20:09:26:18Payment and performance bonding for housing infrastructure projects -- Letter of credit.

An applicant for housing infrastructure funding shall ensure compliance with the requirements of the applicable political subdivision or Indian tribe for contractor bonding. If the political subdivision or Indian tribe does not have contractor bonding requirements, the contractor, before commencing any work, must furnish surety in an amount not less than the contract price to the applicant, for the faithful performance of the contract, with the additional obligation that the contractor promptly pay all persons supplying the contractor with labor or material in the performance of the work provided for in the contract. In lieu of a payment and performance bond, the applicant may obtain a letter of credit in the amount of the housing infrastructure funding. The letter of credit must: (1) List the authority as the named beneficiary; (2) Be irrevocable and unconditional; and (3) Be issued by a federally insured financial institution.

Source: 49 SDR 125, effective July 3, 2023; 51 SDR 12, effective August 12, 2024; 52 SDR 10, effective August 4, 2025.