PUBLIC HEARING: Consider Ordinance #16-05 Amending City Code 117-615 to Correct the Approved Formats for Warranties on Stage I and Stage II Improvements

The purpose of this hearing is to consider an ordinance to amend City Code 117-615 to align City Code language with the City's current policy regarding warranties for Stage 1 and Stage II improvements on private developments. When private developments construct Stage 1 improvements (public improvements such as sidewalks, roads, storm drainage, etc.) and Stage 2 improvements (seal coating, street striping, streetlights, etc.), the developer must warranty their work for one (1) year following the final acceptance of any required improvements. If the improvements are defective or fail within that year, the City can draw from the warranty funds to make repairs. The City has a longstanding informal policy of requiring developers to warranty their work by giving the City cash or a letter of credit equal to 25% of the cost of the improvements. The money is refunded at the end of the one-year warranty period. Currently, however, the code suggests that developers also have the option of submitting a bond for warranty and maintenance. The City historically has not accepted bonds in these situations because of the logistical difficulties involved in trying to collect on a bond to pay for repairs. The proposed amendment would remove the language that states that bonds are acceptable for warranties and replace it with new language formalizing the City's policy of requiring 25% of the project costs as a warranty in the form of either cash or a letter of credit. Leaving the language in its current form could create confusion among developers who might reasonably expect the City to honor the current language that bonds are an acceptable format for warranties.

A notification regarding the Public Hearing was published in the Anoka County UnionHerald.

City Code 117-615 currently states that the City requires that a subdivider submit a warranty/maintenance bond for Stage 1 and Stage 2 Improvements. The City does not accept bonds for warranties for logistical reasons and has a longstanding informal policy of requiring subdividers to submit a cash escrow or a letter of credit equal to 25% of the cost of the improvements. The proposed ordinance would amend City Code to bring the code's language into alignment with actual City practices. The following revision is being proposed to 117-615 with strike-outs indicating text that is being removed and underlining indicating text that is being added:

(l) Warranty. The city shall, where appropriate, require a subdivider submission of a warranty/maintenance bond financial guarantee in the form of a cash escrow or letter of credit in the amount equal to that established by the development agreement 25% of the cost of the Stage I and Stage II improvements as required by this Article which shall be in force for one year following the final acceptance of any required improvements and shall guarantee satisfactory performance of said improvements.

Alternatives

Alternative 1- Recommend that City Council adopt the proposed ordinance as written.

Alternative 2- Recommend that City Council adopt the proposed ordinance but with modifications.

Alternative 3- Recommend that City Council reject the proposed ordinance.

Staff recommends approval of the ordinance as it is written.

Motion to recommend that City Council Adopt Ordinance #16-05 amending City Code 117-615 (Construction of Improvements) amending the approved formats for warranty.