8.3 Eliminate Surety Bond
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
6/17/02
TIME
4:00 P.M.
AGENDA SECTION:
NO.
ORIGINATING DEPARTMENT:
APPROVED FOR
AGENDA:
~
8
BUILDING SERVICES
ITEM
NO.
3
BY: Michael W. Morgan
BY:~
ITEM:
Ordinance #02-10086, repealing existing Sections 8-57, 8-516 and 8-364 of Chapter 8 and
Section 22-61 of Chapter 22 of the Salina Code.
BACKGROUND:
Staff has been evaluating the possibility of eliminating the surety bond requirement for
contractors. Provided below is background information and staffs recommendation:
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Currently, contractors, both registered and licensed, must provide a surety bond in the
amount of $10,000 on the City's Standard Bond Form.
Certain types of contractors are exempted from the requirement.
Annual cost for a $10,000 bond is approximately $100 per year or $250 for three years.
The City Clerks office spends a considerable amount of time processing and filing submitted
bonds.
Over the past several years very few requests have been made to recover bond proceeds.
Many cities no longer require contractor surety bonds.
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Staff recommends that the surety bond requirement be eliminated for the following reasons:
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The protection afforded the consumer is minimal as bonds are difficult to recover from.
As all contractor costs must be recovered consumers may see lower project costs.
There currently exist more effective methods to ensure contractors perform in accordance
with adopted codes including prosecution in Municipal Court and registration/license
revocation.
.
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It is important that government reviews it's requirements on a routine basis to determine if the
intended goal is being reached and the methods are cost-effective. Staff believes that
elimination of the contractor surety bond requirement is an excellent opportunity to eliminate
bureaucracy without negatively impacting our citizens. Finally, the challenge to staff will be to
use existing tools to hold that small group of contractors accountable for their actions.
The proposed recommendation was reviewed by the Building Codes Advisory Board at it's June
11, 2002 meeting and approved.
RECOMMENDATION:
Staff recommends that you adopt this item on first and second reading. This will eliminate
confusion for new contractor applications.