Deposit Required

Many jurisdictions consider deposits to be a positive incentive for complying with their construction and demolition (C&D) diversion ordinances. One thing to consider when deciding whether to include a deposit requirement, however, is the amount of staff time that may be spent on the handling and processing of deposits. Because of limited staffing resources, some jurisdictions therefore opt to forego a deposit, and instead monitor compliance by conducting periodic, impromptu inspections of project work sites.

Alternative Compliance Incentives

Alternative compliance incentives used by jurisdictions include:

  • A signed letter of intent to comply with the ordinance.
  • Onsite monitoring at any given time to verify compliance.
  • Penalties if a contractor fails to comply with the ordinance.

Deposit Requirement Considerations

When determining what your deposit requirements will be, it is essential that you consider the dynamics of your community and solicit contractor input regarding the requirements, including the basis and procedure for deposit reimbursement. Deposits are generally returned upon submittal of verification that the diversion requirement, or some portion thereof, was met. You may also want to allow a refund in situations when the applicant’s building permit is withdrawn or cancelled before any work has begun.

If you include a deposit program in your ordinance, you will need to establish what the process will be for verifying diversion, and how the refund amount will be determined. Some jurisdictions require the applicant to file a written request for the refund and to provide supporting documentation; the amount of the refund is usually tied to the amount of substantiated diversion. The refund process should be described in the ordinance.

Deposit Uses

Jurisdictions with a diversion deposit program have used the deposit for payment of diversion deposit refunds, as well as:

  • Administrative costs associated with the C&D diversion program.
  • Program costs associated with the C&D diversion program, including infrastructure improvements to facilitate C&D waste diversion.

Deposit Amount

Another important consideration is the deposit amount. If the amount charged is too high for contractors, they may consider not building in your jurisdiction. If the amount is too low, it could be cheaper for the contractor to forfeit their deposit than to comply with the diversion requirement. This would be a good topic to discuss with the stakeholders prior to adopting your ordinance. You could also explore what amount works best with other jurisdictions in surrounding areas that are implementing C&D diversion ordinances that have a deposit requirement.

Deposit amounts can be based on:

  • Cost of the project.
  • Size or square footage of the project.
  • A fixed amount to be determined by the jurisdiction.
  • Type of project.
  • Deposit amounts may vary with the following types of projects:
    • Construction, demolition, remodeling, and grading.
    • Residential or nonresidential buildings.

Legal Considerations

It is important to note, however, that if your jurisdiction is a general law city or county, you should consult with your city attorney’s office or county counsel’s office before including a deposit section in your ordinance, as general law cities and counties may have some limitations on their use of this kind of enforcement mechanism. If you do include a deposit section in your ordinance, you may want to allow deposits to be paid in the form of cash, letter of credit, performance or surety bond, or money order.

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For more information contact: Local Assistance & Market Development,