Subdivision and Site Improvement Bonds are similar, with both protecting public funds and property. Project owners provide these bonds to public bodies at their own expense. The project owners must also pay for upgrades to public property, which, once completed, become the property of the public agency and the community at large.
The primary distinction between the two surety bonds is that Subdivision Bonds guarantee enhancements to new construction while Site Improvement bonds guarantee renovations to existing structures.
What is a Subdivision Bond?
Subdivision Bonds are required from developers and are used to ensure the completion of mandated upgrades to streets, sidewalks, drainage systems, and utilities that the local community uses on a regular basis. These bonds provide security for a specific city, county, district, or state. Residential constructions, commercial complexes, and the updating of existing infrastructure are examples of building projects that may require a Subdivision Bond.
What is a Site Improvement Bond?
A Site Improvement Bond guarantees that renovations or enhancements to an existing facility or site are performed in compliance with the contract terms. Before work can begin on a public project or modifications are made to public property, developers and contractors are frequently required to submit a Site Improvement Bond. They are frequently used to ensure the completion of parking lots, driveways, lighting systems, grading or erosion control, and other infrastructure improvements.
What are the key requirements for Subdivision or Site Improvement Bonds in Arizona?
Bonds are typically issued as a percentage of the total project cost to fund the cost of improvements. Developers must provide project plans, cost estimates, and an improvement agreement. The bond remains active until the renovations are finished and approved by the municipality. Before providing the bond, the surety verifies the developer's financial situation, credit history, and experience.