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Full Text of HB5042
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HB5042 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5042
Introduced 2/10/2026, by Rep. William "Will" Davis
SYNOPSIS AS INTRODUCED:
30 ILCS 550/1
from Ch. 29, par. 15
Amends the Public Construction Bond Act. Provides that the Department
of Transportation and the Illinois State Toll Highway Authority shall
require every contractor for public works to furnish, supply, and deliver
a bond if the public works contract will cost more than $10,000,000
(currently, $500,000). Provides that local governmental units shall
require a bond for public works projects costing over $5,000,000
(currently, $150,000) and may require a bond for public works projects
valued at $5,000,000 or less (currently, $150,000 or less). Provides that
certain bonding requirements apply until January 1, 2034 (currently,
January 1, 2029).
LRB104 16547 HLH 29945 b
A BILL FOR
HB5042
LRB104 16547 HLH 29945 b
1
AN ACT concerning finance.
2
Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:
4
Section 5.
The Public Construction Bond Act is amended by
5
changing Section 1 as follows:
6
(30 ILCS 550/1)
(from Ch. 29, par. 15)
7
(Text of Section before amendment by P.A. 104-168
)
8
Sec. 1.
Except as otherwise provided by this Act, until
9
January 1, 2034,
January 1, 2029,
all officials, boards,
10
commissions, or agents of this State, or of any political
11
subdivision thereof
, other than a local governmental unit
, in
12
making contracts for public work of any kind costing over
13
$150,000 to be performed for the State, or of any political
14
subdivision thereof
, other than a local governmental unit
,
15
shall require every contractor for the work to furnish, supply
16
and deliver a bond to the State, or to the political
17
subdivision thereof entering into the contract, as the case
18
may be, with good and sufficient sureties. The surety on the
19
bond shall be a company that is licensed by the Department of
20
Insurance authorizing it to execute surety bonds and the
21
company shall have a financial strength rating of at least A-
22
as rated by A.M. Best Company, Inc., Moody's Investors
23
Service, Standard & Poor's Corporation, or a similar rating
HB5042
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LRB104 16547 HLH 29945 b
1
agency. The amount of the bond shall be fixed by the officials,
2
boards, commissions, commissioners or agents, and the bond,
3
among other conditions, shall be conditioned for the
4
completion of the contract, for the payment of material,
5
apparatus, fixtures, and machinery used in the work and for
6
all labor performed in the work, whether by subcontractor or
7
otherwise.
8
Until
January 1, 2034,
January 1, 2029,
when making
9
contracts for public works to be constructed, the Department
10
of Transportation and the Illinois State Toll Highway
11
Authority shall require every contractor for those works to
12
furnish, supply, and deliver a bond to the Department or the
13
Authority, as the case may be, with good and sufficient
14
sureties only if the public works contract will cost more than
15
$10,000,000
$500,000
. The Department of Transportation and the
16
Illinois State Toll Highway Authority shall publicly display
17
the following information by website or annual report and
18
shall provide that information to interested parties upon
19
request:
20
(1) a list of each of its defaulted public works
21
contracts, including the value of the award, the adjusted
22
contract value, and the amount remaining unpaid by the
23
Department or Authority, as applicable;
24
(2) the number and the aggregate amount of payment
25
claims made under the Mechanics Lien Act along with the
26
number of contracts in which payment claims are made under
HB5042
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LRB104 16547 HLH 29945 b
1
the Mechanics Lien Act;
2
(3) for each of its public improvement contracts,
3
regardless of the contract value, the aggregate annual
4
revenue of the contractor derived from contracts with the
5
State;
6
(4) for each of its public works contracts, regardless
7
of contract value, the identity of the surety providing
8
the contract bond, payment and performance bond, or both;
9
and
10
(5) for each of its public works contracts, regardless
11
of the bond threshold, a list of bidders for each public
12
works contract, and the amount bid by each bidder.
