H.F. _____ Section 1. Section 26.3, subsection 3, Code 2017, is amended 1 to read as follows: 2 3. Sections 26.4 through 26.13 26.12 and section 573.28 3 apply to all competitive bidding pursuant to this section . 4 Sec. 2. Section 314.1, subsection 2, Code 2017, is amended 5 to read as follows: 6 2. Notwithstanding any other provision of law to the 7 contrary, a public improvement that involves the construction, 8 reconstruction, or improvement of a highway, bridge, or culvert 9 and that has a cost in excess of the applicable threshold in 10 section 73A.18 , 262.34 , 297.7 , 309.40 , 310.14 , or 313.10 , as 11 modified by the bid threshold subcommittee pursuant to section 12 314.1B , shall be advertised and let for bid, except such public 13 improvements that involve emergency work pursuant to section 14 309.40A , 313.10 , or 384.103, subsection 2 . For a city having 15 a population of fifty thousand or less, a public improvement 16 that involves the construction, reconstruction, or improvement 17 of a highway, bridge, or culvert that has a cost in excess of 18 twenty-five thousand dollars, as modified by the bid threshold 19 subcommittee pursuant to section 314.1B , shall be advertised 20 and let for bid, excluding emergency work. However, a public 21 improvement that has an estimated total cost to a city in 22 excess of a threshold of fifty thousand dollars, as modified by 23 the bid threshold subcommittee pursuant to section 314.1B , and 24 that involves the construction, reconstruction, or improvement 25 of a highway, bridge, or culvert that is under the jurisdiction 26 of a city with a population of more than fifty thousand, 27 shall be advertised and let for bid. Cities required to 28 competitively bid highway, bridge, or culvert work shall do so 29 in compliance with the contract letting procedures of sections 30 26.3 through 26.13 26.12 and section 573.28 . 31 Sec. 3. Section 572.7, Code 2017, is amended to read as 32 follows: 33 572.7 In case of internal improvement. 34 When the lien is for material furnished or labor performed in 35 -1- LSB 1709YC (2) 87 jh/rh 1/ 12

H.F. _____ the construction, repair, or equipment of any railroad, canal, 1 viaduct, or other similar improvement, said the lien shall 2 attach to the erections, excavations, embankments, bridges, 3 roadbeds, rolling stock, and other equipment and to all land 4 upon which such improvements or property may be situated, 5 except including the easement or right-of-way. 6 Sec. 4. Section 572.10, Code 2017, is amended to read as 7 follows: 8 572.10 Perfecting lien after lapse of ninety days. 9 A general contractor or a subcontractor may perfect a 10 mechanic’s lien pursuant to section 572.8 beyond ninety days 11 after the date on which the last of the material was furnished 12 or the last of the labor was performed by posting a lien to the 13 mechanics’ notice and lien registry internet site and giving 14 written notice thereof to the owner. Such notice may be served 15 by any person in the manner original notices are required to be 16 served. If the party to be served is out of the county wherein 17 the property is situated, a return of that fact by the person 18 charged with making such service shall constitute sufficient 19 service from and after the time it was posted to the mechanics’ 20 notice and lien registry internet site. 21 Sec. 5. Section 572.25, Code 2017, is amended to read as 22 follows: 23 572.25 Place of bringing action. 24 An A court or arbitration action to enforce a mechanic’s 25 lien shall be brought in the county in which the property to be 26 affected, or some part thereof, is situated. 27 Sec. 6. Section 572.26, Code 2017, is amended to read as 28 follows: 29 572.26 Kinds of action —— amendment. 30 1. An action to enforce a mechanic’s lien shall be by 31 equitable proceedings, and no other cause of action shall be 32 joined therewith. 33 2. a. Any A lien statement may shall not be amended except 34 by leave of court in furtherance of justice , except as to the 35 -2- LSB 1709YC (2) 87 jh/rh 2/ 12

