Sec. 366.404. PERFORMANCE AND PAYMENT SECURITY. (a) Notwithstanding the requirements of Subchapter B, Chapter 2253, Government Code, an authority shall require a private entity entering into a comprehensive development agreement under this subchapter to provide a performance and payment bond or an alternative form of security in an amount sufficient to:
(1) ensure the proper performance of the agreement; and
(2) protect:
(A) the authority; and
(B) payment bond beneficiaries who have a direct contractual relationship with the private entity or a subcontractor of the private entity to supply labor or material.
(b) A performance and payment bond or alternative form of security shall be in an amount equal to the cost of constructing or maintaining the project.
(c) If an authority determines that it is impracticable for a private entity to provide security in the amount described by Subsection (b), the authority shall set the amount of the bonds or the alternative forms of security.
(d) A payment or performance bond or alternative form of security is not required for the portion of an agreement that includes only design or planning services, the performance of preliminary studies, or the acquisition of real property.
(e) The amount of the payment security must not be less than the amount of the performance security.
(f) In addition to, or instead of, performance and payment bonds, an authority may require the following alternative forms of security:
(1) a cashier's check drawn on a financial entity specified by the authority;
(2) a United States bond or note;
(3) an irrevocable bank letter of credit; or
(4) any other form of security determined suitable by the authority.
(g) An authority by rule shall prescribe requirements for alternative forms of security provided under this section.
Added by Acts 2007, 80th Leg., R.S., Ch. 264 (S.B. 792), Sec. 9.03, eff. June 11, 2007.
Section: Previous 366.260 366.261 366.262 366.301 366.302 366.303 366.304 366.401 366.402 366.403 366.404 366.405 366.406 366.407 366.408 NextLast modified: September 28, 2016