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Board approves $3.43 million progress payment to PACE, places $180,485 retainage in escrow; city attorney discloses bank ties
Summary
Franklin City’s Board of Public Works and Safety approved a $3,429,218.70 progress payment to PACE Contracting for the wastewater treatment plant expansion and agreed to place $180,485.20 of retainage in an interest-bearing escrow at Mutual Savings Bank; City Attorney Lynn Gray disclosed she serves on that bank’s board.
Franklin City’s Board of Public Works and Safety voted Tuesday to approve a $3,429,218.70 progress payment to PACE Contracting LLC for work on the city’s wastewater treatment plant expansion and to place the project’s 5% retainage — $180,485.20 — into an interest-bearing escrow account.
City Attorney Lynn Gray explained the retainage process and the statutory authority that lets contractors request escrowed retainage. She told the board the project is a roughly $26,000,000 undertaking and said the current payment request totaled $3,609,703.90, from which the 5% retainage was calculated. “In interest of full disclosure, I am on the board of directors of Mutual Savings Bank,” Gray said, noting that a council member also holds a bank executive position; she said the clerk treasurer suggested Mutual Savings Bank as a local escrow agent and PACE had no objection.
Gray described the escrow terms and costs to the contractor: the agreement calls for a one-time fee of $1,500 and $100 per transaction, to be paid from the retained funds rather than city operating funds. She said the statutory scheme allows earned interest to be returned to the contractor at project completion if contract requirements are met.
Board members asked clarifying questions about whether interest payments would change the contract total; Gray and the mayor said the contract amount remains unchanged and the escrowed funds merely earn interest until released.
A board member moved to approve payment to PACE for $3,429,218.70 and to place the retainage of $180,485.20 into escrow with Mutual Savings Bank; the motion was seconded and the board approved both the payment and a separate motion to authorize the escrow agreement. The board also voted to authorize the mayor to sign the agreement on the city’s behalf.
The board did not record a roll-call tally in the transcript; approval was indicated by voice vote. The escrow agreement documents, the contractor’s payment application, and a disclosure statement noting Gray’s relationship with Mutual Savings Bank were part of the materials presented to the board.
Next steps: staff will execute the escrow agreement with Mutual Savings Bank and process the progress payment to PACE.
