Letter of Credit Requirements

For developers choosing to utilize a Letter of Credit to satisfy financial surety obligations, Letters of Credit (LOC) must meet the following obligations:

1. The City prefers the attached sample form. Variations from this sample may cause a delay in the acceptance of the LOC by the City. Delay in acceptance may cause a delay in the approval process for your project.
2. The LOC must be drawn on a bank. The LOC must be from a state or federally chartered bank or savings and loan association, insured by the Federal Deposit Insurance Corporation, that has an office in the state of Minnesota or a subsidiary of such bank or savings association with an office in the state of Minnesota. LOCs for less than $25,000 must also include a provision allowing for drawing on the LOC without presenting or sending the original LOC. If a LOC is drawn on, it will be returned to the originating bank after funds are received.
3. The bank must submit a copy of its latest call report along with the LOC.
4. The bank on which the LOC is drawn should have assets of at least $25 million.
5. The LOC must be for a minimum term of one (1) year.
6. The LOC must contain a provision allowing for drawing on the LOC if it is not renewed or replaced by sixty (60) days prior to its maturity.
7. The LOC and any financial information must be received by the City not less than seven (7) days prior to the City Council taking action on the request.
8. The City reserves the right to request additional financial information it deems appropriate from the bank providing the LOC. The City reserves the right not to accept a particular LOC.
9. Questions concerning the requirements outlined or the format required should be directed to Diana J. Lund, Finance Director, City of Ramsey, 7550 Sunwood Drive N.W., Ramsey, MN 55303. Please call 763-433-9847.