City of Chico Encroachment Permit Bond for Excavation

What is the Purpose of the Encroachment Permit Bond for Excavation?

The City of Chico requires contractors performing construction involving excavation to obtain an Encroachment Permit Bond for Excavation. The bond represents a financial guarantee by the contractor and the issuing surety company to the City of Chico that all contracted work will be completed on time and the jobsite will be returned to its original condition.

How Much Does the Bond Cost?

Per Municipal Code 14.08.140, the surety bond or other security obtained and provided by a permittee at the time of the issuance of a permit pursuant to the provisions of this chapter authorizing construction or excavation work on or within a public right-of- way or public service easement shall be in the amount of at least $10,000.00; except that where the director determines that the work performed pursuant to such permit is extensive and would expose the city to costs substantially in excess of $10,000.00 to remedy any breach by the permittee in the permittee's duties and obligations to restore the public right-of-way or public service easement to the same condition as it was in prior to the commencement of the construction or excavation work or such modified condition as approved by the director, then the surety bond or other security shall be in an amount which the director determines is necessary to fully cover the city's exposure to all such costs.

The bond cost for the contractor is typically between 1%-7.5% depending on the contractor’s personal credit score.

*Prices shown are based on several factors. Not all available pricing tiers are shown. Rates do not constitute an offer of bonding and are subject to change at any time.

How Does the Permit Application Process Work With the City of Chico?

Applications for a permit must be filed in the office of the director, contain the information prescribed by the director and must be accompanied by a permit fee in an amount established by the city council. 

When an application is filed, the applicant must establish to the city director:

1. That the applicant holds a valid contractor’s license to perform the kind of work within the public right-of-way or public service easement to be authorized by the permit.
   
   or
    
2. The applicant owns the property adjoining the portion of the public right-of way or public service easement in which the work to be authorized by the permit will be performed, and that the work will be performed either entirely by the applicant or by the applicant in conjunction with unpaid assistants. 

(Ord. 1928 §2 (part), Ord. 1992 §2, Ord. 2364 §125)

Where the director determines that a completed application has been filed for a permit required by this chapter and there are no grounds for denying such permit, the director shall approve the application and issue the permit subject to all of the general and special conditions hereinafter provided for by this chapter at such time as the applicant has provided the comprehensive liability insurance and otherwise complied with all other general or special conditions required as conditions precedent to the issuance of the permit.

(Ord. 1928 §2, Ord. 2364 §127)

Does CCIS File the Bond for Applicants?

City of Chico requires wet signatures** on filed bond documents. This means both parties must physically sign the bond prior to sending it in to the City of Chico. The original bond form issued by CCIS needs be mailed to or dropped off at the following location by the contractor once signed:

**Properly review bond forms to confirm if notarization is required. Failure to adhere to document requirements may lead to rejection of the bond form by the City of Chico.

Does This Bond Expire?

The permit bond expires upon the specified expiration date, typically one year from the date of issuance. A new permit bond will need to be purchased should the project take longer than one year.

Claims Information

If the City of Chico files a claim against the Encroachment Permit Bond for Excavation, the Surety company will investigate the legitimacy of the claim and proceed accordingly. CCIS does not handle surety claims in office, however, claims contact information will be provided to the contractor, to move the claims process forward.

If the claim is found to be legitimate, the Surety company will payout to the City of Chico, up to the limit of the bond. 

Unlike insurance policies that protect contractors from unforeseen events, this bond protects the City of Chico, its laborers, and suppliers from the actions of a contractor. Contractors are responsible for their actions and therefore must reimburse the Surety company for any claims paid. Failure to do so will significantly inhibit a contractor’s ability to obtain a surety bond for future jobs.