Texas 2017 - 85th Regular

Texas House Bill HB3913 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	85R27294 TSR-F
2		-	By: Shine, Cyrier H.B. No. 3913
3		-	Substitute the following for H.B. No. 3913:
4		-	By: Alvarado C.S.H.B. No. 3913
	1	+	85R12433 TSR-F
	2	+	By: Shine H.B. No. 3913
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to retainage requirements for certain public works
10	8		construction projects.
11	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	10		SECTION 1. The heading to Subchapter B, Chapter 2252,
13	11		Government Code, is amended to read as follows:
14	12		SUBCHAPTER B. [INTEREST ON] RETAINED PUBLIC WORKS CONTRACT PAYMENTS
15		-	SECTION 2. Section 2252.031, Government Code, is amended by
16		-	amending Subdivision (5) and adding Subdivisions (6) and (7) to
	13	+	SECTION 2. Section 2252.031, Government Code, is amended to
17	14		read as follows:
18		-	(5) "Retainage" means the part of a:
19		-	(A) public works contract payment withheld by a
20		-	governmental entity to secure performance of the contract; or
21		-	(B) payment under a public works contract
22		-	withheld by a prime contractor or subcontractor to secure
23		-	performance of any work that is required of the prime contractor
24		-	under the contract that a subcontractor contracts to perform.
25		-	(6) "Subcontractor" means a person who contracts with
26		-	a prime contractor or any other subcontractor to provide labor or
27		-	materials to fulfill an obligation of the prime contractor under a
28		-	public works contract.
29		-	(7) "Warranty period" means the period of time
30		-	specified in a contract during which certain terms applicable to
31		-	the warranting of work performed under the contract are in effect.
	15	+	Sec. 2252.031. DEFINITIONS. In this subchapter:
	16	+	(1) "Beneficial use" means, following completion of
	17	+	all or a portion of work under a public works contract:
	18	+	(A) for a public works project, the ability of a
	19	+	governmental entity to place the project into operation for the
	20	+	project's intended purpose; or
	21	+	(B) for a public building, the ability of a
	22	+	governmental entity to be issued a certificate of occupancy or
	23	+	temporary certificate of occupancy for the building.
	24	+	(2) "Governmental entity" means:
	25	+	(A) the state, a county, or a municipality;
	26	+	(B) a department, board, or agency of the state,
	27	+	a county, or a municipality;
	28	+	(C) a school district or a subdivision of a
	29	+	school district; or
	30	+	(D) any other governmental or quasi-governmental
	31	+	authority authorized by statute to make a public works contract.
	32	+	(3) [(2)] "Prime contractor" means a person or
	33	+	persons, firm, or corporation contracting with a governmental
	34	+	entity for a public work.
	35	+	(4) [(3)] "Public works" includes the construction,
	36	+	alteration, or repair of a public building or the construction or
	37	+	completion of a public work.
	38	+	(5) [(4)] "Public works contract payment" means a
	39	+	payment by a governmental entity for the value of labor, material,
	40	+	machinery, fixtures, tools, power, water, fuel, or lubricants used
	41	+	or consumed, ordered and delivered for use or consumption, or
	42	+	specially fabricated for use or consumption but not yet delivered,
	43	+	in the direct performance of a public works contract.
	44	+	(6) [(5)] "Retainage" means the percentage [part] of a
	45	+	public works contract payment withheld by a governmental entity to
	46	+	secure performance of the contract.
	47	+	(7) "Warranty" means the period of time specified in a
	48	+	contract during which certain terms applicable to the warranting of
	49	+	work performed under the contract are in effect.
32	50		SECTION 3. Section 2252.032, Government Code, is amended to
33	51		read as follows:
34		-	Sec. 2252.032. RETAINAGE WITHHELD BY GOVERNMENTAL ENTITY.
35		-	(a) A governmental entity shall:
36		-	(1) include in each public works contract to which the
37		-	governmental entity is a party a provision that establishes, for
38		-	the project that is the subject of the contract:
39		-	(A) the circumstances under which the project
40		-	will be considered substantially complete; and
41		-	(B) if retainage will be released on substantial
42		-	completion of the project and, if so, the percentage of the amount
43		-	of retainage that will be released on substantial completion;
44		-	(2) deposit in an interest-bearing account the
	52	+	Sec. 2252.032. RETAINAGE. (a) A governmental entity
	53	+	shall:
	54	+	(1) deposit in an interest-bearing account the
45	55		retainage of a [public works contract that provides for retainage
46	56		of more than five percent of the] periodic contract payment of a
47	57		public works contract; and
48		-	~~(3) [~~(2)] pay the retainage remaining in the account
49		-	described by Subdivision (2), including any interest earned on the
	58	+	(2) pay the retainage remaining in the account
	59	+	described by Subdivision (1), including any interest earned on the
50	60		retainage, to the prime contractor on completion of the contract.