H.F. _____ amount demanded or to decrease the amount demanded . 1 b. A lien statement amended without leave of court to 2 decrease the amount demanded shall be effected through the 3 mechanics’ notice and lien registry. 4 c. A lien statement amended pursuant to this section shall 5 not affect the priority of the lien statement. 6 Sec. 7. Section 572.28, subsection 1, Code 2017, is amended 7 to read as follows: 8 1. Upon the written demand of the owner or general 9 contractor served on the claimant requiring the claimant to 10 commence action to enforce the lien, such action shall be 11 commenced within thirty days thereafter, or the lien and all 12 benefits derived therefrom shall be forfeited. 13 Sec. 8. Section 572.32, Code 2017, is amended to read as 14 follows: 15 572.32 Attorney fees —— remedies. 16 1. In a court action to enforce a mechanic’s lien, a the 17 court may award the prevailing plaintiff may be awarded party 18 reasonable attorney fees to be taxed as part of the costs in 19 the case . 20 2. In a court action to challenge a mechanic’s lien 21 posted on a residential construction property, if the person 22 challenging the lien prevails, the court may award the 23 prevailing party reasonable attorney fees and actual damages 24 to be taxed as part of the costs in the case . If the court 25 determines that the mechanic’s lien was posted in bad faith or 26 the supporting affidavit was materially false, the court shall 27 award the owner person challenging the lien reasonable attorney 28 fees plus an amount not less than five hundred dollars or the 29 amount of the lien, whichever is less. 30 Sec. 9. Section 573.2, unnumbered paragraph 2, Code 2017, 31 is amended to read as follows: 32 If the requirement for a bond is waived pursuant to section 33 12.44 , a person, firm, or corporation, having a contract with 34 the targeted small business or with subcontractors of the 35 -3- LSB 1709YC (2) 87 jh/rh 3/ 12

H.F. _____ targeted small business, for labor performed or materials 1 furnished, in the performance of the contract on account of 2 which the bond was waived, is entitled to any remedy provided 3 under this chapter . When a bond has been waived pursuant to 4 section 12.44 , or if the public corporation fails to procure 5 a bond, the remedies provided for under this paragraph are 6 available in an action against the public corporation. 7 Sec. 10. Section 573.15, Code 2017, is amended by striking 8 the section and inserting in lieu thereof the following: 9 573.15 Exception. 10 A person, firm, or corporation that has performed labor 11 or furnished materials, service, or transportation to a 12 subcontractor shall not be entitled to a claim against the 13 retainage or bond under this chapter unless the person, 14 firm, or corporation that performed the labor or furnished 15 the materials, service, or transportation does all of the 16 following: 17 1. Notifies the principal contractor in writing with a 18 one-time notice containing the name, mailing address, and 19 telephone number of the person, firm, or corporation that 20 performed the labor or furnished the materials, service, 21 or transportation, and the name of the subcontractor for 22 whom the labor was performed or the materials, service, or 23 transportation were furnished, within thirty days of first 24 performing the labor or furnishing the materials, service, or 25 transportation for which a claim may be made. Additional labor 26 performed or materials, service, or transportation furnished by 27 the same person, firm, or corporation to the same subcontractor 28 for use in the same construction project shall be covered by 29 this notice. 30 2. Supports the claim with a certified statement that 31 the principal contractor received the notice described in 32 subsection 1. 33 Sec. 11. Section 573.16, unnumbered paragraph 2, Code 2017, 34 is amended to read as follows: 35 -4- LSB 1709YC (2) 87 jh/rh 4/ 12

