 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7664
 
                    IN SENATE
 
                                    February 4, 2020
                                       ___________
 
        Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Finance
 
        AN ACT to amend the state finance law and the general municipal law,  in
          relation to payment in construction contracts
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Subdivision 1 of section 139-f of the state finance law, as
     2  added by chapter 769 of the laws of 1978, is amended to read as follows:
     3    1. Payment by public owners to contractors. The contractor shall peri-
     4  odically, in accordance with the terms of the contract,  submit  to  the
     5  public  owner  and/or his agent a requisition for a progress payment for
     6  the work performed and/or materials furnished to the date of the  requi-
     7  sition,  less  any  amount previously paid to the contractor. The public
     8  owner shall in accordance with the terms of  the  contract  approve  and
     9  promptly  pay  the  requisition  for the progress payment less an amount
    10  necessary to satisfy any claims, liens or judgments against the contrac-
    11  tor which have not been suitably discharged and less any retained amount
    12  as hereafter described. The public owner shall retain not more than five
    13  per centum of each progress payment to the contractor  except  that  the
    14  public  owner  may retain in excess of five per centum but not more than
    15  ten per centum of each progress payment to the contractor provided  that
    16  there  are  no  requirements  by  the public owner for the contractor to
    17  provide a performance bond and a labor and material  bond  both  in  the
    18  full  amount  of the contract. The public owner shall pay, upon requisi-
    19  tion from the contractor, for materials pertinent to the  project  which
    20  have  been  delivered  to  the site or off-site by the contractor and/or
    21  subcontractor and suitably stored and secured as required by the  public
    22  owner  and  the  contractor  provided,  the  public owner may limit such
    23  payment to materials in  short  and/or  critical  supply  and  materials
    24  specially  fabricated  for  the project each as defined in the contract.
    25  When the work or major portions thereof as contemplated by the terms  of
    26  the  contract  [are  substantially  completed]  has  reached substantial
    27  completion which, for the purposes of this section, shall mean the state
    28  in the progress of the project when the work required  by  the  contract
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00020-02-0

        S. 7664                             2
 
     1  with  the  public  owner is sufficiently complete in accordance with the
     2  contract so that the public owner may occupy or utilize the work for its
     3  intended use; provided  further,  that  "substantial  completion"  shall
     4  apply  to  the  entire project or a portion of the entire project if the
     5  contract with the public owner  provides  for  occupancy  or  use  of  a
     6  portion  of the project, the contractor shall submit to the public owner
     7  and/or his agent a requisition for payment of the  remaining  amount  of
     8  the contract balance.  Upon receipt of such requisition the public owner
     9  shall  approve  and  promptly  pay  the remaining amount of the contract
    10  balance less two times the value of any remaining items to be  completed
    11  and  an  amount  necessary  to  satisfy  any  claims, liens or judgments
    12  against the contractor which have not been suitably discharged.  As  the
    13  remaining  items  of work are satisfactorily completed or corrected, the
    14  public owner shall promptly pay, upon  receipt  of  a  requisition,  for
    15  these  remaining  items  less an amount necessary to satisfy any claims,
    16  liens or judgments against the contractor which have not  been  suitably
    17  discharged.  Any claims, liens and judgments referred to in this section
    18  shall pertain to the project and shall be filed in accordance  with  the
    19  terms of the applicable contract and/or applicable laws.
    20    §  2.  Subdivision  1-a  of  section 139-f of the state finance law is
    21  renumbered subdivision 1-b and a new subdivision 1-a is added to read as
    22  follows:
    23    1-a. Not later than forty-five business days after the date  when  the
    24  project  has  reached  substantial  completion,  the  public owner shall
    25  submit to the contractor a written list describing all  remaining  items
    26  to  be  completed  by the contractor. Not later than seven calendar days
    27  after receiving a written list describing  all  remaining  items  to  be
    28  completed by the contractor, the contractor shall submit to each subcon-
    29  tractor from whom the contractor is withholding retainage a written list
    30  of  all  remaining  items required to be completed by the subcontractor.
    31  Such list may include items in addition to those  items  on  the  public
    32  owner's list.
    33    §  3.  Subdivision 1 of section 106-b of the general municipal law, as
    34  amended by chapter 661 of the laws of 1992, paragraphs (a)  and  (c)  as
    35  amended  by  chapter  98  of  the  laws  of  1995, is amended to read as
    36  follows:
    37    1. Payment by public owners to contractors. (a) The  contractor  shall
    38  periodically,  in  accordance  with the terms of the contract, submit to
    39  the public owner and/or his agent a requisition for a  progress  payment
    40  for  the  work  performed  and/or materials furnished to the date of the
    41  requisition less any amount  previously  paid  to  the  contractor.  The
    42  public  owner shall in accordance with the terms of the contract approve
    43  and promptly pay the requisition for the progress payment less an amount
    44  necessary to satisfy any claims, liens or judgments against the contrac-
    45  tor which have not been suitably discharged and less any retained amount
    46  as hereafter described. The public owner shall retain not more than five
    47  per centum of each progress payment to the contractor  except  that  the
    48  public  owner  may retain in excess of five per centum but not more than
    49  ten per centum of each progress payment to the contractor provided  that
    50  there  are  no  requirements  by  the public owner for the contractor to
    51  provide a performance bond and a labor and material  bond  both  in  the
    52  full  amount  of the contract. The public owner shall pay, upon requisi-
    53  tion from the contractor, for materials pertinent to the  project  which
    54  have  been  delivered  to  the site or off-site by the contractor and/or
    55  subcontractor and suitably stored and secured as required by the  public
    56  owner  and  the  contractor  provided,  the  public owner may limit such

