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Surety for Infrastructure Improvements

Last updated Jan. 20, 2017 - 9:51 am
Surety Infrastructure Improvements

A surety is required when the construction of infrastructure improvements within the public Right-of-Way has been mandated, prior to map recordation or building permit issuance, whichever occurs first. For reference, please see Section 5.6 in the Raleigh Street Design Manual and Section 8.1.3 of the Unified Development Ordinance (UDO).

General Information about Posting Sureties

  • The City accepts sureties in the form of a Letter of Credit, performance bond, certified check or cash (from a processing standpoint, the City prefers performance bonds to only be used when the surety is greater than $250,000.00)
  • All costs, including renewals and penalties of the surety, shall be paid by the applicant
  • Withdrawals from the surety may be in one or more payments
  • The financial institution associated with the surety shall not have ownership, occupancy, or equity interest in the development other than merely as a security for the performance of an obligation
  • Term length shall be a minimum of 2 years, plus one 2-year renewal, if needed
  • Transportation Technician sends out renewal notices 70 and 40 days prior to renewal expiration date

Posting a Surety: Step 1
Generating an Infrastructure Estimate

Prior to posting a surety, and the accompanying agreement, the amount to be secured has to be determined with an approved estimate. The process for generating an estimate is dependent on what type of development (residential or commercial) and which development code (UDO or "old code") the project is subject to. An Infrastructure Surety Estimate Template is provided here as a resource.

  • Residential (UDO) - The surety is to be posted prior to map recordation. The amount of the estimate should reflect the total construction cost of all remaining public infrastructure required to be built, per the approved Construction Drawings.
    • The estimate should be sent to the Development Services Transportation reviewer that initiated the requirement.
    • The estimate is to be completed by a licensed professional (i.e. Engineer, Architect, or contractor). Quantities and rates are verified by the reviewer. If the proposed work is within the Right-of-Way of a City-maintained street then the estimate shall be adjusted by 125% to calculate the total surety amount.
    • Once the reviewer accepts the estimate, he/she will send an email to the project's representative, copying the Transportation Technician, attaching the approved estimate and specifying the total dollar amount to be posted as a surety.
  • Residential (Old Code, projects submitted prior to September 1, 2013) - The surety shall be posted prior to the release of building permits beyond 75% of the total number of lots. The amount of the estimate should reflect the total construction cost of all remaining public infrastructure required to be built, per the approved Construction Drawings.
    • The estimate should be sent to the City's Engineering Inspections Coordinator and the Transportation Technician.
    • The estimate is to be completed by a licensed professional (i.e. Engineer, Architect, or contractor). Quantities and rates are verified by the Inspector. The estimate shall be adjusted by 150% to calculate the total surety amount.
    • Once the Coordinator accepts the estimate, he/she will send an email to the project's representative, copying the Transportation Technician, attaching the approved estimate and specifying the total dollar amount to be posted as a surety.
  • Commercial - The surety shall be posted prior to map recordation or building permit issuance, whichever occurs first. The amount of the estimate should reflect the total construction cost of all proposed public infrastructure required to be built, per the approved Construction Drawings.
    • The estimate should be sent to the Development Services Transportation reviewer that initiated the requirement.
    • The estimate is to be completed by a licensed professional (i.e. Engineer, Architect, or contractor). Quantities and rates are verified by the reviewer. If the proposed work is within the Right-of-Way of a City-maintained street then the estimate shall be adjusted by 125% to calculate the total surety amount.
    • Once the reviewer accepts the estimate, he/she will send an email to the project's representative, copying the Transportation Technician, attaching the approved estimate and specifying the total dollar amount to be posted as a surety.

Posting a Surety: Step 2
Submitting the Surety Packet

With the surety amount known, please include the following in the submittal packet:

The submittal packet shall be delivered to the Transportation Technician. If the Agreement is not properly completed, or if all pertinent documents are not present, the City will not accept the submittal.

The City accepts sureties in the form of a Letter of Credit, performance bond, certified check or cash. From a processing standpoint, the City prefers performance bonds to only be used when the surety is greater than $250,000.00. If a Letter of Credit or bond surety is pursued, original financial documents must have the following information:

- project name
- estimated project completion date
- responsible City department and contact person
- surety amount
- developer/contact person
- bank on which surety is drawn
- name, phone number and email address of bank contact person
- expiration date

Posting a Surety: Step 3
Review & Execution of the Surety Agreement

Upon receipt of the surety submittal, the Transportation Technician will route all documents to the City Clerk's office, City Manager's office, and City Attorney's office for review and execution.

  • If changes to the agreement are required, the Transportation Technician will contact the specified representative. Revised agreements shall be returned immediately.
  • At any point during the life of the project, the City reserves the right to withdraw any active permits or hold Certificates of Occupancy as needed to ensure that sureties and associated agreements are adequate and in good standing.
  • Once the agreement is executed by the City, the Transportation Technician will send a copy to the contact person for their record.

Please note that this process typically takes 3 weeks.

Expected Processing Time

The average time to process a surety is three weeks. This allows for one week to generate an estimate and an additional two weeks for the Transportation Technician to obtain an executed agreement. Additional time may be required if changes are needed.

Surety Reduction

The UDO-required infrastructure surety may be reduced at initial Certificate of Occupancy issuance to either 15% of the original total estimated construction cost or 125% of the estimated cost of the outstanding infrastructure, whichever is greater.

Reduction Request Submittal:

The reduction request shall be sent (hardcopy or via email) to the Engineering Inspections Coordinator and to the Transportation Technician for review and consideration. The request packet shall include the following:

  • a letter, on company letterhead, stating the request
  • the Infrastructure Surety Estimate showing the remaining items
  • a copy of the Letter of Infrastructure Sufficiency, issued by the Engineering Inspections Supervisor
  • a copy of the applicable original surety documents from the financial institutions

It is the responsibility of the Principal associated with the surety to provide both of the estimates and all other pertinent information to the City Engineering Inspections Coordinator as part of a formal reduction request. Until a reduction request is received and approved by the City, the surety amount shall remain at the original value and renewed accordingly.

The Engineering Inspections Coordinator will approve the reduction by sending an email to the requestor, copying the Transportation Technician, stating the new surety amount after the reduction and referencing the specific surety. The Principal may then use the email as the official authorization to the bank/firm to reduce the surety. The bank/firm must then notify the City in writing when this has occurred.

Surety Release

Completion of the Infrastructure Improvements - At no earlier than 75% occupancy of a project or project phase, but no later than 2 years from the date of initial certificate of occupancy issuance, all development-related improvements shall be installed in accordance with City of Raleigh standards.

Acceptance - Upon full infrastructure completion, all development-related improvements shall be eligible for acceptance by the City of Raleigh for continuous maintenance contingent upon satisfactory completion of an infrastructure walk-thru by the Engineering Inspections group and submittal of the necessary acceptance package documents.

A "Letter of Final Infrastructure Acceptance" shall be issued when all acceptance requirements have been satisfied. Issuance of this letter shall signify the individual infrastructure components (street, water, sewer and/or reuse) are now accepted by the City of Raleigh for continuous maintenance responsibility.

Once final acceptance occurs, the associated surety may be released.

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