Montgomery council approves TriPoint letter of credit for Lift Station 5, adds $150,000 escrow

Montgomery’s City Council on Feb. 24 authorized a standby letter of credit to secure construction of Lift Station No. 5 for the Legacy Grove/TriPoint development and attached a requirement that the developer maintain a minimum $150,000 escrow balance with the city.

City staff described the relocation as a developer-funded requirement tied to the approval of the Legacy Grove TriPoint development and said a letter of credit would secure contractor payments as estimates exceeded initial projections. Staff cited a letter-of-credit amount in the approximately $2.3 million range plus a 10% contingency and recommended the city be able to draw on an escrow account for pay requests to avoid delays.

Brad Sullivan, a TriPoint representative, told the council, “I don't wanna argue the additional deposit, but I would like to advocate for no additional cost,” and said his company believed the letter of credit already secured the contract. Staff explained the escrow requirement was intended as a working balance so the city would not have to advance funds while pay estimates, reviews and bank processes were completed.

Council members discussed mechanics of the letter of credit versus an escrow deposit, including bank fees and reductions to the letter of credit as work is paid. After discussion, a council member moved to authorize the letter of credit contingent on the escrow requirement; a second was made and the motion passed with the amendment to add the $150,000 escrow balance.

The motion authorizes execution of the standby letter of credit and allows the city to process developer pay estimates against the escrow account as they are reviewed. The council did not record individual roll-call vote tallies in the transcript.

Next steps: staff will finalize the letter-of-credit documents and the escrow arrangement so the city may execute the construction contract and work may proceed.