Prosper Development Bonds, Escrow and Right-of-Way Insurance

At closeout, the 2023 Development Manual, whose cover reads Updated August 2022, calls for a two-year maintenance bond for 100% of the public improvement costs. The Engineering Residential Final Acceptance Checklist says the same in its own words, asking for a bond that covers 100% of construction costs for a two-year period, and it asks for separate maintenance bonds for the utilities, paving and subgrade contracts.

The Town's Commercial Inspection Guideline, revised in April 2019, states a two-year maintenance bond for 10% of public improvement costs. That is a tenfold difference on the same kind of work. The newer documents say 100%, but we could not confirm which figure the Town applies to a commercial project today. Ask Town Engineering in writing before the surety prices the bond, especially on commercial or mixed-use sites.

The checklist also asks for an affidavit that the contractor has been paid at least 90% of the contract or in full. A surety writing a 100% maintenance bond for a utility, paving or subgrade contractor will typically want to see that payment picture and the acceptance date, since the two-year term runs from there. Bond terms are subject to underwriting and the terms of the bond issued.

• 2023 Development Manual (updated August 2022): two years, 100% of public improvement costs.
• Residential Final Acceptance Checklist: two years, 100% of construction costs, one bond each for utilities, paving and subgrade.
• Commercial Inspection Guideline (revised April 2019): two years, 10% of public improvement costs.

The percentage, form and timing of any performance bond or letter of credit for platting are set in the Town's Subdivision Ordinance. We could not read that text for this page, so we do not state a figure. Confirm the current performance security terms with the Town before the surety commits capacity, and ask whether a bond, letter of credit or other instrument is accepted for your plat.

What the Town's public documents do show is how it handles work that cannot be built yet. The Development Manual says any required improvements unable to be installed at the time of development must be escrowed before final acceptance. The Final Acceptance Process adds that escrow is required where an adjacent road is not built to its ultimate section.

Section 4 of the Engineering Design Standards, updated July 2020, sets the escrow amount: it includes all construction costs plus engineering at 7% of construction cost and inspection at 3% of construction cost. On a deferred turn lane or a half-built thoroughfare, the developer funds roughly 110% of the construction estimate in cash rather than through a surety, which affects equity and loan budgets more than bond capacity.

The Development Manual separately lists an inspection fee of 3% of public improvement construction costs and says roadway, water and wastewater impact fees are collected at time of development. Developers also build deceleration lanes and median openings on the TxDOT roads that run through Prosper, which the manual lists as US 380, SH 289 (Preston), FM 1193, FM 1385, FM 1461 and FM 2478 (Custer).

The manual also notes that Prosper holds an ISO Class 1/1X rating for property insurance classification. That rating is one factor a property carrier may consider on completed buildings; how much it affects a builders risk or property quote can vary by carrier guidelines and programs.

The Town's Final Acceptance Process, updated 2024, says final acceptance is required for all projects with public infrastructure, and it must come before any residential home permit and before any certificate of occupancy or temporary certificate of occupancy. For a subdivision, that puts the maintenance bonds, the payment affidavits and any escrow on the critical path to the first home start.

Builders buying lots should plan for that sequence. Builders risk start dates, lot takedown schedules and the homebuilder's own insurance typically follow the Town's acceptance date, and the subcontractors' completed-operations coverage should run at least as long as the two-year maintenance bond that begins there.

Contractors and subcontractors working in Prosper right-of-way must register with the Town. The Right-of-Way page asks for the registration form and a current certificate of insurance, and it says the Town of Prosper will need to be added to the insurance. The right-of-way pre-construction handout asks for a completed certificate before work starts, citing code section 13.08.162. No right-of-way permit bond was stated on either page.

The Town also publishes Insurance Requirements for Construction Services. That document applies to contractors working under a contract with the Town, not to private developers as stated. For Town-contract work it calls for general liability of $1 million per occurrence and $2 million aggregate on an occurrence form including XCU, $1 million auto liability, a $1 million umbrella, builder's risk at completed value with the Town as loss payee, the Town as additional insured on a primary and noncontributory basis, a waiver of subrogation on workers' compensation and 30 days' notice.

A private developer's contractors should not assume those limits apply to their right-of-way registration, or that they do not. Ask Town Engineering what limits and endorsement wording it expects on a right-of-way certificate, and keep the certificate current so registration does not lapse at renewal.