CAPE MAY POINT — Borough Commission discussed amending the ordinance for water/sewer connection requirements.
The borough currently requires a $500,000 performance bond and proof of insurance for $500,000 property damage and general liability.
During the May 12 meeting, substitute solicitor Scott DeWeese said solicitor John Amenhauser’s recommendation is to require a performance bond that is tied to the cost of the proposed work to be performed.
“His opinion is that the performance bond should be 100 percent of the proposed work to be completed,” DeWeese said. “He thinks that would adequately cover the [borough] for events that I know occurred recently, when a tree got dug up and the water main broke.”
Public Works Supervisor Bill Gibson said what brought the issue to the commission’s attention was the bond council telling contractors they didn’t understand why there was a large bond for hooking up to water or sewer.
“If you break it, that falls underneath your liability,” Gibson said. “Now your insurance is not covered underneath the bond, so I’m trying to figure out how to cover the borough in a performance bond if they have an accident and break something, like we had before.”
Gibson asked if the proposed wording covers the borough to go after the performance bond, or if it falls back on insurance companies.
Mayor Anita Van Heeswyk asked if the borough could add a minimum. DeWeese said he thought having a minimum and a maximum tied to the performance would work.
“You would go after the performance bond, but it depends on the amount they’re bringing up for it,” DeWeese said, adding that he recommended having a minimum amount.
Gibson said the borough had $500,000 bonds for each sewer and water.
“The bonding companies were telling the contractors if they break [anything] it falls underneath the insurance company,” Gibson said. “The performance bond covers the work they’re actually doing.”
VanHeeswyk asked whether the borough is holding the bond and whether the contractor can do whatever they want with their insurance company.
DeWeese said it should be confirmed with Amenhauser.
“In the scenario that they start construction and break a water main or begin development and essentially abandon the project, then you’re going after the hunt for it,” DeWeese said. “If the contractor is going to be the one to repair it themselves, I think maybe it does fall on their insurance company to provide that.”
Gibson added that he wanted to ensure the wording properly covered the borough when contractors were working for individuals. DeWeese said he would recommend looping in the bond council on that discussion.
“Someone mentioned requiring them to name us as an additional insured on their insurance policy,” Clerk Elaine Wallace said. “Would that make it easier for us to make a claim against that insurance if [there’s] damage?”
DeWeese said it would help the borough, especially if the contractor was not diligent in pursuing money from the insurance company.
Van Heeswyk asked if the information on the performance bond and insurance could be passed on to Amenhauser.
Deputy Mayor Elise Geiger said bond council should have the information, too.
VanHeeswyk also asked engineer Dale Foster if he had a financial amount to recommend for insurance.
“The ordinance only requires $500,000 worth of property damage or liability,” Foster said. “They easily could have an accident that costs significantly more than that.”
Foster added that raising insurance requirements might scare away contractors who do not carry such high coverage.
“Typically, most projects have $3 million worth of liability,” Foster said, adding that he could put together language for how it is handled in road projects and send it to Amenhauser for review.
By RACHEL SHUBIN/Special to the Star and Wave
