§ 573.28 — Early release of retained funds

Iowa § 573.28

• Jurisdiction: Iowa
• Title XIV: PROPERTY
• Ch. 573: LABOR AND MATERIAL ON PUBLIC IMPROVEMENTS

Text

1. For purposes of this section:

a. “Authorized contract representative” means the person chosen by the governmental
entity or the department to represent its interests or the person designated in the contract
as the party representing the governmental entity’s or the department’s interest regarding
administration and oversight of the project.
b. “Department” means the state department of transportation.
c. “Governmental entity” means the state, political subdivisions of the state, public school
corporations, and all officers, boards, or commissions empowered by law to enter into
contracts for the construction of public improvements, excluding the state board of regents
and the department.
d. “Public improvement” means a building or construction work which is constructed
under the control of a governmental entity and is paid for in whole or in part with funds
of the governmental entity, including a building or improvement constructed or operated
jointly with any other public or private agency, but excluding urban renewal demolition and
low-rent housing projects, industrial aid projects authorized under chapter 419, emergency
work or repair or maintenance work performed by employees of a governmental entity,
and excluding a highway, bridge, or culvert project, and excluding construction or repair
or maintenance work performed for a city utility under chapter 388 by its employees or
performed for a rural water district under chapter 357A by its employees.
e. “Repair or maintenance work” means the preservation of a building, storm sewer,
sanitary sewer, or other public facility or structure so that it remains in sound or proper
condition, including minor replacements and additions as necessary to restore the public
facility or structure to its original condition with the same design.
f. “Substantially completed” means the first date on which any of the following occurs:
(1) Completion of the public improvement project or the highway, bridge, or culvert
project or when the work on the public improvement or the highway, bridge, or culvert
project has been substantially completed in general accordance with the terms and
provisions of the contract.
(2) The work on the public improvement or on the designated portion is substantially
completed in general accordance with the terms of the contract so that the governmental
entity or the department can occupy or utilize the public improvement or designated portion
of the public improvement for its intended purpose. This subparagraph shall not apply to
highway, bridge, or culvert projects.
(3) The public improvement project or the highway, bridge, or culvert project is certified
as having been substantially completed by either of the following:
(a) The architect or engineer authorized to make such certification.
(b) The authorized contract representative.
(4) The governmental entity or the department is occupying or utilizing the public
improvement for its intended purpose. This subparagraph shall not apply to highway,
bridge, or culvert projects.
2. Payments made by a governmental entity or the department for the construction of
public improvements and highway, bridge, or culvert projects shall be made in accordance
with the provisions of this chapter, except as provided in this section:
a. At any time after all or any part of the work on the public improvement or highway,
bridge, or culvert project is substantially completed, the contractor may request the release
of all or part of the retained funds owed. The request shall be accompanied by a sworn
statementofthecontractorthat, tencalendardayspriortofilingtherequest, noticewasgiven
as required by paragraphs “f” and “g” to all known subcontractors, sub-subcontractors, and
suppliers.
b. Except as provided under paragraph “c”, upon receipt of the request, the governmental
entity or the department shall release all or part of the retained funds. Retained funds that
areapprovedaspayableshallbepaidatthetimeofthenextmonthlypaymentorwithinthirty
days, whichever is sooner. If partial retained funds are released pursuant to a contractor’s
request, no retained funds shall be subsequently held based on that portion of the work. If
within thirty days of when payment becomes due the governmental entity or the department
does not release the retained funds due, interest shall accrue on the amount of retained funds

at the rate of interest that is calculated as the prime rate plus one percent per year as of the
day interest begins to accrue until the amount is paid.
c. If labor and materials are yet to be provided at the time the request for the release
of the retained funds is made, an amount equal to two hundred percent of the value of
the labor or materials yet to be provided, as determined by the governmental entity’s or
the department’s authorized contract representative, may be withheld until such labor or
materials are provided.
d. Anitemizationofthelaborormaterialsyettobeprovided,orthereasonthattherequest
for release of retained funds is denied, shall be provided to the contractor in writing within
thirty calendar days of the receipt of the request for release of retained funds.
e. The contractor shall release retained funds to the subcontractor or subcontractors in
the same manner as retained funds are released to the contractor by the governmental entity
or the department. Each subcontractor shall pass through to each lower-tier subcontractor
all retained fund payments from the contractor.
f. Prior to applying for release of retained funds, the contractor shall send a notice to all
knownsubcontractors, sub-subcontractors, andsuppliersthatprovidedlaborormaterialsfor
the public improvement project or the highway, bridge, or culvert project.
g. The notice shall be substantially similar to the following:
NOTICE OF CONTRACTOR’S REQUEST
FOR EARLY RELEASE OF RETAINED FUNDS
You are hereby notified that [name of contractor] will be
requesting an early release of funds on a public improvement
project or a highway, bridge, or culvert project designated as [name
of project] for which you have or may have provided labor or
materials. The request will be made pursuant to Iowa Code section
573.28. The request may be filed with the [name of governmental
entity or department] after ten calendar days from the date of this
notice. Thepurposeoftherequestistohave[nameofgovernmental
entity or department] release and pay funds for all work that has
been performed and charged to [name of governmental entity or
department] as of the date of this notice. This notice is provided in
accordance with Iowa Code section 573.28.