§ 152.026. PERFORMANCE GUARANTEE.

(A) Purpose. The village may require that a performance guarantee be deposited with the Village Clerk to insure compliance with the provisions of this chapter and any conditions imposed hereunder and full completion of necessary improvements (see definition under division (B) below). The performance guarantee shall be of an amount equal to 100% of the estimated construction costs associated with the project, and include an inflationary clause to cover costs associated with the normal rate of inflation.

(B) Definitions. For the purpose of this section, the following definitions shall apply unless the context indicates or requires a different meaning.

IMPROVEMENTS. Those features and actions associated with a project that are considered necessary by the Planning Commission or Village Council to protect natural resources or the public health, safety and welfare, including roads, lighting, utilities, sidewalks, screening, landscaping and drainage. Improvements do not include the entire project that is the subject of zoning approval.

PERFORMANCE GUARANTEE. A cash deposit, certified check, irrevocable bank letter of credit, corporate surety bond or combination thereof, in the amount of 100% of the estimated cost of the improvements for which the guarantee is required. No more than 80% of the performance guarantee shall be posted in the form of a surety bond.

(C) Estimated cost of improvements. The estimated cost of the improvements for which a performance guarantee is required shall be determined by the applicant and verified by the village. The village shall be authorized to employ the Village Engineer and/or Department of Public Works and/or consultants to review cost estimates and conduct periodic inspections of the improvements. If the amount of the estimated cost is not reasonably ascertainable by the village, the applicant may be required to submit:

(1) A certified estimate prepared by the applicant's licensed engineer or architect; or

(2) Alternatively, a bona fide contract for the work to be performed, including a provision authorizing enforcement of the contract by the village in the event of a default by the applicant.

(D) Surety bonds. The Village Council shall approve the form and substance of any corporate surety bond. The surety bond shall contain terms and provisions to promote certain and efficient entitlement to the funds by the village in the event of the need for the funds in order to carry out the intent of the security. An acceptable surety bond shall be issued:

(1) By a company licensed to do business in the State of Michigan by the Department of Labor and Economic Growth, Office of Financial and Insurance Services;

(2) By a company with a with a rating of not less than “A” as determined by A.M. Best Company or a similarly recognized rating agency;

(3) In a form that does not require the Village of Pinckney to expend money to complete the project bonded and thereafter seek reimbursement from the surety company; and

(4) With a provision specifying that any dispute on whether and/or the amount of payment to be made by the surety shall be resolved by binding arbitration.

(E) Terms and provisions of performance guarantees.

(1) The performance guarantee shall be deposited with the Village Clerk at the time of the issuance of a land use permit authorizing the development. The village may not require the deposit of the performance guarantee before the date on which the village is prepared to issue the land use permit.

(2) The land use permit shall prescribe the period of time within which the improvements for which the performance guarantee has been required are to be completed. This period shall begin from the date of issuance of the land use permit and shall not exceed two years.

(3) A letter of credit and corporate surety bond shall cover a time period equal to or longer than the time anticipated to complete improvements, and shall require 30-days’ advance written notice to the village prior to termination.

(4) If the performance guarantee is in the form of cash or a certified check, the Clerk shall deposit the funds in an interest-bearing account in a financial institution with which the village regularly conducts business.

(5) The entire performance guarantee, including accrued interest, shall be returned to the applicant upon satisfactory completion of the required improvements, as determined by the village.

(6) In the event the performance guarantee posted is a cash deposit or certified check, the village, upon written request by the applicant, shall rebate to the applicant 50% of the deposited funds when 75% of the required improvements are completed as confirmed by the village, and rebate the remaining 50% of the deposited funds when 100% of the required improvements are completed as confirmed by the village.

(7) In the event the applicant does not install or maintain the required improvements within the time period established by the village, following notice to the property owner and/or other responsible parties, the village shall have the right to use the performance guarantee and any accrued interest to complete the improvements through contract or otherwise, including specifically the right to enter upon the subject property to make the improvements. One or more of the following methods may be used to provide notice to the property owner, regular mail to the address on the permit application and/or by delivery of the notice to the property owner at the address and/or by posting the property.

(8) If the performance guarantee is not sufficient to allow the village to complete the improvements for which the guarantee was posted, the applicant shall be required to pay the village the amount by which the cost of completing the improvements exceeds the amount of the performance guarantee deposited. Should the village use the performance guarantee, or a portion thereof to complete the required improvements, any amounts remaining after the completion shall be applied first to the village's administrative costs including, without limitation, attorney fees, planning consultant fees, engineering consultant fees and similar expenses, with any balance remaining being refunded to the applicant.

(9) If the applicant has posted a performance guarantee or bond with another governmental agency other than the village to insure completion of a required improvement, the applicant shall not be required to deposit a performance guarantee with the village for that same improvement.

(10) At the time the performance guarantee is deposited with the village and prior to the issuance of a land use permit, the applicant may be required to enter into a written agreement with the village incorporating the terms and provisions applicable to the use of the performance guarantee, provided, however, that in the absence of such an agreement, the terms and provisions of this section shall govern.

(Ord. 37, passed 8-28-2005)