        S. 7664                             3
 
     1  payment to materials in  short  and/or  critical  supply  and  materials
     2  specially  fabricated  for  the project each as defined in the contract.
     3  When the work or major portions thereof as contemplated by the terms  of
     4  the  contract  [are  substantially  completed]  has  reached substantial
     5  completion which, for the purposes of  this  section,  shall  mean,  for
     6  public  owners  other  than  school  districts and boards of cooperative
     7  educational services, the state in the progress of the project when  the
     8  work  required  by  the  contract  with the public owner is sufficiently
     9  complete in accordance with the contract so that the  public  owner  may
    10  occupy  or  utilize  the  work  for its intended use and shall mean, for
    11  school districts and boards of cooperative educational services, is  the
    12  date  the  partial or final certificate of substantial completion of the
    13  project which is the date certified by the architect  or  engineer  when
    14  the construction is code compliant and substantially complete in accord-
    15  ance  with  the  contract documents so the school district can occupy or
    16  utilize the project  or  portion  thereof  for  its  intended  use,  the
    17  contractor  shall submit to the public owner and/or his agent a requisi-
    18  tion for payment of the remaining amount of the contract balance.   Upon
    19  receipt  of such requisition the public owner shall approve and promptly
    20  pay the remaining amount of the contract  balance  less  two  times  the
    21  value  of any remaining items to be completed and an amount necessary to
    22  satisfy any claims, liens or judgments against the contractor which have
    23  not been suitably discharged. As the remaining items of work are  satis-
    24  factorily  completed  or corrected, the public owner shall promptly pay,
    25  upon receipt of a requisition, for these items less an amount  necessary
    26  to  satisfy  any claims, liens or judgments against the contractor which
    27  have not been suitably  discharged.  Any  claims,  liens  and  judgments
    28  referred  to  in  this section shall pertain to the project and shall be
    29  filed in accordance with the terms of  the  applicable  contract  and/or
    30  applicable  laws.  Where  the public owner is other than the city of New
    31  York, the term "promptly pay" shall mean  payment  within  thirty  days,
    32  excluding  legal  holidays,  of  receipt  of the requisition unless such
    33  requisition is not approvable  in  accordance  with  the  terms  of  the
    34  contract. Notwithstanding the foregoing, where the public owner is other
    35  than  the city of New York and is a municipal corporation which requires
    36  an elected official to approve progress payments, "promptly  pay"  shall
    37  mean  payment  within  forty-five  days,  excluding  legal  holidays, of
    38  receipt of the requisition unless such requisition is not approvable  in
    39  accordance with the terms of the contract.
    40    (b)  Not  later  than forty-five business days after the date when the
    41  project has reached  substantial  completion,  the  public  owner  shall
    42  submit  to  the contractor a written list describing all remaining items
    43  to be completed by the contractor. Not later than  seven  calendar  days
    44  after  receiving  a  written  list  describing all remaining items to be
    45  completed by the contractor, the contractor shall submit to each subcon-
    46  tractor from whom the contractor is withholding retainage a written list
    47  of all remaining items required to be completed  by  the  subcontractor.
    48  Such  list  may  include  items in addition to those items on the public
    49  owner's list.
    50    (c) Each public owner other  than  the  city  of  New  York  which  is
    51  required  to make a payment from public funds pursuant to a contract and
    52  which does not make such contract payment by the required  payment  date
    53  shall  make  an  interest payment to the contractor on the amount of the
    54  contract payment which is due  unless  failure  to  make  such  contract
    55  payment  is  the  result  of  a lien, attachment, or other legal process
    56  against the money due said contractor,  or  unless  the  amount  of  the

