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Developers warn Elbert County proposal requiring letters of credit could raise costs; county keeps SIA as discussion item
Summary
County staff proposed a standardized subdivision improvement agreement requiring an irrevocable letter of credit (115% of amount) instead of bonds; developers testified that letters of credit are costlier (about 2% of face value) and cash‑secured, which could increase project financing needs and housing costs; the board left the item for further discussion and outreach.
County legal staff and public‑works representatives presented a proposed standard Subdivision Improvement Agreement (SIA) on Feb. 11 to create uniform security requirements for public improvements. The draft cites statutory authority ("30‑28‑137") and proposes requiring letters of credit rather than bonds to secure construction and warranty obligations.
County staff said letters of credit make it easier for the county to draw funds if improvements are not completed. "It's a little easier for the county to draw on if it comes to that," county counsel said. The proposal would standardize forms that previously varied case‑by‑case.
Developers and commenters urged caution. Jim Marshall, speaking as a developer, said letters of credit often require cash security and charge fees of roughly 2% of the face value, which can materially increase upfront cash demands for smaller developers and could be passed on to homebuyers. "For every million dollars, I have to... it's $20,000 it costs me to get that letter of credit," Marshall said, arguing that bonds—while slower to draw on—are more accessible for many builders.
Other developers noted that letters of credit set at 115% of the obligation could tie up significant capital: "If we have a $2 million job, I have to give you a $2 million letter of credit... then I have to put the $2 million in the ground. So now I've got a $4 million investment to build $2 million worth of infrastructure," one commenter said.
County counsel and staff acknowledged the concerns and emphasized the proposal’s goal of protecting county interests if work is not completed; the board agreed to keep the SIA item as a discussion topic, solicit additional feedback from developers, and return the issue to a future meeting for further consideration.
No vote was taken on the proposed form at this meeting.