H.F. _____ Upon written demand of the public corporation, principal 1 contractor , or surety on any bond given for the performance 2 of the contract served, in the manner prescribed for original 3 notices, on the person filing a claim, requiring the claimant 4 to commence action in court to enforce the claim, an action 5 shall be commenced within thirty days, otherwise the retained 6 and unpaid funds due the principal contractor shall be 7 released. Unpaid funds shall be paid to the principal 8 contractor within twenty days of the receipt by the public 9 corporation of the release as determined pursuant to this 10 section . Failure to make payment by that date shall cause 11 interest to accrue on the unpaid amount. Interest shall accrue 12 during the period commencing the twenty-first day after the 13 date of release and ending on the date of the payment. The 14 rate of interest shall be determined pursuant to section 15 573.14 . After an action is commenced, upon the general 16 Upon the surety on any bond given for the performance of 17 the contract consenting, in writing, to the release of the 18 principal contractor of the unpaid funds, or upon the principal 19 contractor filing with the public corporation or person 20 withholding the funds, a surety bond in double the amount of 21 the claim in controversy, conditioned to pay upon the payment 22 of any final judgment rendered for the claims so filed, the 23 public corporation or person shall pay to the contractor the 24 amount of funds withheld. 25 Sec. 12. Section 573.21, Code 2017, is amended to read as 26 follows: 27 573.21 Attorney fees. 28 The court or arbitrator may tax, as part of the costs in the 29 case , a reasonable attorney fee fees in favor of the prevailing 30 party in any claimant for labor or materials who has, in whole 31 or in part, established court or arbitration action brought to 32 enforce a claim filed pursuant to section 573.7 . 33 Sec. 13. NEW SECTION . 573.28 Early release of retained 34 funds. 35 -5- LSB 1709YC (2) 87 jh/rh 5/ 12

H.F. _____ 1. For purposes of this section: 1 a. “Authorized contract representative” means the person 2 chosen by the governmental entity or the department to 3 represent its interests or the person designated in the 4 contract as the party representing the governmental entity’s 5 or the department’s interest regarding administration and 6 oversight of the project. 7 b. “Department” means the state department of 8 transportation. 9 c. “Governmental entity” means the state, political 10 subdivisions of the state, public school corporations, and all 11 officers, boards, or commissions empowered by law to enter 12 into contracts for the construction of public improvements, 13 excluding the state board of regents and the department. 14 d. “Public improvement” means a building or construction 15 work which is constructed under the control of a governmental 16 entity and is paid for in whole or in part with funds of the 17 governmental entity, including a building or improvement 18 constructed or operated jointly with any other public or 19 private agency, but excluding urban renewal demolition and 20 low-rent housing projects, industrial aid projects authorized 21 under chapter 419, emergency work or repair or maintenance 22 work performed by employees of a governmental entity, and 23 excluding a highway, bridge, or culvert project, and excluding 24 construction or repair or maintenance work performed for a city 25 utility under chapter 388 by its employees or performed for a 26 rural water district under chapter 357A by its employees. 27 e. “Repair or maintenance work” means the preservation of a 28 building, storm sewer, sanitary sewer, or other public facility 29 or structure so that it remains in sound or proper condition, 30 including minor replacements and additions as necessary to 31 restore the public facility or structure to its original 32 condition with the same design. 33 f. “Substantially completed” means the first date on which 34 any of the following occurs: 35 -6- LSB 1709YC (2) 87 jh/rh 6/ 12

H.F. _____ (1) Completion of the public improvement project or the 1 highway, bridge, or culvert project or when the work on the 2 public improvement or the highway, bridge, or culvert project 3 has been substantially completed in general accordance with the 4 terms and provisions of the contract. 5 (2) The work on the public improvement or on the designated 6 portion is substantially completed in general accordance with 7 the terms of the contract so that the governmental entity or 8 the department can occupy or utilize the public improvement or 9 designated portion of the public improvement for its intended 10 purpose. This subparagraph shall not apply to highway, bridge, 11 or culvert projects. 12 (3) The public improvement project or the highway, bridge, 13 or culvert project is certified as having been substantially 14 completed by either of the following: 15 (a) The architect or engineer authorized to make such 16 certification. 17 (b) The authorized contract representative. 18 (4) The governmental entity or the department is occupying 19 or utilizing the public improvement for its intended purpose. 20 This subparagraph shall not apply to highway, bridge, or 21 culvert projects. 22 2. Payments made by a governmental entity or the department 23 for the construction of public improvements and highway, 24 bridge, or culvert projects shall be made in accordance with 25 the provisions of this chapter, except as provided in this 26 section: 27 a. At any time after all or any part of the work on the 28 public improvement or highway, bridge, or culvert project is 29 substantially completed, the contractor may request the release 30 of all or part of the retained funds owed. The request shall be 31 accompanied by a sworn statement of the contractor that, ten 32 calendar days prior to filing the request, notice was given as 33 required by paragraphs “f” and “g” to all known subcontractors, 34 sub-subcontractors, and suppliers. 35 -7- LSB 1709YC (2) 87 jh/rh 7/ 12

