Companies looking to develop in Lake George Village may have to secure a performance bond or other financial instrument before their plans can be approved by the village’s various development boards. A revision of that current law would make the requirement of a financial instrument stronger but would offer options to the applicants.
Mayor Bob Blais proposed the revision Monday March 21, during the Village Board of Trustees meeting.
"In the past we've had some [projects] that were partially completed,” Blais said in an interview, adding the new rules will give “some leverage to make sure that it’s finished."
Performance bonds, or similar financial instruments — such as a cashier’s check, a certificate of deposit or an irrevocable letter of credit — are financial documents that the village can turn to if the owner or contractor fails to complete a project in a certain amount of time. In this case, two years.
They are used for private projects that encroach on public spaces, such as when sidewalks or roads must be dug up and then repaired.
They also can be used to make sure the official site plan of a project meets the expectations approved in the planning process.
However, performance bonds themselves are issued by assurity companies that do not necessarily want to issue bonds for small amounts. For that reason, the new code outlines other financial instruments, such as the cashier's check, that can be used and are more flexible for smaller projects, said Dan Barusch a planner with both the Town and Village of Lake George.
Generally, the financial instrument covers the cost of the entire project. The revised law allows for a deduction in the amount secured as progress is made on the project.
Barusch said clarity and leverage is the aim of the changes.
The current code allows the village to hold the performance bond "up to a period of two years after completion,” Barusch said. But that has not been done.
He offered as an example, the Auntie Anne’s pretzel shop that opened last year on Canada Street.
When the storefront was a bicycle shop, it never had a link to the wastewater system, but that upgrade was needed in order to run the restaurant.
At the time, Daniel Margolis, who was representing the owner at the planning board meetings, said the amount of the bond was very high since it effectively doubled the price of the project, at least in the short term.
[Read more about their store here.]
A $30,000 bond was secured for required sewer work at that location.
The sidewalk, dug up during the process, had been brought back to normal after the new pipe was laid, and the bond was returned to the owner shortly thereafter. However, both Blais and Barusch said, the sidewalk repair did not hold and this year it needs more work.
Had the village kept the bond or a portion of it for longer, they might have had the money to repair the sidewalk but now must turn to tax dollars, Barusch said. Other projects have taken too long to complete and the village had no leverage to require repairs and completion, both Blais and Borusch said.
Part of the idea behind the changes is to make sure there is a clear process explaining in which situations and for how long the money will remain accessible by the village, Barusch said.