77R12751 PAM-F
By Brimer H.B. No. 2850
Substitute the following for H.B. No. 2850:
By Brimer C.S.H.B. No. 2850
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to retainage payments under certain construction
1-3 contracts.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2252.031, Government Code, is amended to
1-6 read as follows:
1-7 Sec. 2252.031. DEFINITIONS. In this subchapter:
1-8 (1) "Governmental entity" means:
1-9 (A) the state, a county, or a municipality;
1-10 (B) a department, board, or agency of the state,
1-11 a county, or a municipality;
1-12 (C) a school district or a subdivision of a
1-13 school district; or
1-14 (D) any other governmental or quasi-governmental
1-15 authority authorized by statute to make a public works contract.
1-16 (2) "Pool rate" means:
1-17 (A) for a state agency, the interest rate
1-18 established for the investment pool managed by the comptroller
1-19 known as the state treasury pool; and
1-20 (B) for all other governmental entities, the
1-21 interest rate yield, as determined by the comptroller, of the
1-22 investment pool managed by the comptroller known as TexPool.
1-23 (3) "Prime contractor" means a person [or persons,
1-24 firm, or corporation] contracting with a governmental entity for a
2-1 public work.
2-2 (4) [(3)] "Public works" includes the construction,
2-3 alteration, or repair of a public building or the construction or
2-4 completion of a public work.
2-5 (5) [(4)] "Public works contract payment" means a
2-6 payment by a governmental entity for the value of labor, material,
2-7 machinery, fixtures, tools, power, water, fuel, or lubricants used
2-8 or consumed, ordered and delivered for use or consumption, or
2-9 specially fabricated for use or consumption but not yet delivered,
2-10 in the direct performance of a public works contract.
2-11 (6) [(5)] "Retainage" means the part of a public works
2-12 contract payment withheld by a governmental entity to secure
2-13 performance of the contract.
2-14 (7) "Subcontractor" means a person who provides public
2-15 work, labor, or material to fulfill an obligation to a prime
2-16 contractor or subcontractor for the performance or installation of
2-17 any work required by a public works contract.
2-18 SECTION 2. Section 2252.032, Government Code, is amended to
2-19 read as follows:
2-20 Sec. 2252.032. RETAINAGE. (a) A governmental entity shall:
2-21 (1) deposit [in an interest-bearing account] the
2-22 retainage of a public works contract in an account that bears
2-23 interest at a rate not less than the pool rate [that provides for
2-24 retainage of more than five percent of the periodic contract
2-25 payment]; and
2-26 (2) pay the interest earned on the retainage to the
2-27 prime contractor [on completion of the contract].
3-1 (b) A prime contractor shall pay to a subcontractor from
3-2 whom retainage is withheld the percentage of the interest received
3-3 from a governmental entity that is attributable to the
3-4 subcontractor's work.
3-5 (c) A subcontractor shall pay to its subcontractor from whom
3-6 retainage is withheld the percentage of the interest received from
3-7 the prime contractor that is attributable to its subcontractor's
3-8 work.
3-9 (d) A person obligated to pay interest under Subsection (a),
3-10 (b), or (c) shall pay the interest within the period prescribed for
3-11 payment by Chapter 2251.
3-12 (e) If a governmental entity is obligated to pay interest
3-13 under this section and does not make the interest payments within
3-14 the period prescribed by Subsection (d), interest accrues for the
3-15 overdue payments in the manner and at the rate prescribed by
3-16 Chapter 2251, less interest at the pool rate.
3-17 (f) If a prime contractor or subcontractor is obligated to
3-18 pay interest under this section and does not make the interest
3-19 payments within the period prescribed by Subsection (d), interest
3-20 accrues for the overdue payments in the manner and at the rate
3-21 prescribed by Chapter 2251.
3-22 (g) A provision of this section may not be waived by
3-23 contract or otherwise.
3-24 SECTION 3. (a) This Act takes effect September 1, 2001.
3-25 (b) The changes in law made by this Act apply only to a
3-26 contract executed on or after September 1, 2001. A contract
3-27 executed before September 1, 2001, is governed by the law in effect
4-1 when the contract was executed, and the former law is continued in
4-2 effect for that purpose.