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FINANCIAL ASSURANCES Under the MINNESOTA WETLAND CONSERVATION ACT

FINANCIAL ASSURANCES Under the MINNESOTA WETLAND CONSERVATION ACT. Chuck Holtman Smith Partners PLLP January 30, 2013

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FINANCIAL ASSURANCES Under the MINNESOTA WETLAND CONSERVATION ACT

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  1. FINANCIAL ASSURANCESUnder theMINNESOTA WETLAND CONSERVATION ACT Chuck Holtman Smith Partners PLLP January 30, 2013 This presentation provides a general introduction and overview of the subject. Neither the presentation nor any related discussion constitutes legal advice or creates an attorney-client relationship. You are advised to consult with your legal counsel on all matters relating to managing and using financial assurances in WCA permitting.

  2. FINANCIAL ASSURANCE • Funds • Held by LGU or reliable third party • LGU can use to complete replacement

  3. FORMS OF FINANCIAL ASSURANCE • Cash escrow • Standby letter of credit (LOC) • Permit bond

  4. WCA FINANCIAL ASSURANCE RULE:Minnesota Rules 8420.0522, Subpart 9 • LGU decides need • LGU decides amount (construction, maintenance, monitoring, repair) • Replacement wetland size • Ecological setting & complexity • Partly done? • Responsible party history & reliability • Third party to assume responsibility • Amount: worst case or probable case? • May reduce amount after construction • Responsible party opportunity to cure before LGU uses • Release within 60 days after replacement plan completion

  5. CASH ESCROW • Responsible party’s property • LGU holds in trust account • Escrow agreement • When LGU may use • Notice & opportunity to cure • Right to enter property • Accounting & release of funds

  6. STANDBY LETTER OF CREDIT • Issued by bank • Obligation is bank to LGU • Almost absolute right to funds on demand • Funds within 7 business days • Bank has right to repayment by responsible party

  7. BOND • Issued by insurance company • Complete work vs. provide funds • Issuer may investigate, request meeting • Responsible party indemnifies issuer

  8. !!! POP QUIZ !!! What happens to your financial assurance if the responsible party goes into bankruptcy or dissolves?

  9. MANAGING the ASSURANCE • Lock & key • Tracking • Maintain log • Expiration date • Extension/replacement notice (60 days) • Request that counsel initiate draw (30 days) • Lapse is replacement plan violation • Return LOC/bond to issuer • Accounting for expenditures

  10. !!! POP QUIZ !!! What happens if the responsible party steps out and the new party does not have a financial assurance?

  11. !!! POP QUIZ !!! With the cash in hand can your contractor proceed onto the property and complete the work?

  12. ENTERING PROPERTY • Financial assurance provides for funds but does NOT create authority to enter property and do work • Permit or escrow agreement may do so • Otherwise will need responsible party’s agreement or court order • Draw on assurance • Consult with legal counsel

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