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A BILL TO BE ENTITLED
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AN ACT
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relating to retainage requirements for certain public works |
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construction projects. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Subchapter B, Chapter 2252, |
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Government Code, is amended to read as follows: |
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SUBCHAPTER B. [INTEREST ON] RETAINED PUBLIC WORKS CONTRACT PAYMENTS |
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SECTION 2. Section 2252.031, Government Code, is amended to |
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read as follows: |
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Sec. 2252.031. DEFINITIONS. In this subchapter: |
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(1) "Beneficial use" means, following completion of |
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all or a portion of work under a public works contract: |
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(A) for a public works project, the ability of a |
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governmental entity to place the project into operation for the |
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project's intended purpose; or |
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(B) for a public building, the ability of a |
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governmental entity to be issued a certificate of occupancy or |
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temporary certificate of occupancy for the building. |
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(2) "Governmental entity" means: |
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(A) the state, a county, or a municipality; |
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(B) a department, board, or agency of the state, |
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a county, or a municipality; |
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(C) a school district or a subdivision of a |
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school district; or |
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(D) any other governmental or quasi-governmental |
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authority authorized by statute to make a public works contract. |
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(3) [(2)] "Prime contractor" means a person or |
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persons, firm, or corporation contracting with a governmental |
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entity for a public work. |
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(4) [(3)] "Public works" includes the construction, |
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alteration, or repair of a public building or the construction or |
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completion of a public work. |
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(5) [(4)] "Public works contract payment" means a |
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payment by a governmental entity for the value of labor, material, |
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machinery, fixtures, tools, power, water, fuel, or lubricants used |
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or consumed, ordered and delivered for use or consumption, or |
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specially fabricated for use or consumption but not yet delivered, |
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in the direct performance of a public works contract. |
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(6) [(5)] "Retainage" means the percentage [part] of a |
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public works contract payment withheld by a governmental entity to |
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secure performance of the contract. |
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(7) "Warranty" means the period of time specified in a |
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contract during which certain terms applicable to the warranting of |
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work performed under the contract are in effect. |
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SECTION 3. Section 2252.032, Government Code, is amended to |
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read as follows: |
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Sec. 2252.032. RETAINAGE. (a) A governmental entity |
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shall: |
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(1) deposit in an interest-bearing account the |
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retainage of a [public works contract that provides for retainage
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of more than five percent of the] periodic contract payment of a |
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public works contract; and |
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(2) pay the retainage remaining in the account |
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described by Subdivision (1), including any interest earned on the |
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retainage, to the prime contractor on completion of the contract. |
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(b) If the total value of a public works contract is $1 |
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million or more, a governmental entity: |
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(1) may not withhold retainage in an amount that |
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exceeds five percent of the contract price; and |
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(2) after the governmental entity has beneficial use |
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of the public work that is the subject of the contract, may not |
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withhold retainage in an amount that exceeds two percent of the |
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contract price, excluding interest earned on the retainage. |
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(c) If the total value of a public works contract is less |
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than $1 million, a governmental entity, on receipt of beneficial |
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use of the public work that is the subject of the contract, may not |
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withhold more than one-half of the total retainage under the |
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contract. |
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(d) A governmental entity may not withhold retainage: |
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(1) after completion of the contract by the prime |
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contractor, including during the warranty; or |
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(2) for the purpose of requiring the prime contractor, |
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after completion of the contract, to perform work on manufactured |
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goods or systems that were: |
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(A) specified by the designer of record; and |
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(B) properly installed by the contractor. |
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SECTION 4. The changes in law made by this Act apply only to |
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a contract to which Subchapter B, Chapter 2252, Government Code, |
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applies that is entered into on or after the effective date of this |
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Act. A contract to which Subchapter B, Chapter 2252, Government |
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Code, applies that is entered into before the effective date of this |
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Act is governed by the law in effect when the contract was entered |
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into, and the former law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2017. |