Grading / Public Improvements Bond - City of San Diego, CA in California

Brief Summary

If your approved construction cost estimate is $100,000 or less, the City of San Diego normally does not ask for this bond at all. Above that, the bond amount comes straight from the engineer's estimate and a fixed city schedule, so once the estimate is approved you know exactly what to bond for and can have the DS-401 executed and back to Development Services quickly.

The City of San Diego requires a performance bond from anyone doing work under a Grading Permit or Public Right-of-Way Permit, under San Diego Municipal Code 129.0119. The City sets the amount from the approved construction cost estimate using a schedule that differs by type of work. The bond must be written on City form DS-401 by a California authorized surety rated in the A category or higher.

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How to Apply for a Grading / Public Improvements Bond:

• Get the Construction Cost Estimate prepared by a California licensed civil engineer and approved by the DSD Drainage and Grades reviewer.
• Confirm the estimate is over $100,000, or that the City Engineer has required a bond anyway.
• Calculate the bond amount from the approved estimate using the SDMC 129.0119 schedule, or use the amount DSD gives you.
• Have the surety complete City form DS-401 with project number, job location, permit number and premium amount.
• Have the principal and the attorney in fact sign before a notary, and attach the power of attorney and proof of the signer's authority.
• Submit the executed bond to Development Services before the permit is issued.

Detailed Information About the California Grading / Public Improvements Bond:

Check whether you need it first

San Diego Municipal Code 129.0119 says projects with a completion cost of $100,000 or less are exempt from the bond unless the City Engineer requires one. Information Bulletin 126 also lists Standard Public Improvement Right-of-Way Permits on a Construction Plan template and permits issued to a government agency as not needing a bond. The section was amended by Ordinance O-22109, effective July 15, 2026, and the code notes those amendments do not apply inside the Coastal Overlay Zone until the California Coastal Commission certifies them. Coastal projects should confirm the threshold with Development Services.

How the amount is set

There is no flat figure. A California licensed civil engineer prepares a Construction Cost Estimate using the City's Unit Price List, and the Drainage and Grades reviewer approves it. The City then applies this schedule from SDMC 129.0119(a)(6).

• Grading appurtenances such as private drainage structures: 100 percent of estimated cost
• Revegetation and irrigation: 50 percent of estimated cost
• Grading: 100 percent of the first $5,000, plus 50 percent of the cost from $5,000 to $50,000, plus 25 percent of the cost above $50,000
• Public improvements and structures: 110 percent of estimated cost
• Encroachments: 110 percent of the cost to restore the right of way
• Shoring restoration: 100 percent of the cost to restore the site and remove tie backs and shoring

What the bond guarantees

The bond runs in favor of the City of San Diego and guarantees lien free completion of the permitted work. If the City declares a default, the principal or surety has 21 calendar days to say it will finish the work, or 35 calendar days to deposit the City's completion estimate plus 25 percent, capped at the bond amount. Form DS-401 also covers unpaid laborers and material suppliers.

Form and surety rules

The City accepts only its own form DS-401 for grading and right-of-way permits, not insurer letters or substitute documents. The surety must be authorized in California and rated in the A category or higher by at least one nationally recognized rating organization. Both the principal and the attorney in fact must sign before a notary. A cash deposit or letter of credit can be posted instead. Subdivision improvement agreements use a different form, DS-402.

Release

The bond stays in full force until the as built or as graded documents are approved and the permit is closed. A partial release of up to 75 percent of the estimate may be requested through the Resident Engineer once substantial work is accepted.

How premium is set

This is a performance bond, so the surety underwrites the contractor or owner much like a construction bond, looking at credit, financial statements and experience along with the bond amount.

Eligibility and Requirements for a California Grading / Public Improvements Bond:

• Surety authorized to do business in California.
• Surety rated in the A category or higher by at least one nationally recognized rating organization.
• City of San Diego named as obligee on form DS-401.
• Bond amount matching the City approved figure for the project.
• Bond kept in force until the permit is closed and as builts are approved.
• Contractor or owner credit and financial review by the surety, since this is a performance bond.

California Grading / Public Improvements Bond FAQs:

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