We Got It Done Wednesday!
Have you ever tried to get a decommissioning bond written? It is not an easy task. But this week, we are going to look at how our Commercial Bond Manager, Kristi Enevoldsen, was able to get a 30 year, 15-million-dollar decommissioning bond written.
Decommissioning bonds are also known as reclamation bonds. These bonds guarantee that at the end of the facility’s life, they must dismantle the equipment and restore the surrounding area to its natural condition. The critical issue for these types of bonds is typically the duration of the obligation. The only way these can be done on reasonable terms is if the governmental agency is willing to agree that (a) the surety company can cancel (or, in the case of an annually renewable obligation, the surety company can non-renew), and (b) cancellation (or non-renewal) does not give rise to a forfeiture of the bond amount.
And this bond was no different. We received notice about a solar energy system project that needed a 30 year, 15-million-dollar decommissioning bond. This bond was difficult because of the long term and the size of the bond amount. But due to Kristi’s experience and knowledge on how to get these bonds done, she was able to negotiate surety protection through an annually renewable bond form with a cancellation cause. She also ensured that there was an appropriate decommissioning plan in place, which provides procedures and costs associated with the removal of the facility upon end of life. In addition, it was vital to ensure that the principal had strong financials, experience, and history in these types of projects. And with all of these items put together, Kristi was able to get this bond written.
As you can see, decommissioning bonds and reclamation bonds are not simple bonds to get written. But our team at Goldleaf has the experience, knowledge, and relationships to help get these types of bonds written when the governmental agency remains flexible throughout the process. Huge shout-out to Kristi for getting this bond done!! Follow along next week, to learn about what our President, Jack Anderson, was able to get done.