02 - Subdivision (Tract / Parcel Map)

The following are the procedures for preparation and review of bond documents for subdivisions including the Subdivision Improvement Agreement and Contract, Subdivision Improvement and Warranty Performance Bond, and Subdivision Labor and Material Payment Bond.

BOND TRACKING SYSTEM APPLICATION

Prior to starting an application, City staff will confirm that the Customer has completed the Application for Bond Preparation in its entirety.  

1. Step 1
2. Step 2
3. Step 3
4. Step 4

REVIEW/ACCEPTANCE OF EXECUTED DOCUMENTS

Customer will provide BOE with the documents listed below.  BOE shall review these documents for proper signature/authority.  Additional instructions can be referenced in the Execution Instructions for Bond Submittals from the City's Risk Management Office.

1. Surety Bond
   1. Subdivision Improvement Agreement and Contract (Signed by Principal)
   2. Subdivision Improvement and Warranty Performance Bond (Surety must sign before Principal or document will be rejected)
   3. Subdivision Labor and Material Payment Bond (Surety must sign before Principal or document will be rejected)
   4. Additional Surety Company Requirements
      1. Executed Bond
      2. Power of Attorney for the Surety documents
      3. Notary for the Surety Representative
   5. Additional Principal Company Requirements
      1. Notary for the Principal Representative(s)
      2. Operating agreement, trust agreement, articles of organization, etc..
2. Cash Bond or Certificate of Deposit
   1. Subdivision Improvement Agreement & Contract  (Signed by Principal)
   2. Subdivision Cash or Negotiable Security Improvement and Warranty Performance Agreement  (Signed by Principal)
   3. Cashier Check or CD in an amount 1.5 times the bond amount
   4. Additional Principal Company Requirements
      1. Notary for the Principal Representative(s)
      2. Principal on the MCB receipt MUST match the Principal's name on the Title Report (will be rejected if different)

bOND EXONERATION (IN PROGRESS)

In order for a bond to be released, the District Office that  issued the associated permit must provide written authorization to Bond Control staff directing release of the bond.  This authorization is typically provided upon either completion and acceptance of the work or cancellation of the permit. Once the authorization is obtained, an Exoneration Letter releasing liability will be prepared and distributed to the applicant, Surety company or the Department of Public Works Office of Accounting (OOA) in the case of a Cash Bond. 

The following are actions Bond Control staff need to take when requests for bond exoneration are received.

1. Completion and Acceptance of Work
   1. Direct Customer to the District Office to close the B-Permit Work Order (Once the work order is closed, the Office of Accounting can initiate Final Accounting).
   2. Once Final Accounting is completed, staff shall check that it is reflected in the "Bond to Release" tab of the Bond Tracking System.
   3. Staff to prepare/generate Exoneration Letter in the Bond Tracking System
   4. Staff to send Exoneration Letter
      1. Surety Bond - Staff will email a letter to both the Applicant and Surety company notifying them their bond is being released.
      2. Cash Bond - Staff will email a letter to both the Applicant and Office of Accounting notifying them the bond is being released. OOA will process the release of the bond payment.
      3. Certificate of Deposit - TBD
   5. Additional Bond Tracking System actions
      1. TBD
      2. TBD
2. B-Permit Cancellation
   1. Direct Customer to the District Office to cancel the B-Permit
   2.  

bOND DEFAULT 

Board Policy No. 96 - Revised Procedures for Requesting and Processing Improvement Bonds and Delegation of Authority to the City Engineer to Work Directly with the City Attorney to Default Delinquent Bonds (adopted Board Report dated September 8, 1997), authorized the City Engineer to work directly with the City Attorney on bond defaults. The City Engineer to initiate defaults as indicated below.

1. Bond Control staff to request the District office to concur in defaulting and to work with the Bureau of Contract Administration (BCA) for a determination of percent of work completed. 
2. Bond Control prepares a Default Package to email to the City Attorney.  This package consists of:
   1. Interdepartmental Correspondence (IDC) requesting Bond Default (refer to sample) which includes:
      1. Bond amount to seek
      2. Current balance of the B-Permit deposits to retain
      3. Percentage of work completed
   2. Attachments (in PDF) of:
      1. B-Permit Application
      2. B-Permit Financial Status Report
      3. Subdivision Improvement Agreement and Contract
      4. Subdivision Improvement and Warranty Performance Bond
      5. Subdivision Labor and Material Payment Bond
      6. Project Expiration Notice
      7. Bond Tracking System Record
      8. B-Permit Bond Estimate
      9. BCA response to District request.  Not all projects will have a percent complete and therefore no response may be received.
3. Within the Bond Tracking System, BOE staff should enter the following information:
   1. Bond Tracking Information Grid under Review Bond:
      1. BCA Project Status Report Request:  Date the request was sent to the District Office to request percent complete from BCA
      2. BCA Project Status Report Response: Date the request was received back from the District Office 
      3. Date Sent to City Attorney for Default:  Enter the date the package was sent to the City Attorney
   2. Bond Section Comments Grid
      1. Enter Date, BOE Staff initials, (statement) Bond default request sent to City Attorney on [Date]
4. BOE staff to wait for a response from the City Attorney about the settlement (City Attorney may ask questions of BOE staff during this process).  The settlement may include the following:
   1. Directing the Permittee to complete the work including asking for a time extension and bond rider on the permit 
   2. Directing the Surety to complete the work including asking for a time extension and bond rider on the permit (rarely happens)
   3. Default Settlement payment is made by the Surety
      1. BOE to create a new Bond Record to process the cash payment (modified MCB Preparation Process with a different fund source)
      2. BOE to go to the on-line Bond Tracking System and enter a "Bond Default Settlement Date" which is provided by the City Attorney
      3. Change the "Bond Status" to Defaulted
      4. In the Bond Selection Comments Grid and Enter Date, BOE Staff initials, (statement) See Bond Ref #XXXXX for settlement