By:  Brown                                             S.B. No. 532
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to the retainage of payments for a contract to improve a
    1-2  state highway.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Section 13, Chapter 186, General Laws, Acts of
    1-5  the 39th Legislature, Regular Session, 1925 (Article 6674m,
    1-6  Vernon's Texas Civil Statutes), is amended to read as follows:
    1-7        Sec. 13.  (a)  Said contracts may provide for partial
    1-8  payments to an amount not exceeding ninety-five per cent (95%) of
    1-9  the value of the work done.  Five per cent (5%) of the contract
   1-10  price shall be retained until the entire work has been completed
   1-11  and accepted.  Provided, that at the request of the contractor and
   1-12  with the approval of the Texas <State Highway> Department of
   1-13  Transportation and the State Treasurer the five per cent (5%)
   1-14  retained amount may be deposited under the terms of a trust
   1-15  agreement with a state or national bank domiciled in Texas as
   1-16  selected by the contractor.  Said bank, acting as escrow agent and
   1-17  by instructions from the contractor, may reinvest the retained
   1-18  amount in certificates of deposit issued by state or national banks
   1-19  domiciled in Texas, bank time deposits, or other similar
   1-20  investments prescribed by the trust agreement.  Interest earned on
   1-21  said funds shall be paid to the contractor unless otherwise
   1-22  specified under the terms of said trust agreement.  The escrow
   1-23  agent shall be responsible for all investments and funds as a
   1-24  result of the deposits of the retained amounts until released from
    2-1  such responsibility as instructed by the provisions of said trust
    2-2  agreement.  The Texas <State Highway> Department of Transportation
    2-3  shall provide a trust agreement that will protect the interests of
    2-4  the State of Texas.  All expenses incident to the deposit and all
    2-5  charges made by the escrow agent for custody of the securities and
    2-6  forwarding of interest thereon shall be paid solely by the
    2-7  contractor.  No such expense or charge shall apply to either the
    2-8  contract or the State of Texas.
    2-9        (b)  The limitation on partial payments and the requirement
   2-10  that five per cent (5%) of the contract price be retained until the
   2-11  work has been completed and accepted shall not apply to contracts
   2-12  for maintenance or contracts for the making of all necessary plans
   2-13  and surveys preliminary to construction, reconstruction, or
   2-14  maintenance.
   2-15        SECTION 2.  The change in law made by Section 1 of this Act
   2-16  applies only to a contract awarded on or after the effective date
   2-17  of this Act.  A contract awarded before the effective date of this
   2-18  Act is governed by the law then in effect, and the former law is
   2-19  continued in effect for that purpose.
   2-20        SECTION 3.  The importance of this legislation and the
   2-21  crowded condition of the calendars in both houses create an
   2-22  emergency and an imperative public necessity that the
   2-23  constitutional rule requiring bills to be read on three several
   2-24  days in each house be suspended, and this rule is hereby suspended,
   2-25  and that this Act take effect and be in force from and after its
   2-26  passage, and it is so enacted.