A guaranty or collateral is required on all projects, prior to project permitting, where a contractor will be working on Loudoun Water’s public utilities. The amount of the guaranty is listed on the project’s approval letter.  Prior to commencing construction, applicants are required to furnish a guaranty with Loudoun Water. The guaranty or collateral to be held by Loudoun Water may take the form of:

1.)   Cash escrow, submit checks made out to Loudoun Water (cashier checks are not required).

2.)    Letter of Credit, from a bank insured by the FDIC with offices in the Commonwealth of Virginia, with a SNL Financial (f/k/a Highline) Bank Rating of 35 or higher. See link below for specific form to use and bank requirements:

·        Form for Letter of Credit

3.)   Surety Bond, from a provider with an A. M. Best rating of A or A+ and a size category of VIII or larger to cover performance, labor and material payment, and maintenance with Loudoun Water named as beneficiary. 

Standard Bond (Public Improvements)
The guaranty will be in the amount of 100% of the estimated cost of the public water, sanitary sewer, and reclaimed water improvements for all installations.  To calculate the estimate of construction costs please use the Estimate of Construction Cost form below.

·        Estimate of Construction Cost

Bond Reductions
Once the facilities are installed and have met the applicable requirements, the corresponding bond may be reduced, at the applicant’s request.  Tiers of reduction are as follows:

Reduction to 50% of Estimated Construction Cost
Where 50% of the estimated construction cost of the proposed water and sewer facilities have been installed and undergone testing/sampling, the applicant may request a reduction in the amount of the bond to 50% of estimated construction cost.  Beneficial Use Inspection is not required prior to making such a request.  To make such a request, the applicant must submit the online webform requesting reduction.  Upon receipt of the webform, the applicant will be contacted by Loudoun Water to discuss your eligible bond reduction and any further requirements.  At a minimum, requirements will include: 

1.     Submission of lien releases and affidavits of payments, demonstrating that contractors and suppliers have been paid.

2.     Payment of the Record Drawing Fee, if not paid prior.

3.     Payment of an administrative processing fee of $500.

Upon receipt of the items listed above, the Project Engineer and Project Inspector will verify that at least 50% of the work has been completed.  Upon successful verification, a letter stating the reduced bond amount will be sent to the applicant, to serve as basis of the reduction rider.

Reduction to 20% of Estimated Construction Cost
Where all proposed water and sewer facilities have successfully passed a Beneficial Use Inspection, the applicant may request a reduction of the bond to 20% of estimated construction cost.  To make such a request, the applicant must submit the online webform requesting reduction.  Upon receipt of the webform, the applicant will be contacted by Loudoun Water to discuss your eligible bond reduction and any further requirements.  At a minimum, requirements will include:

         1.  Submission of lien releases and affidavits of payments, demonstrating that contractors and suppliers have been paid.

         2.  Payment of the Record Drawing Fee, if not paid prior.

Reduction to 5% of Estimated Construction Cost
Once the installed facilities are fully complete and successfully undergo a Final Inspection, Loudoun Water will provide a letter to the applicant, outlining the paperwork needed for final acceptance and bond reduction/release. In accordance with the agreement for the project, Loudoun Water requires that a maintenance bond remain in effect for a period of one year, beginning at the date of the passing of the Final Inspection and acceptance of the facilities, to serve as a warranty against future defects in the work. The amount of the maintenance bond is 5% of the cost of the facilities.

If the performance and payment bond in effect has been written to also accomplish the maintenance function, then it may simply be reduced to remain in effect during the warranty year by using a Rider or Amendment. Alternately, where such is not the case, a maintenance bond must be furnished prior to release of the performance and payment bond.

Surety Bonds must use Loudoun Water’s standard form.  Letters of Credit and Surety Bonds submitted that are not in Loudoun Water’s standard form shall not be accepted.