(

a) In each contract for public works of improvement, entered into on or after January 1, 1996, the public agency shall pay to the prime design professional any progress payment within days of receipt of a written demand for payment in accordance with the contract, and the final retention payment within days of receipt of a written demand for payment in accordance with the contract. If the public agency disputes in good faith any portion of the amount due, it may withhold from the payment an amount not to exceed percent of the disputed amount. The disputed amount withheld is not subject to any penalty authorized by this section. (

b) If any amount is wrongfully withheld or is not timely paid in violation of this section, the prime design professional shall be entitled to a penalty of 1 1 percent for the improperly withheld amount, in lieu of any interest otherwise due, per month for every month that payment is not made. In any action for the collection of amounts withheld in violation of this section, the prevailing party is entitled to his or her reasonable attorney’s fees and costs. (

c) The penalty described in subdivision (

b) is separate from, and in addition to, the design professionals liens provided by

Chapter 3 (commencing with

Section 8300) of Title of Part of Division 4, mechanics liens provided by

Chapter 4 (commencing with

Section 8400) of Title of Part of Division 4, and stop payment notices on public works provided by

Chapter 4 (commencing with

Section 9350) of Title of Part of Division 4. (

d) This

section does not apply to state agency contracts subject to

Section 927.6 of the Government Code. (

e) None of the rights or obligations created by this

section between prime design professionals and public agencies apply to construction loan funds held by a lender pursuant to a construction loan agreement. (

f) For purposes of this section: (1) “Public agency” means the state, any county, any city, any city and county, any district, any public authority, any public agency, any municipal corporation, or other political subdivision or political corporation of the state. (2) “Design professional” means a person licensed as an architect pursuant to

Chapter 3 (commencing with

Section 5500) of Division of the Business and Professions Code, registered as a professional engineer pursuant to

Chapter 7 (commencing with

Section 6700) of Division of the Business and Professions Code, or licensed as a land surveyor pursuant to

Chapter 15 (commencing with

Section 8700) of Division of the Business and Professions Code. (3) “Prime design professional” means a design professional with a written contract directly with the public agency.