SECTION 293.48. Street and Water, Wastewater and Drainage Utility (Street and Utility) Construction by Developer

Except as otherwise provided, unless street and utility construction is completed within the area to be developed by the proposed bond issue, the developer must provide assurance to the satisfaction of the executive director, prior to advertisement for sale of the district's bonds, that such street and utility construction will be completed as hereinafter provided.

(1) The developer must enter into an agreement with the district, secured by an escrow of funds in the name of the district, a letter of credit, or a deferral of reimbursement of bond funds owed, specifying that if street and utility construction is not completed within a reasonable and specified period of time after the district sells its bonds, the district may award a contract for completion of the streets and utilities with financing to be accomplished by utilizing the letter of credit; provided, however, the district shall not proceed in such a manner until the executive director, after having given at least ten days' written notice to both the district and the developer, has reviewed the matter, either on the petition of the district or on his own motion and has approved the district's awarding of the contract and utilization of the letter of credit; and provided further, the executive director may extend the time for the developer to complete the streets and utilities if the developer renews the letter of credit and adequately compensates the district for lost revenues and taxes resulting from failure to complete the streets and utilities within the specified time. In the event that the letter of credit has not been renewed or replaced 45 days prior to its expiration date, or in the event that the developer commences any proceeding, voluntary or involuntary, or any proceeding, voluntary or involuntary, is commenced against the developer involving the bankruptcy, insolvency, reorganization, liquidation, or dissolution of the developer, or any receiver is appointed for the developer, or the developer makes a general assignment for the benefit of creditors, the district shall have the immediate right to draw down the lesser of the current cost, as estimated by the district's engineer, to construct the streets and utilities, or the entire remaining balance of the letter of credit. The current estimated costs to construct the streets and utilities shall include construction contract amounts, engineering, surveying and testing fees, and a 10% contingency. The district shall deposit such funds in a separate account and shall not commit or expend such funds until the executive director has authorized use of the funds as provided in this subsection. Within 30 days after final completion of the streets and utilities, the district shall provide an accounting of the use of funds drawn pursuant to the provisions hereof and shall refund any remaining funds, including accrued interest, if any, to the developer or his designee. A district shall not allow any letter of credit to expire, except upon completion of the paving in substantial compliance with the agreement or written approval of the executive director. A copy of the street and utility construction agreement meeting the criteria specified in §293.57 of this title (relating to Form of Street and Utility Construction Agreement), the letter of credit, and any amendments or renewals thereof shall be submitted to the executive director within ten days after their execution or receipt by the district. The letter of credit must be from a financial institution meeting the qualifications as specified in §293.56 of this title (relating to Requirements for Letters of Credit).

(2) The developer shall include in the street and utility construction contract a provision that places the responsibility on the contractor for repair and clean-up of broken manholes, buried valve boxes, broken wastewater pipe, and all other damage to district facilities caused by construction of streets and utilities.

(3) The district shall charge a district employee or consultant with the responsibility to frequently inspect and conduct operational tests on unused facilities and promptly report:

(A) undue facility and equipment deterioration, leaks, silting, infiltration and other problems with utility systems resulting from nonuse; and

(B) damage caused by vandalism, or road, street, commercial, industrialand/or housing construction in order to establish responsibility promptly.

(4) In instances where a contractor for underground facilities has otherwise satisfactorily completed his contract, except for drainage inlets, manholes, and other adjustments, in accordance with plans and specifications as approved by the commission, and the district has assumed ownership of the contract, but the contractor cannot proceed to completion because of street or road construction delay, the district board of directors may delete the remaining incomplete bid items by change order, accept the construction, and close the contract, provided that the developer agrees in writing:

(A) to include the deleted items and adjustments in the street or road construction contract, when accomplished, or in a separate contract, and to pay all construction costs of these items in excess of the original contract price, or the agreed deleted price; and

(B) to pay the cost of reasonable measures necessary to initially prepare the district's underground facilities for the anticipated period of nonuse and to pay clean-up costs after nonuse.

Source Note: The provisions of this §293.48 adopted to be effective September 5, 1986, 11 TexReg 3736; amended to be effective June 30, 1993, 18 TexReg 3758; amended to be effective October 22, 1996, 21 TexReg 9905; amended to be effective June 5, 1998, 23 TexReg 5715; amended to be effective September 14, 2000, 25 TexReg 8955