Iowa Admin. Code r. 561-8.7

Current through Regsiter Vol. 46, No. 26, June 12, 2024

Rule 561-8.7 - Interest on retained funds

(1)Scope. This rule implements Iowa Code subsection 573.12(3) regarding payment to a contractor of interest earned on retained funds. This rule does not address payment of interest under Iowa Code section 573.14.

(2)General requirements.

a. Interest shall be paid pursuant to Iowa Code section 573.12 only on state contracts awarded on or after June 19, 1991.

b. Interest shall be paid on retained funds of a contract only if the accrued interest on those funds is at least $25. This dollar threshold reflects the cost to the department of processing an interest payment on retained funds in contracts for the construction of public improvements.

c. Interest shall not be paid on retained funds of a contract declared in default.

(3)Procedures.

a. Interest shall begin to accrue on retained funds on the date the first progress payment is issued. An interest rate shall be established on this date in accordance with Iowa Code section 12C.6. This interest rate shall apply for the duration of the contract.

b. In general, interest shall continue to accrue on retained funds until the date final payment is approved by the chief engineer Final payment is payment of retained funds less assessed liquidated damages, if applicable.

c. Notwithstanding paragraph"b, " interest shall cease to accrue on retained funds:

(1) Upon the expiration of 60 days following field acceptance of a project if the contractor has failed to submit to the department the documentation necessary for final payment, as specified in the contract provision.

(2) Upon the court obtaining jurisdiction of the retained funds pursuant to Iowa Code section 573.16. Retained funds turned over to the court will include the interest accrued on those funds to the date the action was filed, if the interest has not been paid to the contractor.

Iowa Admin. Code r. 561-8.7