From: Mac Corthell

Sent: Thu Jun 16 08:27:55 2022

To: Sam Miller; darren@iconconstruction.net

Subject: RE: River Meadows - Bonding

Importance: Normal

Attachments: image001.png; image002.jpg;

 

Hi Darren,

Sam looped me in on this to ensure we are going down the right path given we have a conflict in our code/design standards. We’ve been weeding these conflicts out since I got here, but clearly have a few more to get to, so thank you for your patience on this.

Your discussion below makes sense, comports with my experience, and complies with the legislatively enacted regulations which I see as superseding any rules implemented by individuals.

With all of that said, we will not require bonding of your public improvements on private property until Final Plat. Please ensure you provide the bond with your final plat submittal to the city when the time comes so that we don’t experience any delays in processing. Thank you.

Sincerely,

Macahan “Mac” Corthell, J.D. | Community Development Director

City of Molalla

315 Kennel Ave. | PO Box 248 |Molalla, OR 97038

Phone – 503.759.0243

Email – mcorthell@cityofmolalla.com

Website – http://www.cityofmolalla.com

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From: Darren Gusdorf <darren@iconconstruction.net>

Sent: Wednesday, June 15, 2022 2:25 PM

To: Sam Miller <smiller@cityofmolalla.com>

Cc: Harlan Borow <harlan@iconconstruction.net>; Peter Watts <peter@peterowattspc.com>; Mark Handris <mark@iconconstruction.net>

Subject: RE: River Meadows - Bonding

Importance: High

Good afternoon Sam,

Thank you for your time on the phone yesterday regarding our River Meadows development project. As discussed, a performance bond request at this stage of the project, that relates to on-site private improvements, is not applicable at this time. As explained, here’s why this doesn’t work. The onsite improvements are all private, with all services and materials supplied and owned by a private entity. In the event a developer/owner didn’t complete the interior improvements, on the private side of the project, the city would have no recourse, ability, or legal means to move onto private property and continue the build-out of the project when the property and improvements within the project are not owned by the public. Even if we had a $1M+ performance bond in place, the city would have no reason or legal grounds to use these funds to build out the private side of the subdivision. For OFF-SITE work, such as the improvements in the existing public right of way (under county rule/jurisdiction), it’s appropriate and makes perfect sense for a performance bond to be in place prior to permit issuance, so the county CAN use these funds to finish the needed improvements in their ROW if a developer fails to complete. The work affiliated within the development, outside of the public ROW, is not “bondable” at this time, for the reasons/rationale explained above.

I’ve read through your code section about bonding (inserted below), and as suspected and as I had hoped, the code written below is correct and needs no modifications to address this issue. The interpretation and policy implementation is not being followed correctly. Section A, states that at time of plat recording, the city will require a performance bond “acceptable assurance” for the balance of said improvements. This makes perfect sense, and what we are accustomed to in all jurisdictions. At time of plat recording, in this case, when the interior PRIVATE portions of the development are being conveyed to the city, that’s when they become PUBLIC, and only when they become public, would the city have the legal means to utilize a performance bond or other means of surety to complete any incomplete items left undone by the applicant/owner/developer. At time of plat recording, IF there were any incomplete items, the city would require a performance bond be put up and in place as surety on those specific incomplete items PRIOR to releasing/recording the plat BEFORE the private infrastructure becomes publicly owned. The trigger is at time of final plat/recording. We must first build the subdivision, get through punch, and identify any incomplete items, before we would be required to obtain a performance bond, still PRIOR to plat recording and PRIOR to the development becoming public.

Section B refers to the calculation and valuation of the performance bond. An engineer’s estimate would be presented to the city itemizing any/all incomplete items at that time to determine the valuation of the bond. There might be some confusion on this, being the engineer’s estimate for the full build-out is utilize to determine permit valuations. Using this engineer’s estimate for the full build-out to determine “front end” bonding/valuation is not the intent, and again, is not the correct timing/implementation of a performance bond.

