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City of Centerville <br /> Policy and Procedure to Reduce the Amount of a Letter Of Credit Issued to the City <br /> 1. Procedure for requesting a reduction to the amount of a Letter of Credit <br /> a. A request to reduce a Letter of Credit must be recommended by Staff and approved by <br /> City Council action (usually on a Consent Agenda). <br /> b. Make request in writing along with supporting documents. Reduction requests must be <br /> accompanied by a line-item pay request to the contractor, or similar detailed accounting <br /> of the work representing the corresponding reduction to the Letter of Credit. <br /> c. Staff needs time to review and process the reduction request. Deadline to submit a <br /> reduction request is two weeks prior to any given City Council meeting. <br /> d. If approved,the City Administrator will author a letter approving the amount of the <br /> reduction.The letter will be addressed to the Financial Institution that issued the Letter <br /> of Credit.The party requesting the reduction will be responsible for having the Financial <br /> Institution issue a new or amended Letter of Credit under the same terms as the original <br /> instrument. <br /> 2. Frequency for requesting a reduction to the amount of a Letter of Credit <br /> a. Requests may be made on a monthly basis. <br /> b. More frequent requests for reductions may be made. However, administrative costs <br /> associated with these requests will be charged and payable before the City will consent <br /> to the reduction. <br /> 3. Minimum amount of Letter of Credit <br /> A letter of credit cannot be drawn down to less than 5 %of the original value of the <br /> Letter of Credit or$20,000, whichever is greater, until the agreement governing the <br /> project is satisfied. <br /> 4. Letter of Credit Reduction Guidelines <br /> a. Reductions to a Letter of Credit will be made in the amount of the value of <br /> improvements complete and approved, as documented in the submitted materials, plus <br /> the multiplier used to calculate the original Letter of Credit. For example, if a LOC is <br /> issued at 150%of the estimated value of improvements, then LOC reduction requests <br /> would be granted in the amount of 150%of the value of work completed, subject to the <br /> minimum restrictions stated above. <br /> b. The city shall reserve the right to issue reductions in any amount less than the requested <br /> reduction, if, in the opinion of staff or council, a portion of the work completed is not <br /> acceptable. Alternatively, the city may simply deny the entire reduction request for the <br /> same reason. <br /> 5. Governing authority <br /> a. The terms of any written contract or agreement with the City in conflict with this policy <br /> is the controlling. <br /> Draft Version 07202018 <br />