13
Until January 1, 2034, all officials, boards, commissions,
14
or agents of a local governmental unit, in making contracts
15
for public work of any kind costing over $5,000,000 to be
16
performed for the local governmental unit shall require every
17
contractor for the work to furnish, supply, and deliver a bond
18
to the local governmental unit with good and sufficient
19
sureties. The surety on the bond shall be a company that is
20
licensed by the Department of Insurance authorizing it to
21
execute surety bonds and the company shall have a financial
22
strength rating of at least A- as rated by A.M. Best Company,
23
Inc., Moody's Investors Service, Standard & Poor's
24
Corporation, or a similar rating agency. The amount of the
25
bond shall be fixed by the officials, boards, commissions,
26
commissioners, or agents, and the bond, among other
HB5042
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LRB104 16547 HLH 29945 b
1
conditions, shall be conditioned for the completion of the
2
contract, for the payment of material, apparatus, fixtures,
3
and machinery used in the work and for all labor performed in
4
the work, whether by subcontractor or otherwise.
Until
January
5
1, 2034,
January 1, 2029,
local governmental units may require
6
a bond, by ordinance or resolution, for public works contracts
7
valued at
$5,000,000
$150,000
or less.
8
On and after
January 1, 2034,
January 1, 2029,
all
9
officials, boards, commissions, or agents of this State, or of
10
any political subdivision thereof, in making contracts for
11
public work of any kind costing over $50,000 to be performed
12
for the State, or of any political subdivision thereof, shall
13
require every contractor for the work to furnish, supply and
14
deliver a bond to the State, or to the political subdivision
15
thereof entering into the contract, as the case may be, with
16
good and sufficient sureties. The surety on the bond shall be a
17
company that is licensed by the Department of Insurance
18
authorizing it to execute surety bonds and the company shall
19
have a financial strength rating of at least A- as rated by
20
A.M. Best Company, Inc., Moody's Investors Service, Standard &
21
Poor's Corporation, or a similar rating agency. The amount of
22
the bond shall be fixed by the officials, boards, commissions,
23
commissioners or agents, and the bond, among other conditions,
24
shall be conditioned for the completion of the contract, for
25
the payment of material, apparatus, fixtures, and machinery
26
used in the work and for all labor performed in the work,
HB5042
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LRB104 16547 HLH 29945 b
1
whether by subcontractor or otherwise.
2
If the contract is for emergency repairs as provided in
3
the Illinois Procurement Code, proof of payment for all labor,
4
materials, apparatus, fixtures, and machinery may be furnished
5
in lieu of the bond required by this Section.
6
Each such bond is deemed to contain the following
7
provisions whether such provisions are inserted in such bond
8
or not:
9
"The principal and sureties on this bond agree that all
10
the undertakings, covenants, terms, conditions and agreements
11
of the contract or contracts entered into between the
12
principal and the State or any political subdivision thereof
13
will be performed and fulfilled and to pay all persons, firms
14
and corporations having contracts with the principal or with
15
subcontractors, all just claims due them under the provisions
16
of such contracts for labor performed or materials furnished
17
in the performance of the contract on account of which this
18
bond is given, when such claims are not satisfied out of the
19
contract price of the contract on account of which this bond is
20
given, after final settlement between the officer, board,
21
commission or agent of the State or of any political
22
subdivision thereof and the principal has been made.".
23
Each bond securing contracts between the Capital
24
Development Board or any board of a public institution of
25
higher education and a contractor shall contain the following
26
provisions, whether the provisions are inserted in the bond or
HB5042
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LRB104 16547 HLH 29945 b
1
not:
2
"Upon the default of the principal with respect to
3
undertakings, covenants, terms, conditions, and agreements,
4
the termination of the contractor's right to proceed with the
5
work, and written notice of that default and termination by
6
the State or any political subdivision to the surety
7
("Notice"), the surety shall promptly remedy the default by
8
taking one of the following actions:
9
(1) The surety shall complete the work pursuant to a
10
written takeover agreement, using a completing contractor
11
jointly selected by the surety and the State or any
12
political subdivision; or
13
(2) The surety shall pay a sum of money to the obligee,
14
up to the penal sum of the bond, that represents the
15
reasonable cost to complete the work that exceeds the
16
unpaid balance of the contract sum.
17
The surety shall respond to the Notice within 15 working
18
days of receipt indicating the course of action that it
19
intends to take or advising that it requires more time to
20
investigate the default and select a course of action. If the
21
surety requires more than 15 working days to investigate the
22
default and select a course of action or if the surety elects
23
to complete the work with a completing contractor that is not
24
prepared to commence performance within 15 working days after
25
receipt of Notice, and if the State or any political
26
subdivision determines it is in the best interest of the State
HB5042
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LRB104 16547 HLH 29945 b
1
to maintain the progress of the work, the State or any
2
political subdivision may continue to work until the
3
completing contractor is prepared to commence performance.
