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Proposal to restrict retainage on public and private projects reintroduced in Ohio House

Similar proposal failed in last session

Undeterred by their failure to pass a similar bill in the previous General Assembly, subcontractors are again pushing legislation that would limit the withholding of retainage on both public and private construction projects.

Identical bills, House Bill 497 and Senate Bill 270, were introduced February 1 by Representative John Hagan (R-Alliance) and Senator Gary Cates (R-West Chester).

The House bill has been assigned to the Commerce & Labor Committee, where it received an initial hearing on February 14. The Senate bill was assigned to the Insurance, Commerce & Labor Committee but has not received a hearing.

On public projects, the bills propose to limit the amount of retainage that could be withheld from a construction contractor, subcontractor or material supplier to 8% of the cost of labor during the first half of the contract, with no retainage allowed thereafter.

Contractors, subcontractors and lower-tier subcontractors would not be permitted to withhold a higher percentage of retainage from their subcontractors than was being withheld from them.

Retainage held in escrow, plus interest, would have to be released when each portion of the project, as identified in a "schedule of values," is completed.

On private construction, the bills would extend the requirement that owners deposit all retainage into an escrow account, to be paid out to the contractors or subcontractor with interest, when each portion of the project is completed and accepted, according to a similar schedule of values.

A similar bill introduced in the House of Representatives in 2003 was bottled up as a result of opposition from a long list of heavyweight opponents, including the Ohio Bar Association, Ohio Turnpike Commission, state universities, general contractors and local governments.

That scenario is almost certain to be replayed on these latest proposals. ACEC Ohio opposed the previous proposal but has not yet taken a formal position on the new bills.

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