This bill amends existing laws regarding the retention of fees for public improvement contracts in Iowa. It introduces new provisions that require public corporations to pay contractors the full amount of retention funds held or double the amount of a filed claim, whichever is less, once a surety bond is filed by the contractor. Additionally, if a contractor serves a written demand for action on a claim, the claimant must commence legal action within 30 days, or the claim will be barred, triggering the same payment obligation for the public corporation. Interest on unpaid amounts will accrue starting from the 21st day after the public corporation receives the relevant documents.

Furthermore, the bill allows principal contractors to post a retention bond equal to 5% of the original contract price as a substitute for retention funds, requiring public corporations to release any held retention funds within 20 days of receiving the bond. The bill also modifies the attorney fee provisions, mandating that courts award reasonable attorney fees to claimants who prevail on their claims and to principal contractors who win disputes with public corporations related to contracts or retention funds. Notably, it removes certain limitations on the accrual of interest on retained funds and clarifies the conditions under which funds must be released.

Statutes affected:
Introduced: 573.7, 573.14, 573.13, 573.21