1999 Montana Legislature

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SENATE BILL NO. 240

INTRODUCED BY D. GRIMES

Montana State Seal

AN ACT REQUIRING A GOVERNMENT ENTITY THAT WITHHOLDS FROM A CONSTRUCTION CONTRACTOR MONEY OWED THE CONTRACTOR FOR CONSTRUCTION SERVICES OR MATERIALS TO PAY INTEREST TO THE CONSTRUCTION CONTRACTOR; ALLOWING SUBCONTRACTORS TO PARTICIPATE IN MAKING REQUIRED DEPOSIT OBLIGATIONS AND TO RECEIVE A PRO RATA SHARE OF THE INTEREST EARNED ON THOSE DEPOSITS; PROVIDING FOR ENFORCEMENT; AMENDING SECTION 18-1-301, MCA; AND PROVIDING AN EFFECTIVE DATE AND AN APPLICABILITY DATE.



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



     Section 1.  Section 18-1-301, MCA, is amended to read:

     "18-1-301.  Contractor withdrawals -- deposit of obligations. (1) The contractor under any contract made or awarded by the state of Montana or any department, agency, or political subdivision thereof of the state of Montana, by any county, municipality, or political subdivision of a county or municipality, or by a school district, including any contract for the construction, improvement, maintenance, or repair of any road or highway or the appurtenances thereto to a road or highway, may, from time to time, withdraw the whole or any portion of the sums otherwise due to the contractor under such the contract which that are retained by the state of Montana or any department, agency, or political subdivision thereof of the state of Montana, by any county, municipality, or political subdivision of a county or municipality, or by a school district pursuant to the terms of such the contract, provided the contractor shall deposit with the contracting agency:

     (a)  United States treasury bonds, United States treasury notes, United States treasury certificates of indebtedness, or United States treasury bills;

     (b)  bonds or notes of the state of Montana;

     (c)  bonds of any political subdivision of the state of Montana of a market value not exceeding par at the time of deposit; or

     (d)  certificates of deposit drawn and issued by a national banking association located in the state of Montana or by any banking corporation incorporated under the laws of the state of Montana.

     (2)  Deposited obligations shall must be at least equal in value to the amount so withdrawn from payments retained under such the contract.

     (3)  Except as provided in subsection (4), all interest accrued in the accounts of deposits required under this section must be paid to the contractor.

     (4)  The contractor shall extend to the contractor's subcontractors the opportunity to participate in making the deposits required in subsection (1). Interest accrued in deposit accounts in which subcontractors participate must be distributed on a pro rata basis by the contractor to the participating subcontractors. A subcontractor participating in making the deposits required in subsection (1) may not have additional retainage withheld by the contractor."



     Section 2.  Limit on retainage for public contracts. (1) The maximum retainage applied to construction contracts administered by the state of Montana or any department, agency, or political subdivision of the state of Montana, by any county, municipality, or political subdivision of a county or municipality, or by a school district may not exceed 5% if the contractor is performing by the terms of the contract.

     (2)  The retainage percentage withheld by a government entity, as provided for in subsection (1), from a contractor is the maximum retainage percentage that a contractor may withhold from a subcontractor.

     (3)  For the purposes for this section, "retainage" means the ratio, in percent, of funds retained to the total amount to be paid to the contractor by the government entity.



     Section 3.  Codification instruction. [Section 2] is intended to be codified as an integral part of Title 18, chapter 2, part 3, and the provisions of Title 18, chapter 2, part 3, apply to [section 2].



     Section 4.  Effective date. [This act] is effective July 1, 1999.



     Section 5.  Applicability. [This act] applies to contracts entered into after July 1, 1999.

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Latest Version of SB 240 (SB0240.ENR)
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