 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           880
 
                               2021-2022 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 6, 2021
                                       ___________
 
        Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Rules
 
        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  amended by a chapter of the laws of 2020, amending the state finance law
     3  and the general  municipal  law  relating  to  payment  in  construction
     4  contracts,  as  proposed in legislative bills numbers S.7664 and A.9117,
     5  is amended to read as follows:
     6    1. Payment by public owners to contractors. The contractor shall peri-
     7  odically, in accordance with the terms of the contract,  submit  to  the
     8  public  owner  and/or his agent a requisition for a progress payment for
     9  the work performed and/or materials furnished to the date of the  requi-
    10  sition,  less  any  amount previously paid to the contractor. The public
    11  owner shall in accordance with the terms of  the  contract  approve  and
    12  promptly  pay  the  requisition  for the progress payment less an amount
    13  necessary to satisfy any claims, liens or judgments against the contrac-
    14  tor which have not been suitably discharged and less any retained amount
    15  as hereafter described. The public owner shall retain not more than five
    16  per centum of each progress payment to the contractor  except  that  the
    17  public  owner  may retain in excess of five per centum but not more than
    18  ten per centum of each progress payment to the contractor provided  that
    19  there  are  no  requirements  by  the public owner for the contractor to
    20  provide a performance bond and a labor and material  bond  both  in  the
    21  full  amount  of the contract. The public owner shall pay, upon requisi-
    22  tion from the contractor, for materials pertinent to the  project  which
    23  have  been  delivered  to  the site or off-site by the contractor and/or
    24  subcontractor and suitably stored and secured as required by the  public
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07166-01-1

        S. 880                              2
 
     1  owner  and  the  contractor  provided,  the  public owner may limit such
     2  payment to materials in  short  and/or  critical  supply  and  materials
     3  specially  fabricated  for  the project each as defined in the contract.
     4  When  the work or major portions thereof as contemplated by the terms of
     5  the contract [has reached substantial completion which, for the purposes
     6  of this section, shall mean the state in the  progress  of  the  project
     7  when  the  work required by the contract with the public owner is suffi-
     8  ciently complete in accordance with the  contract  so  that  the  public
     9  owner  may  occupy  or  utilize  the work for its intended use; provided
    10  further, that "substantial completion" shall apply to the entire project
    11  or a portion of the entire project if the contract with the public owner
    12  provides for occupancy or use of a portion of the project] are  substan-
    13  tially completed, the contractor shall submit to the public owner and/or
    14  his  agent  a  requisition  for  payment  of the remaining amount of the
    15  contract balance.  Upon receipt of such  requisition  the  public  owner
    16  shall  approve  and  promptly  pay  the remaining amount of the contract
    17  balance less two times the value of any remaining items to be  completed
    18  and  an  amount  necessary  to  satisfy  any  claims, liens or judgments
    19  against the contractor which have not been suitably discharged.  As  the
    20  remaining  items  of work are satisfactorily completed or corrected, the
    21  public owner shall promptly pay, upon  receipt  of  a  requisition,  for
    22  these  remaining  items  less an amount necessary to satisfy any claims,
    23  liens or judgments against the contractor which have not  been  suitably
    24  discharged.  Any claims, liens and judgments referred to in this section
    25  shall pertain to the project and shall be filed in accordance  with  the
    26  terms of the applicable contract and/or applicable laws.
    27    §  2.  Subdivision  1-a  of section 139-f of the state finance law, as
    28  added by a chapter of the laws of 2020, amending the state  finance  law
    29  and  the  general  municipal  law  relating  to  payment in construction
    30  contracts, as proposed in legislative bills numbers S.7664  and  A.9117,
    31  is amended to read as follows:
    32    1-a.  Not  later than forty-five business days after the date when the
    33  project has reached substantial completion, as such term is  defined  in
    34  the  contract or as it is contemplated by the terms of the contract, the
    35  public owner shall submit to the contractor a  written  list  describing
    36  all  remaining  items  to be completed by the contractor. Not later than
    37  [seven calendar] five business  days  after  receiving  a  written  list
    38  describing  all  remaining  items to be completed by the contractor, the
    39  contractor shall submit to each subcontractor from whom  the  contractor
    40  is  withholding retainage a written list of all remaining items required
    41  to be completed by the subcontractor. Such list  may  include  items  in
    42  addition to those items on the public owner's list.
    43    §  3.  Subdivision 1 of section 106-b of the general municipal law, as
    44  amended by a chapter of the laws of 2020, amending the state finance law
    45  and the general  municipal  law  relating  to  payment  in  construction
    46  contracts,  as  proposed in legislative bills numbers S.7664 and A.9117,
    47  is amended to read as follows:
    48    1. Payment by public owners to contractors. (a) The  contractor  shall
    49  periodically,  in  accordance  with the terms of the contract, submit to
    50  the public owner and/or his agent a requisition for a  progress  payment
    51  for  the  work  performed  and/or materials furnished to the date of the
    52  requisition less any amount  previously  paid  to  the  contractor.  The
    53  public  owner shall in accordance with the terms of the contract approve
    54  and promptly pay the requisition for the progress payment less an amount
    55  necessary to satisfy any claims, liens or judgments against the contrac-
    56  tor which have not been suitably discharged and less any retained amount