4
Unless otherwise agreed to by the procuring agency, in no case
5
may the surety take longer than 30 working days to advise the
6
State or political subdivision on the course of action it
7
intends to take. The surety shall be liable for reasonable
8
costs incurred by the State or any political subdivision to
9
maintain the progress to the extent the costs exceed the
10
unpaid balance of the contract sum, subject to the penal sum of
11
the bond.".
12
The surety bond required by this Section may be acquired
13
from the company, agent or broker of the contractor's choice.
14
The bond and sureties shall be subject to the right of
15
reasonable approval or disapproval, including suspension, by
16
the State or political subdivision thereof concerned. Except
17
as otherwise provided in this Section, in the case of State
18
construction contracts, a contractor shall not be required to
19
post a cash bond or letter of credit in addition to or as a
20
substitute for the surety bond required by this Section.
21
Prior to the completion of 50% of the contract for public
22
works, a local governmental unit may not withhold retainage
23
from any payment to a contractor who furnishes the bond or bond
24
substitute required by this Act in an amount in excess of 10%
25
of any payment made prior to the date of completion of 50% of
26
the contract for public works. When a contract for public
HB5042
- 8 -
LRB104 16547 HLH 29945 b
1
works is 50% complete, the local governmental unit shall
2
reduce the retainage so that no more than 5% is held. After the
3
contract is 50% complete, no more than 5% of the amount of any
4
subsequent payments made under the contract for public works
5
may be withheld as retainage.
6
Prior to the completion of 50% of the contract for public
7
works, the contractor and their respective subcontractors
8
shall not withhold from their subcontractors retainage in
9
excess of 10% of any payment made prior to the date of
10
completion of 50% of the contract for public works. When the
11
contract for public works is 50% complete, the contractor and
12
its subcontractors shall reduce the retainage so that no more
13
than 5% is withheld from their respective subcontractors.
14
After the contract is 50% complete, the contractor and its
15
subcontractors shall not withhold more than 5% of the amount
16
of any subsequent payments made under the contract to their
17
respective subcontractors.
18
When other than motor fuel tax funds, federal-aid funds,
19
or other funds received from the State are used, a political
20
subdivision may allow the contractor to provide a
21
non-diminishing irrevocable bank letter of credit, in lieu of
22
the bond required by this Section, on contracts under $100,000
23
to comply with the requirements of this Section. Any such bank
24
letter of credit shall contain all provisions required for
25
bonds by this Section.
26
In order to reduce barriers to entry for diverse and small
HB5042
- 9 -
LRB104 16547 HLH 29945 b
1
businesses, the Department of Transportation may implement a
2
5-year pilot program to allow a contractor to provide a
3
non-diminishing irrevocable bank letter of credit in lieu of
4
the bond required by this Section on contracts under $500,000.
5
Projects selected by the Department of Transportation for this
6
pilot program must be classified by the Department as low-risk
7
scope of work contracts. The Department shall adopt rules to
8
define the criteria for pilot project selection and
9
implementation of the pilot program.
10
In this Section:
11
"Local governmental unit" has the meaning ascribed to it
12
in Section 2 of the Local Government Prompt Payment Act.
13
"Material", "labor", "apparatus", "fixtures", and
14
"machinery" include those rented items that are on the
15
construction site and those rented tools that are used or
16
consumed on the construction site in the performance of the
17
contract on account of which the bond is given.
18
(Source: P.A. 102-968, eff. 1-1-23; 103-570, eff. 1-1-24.)
19
(Text of Section after amendment by P.A. 104-168
)
20
Sec. 1.
