The Fairfax County Board of Supervisors has begun requiring developers to post a cash or corporate surety bond in an amount equal to the full cost of required improvements on land they're developing, a move builders warn may cut the number of houses constructed in the county.
Previously, personal bonds and/or cash representing a minimum of 10 per cent of this value were acceptable.
David H. Miller, president of the Northern Virginia Builders Association, said, "Under this policy, a builder's corporate surety commitment may only be reduced to a maximum of 50 per cent of the bond's face amount, even though his work may be 99 per cent complete. This policy was approved in spite of the fact that the committee (representing citizens and industry) recommended a 25 per cent maximum. As a result of this change, the builder's ability to gain surety for new projects and his potential for growth are severely restricted."
Miller added that the new policy places a permanent moratorium on personal surety bonding. As a result, he added, builders will have to post either a 100 per cent corporate surety bond or place 100 per cent cash in escrow. He said that this cost could add $200 to $400 to the cost of each new home due to the additional bonding cost to builders.