Bill Text: NJ A2113 | 2018-2019 | Regular Session | Introduced
Bill Title: Requires contracting units and boards of education to credit contractors with interest earned on certain funds withheld from payment to contractors.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced, Referred to Assembly Housing and Community Development Committee [A2113 Detail]
Download: New_Jersey-2018-A2113-Introduced.html
STATE OF NEW JERSEY
218th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION
Sponsored by:
Assemblyman JERRY GREEN
District 22 (Middlesex, Somerset and Union)
SYNOPSIS
Requires contracting units and boards of education to credit contractors with interest earned on certain funds withheld from payment to contractors.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning interest earned on certain contractors' funds withheld by contracting units and amending P.L.1987, c.343, P.L.1979, c.152 and P.L.1979, c.464.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1979, c.152 (C.40A:11-16.1) is amended to read as follows:
1. Whenever any contract, the total price of which exceeds $100,000.00, entered into by a contracting unit, for the construction, reconstruction, alteration or repair of any building, structure, facility or other improvement to real property, requires the withholding of payment of a percentage of the amount of the contract, the contractor may agree to the withholding of payments in the manner prescribed in the contract, or may deposit with the contracting unit registered book bonds, entry municipal bonds, State bonds or other appropriate bonds of the State of New Jersey, or negotiable bearer bonds or notes of any political subdivision of the State, the value of which is equal to the amount necessary to satisfy the amount that otherwise would be withheld pursuant to the terms of the contract. The nature and amount of the bonds or notes to be deposited shall be subject to approval by the contracting unit. For purposes of this section, "value" shall mean par value or current market value, whichever is lower.
If the contractor agrees to the withholding of payments, the amount withheld shall be deposited, with a banking institution or savings and loan association insured by an agency of the Federal government, in an account bearing interest at the rate currently paid by such institutions or associations on time or savings deposits. The amount withheld, or the bonds or notes deposited, and any interest accruing on such bonds or notes, shall be returned to the contractor upon fulfillment of the terms of the contract relating to such withholding. Any interest accruing on cash payments withheld from the contractor for contracts entered into after the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be credited to the [contracting unit] contractor.
(cf: P.L.1991, c.434, s.1)
2. Section 2 of P.L.1979, c.464 (C.40A:11-16.3) is amended to read as follows:
2. a. With respect to any contract entered into by a contracting unit pursuant to section 1 of P.L.1979, c.464 (C.40A:11-16.2) for which the contractor shall agree to the withholding of payments pursuant to P.L.1979, c.152 (C.40A:11-16.1), 2% of the amount due on each partial payment shall be withheld by the contracting unit pending completion of the contract; provided, however, that upon the contractor's application therefor, the contracting unit shall release to the contractor, a subcontractor's proportionate share of the amount withheld, upon acceptance by the project's architect or construction manager of the subcontractor's completed portion of the entire project.
b. Upon acceptance of the work performed pursuant to the contract or acceptance of the work performed by a subcontractor for which the contractor has agreed to the withholding of payments pursuant to subsection a. of this section, all amounts being withheld by the contracting unit shall be released and paid in full to the contractor within 45 days of the [final] acceptance date agreed upon by the contractor and the contracting unit, without further withholding of any amounts for any purpose whatsoever, provided that the contract , or subcontractor's portion of the contract when applicable, has been completed as indicated. If the contracting unit requires maintenance security after acceptance of the work performed pursuant to the contract, such security shall be obtained in the form of a maintenance bond. The maintenance bond shall be no longer than two years and shall be no more than 100% of the project costs.
(cf: P.L.1999, c.440, s.26)
3. Section 2 of P.L.1987, c.343 (C.18A:18A-40.2) is amended to read as follows:
2. Whenever any contract, the total price of which exceeds $100,000.00, entered into by a board of education for the construction, reconstruction, alteration or repair of any building, structure, facility or other improvement to real property, requires the withholding of payment of a percentage of the amount of the contract, the contractor may agree to the withholding of payments in the manner prescribed in the contract, or may deposit with the board of education negotiable bearer bonds of the State of New Jersey, or negotiable bearer bonds or notes of any political subdivision of the State, the value of which is equal to the amount necessary to satisfy the amount that otherwise would be withheld pursuant to the terms of the contract. The nature and amount of the bonds or notes to be deposited shall be subject to approval by the board of education. For purposes of this section, "value" shall mean par value or current market value, whichever is lower.
If the contractor agrees to the withholding of payments, the amount withheld shall be deposited, with a banking institution or savings and loan association insured by an agency of the federal government, in an account bearing interest at the rate currently paid by such institutions or associations on time or savings deposits. The amount withheld, or the bonds or notes deposited, and any interest accruing on such bonds or notes, shall be returned to the contractor upon fulfillment of the terms of the contract relating to such withholding. Any interest accruing on cash payments withheld from the contractor for contracts entered into after the date of enactment of P.L. , c. (pending before the Legislature as this bill) shall be credited to the [board of education] contractor.
(cf: P.L.1987, c.343, s.2)
4. Section 3 of P.L.1987, c.343 (C.18A:18A-40.3) is amended to read as follows:
3. With respect to any contract entered into by a board of education pursuant to section 1 of P.L.1987, c.343 (C.18A:18A-40.1) for which the contractor shall agree to the withholding of payments pursuant to section 2 of P.L.1987, c.343 (C.18A:18A-40.2), 5% of the amount due on each partial payment shall be withheld by the board of education pending completion of the contract if the contractor does not have a performance bond; provided, however, that upon the contractor's application therefore, the board of education shall release to the contractor, a subcontractor's proportionate share of the amount withheld, upon acceptance by the project's architect or construction manager of the subcontractor's completed portion of the entire project. If the contractor does have a performance bond, 2% of the amount due on each partial payment shall be withheld by the board of education when the outstanding balance of the contract exceeds $500,000, and 5% of the amount due on each partial payment shall be withheld by the board of education when the outstanding balance of the contract is $500,000 or less.
(cf: P.L.1999, c.440, s.76)
5. This act shall take effect immediately.
STATEMENT
This bill would require contracting units (counties, municipalities, and local public entities) and boards of education to credit contractors with interest earned on certain retained payments that are released to the contractor upon completion of a project. Current law provides that the contracting units may retain interest earned on the retained two percent of payments paid to the contractor. This bill would provide that the interest on such withheld payments should be paid to the contractor upon completion of a project.
The bill would also provide that, upon the contractor's application, the contracting unit or board of education would be required to release to the contractor a subcontractor's proportionate share of the amount withheld, upon acceptance by the project's architect or construction manager of the subcontractor's completed portion of the entire project. Under current law, the contractor has to wait until completion of the entire project before release of the retained funds for the completed work of one it its subcontractors.
