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extended for such items for an additional year to ensure that such defects have been <br />satisfactorily corrected. <br />If, in the judgment of the City Engineer or his designee, a design defect in the <br />work of improvement becomes apparent during the course of construction, or within the <br />one-year guaranty period provided pursuant to this Section 6 (except for those <br />manufactured products for which extended warranties have been provided, in which <br />case the extended warranty period shall apply) following acceptance by the City of the <br />Improvements, and such design defect, in the judgment of the City, may substantially <br />impair the public health and safety, Owner shall, upon written order by the City, correct <br />such design defect at Owner's sole cost and expense, and the sureties under the <br />applicable Faithful Performance and Labor and Materials Bonds shall be liable to the <br />City for the corrective work required. <br />If Owner fails to comply with the requirements set forth in this Section 6 within <br />thirty (30) days after being notified of a defect in writing, City shall have the right, but shall <br />not be obligated, to repair or obtain the repair of the defect, and Owner shall pay to City <br />on demand ali costs and expense of such repair. Notwithstanding anything to the <br />contrary set forth herein, if any defect in workmanship or material covered by the <br />guarantee provided by this Section 6 results in a condition that constitutes an immediate <br />hazard to the public health, safety, or welfare, City shall have the right to immediately take <br />action necessary to protect the public health, safety, and welfare, and Owner shall pay to <br />City on demand all costs and expense of such repair; provided, however, City shall when <br />reasonably practicable, notify Owner prior to repairing, or causing to be repaired, such <br />defect. The foregoing statement relating to hazards to health and safety shall be deemed <br />to include either temporary or permanent repairs which may be required as determined in <br />the sole discretion and judgment of City. <br />If City, in the exercise of its sole discretion, elects to make or perform, or cause <br />to be made or performed, the necessary repairs, replacements or work, Owner shall pay, <br />in addition to actual costs and expenses of such repair, replacement, or work, fifty percent <br />(50%) of such costs and expenses for City's administrative and overhead expenses. In <br />addition, Owner shall pay interest at the lesser of 10% per annum or the maximum rate <br />permitted by law commencing upon the date City bills Owner for such work or repairs. <br />7. Insurance Requirements. <br />All of the covenants and requirements set forth in this Section are intended to <br />apply to separately to Lot 1 Improvements and Lot 2 Improvements. Prior to City's <br />issuance of permits for the applicable Lot 1 or Lot 2 Improvements, Owner shall obtain <br />or cause to be obtained and filed with the City's Risk Manager, all insurance required <br />pursuant to this Section 7, and such insurance shall have been approved by the City's <br />Risk Manager as to form, amount and carrier. <br />Prior to the commencement of work on the applicable Lot 1 or Lot 2 <br />Improvements, Owner's general contractor shall obtain or cause to be obtained and filed <br />1328680-7 $ <br />