By Brown                                               S.B. No. 532
       74R3671 DRH-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to exempting contracts for certain services from retainage
    1-3  requirements applying to highway improvement contracts.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 13, Chapter 186, General Laws, Acts of
    1-6  the 39th Legislature, Regular Session, 1925 (Article 6674m,
    1-7  Vernon's Texas Civil Statutes), is amended to read as follows:
    1-8        Sec. 13.  (a)  Except as provided by Subsection (b) of this
    1-9  section, said <Said> contracts may provide for partial payments to
   1-10  an amount not exceeding ninety-five per cent (95%) of the value of
   1-11  the work done.  Five per cent (5%) of the contract price shall be
   1-12  retained until the entire work has been completed and accepted.
   1-13  Provided, that at the request of the contractor and with the
   1-14  approval of the Texas <State Highway> Department of Transportation
   1-15  and the State Treasurer the five per cent (5%) retained amount may
   1-16  be deposited under the terms of a trust agreement with a state or
   1-17  national bank domiciled in Texas as selected by the contractor.
   1-18  Said bank, acting as escrow agent and by instructions from the
   1-19  contractor, may reinvest the retained amount in certificates of
   1-20  deposit issued by state or national banks domiciled in Texas, bank
   1-21  time deposits, or other similar investments prescribed by the trust
   1-22  agreement.  Interest earned on said funds shall be paid to the
   1-23  contractor unless otherwise specified under the terms of said trust
   1-24  agreement.  The escrow agent shall be responsible for all
    2-1  investments and funds as a result of the deposits of the retained
    2-2  amounts until released from such responsibility as instructed by
    2-3  the provisions of said trust agreement.  The department <State
    2-4  Highway Department> shall provide a trust agreement that will
    2-5  protect the interests of the State of Texas.  All expenses incident
    2-6  to the deposit and all charges made by the escrow agent for custody
    2-7  of the securities and forwarding of interest thereon shall be paid
    2-8  solely by the contractor.  No such expense or charge shall apply to
    2-9  either the contract or the State of Texas.
   2-10        (b)  The Texas Department of Transportation may not retain
   2-11  any money under Subsection (a) of this section if the contract is
   2-12  for engineering, designing, planning, or surveying services only.
   2-13        SECTION 2.  The change in law made by this Act applies only
   2-14  to a contract awarded on or after the effective date of this Act.
   2-15  A contract awarded before the effective date of this Act is
   2-16  governed by the law in effect when the contract was awarded, and
   2-17  the former law is continued in effect for that purpose.
   2-18        SECTION 3.  This Act takes effect September 1, 1995.
   2-19        SECTION 4.  The importance of this legislation and the
   2-20  crowded condition of the calendars in both houses create an
   2-21  emergency and an imperative public necessity that the
   2-22  constitutional rule requiring bills to be read on three several
   2-23  days in each house be suspended, and this rule is hereby suspended.