The passing of North Carolina House Bill 721 clarifies that surety bonds are an accepted form of performance guarantee for subdivision developers. The bill also deletes ambiguous language in the existing legislation. The bill became effective October 15, 2015.
HB 721 modifies Part 2 of Article 19 of North Carolina General Statutes, Chapter 160A. The section allows cities to regulate the subdivision of land through subdivision control ordinances. The ordinances can require review and approval of sketch plans, preliminary plats and final plats.
Ordinances are in place to promote “orderly growth and development of the city.” Ordinances can require certain provisions of the subdivision developer, including the following:
- Reservation of recreational areas for residents of the subdivision
- Coordination of existing roads and utilities with those that are planned
- Construction of right-of-ways or easements for street or utility purposes
- Detailed plats throughout subdivision development, approved as changes are made
These provisions are at the discretion of the city issuing the subdivision control ordinance. They’re meant to promote distribution of population and traffic in a way that avoids overcrowding or congestion.
Subdivision control ordinances can reserve school sites in accordance with approved comprehensive land use plans. If a subdivision containing reserved school site land is submitted for development approval, the city will notify the appropriate board of education. The board can choose to reserve the school site or allow it to be subdivided, provided they respond within 18 months of notification. Developers may be required by ordinance to provide funds for the construction of roads or recreational areas in lieu of constructing them.
The ordinance can also require the developer to provide a performance guarantee. HB 721 allows the following forms of performance guarantees:
- Surety bond
- Letter of credit
- Another form of guarantee providing equivalent security
The developer can choose which form of guarantee to provide. The guarantee ensures that the developer will perform any required improvements that are specified in their subdivision control ordinance. The developer must not allow the guarantee to expire before construction is completed. The amount of the surety bond or guarantee will vary, but will not exceed 125% of the estimated cost of the project’s completion.
If you have questions about subdivision development, contact the department in your city or county that handles zoning, such as the Department of City Planning in Raleigh or the Dare County Planning Department. SuretyBonds.com can help you purchase a surety bond in North Carolina quickly, easily and accurately.