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THE CITY OF 4 <br /> III ° MN COUNCIL AGENDA REPORT <br /> pL E ASANTONe <br /> September 4, 2012 <br /> Community Development <br /> Engineering Division <br /> TITLE: APPROVE THE REDUCTION AND SUBSTITUTION OF PERFORMANCE <br /> AND LABOR AND MATERIALS BONDS FOR TRACT 7374 — CANYON <br /> OAKS <br /> SUMMARY <br /> Tract 7374, Canyon Oaks, a subdivision on the Bernal Property was approved in July of <br /> 2002 for construction of 128 residential single-family homes. The property is located at <br /> the southern end of Case Avenue. The sub-division improvements and homes have <br /> been constructed and occupied for more than 8 years; however, the project has not yet <br /> been accepted as complete because of a soil settlement issue on a portion of one of the <br /> streets within the project. <br /> KB Homes, the developers of the project, removed and replaced the portion of settled <br /> roadway in the summer of 2011 and then requested to reduce the Performance and <br /> Labor and Materials bonds from $5,635,500 to $600,000 - an amount which is two times <br /> greater than the estimated cost to repair the settled street if it were to fail again. In July <br /> of 2012, Staff from the Engineering Division and the City Attorney's office discussed the <br /> issue and agreed a reduction in the bond to $600,000 was reasonable. <br /> RECOMMENDATION <br /> Ratify reduction and substitution of Performance and Labor and Materials bonds to <br /> $600,000. <br /> FINANCIAL STATEMENT <br /> There is no fiscal impact associated with the reduction of these bonds since the new <br /> bonds cover twice the expected cost to repair the street should it settle again. <br /> Additionally, the original Maintenance bond in the amount of $563,500 is still in place to <br /> cover any warranty work on the entire project. <br />