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18 <br /> <br />the irrevocable LOC shall be subject to approval by the CITY Finance Director and shall <br />continue to be in full force and effect until released by the CITY. The irrevocable LOC shall <br />be for a term ending one (1) years after acceptance by the CITY provided it is automatically <br />renewable for successive one-year periods from the present or any future expiration dates, and <br />further provided that the irrevocable LOC states that at least ninety (90) days prior to the <br />expiration date the bank will notify the CITY if the bank elects not to renew for an additional <br />period. In such an event, the DEVELOPER, shall deposit with the CITY a replacement LOC <br />before expiration of the existing LOC. The irrevocable LOC shall secure compliance by the <br />DEVELOPER with the terms of this DEVELOPMENT AGREEMENT. The CITY may draw <br />down on the irrevocable LOC or cash deposit, without any further notice than that provided <br />in Section 13.1 relating to a DEVELOPER DEFAULT, for any of the following reasons: <br /> <br />a) a DEVELOPER DEFAULT not cured in 30 days; or <br /> <br />b) upon the CITY receiving notice that the irrevocable LOC will be allowed to lapse prior <br />to two (2) years after acceptance by the CITY. <br /> <br />The CITY shall use the LOC proceeds to reimburse the CITY for its costs and to cause the <br />DEVELOPER IMPROVEMENTS to be constructed to the extent practicable; if the CITY <br />ENGINEER determines that such DEVELOPER IMPROVEMENTS have been constructed <br />and after retaining 10% of the proceeds for later distribution pursuant to Section 13.2, the <br />remaining proceeds shall be distributed to the DEVELOPER. <br /> <br />With CITY approval, the irrevocable LOC may be reduced pursuant to Section 13.2 from <br />time to time as financial obligations are paid. <br /> <br />13.2. LOC RELEASE AND ESCROW INCREASE; DEVELOPER <br />IMPROVEMENTS. The DEVELOPER may request that the LOC or cash deposits required <br />by the DEVELOPMENT AGREEMENT be reduced at the following milestones: <br /> <br />a) Pond cleaning portion of the LOC is retained until all townhomes within the <br />development have been issued a full certificate of occupancy; <br /> <br />b) Up to two site improvement reductions at least two months apart; <br /> <br />c) Final streets are retained in full until completion of the final streets; <br /> <br /> <br />If it is determined by the CITY that the DEVELOPMENT PLANS were not strictly <br />adhered to, or that work was done without CITY inspection, the CITY may require, as a <br />condition of acceptance, that the DEVELOPER post an irrevocable LOC, or cash deposit <br />equal to 125% of the estimated amount necessary to correct the deficiency or to protect against <br />deficiencies arising therefrom. In the event that work, which is concealed, was done without <br />permitting CITY inspection, then the CITY may, in the alternative, require the concealed <br />condition to be exposed for inspection purposes. <br />