H.F. _____ b. Except as provided under paragraph “c” , upon receipt of 1 the request, the governmental entity or the department shall 2 release all or part of the retained funds. Retained funds that 3 are approved as payable shall be paid at the time of the next 4 monthly payment or within thirty days, whichever is sooner. If 5 partial retained funds are released pursuant to a contractor’s 6 request, no retained funds shall be subsequently held based 7 on that portion of the work. If within thirty days of when 8 payment becomes due the governmental entity or the department 9 does not release the retained funds due, interest shall accrue 10 on the amount of retained funds at the rate of interest that is 11 calculated as the prime rate plus one percent per year as of 12 the day interest begins to accrue until the amount is paid. 13 c. If labor and materials are yet to be provided at the 14 time the request for the release of the retained funds is made, 15 an amount equal to two hundred percent of the value of the 16 labor or materials yet to be provided, as determined by the 17 governmental entity’s or the department’s authorized contract 18 representative, may be withheld until such labor or materials 19 are provided. 20 d. An itemization of the labor or materials yet to be 21 provided, or the reason that the request for release of 22 retained funds is denied, shall be provided to the contractor 23 in writing within thirty calendar days of the receipt of the 24 request for release of retained funds. 25 e. The contractor shall release retained funds to the 26 subcontractor or subcontractors in the same manner as retained 27 funds are released to the contractor by the governmental entity 28 or the department. Each subcontractor shall pass through to 29 each lower-tier subcontractor all retained fund payments from 30 the contractor. 31 f. Prior to applying for release of retained funds, the 32 contractor shall send a notice to all known subcontractors, 33 sub-subcontractors, and suppliers that provided labor or 34 materials for the public improvement project or the highway, 35 -8- LSB 1709YC (2) 87 jh/rh 8/ 12

H.F. _____ bridge, or culvert project. 1 g. The notice shall be substantially similar to the 2 following: 3 NOTICE OF CONTRACTOR’S REQUEST 4 FOR EARLY RELEASE OF RETAINED FUNDS 5 You are hereby notified that [name of contractor] will be 6 requesting an early release of funds on a public improvement 7 project or a highway, bridge, or culvert project designated as 8 [name of project] for which you have or may have provided labor 9 or materials. The request will be made pursuant to Iowa Code 10 section 573.28. The request may be filed with the [name of 11 governmental entity or department] after ten calendar days from 12 the date of this notice. The purpose of the request is to have 13 [name of governmental entity or department] release and pay 14 funds for all work that has been performed and charged to [name 15 of governmental entity or department] as of the date of this 16 notice. This notice is provided in accordance with Iowa Code 17 section 573.28. 18 Sec. 14. REPEAL. Section 26.13, Code 2017, is repealed. 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 This bill relates to mechanics’ liens and public 23 construction liens. 24 MECHANIC’S LIENS. Under current law, when a mechanic’s 25 lien is for material furnished or labor performed in the 26 construction, repair, or equipment of any railroad, canal, 27 viaduct, or other similar improvement, the lien does not attach 28 to an easement or right-of-way. The bill provides that such a 29 mechanic’s lien does attach to an easement or right-of-way. 30 Under Code section 572.8, a person shall perfect a 31 mechanic’s lien by posting to the mechanics’ notice and lien 32 registry internet site a verified statement of account of 33 the demand due the person setting forth certain specified 34 information. Currently, if a general contractor or a 35 -9- LSB 1709YC (2) 87 jh/rh 9/ 12

