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Motion carried. All voted in favor. <br />4.2) Introduce Ordinance to Amend City Subdivision Code related to Financial Sureties <br />for Required Improvements <br />Senior Planner Gladhill stated that the City has been approached by a developer and asked to <br />explore other forms of surety to ensure that required improvements as defined in City Code are <br />completed in a timely manner consistent with approved plans. He summarized the City's current <br />policy /standard procedure — cash surety or letter of credit in the amount of 125 percent of the <br />cost of required improvements. For petitioned projects, Code requires a financial guarantee of • <br />20 percent of the cost of the project over the life of the assessment. Mr Gladhill pointed out that <br />cash sureties or letters of credit are common tools for cities to ensure timely completion of the <br />required improvements. This ensures, in the event of default of the developer, that the City has <br />adequate financial resources to complete these necessary public improvements. One method <br />suggested was to agree to hold the required Certificate of Occupancy until required <br />improvements are completed. Under this scenario, a building would not be occupied until the <br />required improvements were completed. The City could then collect a financial surety in the <br />amount of 125% of the remaining/uncompleted required improvements if a Certificate of <br />Occupancy. He noted that the Certificate of Occupancy is legally tied to only the building code <br />and extends only ten (10) feet beyond the foundation of the building. The Building Official has <br />stated this scenario would only be viable if the developer agreed to withhold the Certificate of <br />Occupancy within the Development Agreement/Contract, which would be recorded against the <br />property. This way, the City has a legal avenue to withhold the Certificate of Occupancy for <br />activities not ordinarily part of the Certificate of Occupancy. Mr. Gladhill stated that a concern <br />with this scenario is in the event of developer default once a Building Permit has been issued but <br />before a Certificate of Occupancy is issued. He continued that this may be a tool to spur <br />economic development; however, the City should take care to ensure that the City is protected in <br />the event of developer default. The City has had to, on occasion, call on these financial sureties <br />even after construction has commenced and certificate of occupancies have been issued within a <br />project. The City needs to ensure that the City will not end up being responsible for completing <br />required public improvements without a financial surety to pay for these improvements. Mr. <br />Gladhill stated that staff researched a small sample of metro cities with experience dealing with <br />financial sureties. Each of these three communities, based on staffs interpretation of these <br />codes, required a financial surety of at least the amount of the required improvements until such <br />time the improvements were completed. <br />City Attorney Goodrich stated that as staff reviewed our provisions, it was evident this was <br />drafted some years ago and addressed mostly residential. To cover this and give us more <br />flexibility we will propose the language in the draft ordinance. This would not be allowed the <br />way the Code is written now. <br />Councilmember Elvig asked if it is only one developer asking for this. <br />Mr. Gladhill noted that this was received as a request from Legacy Christian Academy. We hear <br />a lot of feedback from other developers asking us to streamline and to look at the sureties as <br />well. We have been flexible in reducing that letter of credit. <br />Special City Council — April 5, 2011 <br />Page 4 of 7 <br />