until all punch-list items have been completed
and maintenance periods have passed. Additionally, state law prohibits reduction of Material and Labor
bonds until a notice of completion is filed, so the Ordinance amendment will not affect these types of
bonds.
Further, the Ordinance provides the Director of Public Works discretion as to whether a facility is
"substantially complete" or not so that the City is not obligated to reduce a bond until the project is fully
complete. The proposed ordinance is in compliance with state law and the Subdivision Map Act.
DECISION MAKER CONFLICT
The ordinance is of citywide benefit, affecting all members of the community equally; therefore, there is no
conflict.
CURRENT FISCAL IMPACT
There is no fiscal impact due to this ordinance other than the staff costs associated with the bond reduction
process. This bond reduction effort is developer funded and does not impact the City's General Fund.
ONGOING FISCAL IMPACT
None.
ATTACHMENTS
l: Proposed Redline Ordinance
PreprtreA 6y: Sifverster Evetovich, Principnl Civi(Engineer
K.~IPUBLC WOR.YSIACENDAICAS2009107-14-0910rdinnnce - BanAreduc[imu ngendn repon-rlm.Ao<
11-2
ATTACI-IMIENT I
ORDINANCE NO
ORDINANCE OF THE CITY OF CHULA VISTA
AMENDING CHAPTER 15.04, SECTION 15.04.225,
AND CHAPTER 18.16, SECTION 18.16.310, OF THE
CHULA VISTA MUNICIPAL CODE
WHEREAS, the Chula Vista Municipal Code requires that the City retain surety
bonds associated with land development projects until all work has been completed and a
notice of completion is filed; and
WHEREAS, the recent down tum in economic activity has created a climate
where builders are trying to lower costs to remain competitive; and
WHEREAS, several builders have requested that the City authorize the partial
reduction in the bond amounts to correspond with the estimated costs of remaining
improvement work; and
WHEREAS, many of the City's major developments in the eastern temtories
require very large bonds securing millions of dollazs of public improvements, grading
and landscaping; and
WHEREAS, the retention of the full bond amount costs developers additional
bond premiums for work that has already been completed; and
WHEREAS, the added costs of maintaining bonds at the full amount has
contributed to several projects being placed on hold.
NOW, THEREFORE, that the City Council of the City Of Chula Vista does, hereby,
ordain as follows:
SECTION I. That Chula Vista Municipal Code Chapter 15.04, Section 15.04.225 be
amended to read as follows:
15.04.225 Release ofbonds/security.
A Landscaping, Irrigation, Grading, and Drainage Bonds and other security for these
pumoses shall be released upon the latter of the following:
1_35 days after filing a "notice of completion" with the county recorder (recorded
copy to city engineer) for improvements accepted by this city.
2. thean acceptance of completed Form PW-E-106 ("request for release of
bonds") submitted by the permittee. T~~ ° '~ w, *~-~ „rr.,,,. ,.r,,.e
J b~~ ~ Y
11-3
B. Notwithstanding the foregoing Section 15.04.225(A), the Director of Public Works
may approve the partial release ofthe faithful performance security after the completion
of all improvements per approved plans, as determined by the City Inspector in his sole
discretion, in an amount not to exceed seventy-five percent of the original security
determined by the Director of Public Works. in his sole discretion to complete the
outstanding work'
C Prior to the release of security for faithful performance for landsca~ng bonds a
maintenance bond in the amount of fifteen percent of the original security shall be
provided to cover the one-veaz maintenance period. Such bond shall not be released until
the end of the maintenance period. In lieu of a providing a maintenance bond. the faithful
performance security maybe reduced to fifteen percent of the original security amount
An addendum to the bond in the form of a rider or equivalent document containing
language requiring the maintenance of improvements as an obligation to be fulfilled
under the bond shall be required and provided to the Citv
SECTION II. That Chula Vista Municipal Code Chapter 18.16, Section 18.16.310, be
amended to read as follows:
18.16.310 Security arrangements -Release of surety.
A. Improvement security given for faithful performance of the agreement rr3ay
shall be released upon
+~fl>-tterragreexten~the performance of the act secured or final completion and
acceptance of the reouired work.
Notwithstanding the foregoing, the Director of Public Works may approve the
partial release of the faithful performance security after the completion of all
improvements in accordance with approved plans, to the satisfaction of the
City Inspector in an amount not to exceed seventy-five percent of the dollar
amount of the original security for faithful performance provided the
remaining balance of such security for faithful performance equals or exceeds
the estimated cost, as determined by the Director of Public Works, in his sole
Agreement.
