AIA California is pleased to share that our sponsored legislation, SB 1205 (Senator Valladares), has continued to advance through the legislative process, most recently passing out of the Senate Governmental Organization and Local Government Committees with strong support. The bill will next be considered by the Senate Appropriations Committee.

SB 1205 addresses long-standing concerns around the application of retention to design services contracts. Retention is a construction-focused risk management tool intended to ensure completion of physical work. However, it has increasingly been applied to professional services in ways that do not align with the nature of design work or how architects and engineers deliver their services.

As introduced, SB 1205 sought to exempt design professionals from retention requirements when in direct contract with a client. While that approach highlighted the core issue, discussions with legislative committee consultants and stakeholders resulted in a revised framework that still represents meaningful progress.

As currently amended, SB 1205:

• Applies a 5% cap on retention for design professionals, aligning with the existing cap applicable to contractors under Public Contract Code 7201; and
• Requires that that retention be returned within 60 days of a design professional completing their contractual obligations, regardless of overall project completion. 

While the amended bill does not fully eliminate retention on design services, it establishes important guardrails to limit excessive withholding and ensures that design professionals are paid in a more timely and predictable manner.

AIA California believes these changes represent a significant step forward. By creating greater consistency and fairness in how retention is applied, SB 1205 helps address a practice that has placed unnecessary financial strain on design professionals particularly small and mid-sized firms.

What’s Next
SB 1205 will next be heard in the Senate Appropriations Committee. AIA California will continue working with legislators, stakeholders, and members as the bill moves through the process.

We are grateful to our members and partners who have helped advance this effort and shared their experiences. Your continued engagement is critical to shaping policies that strengthen the profession and support the delivery of high-quality design services across California.