§ 15-6. Sureties or improvement guarantees.

15-6.1.

Agreement and security.

(A)

Financial guarantee in lieu of immediate installation for approval. In lieu of requiring the completion, installation, and dedication of all improvements prior to final plat approval, the city may enter into an agreement with the developer whereby the developer shall complete all required improvements. Once said agreement is signed by the developer and the security required herein is provided, the final plat may be approved if all other requirements of this ordinance are met. To secure this agreement, the developer shall provide any or a combination of the following guarantees to cover the costs of the uncompleted improvements:

(1)

Surety performance bond(s).

(a)

The developer shall obtain a surety bond from a surety bonding company authorized to issue said bonds in North Carolina.

(b)

The bond shall be payable to the City of Shelby and shall be in an amount equal to 125 percent of the entire estimated cost, as approved by the city, of installing all uncompleted improvements. Developers must submit a request for bonding including a detailed construction cost estimate upon submission of the final plat.

(c)

The bond amount and term shall be as approved by the city engineer.

(d)

The city attorney shall review the submitted bond and make a recommendation regarding its sufficiency to the city engineer.

(2)

Cash or equivalent security.

(a)

The developer shall deposit cash, an irrevocable letter of credit or other instrument readily convertible into cash at face value, either with the city or in escrow with a financial institution. The amount of deposit shall be equal to 125 percent of the entire estimated cost, as approved by the city, of installing all uncompleted improvements.

(b)

If cash or other instrument is deposited in escrow with a financial institution as provided above, then the developer shall file with the city an agreement between the financial institution and himself guaranteeing the following:

(i)

That said escrow account shall be held in trust until released by the city and may not be used or pledged by the developer in any other matter during the term of the escrow; and

(ii)

That in case of a failure on the part of the developer to complete said improvements, the financial institution shall, upon notification by the city, immediately pay the funds deemed necessary by the city to complete the improvements, up to the full balance of the escrow amount, or deliver to the city any other instruments fully endorsed or otherwise made payable in full to the city.

(c)

All instruments shall be reviewed by the city attorney and a recommendation regarding their sufficiency made to the city engineer.

(B)

Duration of financial guarantees.

(1)

The duration of a financial guarantee shall be of a reasonable period (as determined by the UDO administrator) to allow for completion and acceptance of improvements. In no case shall the duration of the financial guarantee for improvements exceed one year.

(2)

All developments whose improvements are not completed and accepted 14 days prior to the expiration of the financial guarantee shall be considered to be in default. Said guarantee may be extended with the consent of the UDO administrator, if such extension takes place prior to default.

(C)

Default.

(1)

Upon default, the surety bonding company or the financial institution holding the escrow account shall, if requested by the city, pay all or any portion of the bond or escrow fund to the city up to the amount deemed necessary by the city to complete the improvements. Upon payment, the city shall expend such funds or portion thereof to complete all or any portion of the required improvements. The city shall return any funds not spent in completing the improvements. Default on a project does not release the developer from liability and responsibility for completion of the improvements.

(2)

Release of guarantee security. The city may release a portion or all of any security posted as the improvements are completed and approved by the city.

(Ord. No. 1-2006, § 1, 1-9-2006; Ord. No. 49-2008, § 1, 11-3-2008)