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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session


Posted: December 3, 2020 09:27 AM
From: Senator John DiSanto
To: All Senate members
Subject: Clarifying Municipal Bonding Requirements for Property Improvements
In the near future, I will reintroduce Senate Bill 1047 of the 2019-20 legislative session clarifying the Municipalities Planning Code to clarify Section 509 regarding final plat approval and the retention of posted financial security for improvements.

While the law’s intent is to ensure developers have sufficient funds to complete all required property improvements, the current language can be misinterpreted to withhold excess funds that greatly restrict a builder’s ability to get bonded for other on-going projects.

Instead of only retaining a bond of 110% of the value of remaining improvements, some municipalities have interpreted the law to retain 10% of the entire original project amount in addition to the cost of remaining improvements.

For example, if the original bond amount was $1 million and there was only $75,000 in remaining work the current planning code enables a municipality to retain $75,000 in outstanding improvement costs plus a $100,000 contingency—or 10% of the original posted security. Under this scenario a municipality is requiring bonding of $175,000 or about 2.5 times the cost of the outstanding work.

Under this example, my legislation allows a municipality to retain the $75,000 in outstanding improvement cost plus a $7,500 (10%) contingency for a total of $82,500. This proposal balances the interests of municipalities with the Commonwealth’s construction and development needs.

This language is supported by both the Pennsylvania State Association of Township Supervisors and the Pennsylvania Builders Association.

Please join me in co-sponsoring this legislation.

Introduced as SB208