2019-12-11 SM Agenda - Item 1 - Attachment 7 - Final New Noosa Plan - Part 8-10 Schedule Appendix - Clean version

SC6.5 ­ PSP4              Performance bonds
SC6.5.1             Purpose

(1)   The purpose of the Performance bonds policy is to:
      (a)   provide a means of complying with conditions of approval which seek to have a developer carry out works, make payments
            to Council or to conduct construction and development in accordance with approved plans through providing security in the
            form of a cash bond or bank guarantee (referred to as a bond); and
      (b)   detail the circumstances when Council may require the payment of bonds; and
      (c)   detail the type of bond required.


SC6.5.2             When Council may require the lodgement of bonds

(1)   Without limiting its powers under section 65 of the Planning Act 2017, Council may impose conditions on a development approval
      requiring the lodgement of bonds.
(2)   Bonds may be required for:
      (a)   the undertaking of certain works;
      (b)   ensuring compliance with conditions; or
      (c)   a combination of the above.


SC6.5.3             Types of bonds

(1)   There are three types of bonds being remedial/works bonds; performance bonds; or a combination of the two, with the latter being
      the most common. Each are described in more detail below.
      (a)   Remedial/works bonds:
            (i)     This type of bond secures work that must be carried out or payments required to be made by the developer. Typical
                    circumstances may be the requirement to construct roadworks/infrastructure works. Where the developer defaults on
                    such works or payments, Council will call upon the bond or part thereof to carry out such work itself or to effect the
                    payment. Any balance will be returned to the developer on full compliance with conditions.
            (ii)    The required level of bond is based upon 150% of the estimated cost of construction or the required payment. The
                    additional 50% is attributable to any approval not being acted upon until some considerable time after it is granted
                    and price rises or cost overruns which may occur.

      (b)   Performance bonds:
            (i)     This type of bond is used as an incentive to a developer to construct properly or develop in accordance with the
                    conditions of approval. Some common examples may include compliance with a load limit on certain roads,
                    retention of trees or vegetation or construction of the development in accordance with the approved plans. Very often,
                    in the view of the community, these circumstances are critical to satisfactory development being achieved.
            (ii)    Because of the nature of these conditions, the calculation of the appropriate level of bonding is not easily reduced to
                    an exercise in mathematics, eg. the removal of a significant tree is a situation which usually cannot be remedied for
                    100­200 years. Accordingly, the performance bond must act as an incentive to complying with conditions and must
                    therefore be of a sufficient scale to ensure that the developer is unlikely to contemplate non­ compliance. The bond
                    must also be of sufficient scale to ensure that the developer undertakes adequate monitoring to be certain any
                    contractors, employees, etc., do not unknowingly cause a breach.
            (iii)   In determining the level of such a bond, Council and its officers will have regard to the following:
                    (A)   Critical site attributes;
                    (B)   The importance in planning, environmental and engineering terms of the Council's requirements;
                          Scale of the specific matters against which security is required;
                    (C)   The likely degree of community concern should a breach occur; and
                    (D)   Remedial action, if any can be taken, which may be required should a breach occur.

            (iv)    As with remedial/works bonds, performance bonds will be returned following completion of development and
                    fulfillment of all the conditions.


  **FINAL DRAFT ­ Post Consultation 2019**
                                                                                                                                 Page 1 of 2