48-586. Form and execution of contract; liquidated damages; supervision of performance; delivery of assessment

A. The superintendent of streets shall make all written contracts and receive all bonds authorized by this article. The contracts shall specify a reasonable time for completion of the improvement.

B. The governing body may prescribe a form of contract not inconsistent with this article and fix a reasonable time for completion of the work, which may be extended from time to time by the superintendent with the consent of the governing body.

C. The governing body may prescribe in the form of the contract, an amount, not as a forfeit or penalty, but as liquidated damages, per calendar day to be paid by the contractor if the contractor fails to complete the work within the time fixed in the contract or as the time for completion of the work may have been extended by the superintendent with the consent of the governing body. Permitting the contractor to finish the work or any part of the work after the time fixed for its completion, or after the date to which the time fixed for its completion may have been extended, does not operate as a waiver by the governing body or the superintendent of any of their rights under the contract or subsections E and F of this section. Any liquidated damages received shall be used to decrease the amounts assessed. Any assessments that are affected by a decrease in the contract amount as a result of the imposition of liquidated damages may be adjusted pursuant to section 48-590, subsection F, except that where the city has contributed its funds to the construction of the improvements, the liquidated damages so received shall be prorated between the city and the properties assessed.

D. The work shall be done under the direction of the superintendent, but the governing body may prescribe rules and regulations relating to the supervision of the work. The superintendent may appoint a suitable person to take charge of and superintend the construction of an improvement who shall see that the contract is fulfilled. The governing body shall fix the compensation to be allowed such person.

E. If the work is not prosecuted with diligence, the governing body, after a hearing upon notice served upon the contractor and his bondsmen, may prescribe such terms and conditions as it deems proper before permitting the contractor to continue with the work.

F. If the governing body finds that the contractor is unable to continue with the work or to perform the work according to the contract, the governing body shall hold the contractor in default and make demand upon the surety to act in accordance with the contract and terms and conditions of the performance bond. Should the surety fail to act within sixty days from written notice, the governing body may order that bids be received from other contractors to complete the work. After receiving bids, the governing body may award the contract to the lowest responsible bidder. If, after receiving the new bids, the cost of completion exceeds the monies or bonds available for payment, the governing body shall make a demand upon the defaulting contractor's bondsman for payment of the differential within twenty days of the mailing of the notice. If the bondsman is represented by an attorney-in-fact, the demand may be served upon the attorney-in-fact or at the bondsman's principal office within this state. If the bondsman has no attorney-in-fact and no principal office within this state, the demand shall be served upon the director of insurance. The demand may not exceed the penal sum of the performance bond. Monies collected from the bondsman shall be used to pay the added costs of the work. Any difference between the actual costs of the work and the amount assessed shall be advanced by the municipality which shall use its contingency funds or any other available funds to make payments to the new contractor. The municipality shall reimburse itself from the amounts paid by the former contractor or his bondsman or from assessments and bonds when funds become available. All additional costs of the work not received from the original contractor's bondsman shall ultimately be assessed against the benefitting parcels of property.

G. If the contractor is not to be paid pursuant to section 48-597, subsection G or section 48-618, subsection F, upon completion of the work the contractor shall be entitled to the issuance and delivery of the assessment as provided in this article.