A financial guarantee 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 guarantee is listed on the project’s approval letter. Prior to commencing construction, applicants are required to furnish a guarantee with Loudoun Water. The guarantee to be held by Loudoun Water may take the form of:
- Cash Escrow, submit checks made out to Loudoun Water (cashier checks are not required). If cash is posted, the amount may be reduced to 50% of the total estimate of construction cost.
- 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. If a letter of credit is provided, the amount may be reduced to 75% of the total estimate of construction cost, with a minimum amount of $10,000. See link below for specific letter of credit form to use and bank requirements.
- 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.
Surety Bonds, Letters of Credit, and Cash Guarantees must use the Loudoun Water forms provided on this webpage. Forms submitted that are not Loudoun Water standard forms will not be accepted.
Standard Financial Guarantee (Public Improvements)
The guarantee will be in the amount of 100% of the estimated construction 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 Costs form below.
Construction Cost Estimate - 100% Guarantee
Standard Financial Guarantee Reductions
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 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 the eligible bond reduction and any further requirements. At a minimum, requirement will include:
- Passing of all Loudoun Water’s requirements for the project’s Beneficial Use Inspection.
- Submission of lien releases and affidavits of payments, demonstrating that contractors and suppliers have been paid and all administrative requirements have been satisfied.
Reduction to 5% of Estimated Construction Cost
Once the installed facilities are fully complete and successfully passed the Final Inspection, Loudoun Water will provide a letter to the applicant, outlining the paperwork needed for final acceptance and reduction/release. In accordance with the agreement for the project, Loudoun Water requires that a maintenance guarantee remain in effect for a period of one year, beginning at the date of the passing of the Final Inspection and Loudoun Water's acceptance of the facilities, to serve as a warranty against future defects in the work. The amount of the maintenance guarantee is 5% of the estimated construction cost of the facilities.
If the performance and payment bond form used also allows the maintenance function, then it may simply be reduced to remain in effect during the warranty year by submitting a rider or amendment. Alternately, where such is not the case, a separate maintenance bond must be furnished prior to release of the original performance and payment bond already posted with Loudoun Water.
Non- Standard Financial Guarantee Reduction
Reduction to 50% of Estimated Construction Cost
When at least 50% of the proposed water and sanitary sewer facilities have been installed and passed testing/sampling, the applicant may request a reduction in the amount of the guarantee to 50% of total estimated construction cost. Passing of the 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 the eligible bond reduction and any further requirements. At a minimum, requirements will include:
- Submission of lien releases and affidavits of payments, demonstrating that contractors and suppliers have been paid.
- 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 guarantee amount will be sent to the applicant, to serve as a basis of the reduction rider.