Agenda - Council Work Session - 09/02/2003

Home

[DRAFT] 12.4 LETTERS OF CREDIT AND ALTERNATIVE SECURITY. Various provisions of this Master Agreement require the Developer to deliver letters of credit to the City to secure the Developer's performance of various obligations. The City Council may,. in its sole and absolute discretion, consider accepting the following alternative security arrangements (or combinations thereof) in lieu of requiring a letter of credit: (a) Cash escrow accounts with bona fide title insurance companies as to which the City is a third party beneficiary. (b) Letters of credit. (c) Performance bonds. (d) Insurance policies insuring performance. (e) Evidence of construction financing sufficient to fund the improvements in question, with delivery to the City of copies of construction draws, lien waivers or other satisfactory evidence of payment of invoices as construction proceeds. (0 Evidence of lines of credit sufficient to fund the improvements in question, updated regularly. (g) Other arrangements satisfactory to the City. The City Council may also consider the alternative security arrangements described in this Section 12.4 in connection with the City's establishment of the requirements for Secondary Development Agreements. Each letter of credit required under the terms of this Master Agreement must be an Irrevocable Letter of Credit from a state or national banking association or other financial institution reasonably acceptable to the City (each a "Letter of Credit"). Unless othera, ise expressly stated in this Master Agreement, a Letter of Credit must be in amount equal to 125% of the City Engineer's of the estimate of the cost to perform the obligation the performance of which the Letter of Credit secures. Each Letter of Credit must obligate the issuer thereof to honor the City's site draft for the full amount o£the Letter of Credit provided the City submits to the issuer, along with the City's site draft, a Certificate signed by the City Administrator of the City of Ramsey stating the Developer is in default in the performance of the obligation the Letter of Credit secures (as stated in the Letter of Credit). The Letter of Credit must, in all other respects, be in a form reasonably acceptable to the'City. Until the Developer completes the performance of the obligation the Letter of Credit secures, the Developer must obtain and provide the City with extensions or renewals o£the Letter of Credit at least thirty (30) days prior to the stated expiration date of the Letter of Credit. Each Letter of Credit the Developer provides pursuant to this Master Agreement must have a stated expiration date of