SF 2783

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 03/13/2018 08:34am

A bill for an act
relating to state government; requiring payments within a certain time period and
release of a retainage within a certain time period; amending Minnesota Statutes
2016, section 15.72.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 15.72, is amended to read:

15.72 PROGRESS PAYMENTS ON PUBLIC CONTRACTS; RETAINAGE.

Subdivision 1.

Monthly payments.

Unless the terms of the contract provide otherwise,
a public contracting agency shall make progress payments on a public contract for a public
improvement monthly as the work progresses. Payments shall be based upon estimates of
work completed as approved by the public contracting agency. A progress payment shall
not be considered acceptance or approval of any work or waiver of any defects therein.

new text begin Subd. 1a. new text end

new text begin Prompt payment to subcontractors. new text end

new text begin This subdivision applies to payment
due under subdivisions 1 and 3. Each contract of a public contracting agency must require
the prime contractor to pay any subcontractor within ten days of the prime contractor's
receipt of payment from the public contracting agency for undisputed services provided by
the subcontractor. The contract must require the prime contractor to pay interest of 1-1/2
percent per month or any part of a month to the subcontractor on any undisputed amount
not paid on time to the subcontractor. The minimum monthly interest penalty payment for
an unpaid balance of $100 or more is $10. For an unpaid balance of less than $100, the
prime contractor shall pay the actual penalty due to the subcontractor. A subcontractor who
prevails in a civil action to collect interest penalties from a prime contractor must be awarded
its costs and disbursements, including attorney fees, incurred in bringing the action.
new text end

Subd. 2.

Retainage.

A public contracting agency may reserve as retainage from any
progress payment on a public contract for a public improvement an amount not to exceed
five percent of the payment. A public agency may reduce the amount of the retainage and
may eliminate retainage on any monthly contract payment if, in the agency's opinion, the
work is progressing satisfactorily.

new text begin Subd. 3. new text end

new text begin Release of retainage. new text end

new text begin Upon the issuance of a certificate of occupancy or
substantial completion of a prime contractor's scope of work, whichever comes first, a public
contracting agency must release the retainage or final payment withheld from the prime
contractor within 30 days.
new text end