Except as otherwise provided by this Act, until
21
January 1, 2034,
January 1, 2029,
all officials, boards,
22
commissions, or agents of this State, or of any political
23
subdivision thereof
, other than a local governmental unit
, in
24
making contracts for public work of any kind costing over
25
$150,000 to be performed for the State, or of any political
HB5042
- 10 -
LRB104 16547 HLH 29945 b
1
subdivision thereof
, other than a local governmental unit
,
2
shall require every contractor for the work to furnish, supply
3
and deliver a bond to the State, or to the political
4
subdivision thereof entering into the contract, as the case
5
may be, with good and sufficient sureties. The surety on the
6
bond shall be a company that is licensed by the Department of
7
Insurance authorizing it to execute surety bonds and the
8
company shall have a financial strength rating of at least A-
9
as rated by A.M. Best Company, Inc., Moody's Investors
10
Service, Standard & Poor's Corporation, or a similar rating
11
agency. The amount of the bond shall be fixed by the officials,
12
boards, commissions, commissioners or agents, and the bond,
13
among other conditions, shall be conditioned for the
14
completion of the contract, for the payment of material,
15
apparatus, fixtures, and machinery used in the work and for
16
all labor performed in the work, whether by subcontractor or
17
otherwise.
18
Until
January 1, 2034,
January 1, 2029,
when making
19
contracts for public works to be constructed, the Department
20
of Transportation and the Illinois State Toll Highway
21
Authority shall require every contractor for those works to
22
furnish, supply, and deliver a bond to the Department or the
23
Authority, as the case may be, with good and sufficient
24
sureties only if the public works contract will cost more than
25
$10,000,000
$500,000
. The Department of Transportation and the
26
Illinois State Toll Highway Authority shall publicly display
HB5042
- 11 -
LRB104 16547 HLH 29945 b
1
the following information by website or annual report and
2
shall provide that information to interested parties upon
3
request:
4
(1) a list of each of its defaulted public works
5
contracts, including the value of the award, the adjusted
6
contract value, and the amount remaining unpaid by the
7
Department or Authority, as applicable;
8
(2) the number and the aggregate amount of payment
9
claims made under the Mechanics Lien Act along with the
10
number of contracts in which payment claims are made under
11
the Mechanics Lien Act;
12
(3) for each of its public improvement contracts,
13
regardless of the contract value, the aggregate annual
14
revenue of the contractor derived from contracts with the
15
State;
16
(4) for each of its public works contracts, regardless
17
of contract value, the identity of the surety providing
18
the contract bond, payment and performance bond, or both;
19
and
20
(5) for each of its public works contracts, regardless
21
of the bond threshold, a list of bidders for each public
22
works contract, and the amount bid by each bidder.
23
Until January 1, 2034, all officials, boards, commissions,
24
or agents of a local governmental unit, in making contracts
25
for public work of any kind costing over $5,000,000 to be
26
performed for the local governmental unit shall require every
HB5042
- 12 -
LRB104 16547 HLH 29945 b
1
contractor for the work to furnish, supply, and deliver a bond
2
to the local governmental unit with good and sufficient
3
sureties. The surety on the bond shall be a company that is
4
licensed by the Department of Insurance authorizing it to
5
execute surety bonds and the company shall have a financial
6
strength rating of at least A- as rated by A.M. Best Company,
7
Inc., Moody's Investors Service, Standard & Poor's
8
Corporation, or a similar rating agency. The amount of the
9
bond shall be fixed by the officials, boards, commissions,
10
commissioners, or agents, and the bond, among other
11
conditions, shall be conditioned for the completion of the
12
contract, for the payment of material, apparatus, fixtures,
13
and machinery used in the work and for all labor performed in
14
the work, whether by subcontractor or otherwise.
Until
January
15
1, 2034,
January 1, 2029,
local governmental units may require
16
a bond, by ordinance or resolution, for public works contracts
17
valued at
$5,000,000
$150,000
or less.
18
On and after
January 1, 2034,
January 1, 2029,
all
19
officials, boards, commissions, or agents of this State, or of
20
any political subdivision thereof, in making contracts for
21
public work of any kind costing over $50,000 to be performed
22
for the State, or of any political subdivision thereof, shall
23
require every contractor for the work to furnish, supply and
24
deliver a bond to the State, or to the political subdivision
25
thereof entering into the contract, as the case may be, with
26
good and sufficient sureties. The surety on the bond shall be a
HB5042
- 13 -
LRB104 16547 HLH 29945 b
1
company that is licensed by the Department of Insurance
2
authorizing it to execute surety bonds and the company shall
3
have a financial strength rating of at least A- as rated by
4
A.M. Best Company, Inc., Moody's Investors Service, Standard &
5
Poor's Corporation, or a similar rating agency. The amount of
6
the bond shall be fixed by the officials, boards, commissions,
7
commissioners or agents, and the bond, among other conditions,
8
shall be conditioned for the completion of the contract, for
9
the payment of material, apparatus, fixtures, and machinery
10
used in the work and for all labor performed in the work,
11
whether by subcontractor or otherwise.
