(A) In addition to the payment to be retained by the city under § 36.03, the city may withhold a sufficient amount of any part payment otherwise due to the contractor to cover:
(1) Payments that may be past due and payable for just claims for labor or materials furnished in and about the performance of the work on the project under the contract;
(2) For defective work not remedied; and
(3) For failure of the contractor to make proper payments to his or her subcontractor.
(B) The city shall disburse and shall have the right to act as agent for the contractor in disbursing such funds as have been withheld pursuant to this section to the parties who are entitled to payment therefrom. The city will render to the contractor a proper accounting of all funds disbursed on behalf of the contractor.
(1980 Code, § 36.04)