Whenever it is required as a condition of subdivision or site plan approval that a performance guarantee must be furnished in favor of the municipality in an amount not exceeding 120 percent of the estimated cost of any required improvements within a stated time, the time allowed for installation of the improvements for which the performance guarantee has been provided may be extended by the town council by resolution. As a condition of or as a part of any such extension, the amount of any performance guarantee shall be increased or reduced, as the case may be, to an amount not to exceed 120 percent of the cost of the installation as determined as of the time of passage of the resolution.