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RELEVANT LINKS: <br />League of Minnesota Cities Handbook for Minnesota Cities 10/15/2018 <br />Expenditures, Purchasing, and Contracts Chapter 22 | Page 38 <br /> The damages or losses incurred either may far exceed these limitations, or <br />multiple claims against the insurance may exceed the dollar limitations of <br />the liability insurance. <br /> Once uncovering these contractual liability limits, the city, or, preferably, <br />the city’s attorney, should negotiate with the consultant to modify or <br />remove them from the contract. <br /> IX. Construction contracts <br /> Several unique requirements exist for public works contracts, whether for <br />a new city hall, utility line extensions, street extensions or improvements, <br />or any other improvements financed from grants-in-aid, the general fund, <br />or special assessments. <br /> These requirements include: <br /> A. Bid bonds <br />Minn. Stat. § 574.27. <br /> <br /> <br /> <br /> <br /> <br />Minn. Stat. § 429.041, subd. <br />1. <br /> <br /> <br /> <br /> <br />Minn. Stat. § 471.345, subd. <br />18. <br />Cities may require bidders to submit a bid bond with their bids. Generally, <br />a bid bond ensures the city does not waste time with a frivolous bid. It <br />guarantees the successful bidder will enter into a contract within the <br />confines of the bid submitted by providing the required bonds and <br />insurance. No general requirement for bid bonds exists in statute, however, <br />projects financed under the special assessment statutes must submit a cash <br />deposit, cashier’s check, bid bond, or certified check for such percentage <br />of the bid amount as specified by the council. Some home rule charters <br />also may require the city to obtain bid bonds from bidders. <br /> Cities may allow electronic submission of bid, performance, or payment <br />bonds or other such security. <br /> B. Performance bond <br />Minn. Stat. § 574.26. <br />Minn. Stat. § 471.345, subd. <br />3. Goodin v. City of Prior <br />Lake, A14-1144 (Minn. Ct. <br />App. March 9, <br />2015)(unpublished decision). <br />Minn. Stat. § 574.29. <br />Before any contract for public work over $175,000 becomes binding, the <br />contractor must provide a payment and performance bond protecting the <br />city, and all people furnishing work, equipment, materials or supplies. If a <br />city does not secure a bond, a third-party supplier that the general <br />contractor fails to pay can hold the city liable for payment. <br />Minn. Stat. § 574.38. Cities may choose to waive the bonds for projects of $175,000 or less. For <br />projects less than $50,000, the city may choose to require a letter of credit <br />in lieu of a performance bond.