B. The 50 percent labor and material bond shall be retained to secure payment to the
contractor, his subcontractors and to persons renting equipment or furnishing labor or
material for 35 days after completion and acceptance of the work. Following such
11-4
35-day period, this labor and material security maybe reduced to an amount not less
than the total of all claims on which an action has been filed and notice thereof given
in writing to the city.
SECTION III. EFFECTNE DATE.
'T'his ordinance will take effect and be in force thirty days after final passage.
Presented by
Richard A. Hopkins
Director of Public Works
Approved as to form by
Bart C. Miesfeld
City Attorney
11-5
ORDINANCE NO
ORDINANCE OF THE CITY OF CHULA VISTA
AMENDING CHAPTER 15.04, SECTION 15.04.225,
AND CHAPTER 18.16, SECTION 18.16.310, OF THE
CHULA VISTA MUNICIPAL CODE
WHEREAS, the Chula Vista Municipal Code requires that the City retain surety
bonds associated with land development projects until all work has been completed and a
notice of completion is filed; and
WHEREAS, the recent down tum in economic activity has created a climate
where builders are trying to lower costs to remain competitive; and
WHEREAS, several builders have requested that the City authorize the partial
reduction in the bond amounts to correspond with the estimated costs of remaining
improvement work; and
WHEREAS, many of the City's major developments in the eastern territories
require very large bonds securing millions of dollazs of public improvements, grading
and landscaping; and
WHEREAS, the retention of the full bond amount costs developers additional
bond premiums for work that has already been completed; and
WHEREAS, the added costs of maintaining bonds at the full amount has
contributed to several projects being placed on hold.
NOW, THEREFORE, that the City Council of the City Of Chula Vista does, hereby,
ordain as follows:
SECTION I. That Chula Vista Municipal Code Chapter 15.04, Section 15.04.225 be
amended to read as follows:
15.04.225 Release of bonds/security.
A. Landscaping, Irrigation, Grading, and Drainage Bonds and other security for these
purposes shall be released upon the latter of the following:
1. 35 days after filing a "notice of completion" with the county recorder (recorded
copy to city engineer) for improvements accepted by this city.
2. The acceptance of completed Form PW-E-106 ("request for release of bonds")
submitted by the pernuttee.
11-6
B. Notwithstanding the foregoing Section 15.04.225(A), the Director of Public Works
may approve the partial release of the faithful performance security after the completion
of all improvements per approved plans, as determined by the City Inspector, in his sole
discretion, in an amount not to exceed seventy-five percent of the original security
required pursuant to Chapter 15, Section 15.04 of the CVMC, provided the remaining
balance of the security for faithful performance equals or exceeds the estimated cost, as
determined by the Director of Public Works, in his sole discretion, to complete the
outstanding work.
C. Prior to the release of security for faithful performance for landscaping bonds, a
maintenance bond in the amount of fifteen percent of the original security shall be
provided to cover the one-yeaz maintenance period. Such bond shall not be released until
the end of the maintenance period. In lieu of a providing a maintenance bond, the faithful
performance security may be reduced to.fifteen percent of the original security amount.
An addendum to the bond in the form of a rider or equivalent document containing
language requiring the maintenance of improvements as an obligation to be fulfilled
under the bond shall be required and provided to the City.
SECTION II. That Chula Vista Municipal Code Chapter 18.16, Section 18.16.310, be
amended to read as follows:
18.16.310 Security arrangements -Release of surety.
A. Improvement security given for faithful performance of the agreement shall be
released upon the performance of the act secured or fmal completion and
acceptance of the required work.
Notwithstanding the foregoing, the Director of Public Works may approve the
partial release of the faithful performance security after the completion of all
improvements in accordance with approved plans, to the satisfacfion of the City
Inspector in an amount not to exceed seventy-five percent of the dollaz amount of
the original security for faithful performance, provided the remaining balance of
such security for faithful performance equals or exceeds the estimated cost, as
determined by the Director of Public Works, in his sole discretion, to complete
the outstanding work required under the Subdivision Improvement Agreement
and/or any Supplemental Subdivision Improvement Agreement.
B. The 50 percent labor and material bond shall be retained to secure payment to the
contractor, his subcontractors and to persons renting equipment or famishing labor or
material for 35 days after completion and acceptance of the work. Following such 35-
day period,. this labor and material security maybe reduced to an amount not less than the
total of all claims on which an action has been filed and notice thereof given in writing to
the city.