        S. 7664                             4
 
     1  interest payment as computed in accordance with the provisions set forth
     2  hereinafter  is  less than ten dollars. Interest payments on amounts due
     3  to a contractor pursuant to this paragraph shall be paid to the contrac-
     4  tor  for the period beginning on the day after the required payment date
     5  and ending on the payment date for those payments required according  to
     6  this  section and shall be paid at the rate of interest in effect on the
     7  date when the  interest  payment  is  made.  Notwithstanding  any  other
     8  provision of law to the contrary, interest shall be computed at the rate
     9  equal  to  the  overpayment rate set by the commissioner of taxation and
    10  finance pursuant to subsection (e) of section one thousand ninety-six of
    11  the tax law. A pro rata share of such interest  shall  be  paid  by  the
    12  contractor  or  subcontractor, as the case may be, to subcontractors and
    13  materialmen in a proportion equal to the percentage of  their  pro  rata
    14  share  of the contract payment. Such pro rata share of interest shall be
    15  due to such subcontractors and materialmen only for those payments which
    16  are not paid to such subcontractors and materialmen prior  to  the  date
    17  upon  which  interest  begins to accrue between the public owner and the
    18  contractor.  Such pro rata shares of interest shall  be  computed  daily
    19  until such payments are made to the subcontractors and materialmen.
    20    [(c)]  (d)  For  projects of a public owner other than the city of New
    21  York, if state funds directly related to and which  have  been  budgeted
    22  for  the  construction  of the project for which the payment is due have
    23  not been received prior to the expiration of the  thirty  or  forty-five
    24  days  specified  in  paragraph  (a)  of  this  subdivision, the interest
    25  provided for in paragraph [(b)] (c) of this subdivision shall not  begin
    26  to  accrue and payment shall not be due, until ten days after receipt of
    27  the state funds. Nothing in this  paragraph  shall  prevent  the  public
    28  owner  from  approving  the requisition, subject to receipt of the state
    29  funds. State funds shall mean monies provided to the public owner by the
    30  state, its officers,  boards,  departments,  commissions,  or  a  public
    31  authority  and  public benefit corporation, a majority of the members of
    32  which have been appointed by the governor or who  serve  as  members  by
    33  virtue of holding a civil office of the state, or a combination thereof.
    34    §  4.  This  act  shall  take  effect  immediately  and shall apply to
    35  contracts entered into on and after such effective date.
Relates to payment in construction contracts

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