51	61		(b) If the total value of a public works contract is $1
52	62		million or more, a governmental entity:
53	63		(1) may not withhold retainage in an amount that
54		-	exceeds five percent of the contract price;
55		-	(2) may release retainage for completed portions of
56		-	the work; and
57		-	(3) may release a portion of the retainage on
58		-	substantial completion of the project.
59		-	(c) A governmental entity may not withhold retainage:
	64	+	exceeds five percent of the contract price; and
	65	+	(2) after the governmental entity has beneficial use
	66	+	of the public work that is the subject of the contract, may not
	67	+	withhold retainage in an amount that exceeds two percent of the
	68	+	contract price, excluding interest earned on the retainage.
	69	+	(c) If the total value of a public works contract is less
	70	+	than $1 million, a governmental entity, on receipt of beneficial
	71	+	use of the public work that is the subject of the contract, may not
	72	+	withhold more than one-half of the total retainage under the
	73	+	contract.
	74	+	(d) A governmental entity may not withhold retainage:
60	75		(1) after completion of the contract by the prime
61		-	contractor, including during any warranty period after completion
62		-	of the contract; or
	76	+	contractor, including during the warranty; or
63	77		(2) for the purpose of requiring the prime contractor,
64	78		after completion of the contract, to perform work on manufactured
65	79		goods or systems that were:
66	80		(A) specified by the designer of record; and
67	81		(B) properly installed by the contractor.
68		-	SECTION 4. Subchapter B, Chapter 2252, Government Code, is
69		-	amended by adding Section 2252.0325 to read as follows:
70		-	Sec. 2252.0325. RETAINAGE WITHHELD BY PRIME CONTRACTOR OR
71		-	SUBCONTRACTOR. (a) If, for the purpose of fulfilling an obligation
72		-	of the prime contractor under a public works contract, a prime
73		-	contractor enters into a subcontract that has a total value of at
74		-	least $250,000:
75		-	(1) the prime contractor may not withhold from a
76		-	subcontractor a greater percentage of retainage than the percentage
77		-	being withheld from the prime contractor by the governmental entity
78		-	under the public works contract; and
79		-	(2) a subcontractor who enters into a contract with
80		-	another subcontractor to provide labor or materials under the
81		-	public works contract may not withhold from that subcontractor a
82		-	greater percentage of retainage than the percentage that may be
83		-	withheld from the subcontractor as determined under Subdivision
84		-	(1).
85		-	(b) A prime contractor who receives a payment of interest
86		-	under Section 2252.032 shall pay to any subcontractor of the prime
87		-	contractor from whom the prime contractor has withheld retainage
88		-	under a public works contract a proportionate share of the interest
89		-	the prime contractor receives in an amount based on the ratio of the
90		-	amount of retainage withheld by the prime contractor from the
91		-	subcontractor to the amount of retainage withheld by the
92		-	governmental entity from the prime contractor.
93		-	(c) A subcontractor who receives a payment of interest under
94		-	this section shall pay to any contracting subcontractor from whom
95		-	the subcontractor withheld retainage a proportionate share of the
96		-	interest the subcontractor receives in an amount based on the ratio
97		-	of the amount of retainage withheld by the subcontractor from the
98		-	contracting subcontractor to the amount of retainage withheld from
99		-	the subcontractor by the prime contractor or by another
100		-	subcontractor, as applicable.
101		-	SECTION 5. The changes in law made by this Act apply only to
	82	+	SECTION 4. The changes in law made by this Act apply only to
102	83		a contract to which Subchapter B, Chapter 2252, Government Code,
103	84		applies that is entered into on or after the effective date of this
104	85		Act. A contract to which Subchapter B, Chapter 2252, Government
105	86		Code, applies that is entered into before the effective date of this
106	87		Act is governed by the law in effect when the contract was entered
107	88		into, and the former law is continued in effect for that purpose.
108		-	SECTION 6. This Act takes effect immediately if it receives
	89	+	SECTION 5. This Act takes effect immediately if it receives
109	90		a vote of two-thirds of all the members elected to each house, as
110	91		provided by Section 39, Article III, Texas Constitution. If this
111	92		Act does not receive the vote necessary for immediate effect, this
112	93		Act takes effect September 1, 2017.