Goodyear Performance Bonds, Warranty Bonds and Project Insurance

The manual says financial assurance must equal 100 percent of the estimated cost to build all improvements within the boundary of a final plat, map of dedication, condominium plat or amended plat, and that the amount is not determined by separate phasing limits on construction plans. Assurance for any work in city right-of-way, property or easements must be in place before city permits. The cost comes from an engineer's estimate in tabular form, with a separate estimate for each plan set, quantities that match the plan coversheets and unit rates based on current industry rates.

For a developer planning to build a large plat in stages, this front-loads the surety commitment. A plat with five construction phases needs security for all five at the start. The practical options are to plat in smaller pieces, to discuss the structure with the city early or to arrange enough surety capacity to carry the full amount. Each choice affects working capital, the indemnity exposure of the principals and how the lender reads the project's contingent obligations.

Section 2.15.3 sets the warranty period for completed improvements at two years from the Letter of Acceptance or Notice of Approval, and 90 days for landscaping and irrigation. The period continues until all warranty punch list items are resolved to the City Engineer's satisfaction. The warranty bond must equal 10 percent of the original engineer's estimate for the improvements under the performance bond, run in favor of the city, identify the development, location and improvement types and be held at least two years and until the defects the city inspector identifies are fixed.

The manual accepts warranty bonds only from entities rated A+ by A.M. Best. That narrows the surety market for the warranty instrument compared with many performance bond requirements, so confirm the surety's current rating before the closeout package is assembled. A developer that pushes the warranty down to its site contractor should make sure the contractor's maintenance bond, or the developer's own, meets that rating and runs at least as long as the city's period.

Under Section 2.15.4, Goodyear keeps a performance bond until all of the improvements it covers are complete, electronic copies of approved as-built drawings are accepted, a Notice of Approval or Letter of Acceptance has been issued and a compliant warranty bond has been provided. Until then, the surety's obligation is open and so is the developer's indemnity.

The warranty standards also describe work the developer must finish before the warranty expires. For pavement, cracks a quarter inch or wider must be cleaned and sealed under MAG Section 337 and new pavements sealed. Pavement under warranty must receive new thermoplastic markings at the final warranty inspection. These are scope items for the site or paving contractor, and they belong in the subcontract with a price, a schedule and a bonded obligation, not left as a surprise in the second year.

Goodyear's general grading and drainage notes require developers of new projects to provide financial assurance, in a form and amount acceptable to the City Engineer and City Attorney, to cover the cost of correcting stormwater drainage or disposal problems that arise in the first two years after initial construction. If the disposal method cannot drain retained stormwater within 36 hours after a rain event, the developer's engineer must submit a corrective action plan to the city. The design standards page adds that where the manual's notes conflict with Maricopa County Environmental Services or ADEQ requirements, the most stringent standard applies.

This assurance is separate from the warranty bond and focuses on performance of retention basins and drywells over time. A basin that will not drain is often a design, construction and maintenance question all at once, so the claim may involve the engineer's professional liability, the contractor's completed-operations coverage and the developer's own liability. Ask how each policy treats drainage failures and water damage to neighboring property before turnover, and whether a project-specific policy would simplify the answer.

Section 2.3.1 states that permits are issued only for work by contractors who are licensed with the State of Arizona, bonded, hold an Arizona state tax number and have a Goodyear business registration number. The permit application in Section 2.9.1 also asks for a current certificate of insurance naming the city as additional insured, with general liability, products-completed operations and general aggregate limits, vehicle liability and workers' compensation as Arizona law requires, at the amounts the manual lists.

Those amounts are the city's permit minimums, not a recommendation for a project. A developer's own contract, its lender and any wrap-up may require more. The manual also says that, where applicable, financial assurance must be posted and the final plat or right-of-way dedication recorded before construction plans qualify for an extension review, so a project that stalls before posting security may face a full re-review under newer standards.