12
If the contract is for emergency repairs as provided in
13
the Illinois Procurement Code, proof of payment for all labor,
14
materials, apparatus, fixtures, and machinery may be furnished
15
in lieu of the bond required by this Section.
16
Each such bond is deemed to contain the following
17
provisions whether such provisions are inserted in such bond
18
or not:
19
"The principal and sureties on this bond agree that all
20
the undertakings, covenants, terms, conditions and agreements
21
of the contract or contracts entered into between the
22
principal and the State or any political subdivision thereof
23
will be performed and fulfilled and to pay all persons, firms
24
and corporations having contracts with the principal or with
25
subcontractors, all just claims due them under the provisions
26
of such contracts for labor performed or materials furnished
HB5042
- 14 -
LRB104 16547 HLH 29945 b
1
in the performance of the contract on account of which this
2
bond is given, when such claims are not satisfied out of the
3
contract price of the contract on account of which this bond is
4
given, after final settlement between the officer, board,
5
commission or agent of the State or of any political
6
subdivision thereof and the principal has been made.".
7
Each bond securing contracts between the Capital
8
Development Board or any board of a public institution of
9
higher education and a contractor shall contain the following
10
provisions, whether the provisions are inserted in the bond or
11
not:
12
"Upon the default of the principal with respect to
13
undertakings, covenants, terms, conditions, and agreements,
14
the termination of the contractor's right to proceed with the
15
work, and written notice of that default and termination by
16
the State or any political subdivision to the surety
17
("Notice"), the surety shall promptly remedy the default by
18
taking one of the following actions:
19
(1) The surety shall complete the work pursuant to a
20
written takeover agreement, using a completing contractor
21
jointly selected by the surety and the State or any
22
political subdivision; or
23
(2) The surety shall pay a sum of money to the obligee,
24
up to the penal sum of the bond, that represents the
25
reasonable cost to complete the work that exceeds the
26
unpaid balance of the contract sum.
HB5042
- 15 -
LRB104 16547 HLH 29945 b
1
The surety shall respond to the Notice within 15 working
2
days of receipt indicating the course of action that it
3
intends to take or advising that it requires more time to
4
investigate the default and select a course of action. If the
5
surety requires more than 15 working days to investigate the
6
default and select a course of action or if the surety elects
7
to complete the work with a completing contractor that is not
8
prepared to commence performance within 15 working days after
9
receipt of Notice, and if the State or any political
10
subdivision determines it is in the best interest of the State
11
to maintain the progress of the work, the State or any
12
political subdivision may continue to work until the
13
completing contractor is prepared to commence performance.
14
Unless otherwise agreed to by the procuring agency, in no case
15
may the surety take longer than 30 working days to advise the
16
State or political subdivision on the course of action it
17
intends to take. The surety shall be liable for reasonable
18
costs incurred by the State or any political subdivision to
19
maintain the progress to the extent the costs exceed the
20
unpaid balance of the contract sum, subject to the penal sum of
21
the bond.".
22
The surety bond required by this Section may be acquired
23
from the company, agent or broker of the contractor's choice.
24
The bond and sureties shall be subject to the right of
25
reasonable approval or disapproval, including suspension, by
26
the State or political subdivision thereof concerned. Except
HB5042
- 16 -
LRB104 16547 HLH 29945 b
1
as otherwise provided in this Section, in the case of State
2
construction contracts, a contractor shall not be required to
3
post a cash bond or letter of credit in addition to or as a
4
substitute for the surety bond required by this Section.
5
Prior to the completion of 50% of the contract for public
6
works, the State or a local governmental unit, except for the
7
Department of Transportation, may not withhold retainage from
8
any payment to a contractor who furnishes the bond or bond
9
substitute required by this Act in an amount in excess of 10%
10
of any payment made prior to the date of completion of 50% of
11
the contract for public works. When a contract for public
12
works is 50% complete, the State or the local governmental
13
unit, except for the Department of Transportation, shall
14
reduce the retainage so that no more than 5% is held. After the
15
contract is 50% complete, no more than 5% of the amount of any
16
subsequent payments made under the contract for public works
17
may be withheld as retainage.
