Staff recommends approval of the ordinance amending Subsection (a) of Section 25-453 of the Code of Ordinances to allow extensions of surety bonds or letters of credit by developers of construction projects.
The City Code currently allows developers who have not completed required infrastructure improvements prior to platting to post a surety bond or letter of credit (LOC) guaranteeing construction of the improvements. The City Code currently does not have a provision for extension of such bonds or LOC’s. The Code is silent in this regard.
There may be situations where a developer has not sold any platted lots to third parties, has not completed the required infrastructure, and simply needs more time due to unforeseen market conditions. Provided that the developer can provide an opinion from an attorney or a letter from a title insurance company demonstrating that no lots have been sold to third parties, and providing that they submit an updated engineer’s estimate of probable costs and provide a new surety for the improvements, the City could allow a developer to effectively extend the required date of completion of the infrastructure. The developer of the Legacy of Leesburg subdivision has requested such an extension, and staff concurs that it would be appropriate.
The alternative is to not allow extensions, whereby the City cashes the surety and must go in and finish construction of the improvements on its own. This is undesirable for a variety of reasons, and should be avoided whenever there are no other parties impacted.
1. Approve the ordinance amending the City Code as presented; or
2. Such alternative action as the Commission may deem appropriate
There should be no direct fiscal impact to the City.
Prepared by: ______________________
Attachments: Yes____ No ______
Advertised: ____Not Required ______
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head ________
Finance Dept. _____JB___________
Deputy C.M. ___________________
City Manager ___________________
Account No. _________________
Project No. ___________________
WF No. ______________________
AN ORDINANCE OF THE CITY OF LEESBURG, FLORIDA, AMENDING SUBSECTION (a) OF § 25 – 453 OF THE CODE OF ORDINANCES PERTAINING TO THE CONSTRUCTION OF SUBDIVISION IMPROVEMENTS, AUTHORIZING THE EXTENSION OF A SURETY BOND OR LETTER OF CREDIT PLACED WITH THE CITY BY THE DEVELOPER TO SECURE CONSTRUCTION OF INFRASTRUCTURE FOR THE SUBDIVISION, SPECIFYING CONDITIONS TO ANY SUCH EXTENSION, REPEALING CONFLICTING ORDINANCES, PROVIDING A SAVINGS CLAUSE, AND PROVIDING AN EFFECTIVE DATE.
BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA:
§25 – 453(a) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as set forth below:
a) Where the required minimum improvements set forth in this section have not been completed prior to the submission of the record plat for approval, the developer of the subdivision shall, as a prerequisite to obtaining City signatures required for recording, file with the City a surety bond, in favor of the City, conditioned to secure the construction of such improvements in a satisfactory manner and within a period not to exceed two (2) years. No surety bond guaranteeing the improvements shall be accepted unless it is enforceable by and payable to the City in a sum at least equal to one hundred twenty-five (125) percent of the cost of constructing the unconstructed improvements as estimated by the design engineer of such improvements, approved by the City Manager or his designated representative, and in form with security and conditions approved by the city attorney. In lieu of the surety bond, the developer may file as substitute security, at his option, a letter of credit or cash, for one hundred ten (110) percent of the cost of the unconstructed improvements.
If at the end of the two (2) year period the developer has not completed the infrastructure improvements, the developer may file a request not later than 90 days prior to the end of the two (2) years, seeking an extension of time. Only one such request may be made, and if granted the new deadline established in response to the request for extension shall be absolute. The request shall be considered and granted or denied by the City Manager or his designated representative, provided that to obtain any extension the developer must meet the following minimum standards:
(i) Submit a title opinion from an attorney or title insurance company licensed in Florida, with an effective date no more than ten (10) days prior to the request for an extension, demonstrating that no lots within the subdivision have been sold to third party purchasers and that the developer remains the lawful owner of all such lots;
(ii) Demonstrate good cause for the failure to complete the infrastructure improvements within the original two (2) year period. Good cause may include, but shall not be limited to, the following: shortages of materials or labor required to construct the improvements; weather, labor strife, war, or other such tangible events wholly beyond the control of the developer; or severe general economic conditions (but not including economic or financial problems specific to the developer itself) which rendered the completion of the infrastructure improvements difficult or impossible, or which would make it difficult to market and sell the subdivision lots within a reasonable time if the infrastructure improvements were completed.
(iii) Submit an updated estimate from the design engineer of the cost to construct or complete the infrastructure improvements as of the date of the request, to be approved by the City Manger or his designated representative.
(iv) Submit a letter of commitment from a surety or financial institution agreeing to issue the necessary replacement surety bond or letter of credit in the amount of the new cost estimate or such other amount as is specified by the City Manager after review of the engineer’s cost estimate. If the developer secured its obligations by a cash bond it shall remain in place with such adjustment upward or downward as is required to conform to the new estimate of the cost for the infrastructure improvements.
(v) The new surety bond or letter of credit, or the appropriate amount of cash, shall be deposited with the City no later than the earlier of 30 days after the City Manager approves the extension, or ten days prior to the date on which the original bond or letter of credit would expire by its own terms.
The granting or denial of the request for extension shall be in writing and if the decision is to deny the request, the notice of denial shall set forth the reasons for the denial. If the City Manager denies the extension, the developer may appeal that denial to the City Commission by filing a notice of appeal with the City Manager no later than ten (10) days after the date of the denial notice, and the appeal shall be heard at the next regularly scheduled City Commission meeting, provided that no appeal or other event shall extend the time for a final determination on the request past the expiration date of the original surety bond or letter of credit, and if that would be the result of an appeal then the City is authorized hereby to draw on the original bond or letter of credit in accordance with its terms.
If any portion of this ordinance is declared invalid or unenforceable, then to the extent it is possible to do so without destroying the overall intent and effect of this ordinance, the portion deemed invalid or unenforceable shall be severed herefrom and the remainder of this ordinance shall continue in full force and effect as if it were enacted without including the portion found to be invalid or unenforceable.
All ordinances or parts of ordinances which are in conflict with this ordinance are hereby repealed, to the extent necessary to alleviate the conflict, but shall continue in effect insofar as they are not in conflict herewith, unless repeal of the conflicting portion destroys the overall intent and effect of any of the conflicting ordinances, in which case those ordinances so affected shall be hereby repealed in their entirety.
This ordinance shall become effective upon its passage and adoption according to law.
PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the day of , 2009.
THE CITY OF LEESBURG, FLORIDA