Surety bonds free up capital…

Surety bonds free up capital especially when a project is complete and yet the municipal processing time to either reduce or return the letter of credit takes an EXTRAORDINARY [emphasis added] amount of time. These regulations will certainly solve this most unfair problem.

(Outside the Planning Act, Municipal service corporations and utility companies should also be required to accept surety bonds).

Another problem, which is worthwhile identifying at this time, is that the standard level for acceptance by a developer seems to be different from that of a town-initiated project. For a very simple example, a town snowplow cosmetically damages developer-installed curbs and the developer is forced to remove and replace that damaged section. The same damage on town assumed assets is not replaced at the same rate. Too often, I’ve seen excessive waste replacing functioning infrastructure (with equivalent service life) from an overzealous town because it is on the developer’s dime. The consequence is that the losses from one phase are offset by higher prices on the next phase and this hurts the consumer in the end.

The pendulum needs to be restored. For that reason, I would like to see changes to #3 – Guaranteed Payment such that the default of the obligation should not be determined by the municipality “in its sole discretion”, but by the municipality proving its case to the issuer. If this bond program is abused, the cost of obtaining the bond will be so high that developers would revert to LC’s and this defeats the whole purpose of creating this regulation set.

If there were one province-wide standard subdivision agreement with uniform engineering standards (allowing geographic for deviations) though-out, the abovementioned problem would be eliminated. However, that is for another day, we hope!