18
Subject to the limitations in this Section, a State agency
19
may withhold as retainage a portion of the moneys from the
20
payment of a contract that is entered into on or after the
21
effective date of this amendatory Act of the 104th General
22
Assembly if and only if the State agency determines that
23
satisfactory progress has not been achieved by a contractor or
24
subcontractor during any period for which a payment is to be
25
made. Satisfactory progress shall be clearly provided for in
26
the contract between the State agency and the contractor or
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1
subcontractor. Retainage may not be used as a substitute for
2
good contract management, and the State agency may not
3
withhold funds without cause. Determinations to retain and the
4
specific amount to be withheld must be made by the State agency
5
on a case-by-case basis based on the performance of milestones
6
under the current contract as provided for in the contract
7
between the State agency and the contractor. A contractor may
8
not withhold retainage from a subcontractor except to the
9
extent a State agency has withheld retainage from the
10
contractor which is attributable to that subcontractor's
11
subcontract. This paragraph does not apply to the Illinois
12
State Toll Highway Authority.
13
Prior to the completion of 50% of the contract for public
14
works, the contractor and their respective subcontractors
15
shall not withhold from their subcontractors retainage in
16
excess of 10% of any payment made prior to the date of
17
completion of 50% of the contract for public works. When the
18
contract for public works is 50% complete, the contractor and
19
its subcontractors shall reduce the retainage so that no more
20
than 5% is withheld from their respective subcontractors.
21
After the contract is 50% complete, the contractor and its
22
subcontractors shall not withhold more than 5% of the amount
23
of any subsequent payments made under the contract to their
24
respective subcontractors.
25
When other than motor fuel tax funds, federal-aid funds,
26
or other funds received from the State are used, a political
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1
subdivision may allow the contractor to provide a
2
non-diminishing irrevocable bank letter of credit, in lieu of
3
the bond required by this Section, on contracts under $100,000
4
to comply with the requirements of this Section. Any such bank
5
letter of credit shall contain all provisions required for
6
bonds by this Section.
7
In order to reduce barriers to entry for diverse and small
8
businesses, the Department of Transportation may implement a
9
5-year pilot program to allow a contractor to provide a
10
non-diminishing irrevocable bank letter of credit in lieu of
11
the bond required by this Section on contracts under $500,000.
12
Projects selected by the Department of Transportation for this
13
pilot program must be classified by the Department as low-risk
14
scope of work contracts. The Department shall adopt rules to
15
define the criteria for pilot project selection and
16
implementation of the pilot program.
17
In this Section:
18
"Local governmental unit" has the meaning ascribed to it
19
in Section 2 of the Local Government Prompt Payment Act.
20
"Material", "labor", "apparatus", "fixtures", and
21
"machinery" include those rented items that are on the
22
construction site and those rented tools that are used or
23
consumed on the construction site in the performance of the
24
contract on account of which the bond is given.
25
"Retainage" means a portion of money withheld from a
26
payment, including, but not limited to, a payment as defined
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LRB104 16547 HLH 29945 b
1
in the Local Government Prompt Payment Act or the State Prompt
2
Payment Act, made to a contractor or subcontractor intended to
3
ensure that the contractor or subcontractor completes the
4
requirements of the contract or subcontract. "Retainage" does
5
not include (i) moneys withheld due to violations of local,
6
State, or federal laws or (ii) moneys withheld from grants to
7
entities for capital improvements to non-State property.
8
Nothing in this amendatory Act of the 104th General
9
Assembly may be construed to modify any provision of the State
10
Prompt Payment Act or the Local Government Prompt Payment Act.
11
(Source: P.A. 103-570, eff. 1-1-24; 104-168, eff. 6-1-27.)
12
Section 95.
No acceleration or delay.
Where this Act makes
13
changes in a statute that is represented in this Act by text
14
that is not yet or no longer in effect (for example, a Section
15
represented by multiple versions), the use of that text does
16
not accelerate or delay the taking effect of (i) the changes
17
made by this Act or (ii) provisions derived from any other
18
Public Act.
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