48-924. Form and execution of contract; supervision of performance; default; new bids; delivery of assessment

A. The superintendent of streets shall make all written contracts and receive all bonds authorized by this article. The contract shall require the contractor to timely repair any defects in the work determined to exist within one year after completion of the contract. The contracts shall specify a reasonable time for the completion of the improvement.

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

C. The work shall be done pursuant to contract and under the direction of the superintendent, but the board of directors 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 board of directors shall fix the compensation to be allowed such person.

D. If the work is not prosecuted with diligence, the board of directors, after a hearing upon notice mailed or personally served upon the contractor, the contractor's surety and all persons shown as the owners of property affected by the assessments as their names and addresses appear on the last certified property tax roll, may prescribe such terms and conditions as it deems proper before permitting the contractor to continue with the work if the board of directors determines that the contractor is capable of continuing the work. The determination of the board of directors shall be final and conclusive, and the determination may be reviewed only by a special action. Any such action shall be given priority by the court. The board of directors may cause a reporter's transcript to be made of the hearing. Such transcript, when made and certified and filed with the clerk, shall be the official record of the hearing. Upon request by the contractor, the surety, any owner, or the superintendent of streets, the board of directors may issue subpoenas or subpoenas duces tecum directed to any witness desired by any party to the hearing. The subpoena shall have the same effect as subpoenas in civil actions. If the subpoena is not obeyed, the board of directors may, on a majority vote of its members, cite the disobedient party for contempt and certify such action to the superior court. The superior court shall act upon such citation in the same manner as other cases of civil contempt.

E. If the board of directors finds that the contractor is unable to continue with the work or to perform the work according to the contract or has not performed the work according to the contract, the board of directors shall hold the contractor in default and make demand on the surety to act in accordance with the contract and terms and conditions of the performance bond. If the surety fails to act within sixty days from receiving written notice, the board of directors may order that bids be received from other contractors to complete the work. After receiving bids, the board of directors 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 board of directors shall make a demand on the defaulting contractor's surety for payment of the difference within twenty days of the mailing of the notice. If the surety is represented by an attorney-in-fact, the demand may be served on the attorney-in-fact or at the surety's principal office within this state. If the surety 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 surety shall be used to pay the added costs of the work. The district shall advance any difference between the actual costs of the work and the amount assessed and shall use its contingency fund or any other available monies to make payments to the new contractor. The district shall reimburse itself from the amounts paid by the former contractor or surety or from assessments and bonds when monies become available. All additional costs of the work not received from the original contractor or such contractor's surety may be assessed against the benefiting parcels of property if the board of directors finds that such action is necessary both to prevent a default on the district's bonds and to complete the work.

F. If the contractor is not to be paid pursuant to section 48-935, subsection G or section 48-962, subsection F, upon completion of the work the contractor is entitled to the issuance and delivery of the assessment as provided by this article.

G. This section governs over any other law. Notwithstanding any other law, the contractor and the surety shall not be paid interest on amounts due during any period of contract suspension or termination unless the findings of the board of directors are arbitrary and capricious.