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<br />17 <br />216348v2 <br />The statute sets forth “minimum criteria” for contractors which include such things as compliance with <br />state workers compensation laws and unemployment insurance laws, federal tax I.D number, <br />authority to transact business in Minnesota, compliance with Federal Wage and Hour requirements, <br />etc. <br /> <br />A contractor responding to the City’s contract solicitation must submit a signed statement under oath <br />of compliance with the minimum criteria identified in this statute. <br /> <br />If that contractor is awarded the contract, then a supplemental verification under oath must be <br />presented to the City that the contractor has received from all subcontractors’ statements under oath <br />that they also meet the minimum requirements under this statute. <br /> <br />Prompt Payment to Subcontractors <br /> <br />City contracts that involve a prime contractor must require the prime contractor to pay subcontractors <br />within ten days of the prime contractor’s receipt of payment from the City for undisputed services <br />provided by the subcontractor. <br /> <br />The contract must require the prime contractor to pay interest of 1.5 percent per month or any part of <br />a month to the subcontractor on any undisputed amount not paid on time. <br /> <br />Performance and Payment Bonds <br /> <br />For some contracts, cities must require contractors to provide a performance bond and a payment <br />bond. This requirement applies to contracts over $175,000 for the performance of public work. The <br />required performance bond benefits the City by ensuring that the work is completed according to the <br />terms of the contract, while the required payment bond benefits subcontractors and people who <br />provide labor and materials, by seeing that their claims for labor and materials are paid. For any <br />increases, such as change orders, to contracts with performance and payment bonds, City Council <br />review is required to determine if additional performance and payment bonds are required. City <br />Council will vote to require or waive such additional bonds. <br /> <br />Retainage <br /> <br />For a contract for public improvement, a public contracting agency may withhold up to five percent of <br />any progress payment as retainage to ensure satisfactory performance. If it does so, it must release <br />the retainage no more than 60 days after substantial completion. <br /> <br />“Substantial completion” is the date when construction is sufficiently completed so that the owner can <br />occupy or use the improvement for the intended purpose. For streets, highways, and bridges, <br />“substantial completion” is defined as the date when construction-related traffic devices and ongoing <br />inspections are no longer required. <br /> <br />The City is permitted to continue to withhold up to 250 percent of the cost to correct or complete <br />known work at the time of substantial completion, and the greater of $500 or one percent of the value <br />of the contract pending submission of final paperwork. <br /> <br />The amount withheld for cost to correct or complete must be released within 60 days of work <br />completion. The amount withheld pending submission of final paperwork must be released within 60 <br />days of submission of final paperwork.