6A - Development Bonds Discussion

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` STAFF REPORT Item: Development Bonds Agenda Item:7(a) Background: Last month the issue of bonding for public and private improvements came up at the last minute on the RV Resort. We resolved the issue at that meeting,but we were requested to come back this month with a discussion on this topic. Section io.1 of the Ordinance reads: Prior to the submission of a Final Plat application and prior to approval of a metes and bounds subdivision, the subdivider shall provide for the construction of the required improvements at their expense and shall have the work completed or shall enter a Development Contract and give bond or other financial assurance satisfactory to the Council in an amount equal to 125% of the estimated cost of the uncompleted improvements except as provided in 10.3. The bond shall be released by the City Council upon the recommendation of the City Engineer indicating the improvements are satisfactorily complete. We all seem to be in agreement that a developer that has outstanding public improvements at the time of final plat must provide a bond to secure those improvements. What is less clear is what other improvements on the property would be considered "required". Among the conceivable possibilities would be: ➢ Clustered Sewer Systems ➢ Community Water Systems ➢ Internal Private Roads ➢ Required Stormwater Improvements ➢ Required Erosion Control Systems ➢ Required Recreational Features In the past we have required bonding for clustered sewer and water systems that are private. The logic behind that is, without those improvements, the properties would not be viable. This would be where there is no option for an individual system, such as Wilderness Point(where we required a bond) and the RV Resort (where we did not require one). The bond ensures that the systems will be constructed and is the only leverage the City has once the final plat is signed. We cannot recall an instance in the City of Pequot Lakes where we have required bonding for internal roads, although we know of other communities where this is done. The same would go for the stormwater and erosion control improvements. We only know of one local community, Breezy Point,that has bonded for recreational features of a development, but that was a circumstance where the specific feature was added to mitigate other impacts. Once the City signs the final plat,the only things that would bind a developer to a certain level of performance are the development agreement and the financial security. With a development agreement, we can always pursue the developer for breach of contract, but there is not much that can be done if that developer becomes financially insolvent. With a financial security, the financial shape of the developer becomes less important because the City can, if need be,use the security to complete the improvements. City of Pequot Lakes Staff Report 4_1 May 17,2007