Bonds and Agreements Primer Fairfax County Customer and Technical Support Center Sept. 8, 2016 Presentation to NAIOP/NVBIA

2.  Liability follows Developer named in the
agreement
 Sale of company or property, and issuance
of RUP and Non-RUP does not release
development agreement obligations
Developer defined at VA Code § 15.2-851.1

3. Protect public
› Ensure public and proffered
improvements are constructed
according to standards on the plans
› e.g., streets, walkways, streetlights,
sanitary sewer, storm drains, trees

4. Requirements defined in PFM
Chapter 2-0600: Bonds &
Agreements
Bond is returned to the developer
when the public and proffered
improvements are completed and
accepted

5.  New bonds for construction plans with public
improvements
› Bond Estimate Review
› Bond and Permit Package Approval
 Bond release = goal as soon as project is
completed and approved
 If the project is not completed by the bond
expiration date:
› Bond extension
› Bond reduction
› Bond replacement
Details:
http://www.fairfaxcounty.gov/dpwes/construction/bonds

6.  Private developer
› Permit package
› Development Agreement
› Corporate Surety/Letter of Credit/Set Aside
Letter/Cash
› Signature authority – organizational documents and
incumbency certificates
› Fees
 County review
Details:
http://www.fairfaxcounty.gov/dpwes/construction/bonds

7.  Any documents submitted by COB Friday are
reviewed prior to and included in the following
Wednesday Bond Committee
› Unless submittal is found incomplete
 County review: Bond Committee
› Department of Finance
› Office of the County Attorney
› LDS

8.  County emails three notices: at 60 days before
expiration, at 30 days and at time of Default
 Bond reduction allowed when some work
complete (at least 30%)
 Replacement agreement is required when
› Developer changes
› Type of Surety changes
› New Surety needed because bank has fallen below
rating requirements
› Requires the same documents as a new bond
9/12/2016 8

9.  Customers may request a replacement bond
at any time
› Sale of property
› Change of corporate ownership or membership
9/12/2016 9

10.  All improvements installed and required
approvals/acceptances obtained
 Developer requests bond release via the county
site inspector and passes final inspection
 Fairfax County Provides Letter 18 to Developer
 Fairfax County notifies Outside Agencies
› Seven business days for comment
 Letter 18 signed by Developer & returned to
Fairfax County
 Bond Released

11.  Before we can release bonds, approvals from:
› Fairfax County Water Authority
› Wastewater
› Street Lights
› VDOT street acceptance
› Urban Forestry
› All development related proffers and their associated
agencies
› Fire Marshal
› Others (e.g., property corner certifications, geotechnical
certifications, permits, violations, etc.)
 Full list of requirements from PFM 2-0603 :
http://www.fairfaxcounty.gov/dpwes/publications/pfm/chapter2.pdf

12. Most common hold ups:
› VDOT street acceptance
› Proffers/development conditions
› Streetlights – either not installed or
payment not received

13. Remember the emails sent at
60 and again 30 days?
›(and again at default?)
If the development agreement
expires, project moves into
default

14.  PFM 2-0600
 Future agreements may not be accepted
 Future bond amounts may be 150% of
engineering estimate
 Future cash or letter of credit may be
required in lieu of performance bond
 Hold up permit issuance and inspections

15. Per VA Code § 15.2-851.1, developers with
prior defaults risk needing to post cash or
letter of credit :
If the owner or developer has not met all previous land
development obligations in accordance with all
development agreements with the locality as determined
by the governing body or its designated administrative
agency for the previous seven years, then a personal,
corporate, or property bond may be disallowed by the
governing body as security for such facilities, and in such
event, security for such facilities shall be restricted to a
certified check, cash escrow, or a letter of credit that meets
the requirements of clause (iv) herein.
See also PFM 2-0601.5.

16. Per VA Code § 15.2-851.1, developers with
prior defaults may be required to post 150%
construction cost for future developments:
However, if for the previous seven years the owner or developer has not
met all previous land development obligations in accordance with all
development agreements with the locality as determined by the
governing body or its designated administrative agency, the governing
body may require that the allowance for estimated administrative costs,
inflation, and potential damage to existing roads or utilities be greater
than 25% of the estimated construction costs, but not to exceed 50% of
the estimated construction costs. “Developer,” as used in this section,
means any owner, builder, subdivider or other person or entity engaged
in the land development process and shall include their principals,
officers, members, managers, partners, alter egos, and members of the
immediate family related to any of the foregoing.

17.  2-0601.2B (95-06-PFM) The bond amount is the
full amount of the cost estimate plus
contingencies, engineering costs and inflation.
In the event the developer has not met all the
previous land development obligations in
accordance with all development agreements
with Fairfax County for the previous seven
years, then the bond amount should include the
cost estimate plus a factor of 50 percent of the
estimate to cover administrative costs, inflation,
and potential damage to existing roads or
utilities.

18.  Avoid difficulties with your future
agreements – obtain bond release
 Street acceptance most frequent hurdle
 NVBIA/NAIOP/Fairfax County/VDOT
committee
› Joint inspection process
› Better results

19.  County inspector and technical specialist
 VDOT inspector
 Owner/developer and optionally their
contractor performing work onsite
 Held after owner/developer submits post-
construction package
› Submit to county inspector with public street
inspection guideline checklist
› County forwards to VDOT
› VDOT contacts county staff with inspection
date/time

20.  Conditions are site specific
 These are just examples – ultimately the
approving authority (e.g., VDOT)
determines the final punch list
› Joint inspection has helped speed this up
 Your bond release can be held up because of
details missed at construction

26.  Proceed with street dedication before wear
and tear
 Failure to achieve street dedication may
require future milling and paving

28.  http://www.fairfaxcounty.gov/dpwes/con
struction/bonds/
 Most common errors:
http://www.fairfaxcounty.gov/dpwes/con
struction/bonds/common-errors.htm
 Development agreement:
http://www.fairfaxcounty.gov/dpwes/for
ms/developmentagreement.pdf

29.  Bonds and Agreements Center
› Hallala Faraj, Chief
› 703-324-1519
› hallala.faraj@fairfaxcounty.gov
 Site and Technical Services
› Kenneth Williams, Chief
› 703-324-1757
› kenneth.williams@fairfaxcounty.gov
 Customer and Technical Support Center
› Ellie Codding, Chief
› 703-324-1695
› eleanor.codding@fairfaxcounty.gov