Berlin Lays Out Development Rules

BERLIN – A new public works agreement will govern major development in Berlin after the Berlin Mayor and Council approved the new regulations Monday night.

The new public works agreement outlines the responsibilities of a developer building a project including new infrastructure, such as roads, and imposes performance and other bonds.

The several times delayed agreement is meant to lay out the responsibility of developers to the town clearly, said Mayor Gee Williams. A couple of recent situations have shown the need for more clear rules.

“It lays it all out up front so there are no questions,” said Josh Chandler of Davis Bowen and Friedel engineers. “The whole point of this is to get everything out there.”

Nothing should be able to slip through the cracks with the public works agreement in use, said Chandler.

A major requirement of the public works agreement is a performance bond at 150 percent of the construction estimate.

The council made one change to the draft agreement as presented Monday night, removing a provision from the document that required developers to post a bond to secure payment for other companies or major suppliers used by the developer.

Town Administrator Tony Carson questioned the inclusion of the subcontractor protection bond, calling it “a little unusual.”

If a development goes bankrupt or leaves town, that bond would protect subcontractors and major material suppliers, Chandler said.

The disadvantage of including that bond in the agreement is the extra upfront cost to the developer, which would be passed onto homebuyers, Chandler explained.

The potential liability to the town of Berlin, if the bond were seen as infringing on the agreement between a developer and a subcontractor, could also be a concern.

The town might not want to get involved in that, Chandler said.

The intent is to make the agreement and responsibilities of a developer clearer and cleaner, said Williams, but this section of the public works agreement does the opposite.

Consulting attorney Nathan Greenbaum, an expert on infrastructure law, suggested the section in question, Chandler said.

“I think there are other ways to skin that cat, other ways that aren’t so much of a hardship upfront,” he said.

Williams said he was concerned that inclusion of the subcontractor bond would put the town in the middle of disputes between developers and subcontractors.

The clause may be appropriate for federal contracts, Williams said, which Greenbaum often deals with.

“I would recommend removing it,” said Chandler.

Any concerns over subcontractors getting paid could be addressed in bid documents, Carson said.

Or the town could require a release of liens before final payment, Chandler suggested.

That would still get the town involved in the same issue, said town attorney Dave Gaskill, putting the town in the middle of a transaction that Berlin has no interest in.

“I just don’t think the town needs to get involved in it,” said Gaskill.

“This is just not appropriate at this time,” said Williams.

The town council agreed to take the subcontractor pay guarantee bond provision out entirely.

The public works agreement would apply only to construction projects including new infrastructure, staff clarified, like water mains, sewer mains, street lights or pump stations, as well as roads and any infrastructure the town would eventually own.

Single-family homes on one existing lot would not be affected, Planning and Zoning Director Chuck Ward said.

Town staff would decide whether a developer must execute a public works agreement for a project. The decision would be made after construction plans have been recommended for approval and before construction begins. 

The public works agreement, when required by the town, would need to be signed before the town would issue a building permit.

The town could also add additional requirements as it sees fit, Williams said.

That would be reviewed by the town attorney before recordation, Ward said.

Councilwoman Lisa Hall asked whether the town should have specific criteria for projects subject to a public works agreement.

Construction plans for infrastructure indicate which projects should be subject to a public works agreement, said Ward.