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16.7 .3 R. <br /> The city shall reserve as retainage from any progress payment on a Public <br />ETAINAGE <br />Improvement contract an amount not to exceed five percent (5%) of the payment. <br />16.7 .3 .1 Reduction of Retainage. <br /> As work progresses, the city may reduce the amount <br />of the retainage, and the city may eliminate retainage on any remaining monthly <br />contract payments after fifty percent (50%) of the work under the contract is <br />completed if, in the city’s opinion, such work is progressing satisfactorily. <br />Elimination or reduction of retainage shall be allowed only upon written <br />application by the contractor, and the application shall include written approval <br />of the contractor’s surety. However, when the contract work is ninety-seven <br />and one-half percent (97.5%) completed the contracting agency may, at the <br />contracting agency’s discretion and without application by the contractor, <br />reduce the retained amount to one hundred percent (100%) of the value of the <br />contract work remaining to be done. Upon receipt of a written application by <br />the contractor, the contracting agency shall respond in writing within a <br />reasonable time. <br />16.7 .3 .2 Forms of Retainage. <br />16.7 .3 .2 .1 Cash. <br /> Unless retainage is deposited or replaced as provided in this <br />subsection 16.7.3.2, moneys retained by the city shall be retained in a fund <br />by the city and paid to the contractor in accordance with these regulations. <br />16.7 .3 .2 .2 City’s Right to Reimbursement for Expenses Incurred. <br /> If the city <br />incurs additional costs as a result of the exercise of the options described <br />in subsection (1) of this section, the city may recover such costs from the <br />contractor by reduction of the final payment. As work on the contract <br />progresses, the city shall, upon demand, inform the contractor of all <br />accrued costs. <br />16.7 .3 .2 .3 Contractor’s Option to Replace Retainage with Bonds or Securities. <br />The contractor may deposit bonds or securities with the city or in any bank <br />or trust company to be held in lieu of the cash retainage for the benefit of <br />the city. In such event the city shall reduce the retainage in an amount <br />equal to the value of the bonds and securities and pay the amount of the <br />reduction to the contractor in accordance with ORS 279C.570. Interest on <br />the bonds or securities shall accrue to the contractor. <br />16.7 .3 .2 .4 Contractor May Request Deposit in Interest Bearing Account. <br /> If the <br />contractor elects, the retainage as accumulated shall be deposited by the <br />city in an interest-bearing account in a bank, savings bank, trust company <br />or savings association for the benefit of the city. Earnings on the account <br />shall accrue to the contractor. <br />Article 16 Contract Administration Page 85 <br />Exhibit A to Administrative Order No. 44-08-06-F <br /> <br />