11-7
SECTION III. EFFECTIVE DATE.
This ordinance will take effect and be in force thirty da
Presented by
Richard A. Hopkins
Duector of Public Works
11-8
City Attorney
ORDINANCE NO
ORDINANCE OF THE CITY OF CHULA VISTA
AMENDING CHAPTER 15.04, SECTION 15.04.225,
AND CHAPTER 18.16, SECTION 18.16.310, OF THE
CHULA VISTA MUNICIPAL CODE
WHEREAS, the Chula Vista Municipal Code requires that the City retain surety
bonds associated with land development projects until all work has been completed and a
notice of completion is filed; and
WHEREAS, the recent down turn in economic activity has created a climate
where builders are trying to lower costs to remain competitive; and
WHEREAS, several builders have requested that the City authorize the partial
reduction in the bond amounts to correspond with the estimated costs of remaining
improvement work; and
WHEREAS, many of the City's major developments in the eastern temtories
require very large bonds securing millions of dollars of public improvements, grading
and landscaping; and
WHEREAS, the retention of the full bond amount costs developers additional
bond premiums for work that has already been completed; and
WHEREAS, the added costs of maintaining bonds at the full amount has
contributed to several projects being placed on hold.
NOW, THEREFORE, that the City Council of the City Of Chula Vista does, hereby,
ordain as follows:
SECTION I. That Chula Vista Municipal Code Chapter 15.04, Section 15.04.225 be
amended to read as follows:
15.04.225 Release of bonds/security.
A. Landscaping, Irri~afion, Graduie, and Drainage Bonds and other security for these
pumoses shall be released unon the latter of the following:
1_35 days after filing a "notice of completion" with the county recorder (recorded
copy to city engineer) for improvements accepted by this city.
2. theme acceptance of completed Form PW-E-106 ("request for release of
bonds") submitted by the pertnittee. T"' f ~' "' " "- c`.'~=
J b . ~ r
11-9
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B. Notwithstanding the foregoing Section 15.04.225(A1 the Director of Public Works
may approve the partial release of the faithful performance security after the completion
of all improvements per approved puns. as determned by the Citv Inspector, in his sole
discretion, in an amount not to exceed seventy-five percent of the original secm•ity
required pivsuant to Chapter 15, Section 1.04 of the CVMC, provided the remaining
balance of the security for faithful performance eauals or exceeds the estimated cost, as
determined by the Director of Public Works, in his sole discretion, to complete the
outstanding work.
C. Prior to the release of security far faithfitl nerformance for landscaping bonds, a
the end of the maintenance period. hi lieu of a providing a maintenance bond, the faithful
performance security may be reduced to fifteen percent of the original secuuity amount.
An addendum to the bond ni the form of a rider or equivalent document containing
language requiring the maintenance of improvements as an obligation to be fulfilled
under the bond shall be required and provided to the Ciri•.
SECTION II. That Chula Vista Municipal Code Chapter 18.16, Section 18.16.310, be
amended to read as follows:
18.16.310 Security arrangements -Release of surety.
A. Improvement security given for faithful performance of the agreement ~`
shall be released upon ..,.,.,rdctlc~a of u'~~c ~*~° ~~ ~ --~~«: c .,,e _~.
•.,~ _e~e..,.,, .. ,.,a. ,. ..a,._ .. _..«,.
the performance of the act secured or final completion and
acceptance of the required work.
Notwithstanding the foregoing, the Duector of Public Works may approve the
partial release of the faithful performance security after the completion of all
improvements in accordance with approved plans, to the satisfaction of the
City Inspector in an amount not to exceed seventy-five percent of the dollaz
amount of the original security for faithful nerformance, provided the
remaining balance of such security for faithful performance equals or exceeds
the estimated cost, as determined by the Director of Public Works, in his sole
discretion, to complete the outstanding work required under the Subdivision
Improvement :Agreement and/or any Supplemental Subdivision Improvement
Agreement.
B. The 50 percent labor and material bond shall be retained to secure payment to the
contractor, his subcontractors and to persons renting equipment or furnishing labor or
material for 35 days after completion and acceptance of the work. Following such
11-10
35-day period, this labor and material security may be reduced to an amount not less
than the total of all claims on which an action has been filed and notice thereof given
in writing to the city.
SECTION III. EFFECTIVE DATE.
This ordinance will take effect and be in force thirty days after final passage.
Presented by
Richard A. Hopkins
Director of Public Works
11-11