I hope this makes sense. As mentioned when we spoke, we have run into this before in prior jurisdictions. Each time, the end conclusion has been the same; Performance bonds for work outside of public property have been deemed undeployable, not applicable, and have been exempt on all of our projects. I understand that you are not the decision maker on this issue, and appreciate you running it up the ladder to the appropriate parties who can review and keep these discussions going. We’re at the finish line on plan review and are hoping to complete the pre-con and obtain our development permit next week. We need to get this resolved as soon as possible to keep this project moving. As mentioned on the phone a $1M+ bond, is extremely expensive, with annual dues that would cost approximately $45,000. This is an astronomical and unwarranted cost for something that can never be utilized.

Thank you for all of your help with this. Please keep me posted with where these conversations are going within the city of Molalla.

Thank you!

17-3.6.100 Performance Guarantee and Warranty

A. Performance Guarantee Required. The City at its discretion may approve a final plat or building permit when it determines that all of the public improvements required for the site development or land division, or phase thereof, are complete and the applicant has an acceptable assurance for the balance of said improvements. The applicant shall provide a performance and payment bond in accordance with the current version of the Public Works Design Standards.

B. Determination of Sum. The assurance of performance shall be for a sum determined by the City Engineer as required to cover the cost of the improvements and repairs, including related engineering and incidental expenses, plus reasonable inflationary costs. The assurance shall not be less than 150 percent of the estimated improvement costs.

C. Itemized Improvement Estimate. The applicant shall furnish to the City an itemized improvement estimate, certified by a registered civil engineer, to assist the City in calculating the amount of the performance assurance.

D. Agreement. A written agreement between the City and applicant shall be signed recorded. The agreement may include a provision for the construction of the improvements in stages and for the extension of time under specific conditions. The agreement shall contain all of the following:

1. The period within which all required improvements and repairs shall be completed;

2. A provision that if work is not completed within the period specified, the City may complete the work and recover the full cost and expenses from the applicant;

3. The required improvement fees and deposits.

E. When Applicant Fails to Perform. In the event the applicant fails to carry out all provisions of the agreement and the City has un-reimbursed costs or expenses resulting from such failure, the City shall call on the bond, cash deposit, or letter of credit for reimbursement.

F. Termination of Performance Guarantee. The applicant shall not cause termination, nor allow expiration, of the guarantee without first securing written authorization from the City.

G. Warranty Bond. A warranty bond good for two years is required on all public improvements and landscaping when installed in the public right-of-way. The warranty bond shall equal 120 percent of the total cost of improvements and begin upon acceptance of said improvements by the City. (Ord. 2017-08 §1)

Darren Gusdorf

General Manager - Commercial & Residential Division

ICON Construction & Development, LLC #150499

1969 Willamette Falls Drive, Suite 260 | West Linn, OR 97068

503.657.0406 office | 503.655.5991 fax

darren@iconconstruction.net

www.iconconstruction.net

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From: Sam Miller <smiller@cityofmolalla.com>

Sent: Tuesday, June 14, 2022 11:53 AM

To: William Doster <williamd@symonsengineering.com>

Cc: Darren Gusdorf <darren@iconconstruction.net>

Subject: RE: River Meadows - Bonding

Hi William,

See comments in red below and attached is City form for the performance bond, please fill out the remaining portions and return with bond ( City will need the original hard copy).

FYI, remaining balance due for PW Permit is $28,981.94. which will need to be paid prior to scheduling preconstruction meeting, along with submittal of liability insurance, 1200-C permit, and bonding.

Let me know if you have any questions.

Regards,

Sam Miller | Sr. Engineer Tech.

City of Molalla

315 Kennel Ave. | PO Box 248 | Molalla, OR 97038

T : 503-759-0217 | E: smiller@cityofmolalla.com

From: William Doster <williamd@symonsengineering.com>

Sent: Monday, June 13, 2022 2:27 PM

To: Sam Miller <smiller@cityofmolalla.com>

Cc: Darren Gusdorf <darren@iconconstruction.net>

Subject: River Meadows - Bonding

Hi Sam,

I’m trying to get everything to ICON so they can complete the bonding. Below is the info they need:

As discussed, we’ll need the following information from the city before I can order up this performance bond:

 

Attached is my updated engineer’s estimate. All of the latest plan changes have been incorporated into the estimate (i.e. the leveling course).

Thank you,

William Doster

Symons Engineering Consultants, Inc.

phone: 503 760 1353

www.symonsengineering.com

Integrity & Strength in Design

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