Franchise for Commercial Solid Waste & Divertible Materials Handling Bond - City of Newport Beach, CA in California

Brief Summary

A Newport Beach commercial hauling franchise does not take effect until the city has your bonds and insurance, and the acceptance window is short. Posting a surety bond instead of a cash deposit keeps that money working in your fleet, and the city's own bond form makes the filing simple once you know what goes on it.

Haulers awarded a non-exclusive franchise for commercial solid waste and divertible materials handling in Newport Beach must give the city either a cash deposit or a faithful performance bond before placing any container. The city's bond form under the 2020 model franchise agreement is written for $7,500, the City of Newport Beach is the obligee, and the bond must stay in force for seven years from the date the franchise is granted.

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How to Apply for a Franchise for Commercial Solid Waste & Divertible Materials Handling Bond:

• Apply to the City of Newport Beach for a non-exclusive commercial solid waste franchise.
• Confirm the bond amount with Public Works, since the director sets the deposit or bond amount.
• Use the city's Faithful Performance Bond form attached to the franchise agreement as Exhibit A.
• Have the bond signed by the principal and the surety, with notary acknowledgments for both.
• Deliver the bond and insurance certificates with the written acceptance filed with the City Clerk.
• Keep the bond in force for seven years from the date the franchise is granted.

Detailed Information About the California Franchise for Commercial Solid Waste & Divertible Materials Handling Bond:

Who needs it

Newport Beach Municipal Code Section 12.63.030 bars anyone from providing commercial solid waste handling services in the city without first being awarded a franchise and signing a franchise agreement. The city keeps a list of approved non-exclusive franchise haulers in two groups. Tier 1 haulers collect municipal solid waste and divertible materials. Tier 2 haulers handle construction and demolition debris. This bond belongs to the franchise for commercial solid waste and divertible materials handling.

Amount and form

Section 5 of the 2020 model franchise agreement says that before placing any container on public or private property the franchisee must either give the city a cash deposit or obtain and maintain a faithful performance bond, with the amount set at the Public Works Director's sole discretion. The bond form attached to the agreement as Exhibit A is written for $7,500. Use the Exhibit A form, since the agreement requires the bond to be in that form, and confirm the amount with Public Works before the bond is issued in case the director has set a different figure for you.

Surety standards

The agreement asks more of the surety than most city bonds do. The surety must be authorized by the California Insurance Commissioner, listed on the U.S. Treasury Circular 570, and rated A or better with a Financial Size Category of VII or larger in Best's Key Rating Guide. The executed bond needs notary acknowledgments for both the principal and the surety.

What it covers and how long

The bond guarantees that the franchisee performs every service, covenant and condition of the franchise agreement and indemnifies and defends the city as the agreement requires. Changes or time extensions to the agreement do not release the surety. The principal must keep the bond in force for seven years after the franchise is granted.

Timing

The city's franchise ordinances state that a franchise does not become effective until the hauler files written acceptance with the City Clerk and delivers all required bonds and insurance, and the acceptance is due within ten days after the ordinance is adopted. The 2020 franchise term runs to October 7, 2027, so haulers should expect a new agreement for later terms and check its bond terms with the city.

Eligibility and Requirements for a California Franchise for Commercial Solid Waste & Divertible Materials Handling Bond:

• A surety authorized by the California Insurance Commissioner.
• Surety listed on U.S. Treasury Circular 570.
• Surety rated A or better, Financial Size Category VII or larger, by A.M. Best.
• City of Newport Beach named as obligee.
• Credit and financial review of the hauler, which sets the premium.

California Franchise for Commercial Solid Waste & Divertible Materials Handling Bond FAQs:

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