Real estate group knocks contractor ‘hold back’ deal
A late-session push from subcontractors and general contractors for a bill lowering retainage rates on private construction projects drew cheers from some top lawmakers but jeers from a prominent real estate group.
On Tuesday, the Associated Subcontractors of Massachusetts and the Associated General Contractors of Massachusetts announced they had resolved longstanding differences and reached agreement on legislation reducing the amount of money held back by project owners on certain private-sector construction projects to assure that work is satisfactorily completed.
They pitched as a compromise new legislation that lays out a timeline and process for closing out payments on projects of more than $3 million while bringing retainage amounts on private construction projects over $3 million down to 5 percent from the current practice of 10 percent.
In a letter to senators, Monica Lawton of ASM and Robert Petrucelli of AGC said 10 percent “is too much and it’s held too long, which can create serious cash flow problems.”
But Greg Vasil, president of the Greater Boston Real Estate Board, said the two groups had only shared conceptual ideas with some of the key parties who make real estate projects happen.
“They never clued in the owners, bankers or architects,” Vasil said.
After he had an opportunity to review the bill, Vasil said, “As an organization we are disappointed in both the generals and subs. They feel like the Legislature has given them the keys to the kingdom to do what they want.”
Asked if there were specific aspects of the bill the real estate trade group liked or disliked, Vasil questioned the need for a law since the provisions in the bill can be executed in a construction contract. He also wondered about safeguards for owners in the event of faulty work.
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