H.F. _____ subcontractor has not posted the mechanic’s lien to the 1 registry within 90 days after the date on which the last 2 of the material was furnished or the last of the labor was 3 performed, the general contractor or subcontractor must post 4 the mechanic’s lien on the registry and serve the owner with 5 notice of the posting to perfect the lien. The bill provides 6 that only a subcontractor must post the mechanic’s lien and 7 serve the owner to perfect the mechanic’s lien. 8 Under current law, a court action to enforce a mechanic’s 9 lien must be brought in the county in which the property to be 10 affected is situated. The bill provides that same rule applies 11 to arbitration actions. 12 Under current law, a lien statement may only be amended by 13 leave of court in furtherance of justice or as to the amount 14 demanded. The bill provides that a lien statement may only be 15 amended by leave of court in further of justice or to decrease 16 the amount demanded. An amendment to decrease the amount 17 demanded must be accomplished through the mechanics’ notice 18 and lien registry. The bill provides that amending a lien 19 statement by leave of court in furtherance of justice or to 20 decrease the amount demanded does not affect the priority of 21 the lien statement. 22 Under current law, the owner of property subject to a 23 mechanic’s lien may serve written demand on the claimant 24 requiring the claimant to commence action to enforce the lien 25 within 30 days of the notice. If the claimant fails to do so, 26 the lien and all benefits derived therefrom are forfeited. 27 The bill provides that, in addition to an owner, a general 28 contractor may make such a demand. 29 Under current law, in a court action to enforce a mechanic’s 30 lien, the court may award a prevailing plaintiff reasonable 31 attorney fees. The bill provides that the court may award 32 attorney fees to any prevailing party in an action to enforce 33 a mechanic’s lien. 34 Under current law, in a court action to challenge a 35 -10- LSB 1709YC (2) 87 jh/rh 10/ 12

H.F. _____ mechanic’s lien posted on a residential construction property, 1 the court may award reasonable attorney fees and actual damages 2 to the person challenging the lien if such person prevails. 3 The bill provides that the court may award reasonable attorney 4 fees to the prevailing party in an action to challenge a 5 mechanic’s lien posted on a residential construction property. 6 PUBLIC CONSTRUCTION LIENS. Under Code chapter 573 (labor 7 and material on public improvements), and subject to certain 8 exceptions, contracts for construction of public improvements 9 must be accompanied by a bond if the contract price equals 10 or exceeds $25,000. The bill provides that if the public 11 corporation fails to procure a bond, the public corporation is 12 liable to claimants for the contractor’s nonpayment. 13 Current Code section 573.15 provides an exception to the 14 requirement that a public corporation retain a portion of funds 15 due a contractor on a public improvement project in a fund 16 for the payment of claims for materials furnished and labor 17 performed. The exception provides that a public corporation 18 need only retain funds due a supplier of material to a general 19 contractor if the supplier provides the general contractor 20 with one of two permitted types of notice after the materials 21 are supplied. The bill provides that, in addition to claims 22 for materials, the exception shall apply to claims for labor, 23 service, or transportation. The bill also amends the notice 24 requirement to provide that a supplier of labor, materials, 25 service, or transportation to a general contractor must give 26 only one type of notice, along with a certified statement that 27 such notice was given. 28 Current Code section 573.16 provides that even if a claimant 29 has commenced an action for payment of funds, the public 30 corporation shall release the unpaid funds to the contractor if 31 the contractor files a surety bond in double the amount of the 32 claim in controversy, conditioned upon the payment of any final 33 judgment rendered for the claims. The bill provides that the 34 unpaid funds shall also be released to the contractor if the 35 -11- LSB 1709YC (2) 87 jh/rh 11/ 12

H.F. _____ surety on any bond given for the performance of the contract 1 gives written consent to the release of the unpaid funds. 2 Current Code section 573.21 provides that if a claimant 3 establishes a claim for labor or materials under Code chapter 4 573, the court may tax reasonable attorney fees in favor of the 5 claimant. The bill provides that a court or arbitrator may tax 6 reasonable attorney fees in favor of any prevailing party in 7 a court or arbitrarian action brought for labor or materials 8 under Code chapter 573. 9 The bill repeals Code section 26.13 (public construction 10 bidding —— early release of retained funds) and creates new 11 Code section 573.28 with the same language except for corrected 12 internal references. 13 -12- LSB 1709YC (2) 87 jh/rh 12/ 12