A performance bond is posted by the subdivider
to guarantee to the Town that he will faithfully construct or cause
to be constructed the required public improvements which were an integral
part of his approved final plat and, further, that the construction
shall be completed within a reasonable period of time.
[Amended 12-13-1994 by L.L. No. 57-1994]
A. Form of security. Any security to a bond must be provided
pursuant to a written security agreement with the Town, approved by
the Town Board and also approved by the Town Attorney as to form,
sufficiency and manner of execution, and shall be limited to:
(1) The deposit of funds in a savings passbook or a certificate
of deposit (CD) issued by a bank or trust company located and authorized
to do business in the State of New York and maintaining an office
for the transaction of its business in the Town of Southampton. The
Town Board may require that the savings passbook or CD be accompanied
by an executed withdrawal slip made payable to the Town of Southampton
and/or an assignment of the right to the funds upon a default. Each
passbook or CD shall also be accompanied by a letter from the bank
acknowledging the use of the passbook or CD as security to a bond
and that no funds will be released unless authorized by a resolution
of the Town Board.
(2) An unconditional and irrevocable letter of credit
from a bank or a corresponding bank located and authorized to do business
in the State of New York and maintaining an office for the transaction
of business in the Town of Southampton. The letter of credit shall
certify the following:
(a)
That the creditor does guarantee funds in an
amount equal to the cost, estimated by the Town Engineer or Superintendent
of Highways and approved by the Planning Board, of completing all
required improvements.
(b)
That, in the case of failure on the part of
the subdivider to complete the specified improvements within the required
time period, the creditor shall pay to the Town Board immediately,
and without further action, such funds as are necessary to finance
the completion of those improvements, up to the limit of credit stated
in the letter.
(c)
That the letter of credit may not be withdrawn,
or reduced in amount, until released by the Town Board.
(d)
That the term of the letter of credit shall
extend at least six months past the term of the bond.
(3) Obligations of the United States of America.
(4) Any obligations fully guaranteed as to interest and
principal by the United States of America, having a market value at
least equal to the full amount of the security required.
(5) Property escrow. Upon the recommendation of the Planning
Board, the Town Board may accept a deed, transferring the fee title
of real property, free and clear of any mortgage or lien, having a
value established by the Town Tax Assessor of at least 150% of the
amount of the security required; such title to be held by the Town
in escrow only for the purpose of securing the performance or maintenance
required. The Town Board shall retain the right to reject the use
of a property escrow where there is no benefit to the Town or it may
reject the use of any property when value of such property is sufficiently
unstable, when it believes that the property will be unusually difficult
to sell or for other reasons such as will inhibit the Town from exchanging
the property for a sufficient amount of money to complete the required
improvements. Said deed shall be accompanied by the following:
(a)
All documents necessary for recording of the
deed in the Suffolk County Clerk's office.
(b)
An agreement with the Town Board, to be filed
in the office of the Suffolk County Clerk, stating the following:
[1]
That, in the event of default in performance or maintenance for which the undertaking shall have been given, the Town Board may accept the property on behalf of the Town of Southampton. In such a case, the Town may record the deed in the office of the Suffolk County Clerk, sell such real property and apply the net proceeds of the sale in the same manner as if the funds had been held in a deposit or certificate described in Subsection
A(1) above.
[2]
That the grantor shall pay all real property
taxes on the property held in trust during the term of the bond.
[3]
That the property to be placed in trust as an
improvement guarantee will not be used for any other purpose, or pledged
as a security in any other matter, unless and until released by the
Town Board.
[4]
That upon the completion of the work or maintenance
period or when the benefit to the Town shall have been received or
the purpose of accepting this form of security is deemed unnecessary
by the Town Board, the deed and/or title to the subject property shall
be released or conveyed to the grantor or such other person as may
be entitled to the same, free and clear of any liens or defects, except
those in existence at the time of the delivery of the deed to the
Town and which continue in existence or which may have thereafter
been placed thereon with the knowledge and consent of the owner.
(c)
Affidavit of title or title certification affirming
that the property to be used as a guaranty is free and clear of any
encumbrances or liens at the time it is to be put into trust.
(6) Notwithstanding the aforementioned provisions, the
Town Board may, in its discretion, accept such other security as may
be allowed by law, where there is a benefit to the Town.
B. If the term of the performance bond will expire prior
to the completion of the public improvements, the Town Engineer and/or
Superintendent of Highways shall recommend to the Planning Board either
that the term of the bond be extended to permit completion of the
work by the subdivider or that the bond be declared in default. The
Planning Board shall advise the Town Board, by resolution, if its
recommendation is for default of the bond. The Town Board shall act
on the release of or declaration of default on the performance bond.
C. The performance bond shall have a term of two years.
The term of a performance bond may be extended by the Planning Board,
with the approval of the Town Board. When such an extension is granted,
it may be required that the performance bond estimate be increased
to take into consideration changes in construction costs in order
to carry out the required capital improvements.