This perennial issue, which mandates how the private sector conducts its business, is a one-size-fits-all solution and interferes with the very basic tenet of freedom to contract. Additionally, setting a cap at a figure as low as five percent does not provide the incentive necessary to ensure any incomplete or substandard work product is completed or issues addressed.
It also is worthwhile to note that the construction industry has numerous payment protections currently in place. Tools such as liens, notice to lenders, legal remedies and contract protections are currently available and utilized in this line of work. Further, in most circumstances, owners, developers and general contractors are dependent on bank financing for large-scale projects. Because regulators require the banking industry to have adequate risk mitigation, it is a standard practice for a financial institution to retain a minimum of 10 percent until all work is complete. Had HB11-1165 become law bank financing could have been impacted, limiting the ability of the development community to take a project from the concept envisioned on blueprints to reality.
A special thank you to attorney Dennis Polk, of Holley Albertson and Polk, whose expertise in this area was of great help as we worked with legislators to outline the unintended consequences of the proposed measure.
Should you have questions about this piece of legislation, or any other bill of interest, please do not hesitate to contact me at [email protected].
Warmly,
Tamra
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