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 CITY COUNCIL AGENDA ITEM NO. 12

Meeting Date: January 8, 2008
Subject/Title: Adopt a Resolution authorizing the City Engineer to reduce and release security furnished per the Subdivision Map Act (CA Government Code §66410-66499.58) to guarantee performance of various agreements and acts of work.

Prepared by: Debra Galey, Management Analyst

Submitted by: Bailey Grewal, Director of Public Works/City Engineer
_____________________________________________________________________________________

RECOMMENDATION
Adopt a Resolution authorizing the City Engineer to reduce and release security furnished per the Subdivision Map Act (CA Government Code §66410-66499.58) to guarantee performance of various agreements and acts of work.

PREVIOUS ACTION
None.

BACKGROUND
The Subdivision Map Act authorizes local jurisdictions to require security be posted to guarantee the performance and completion of various agreements and acts of work. This section is applied in various circumstances including, but not limited to, the following typical situations:

 Support Subdivision Improvement Agreement that guarantees improvements to service additional lots upon approval of final map and subdivision of property.
 Support Deferred Improvement Agreement to guarantee performance of the agreement and construction of future improvements that have been deferred to a later, more necessary, date.

Currently, upon completion of work and performance of agreements, acceptance of the improvements and release of security is authorized by City Council action.

In January 2006, Assembly Bill 1460 was passed resulting in changes to Government Code §66499.7. In summary, the code requires release of security and acceptance of work within a specified time frame of completion. As an alternative, the code also includes provisions for the partial release of security upon partial performance of the agreement and/or work without the obligation of acceptance until full completion. Pursuant to the section, parties that have provided security are entitled to request a reduction in the value of current security posted upon a minimum of 80% completion of the work. The section further requires a replacement bond in the amount of 200% of the remaining work and allows the legislative body to authorize any of its officers to reduce or release security. Reduction of existing security under this Government Code Section for partially complete work does not accept the improvements for maintenance by the City and does not release the security provider of their obligation to complete the remaining work or any loss or damage to complete or incomplete work.

Municipal Code Chapter 12.08 empowers the City Engineer to deem work complete. With this current authority, it is logical to also authorize the City Engineer to reduce existing security by the value of complete work, in compliance with Assembly Bill 1460, and accept necessary replacement.

Replacement security is to be posted in the following form:
Value of 200% of remaining work Form of Security
Less than $100,000 Cash

Equal to or greater than $100,000 Cash
Surety Bond
Letter of Credit
Certificate of Deposit
Other form acceptable to the City Engineer

Reduction of security does not accept improvements for maintenance by the City and these actions will continue to be brought to City Council for consideration.

FISCAL IMPACT
There will be no fiscal impact associated with security reduction. The action does not accept improvements; therefore, maintenance costs would not be incurred until improvements are accepted by action of the City Council.

Attachments:
Resolution

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING THE CITY ENGINEER TO REDUCE AND RELEASE SECURITY FURNISHED PER THE SUBDIVISION MAP ACT (CA GOVERNMENT CODE §66410-66499.58) TO GUARANTEE PERFORMANCE OF VARIOUS AGREEMENTS AND ACTS OF WORK.

WHEREAS, Government Code §66410-66499.58 authorizes local jurisdictions to require security to guarantee the performance and completion of various agreements and acts of work; and

WHEREAS, Municipal Code Chapter 12.08 authorizes the City Engineer to deem work complete; and

WHEREAS, Government Code §66499.7 allows for the partial release of security upon partial performance of the agreement and/or work; and

WHEREAS, Government Code §66499.7 allows substitute bonds or other security used as replacement security for incomplete work to be subject to the approval of the public entity; and

WHEREAS, Government Code §66499.7 allows local jurisdictions to authorize any of its officers to reduce or release security.

NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Brentwood that:

1. The City Engineer, or their designee, is hereby authorized to reduce and release security, in the manner outlined per Government Code §66499.7, upon a minimum of 80% execution of the agreement and completion of work guaranteed by said security.

2. The City Engineer, or their designee, is hereby authorized to accept replacement security for incomplete work in the amount of 200% of the value of the remaining work.

3. Replacement security may be posted in the following form:

a. Value of remaining work less than $100,000; replacement security shall be in the form of cash or cashier’s check.
b. Value of remaining work equal to or greater than $100,000; replacement security shall be in the form of cash or cashier’s check, surety bond, Letter of Credit, Certificate of Deposit or other form acceptable to the City Engineer, or their designee.

4. A reduction in security, is not, and shall not be, deemed as 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 party entering into the agreement and/or performing the work until all required improvements have been accepted by the authorized City agent and all other required improvements have been fully completed.

5. Reduction and release of security per this Resolution shall not apply to security posted for the guarantee of warranty or maintenance periods.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting on the 8th day of January 2008 by the following vote:
 
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