A BILL TO BE ENTITLED
AN ACT to establish a maintenance bond process for subdivision roads dedicated for public use to prevent degradation of transportation improvements prior to addition to the state highway system.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 153A‑331 reads as rewritten:
"§ 153A‑331.  Contents and requirements of ordinance.
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(e)	The ordinance may provide for the more orderly development of subdivisions by requiring the construction of community service facilities in accordance with county plans, policies, and standards. To assure compliance with these and other ordinance requirements, the ordinance may provide for performance guarantees to assure successful completion of required improvements at the time the plat is recorded as provided in subsection (b) of this section. For transportation improvements intended to be designated as public under G.S. 136‑102.6, the ordinance may also provide for maintenance guarantees to prevent degradation of transportation improvements until the improvements are added to the State highways system for maintenance pursuant to G.S. 136‑102.6(d). For any specific development, the type of performance or maintenance guarantee shall be at the election of the developer.
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(g)	Any performance or maintenance guarantee shall comply with G.S. 160A‑372(g)."
SECTION 2.  G.S. 160A‑372 reads as rewritten:
"§ 160A‑372.  Contents and requirements of ordinance.
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(c)	The ordinance may provide for the more orderly development of subdivisions by requiring the construction of community service facilities in accordance with municipal plans, policies, and standards. To assure compliance with these and other ordinance requirements, the ordinance may provide for performance guarantees to assure successful completion of required improvements at the time the plat is recorded as provided in subsection (b) of this section. For transportation improvements to be designated as public under G.S. 136‑102.6, the ordinance may also provide for maintenance guarantees to prevent degradation of transportation improvements until the improvements are added to the State highways system for maintenance pursuant to G.S. 136‑102.6(d). For any specific development, the type of performance or maintenance guarantee shall be at the election of the developer.
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(g)	For purposes of this section, all of the following shall apply with respect to performance guarantees:
(1)	The term "performance guarantee" or "maintenance guarantee" shall mean any of the following forms of guarantee:
a.	Surety bond issued by any company authorized to do business in this State.
b.	Letter of credit issued by any financial institution licensed to do business in this State.
c.	Other form of guarantee that provides equivalent security to a surety bond or letter of credit.
(2)	The performance guarantee shall be returned or released, as appropriate, in a timely manner upon the acknowledgement by the city or county that the improvements for which the performance guarantee is being required are complete. The engineer of record for the design of transportation improvements intended to be designated as public under G.S. 136‑102.6 shall provide a sealed certification to the city or county and the Division of Highways confirming that the transportation improvements have been completed according to the plans that received the certificate of approval pursuant to G.S. 136‑102.6(d). If the improvements are not complete and the current performance guarantee is expiring, the performance guarantee shall be extended, or a new performance guarantee issued, for an additional period until such required improvements are complete. A developer shall demonstrate reasonable, good faith progress toward completion of the required improvements that are the subject of the performance guarantee or any extension. The form of any extension shall remain at the election of the developer.
(2a)	Within 20 business days following the filing of the certificate of completion by the engineer of record, the developer shall provide a maintenance guarantee for the transportation improvements intended to be designated as public under G.S. 136‑102.6. The maintenance guarantee shall be returned or released, as appropriate, when any of the following occur:
a.	The transportation improvements are added to the State highways system for maintenance pursuant to G.S. 136‑102.6(d).
b.	The rerecording of a subdivision plat designating the transportation improvements as private.
(3)	The amount of the performance guarantee shall not exceed one hundred twenty‑five percent (125%) of the reasonably estimated cost of completion at the time the performance guarantee is issued. Any extension of the performance guarantee necessary to complete required improvements shall not exceed one hundred twenty‑five percent (125%) of the reasonably estimated cost of completion of the remaining incomplete improvements still outstanding at the time the extension is obtained.
(3a)	The amount of the maintenance guarantee shall not exceed fifteen percent (15%) of the reasonably estimated total cost of construction of the transportation improvements at the time the guarantee is issued.
(4)	The performance guarantee shall only be used for completion of the required improvements and not for repairs or maintenance after completion."
SECTION 3.  This act is effective when it becomes law.