Discuss Amending the Approved Format for Warranties on Stage I and Stage II Improvements (Project No. 16-21); Case of the City of Ramsey

Purpose/Background:

The purpose of this discussion is to consider amendments to City Code 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 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.

No action is being requested. For discussion only.