Subdivision or Site Improvement Bonds provide a guarantee to a government entity that the developer will complete the required improvements within a stated period, in accordance with the governing body’s requirements. Municipalities, counties, or cities as well as developers or builders often require these bonds.
These bonds protect public interests, facilitate project approvals, demonstrate the developer’s commitment to meeting local government requirements, and ensure that developers are financially responsible for the completion of improvements.
What is a Subdivision Bond?
These bonds are required by local governments to guarantee that the developer will complete public improvements as specified in the subdivision agreement. Examples of public improvements include streets, sidewalks, utilities (water, sewer, electricity), storm drainage systems, and landscaping. A Subdivision Bond is typically required before a developer can sell individual lots within the subdivision.
What is a Site Improvement Bond?
These bonds are required when improvements are made to a single site (e.g., commercial development or private property) to ensure compliance with local ordinances. They guarantee the completion of specific on-site and off-site improvements, such as parking lots, driveways, lighting systems, grading or erosion control, and other infrastructure improvements.
What are the key requirements for Subdivision or Site Improvement Bonds?
- Bond Amount: The bond amount is typically based on the cost of the improvements, often set as a percentage of the total estimated project cost.
- Project Details: Developers must provide project plans, cost estimates, and an improvement agreement.
- Duration: The bond remains active until the improvements are completed and accepted by the municipality.
- Credit Check: The surety evaluates the developer’s financial standing, credit history, and experience before issuing the bond.