        S. 880                              3
 
     1  as hereafter described. The public owner shall retain not more than five
     2  per centum of each progress payment to the contractor  except  that  the
     3  public  owner  may retain in excess of five per centum but not more than
     4  ten  per centum of each progress payment to the contractor provided that
     5  there are no requirements by the public  owner  for  the  contractor  to
     6  provide  a  performance  bond  and a labor and material bond both in the
     7  full amount of the contract. The public owner shall pay,  upon  requisi-
     8  tion  from  the contractor, for materials pertinent to the project which
     9  have been delivered to the site or off-site  by  the  contractor  and/or
    10  subcontractor  and suitably stored and secured as required by the public
    11  owner and the contractor provided,  the  public  owner  may  limit  such
    12  payment  to  materials  in  short  and/or  critical supply and materials
    13  specially fabricated for the project each as defined  in  the  contract.
    14  When  the work or major portions thereof as contemplated by the terms of
    15  the contract [has reached substantial completion which, for the purposes
    16  of this section,  shall  mean,  for  public  owners  other  than  school
    17  districts  and  boards of cooperative educational services, the state in
    18  the progress of the project when the work required by the contract  with
    19  the  public  owner  is  sufficiently  complete  in  accordance  with the
    20  contract so that the public owner may occupy or utilize the work for its
    21  intended use and shall mean, for school districts and boards of  cooper-
    22  ative educational services, is the date the partial or final certificate
    23  of  substantial completion of the project which is the date certified by
    24  the architect or engineer when the construction is  code  compliant  and
    25  substantially  complete in accordance with the contract documents so the
    26  school district can occupy or utilize the project or portion thereof for
    27  its intended use] are  substantially  completed,  the  contractor  shall
    28  submit to the public owner and/or his agent a requisition for payment of
    29  the  remaining  amount  of  the contract balance.   Upon receipt of such
    30  requisition the public owner shall approve and promptly pay the  remain-
    31  ing  amount  of  the  contract  balance  less two times the value of any
    32  remaining items to be completed and an amount necessary to  satisfy  any
    33  claims,  liens  or  judgments against the contractor which have not been
    34  suitably discharged. As the remaining items of work  are  satisfactorily
    35  completed  or  corrected,  the  public  owner  shall  promptly pay, upon
    36  receipt of a requisition, for these items less an  amount  necessary  to
    37  satisfy any claims, liens or judgments against the contractor which have
    38  not  been  suitably discharged. Any claims, liens and judgments referred
    39  to in this section shall pertain to the project and shall  be  filed  in
    40  accordance  with  the terms of the applicable contract and/or applicable
    41  laws. Where the public owner is other than the city  of  New  York,  the
    42  term  "promptly  pay"  shall  mean payment within thirty days, excluding
    43  legal holidays, of receipt of the requisition unless such requisition is
    44  not approvable in accordance with the terms of  the  contract.  Notwith-
    45  standing the foregoing, where the public owner is other than the city of
    46  New  York and is a municipal corporation which requires an elected offi-
    47  cial to approve progress payments, "promptly  pay"  shall  mean  payment
    48  within  forty-five  days,  excluding  legal  holidays, of receipt of the
    49  requisition unless such requisition is not approvable in accordance with
    50  the terms of the contract.
    51    (b) Not later than forty-five business days after the  date  when  the
    52  project  has  reached substantial completion, as such term is defined in
    53  the contract or as it is contemplated by the terms of the contract,  the
    54  public  owner  shall  submit to the contractor a written list describing
    55  all remaining items to be completed by the contractor.  Not  later  than
    56  [seven  calendar]  five  business  days  after  receiving a written list

        S. 880                              4
 
     1  describing all remaining items to be completed by  the  contractor,  the
     2  contractor  shall  submit to each subcontractor from whom the contractor
     3  is withholding retainage a written list of all remaining items  required
     4  to  be  completed  by  the subcontractor. Such list may include items in
     5  addition to those items on the public owner's list.
     6    (c) Each public owner other  than  the  city  of  New  York  which  is
     7  required  to make a payment from public funds pursuant to a contract and
     8  which does not make such contract payment by the required  payment  date
     9  shall  make  an  interest payment to the contractor on the amount of the
    10  contract payment which is due  unless  failure  to  make  such  contract
    11  payment  is  the  result  of  a lien, attachment, or other legal process
    12  against the money due said contractor,  or  unless  the  amount  of  the
    13  interest payment as computed in accordance with the provisions set forth
    14  hereinafter  is  less than ten dollars. Interest payments on amounts due
    15  to a contractor pursuant to this paragraph shall be paid to the contrac-
    16  tor for the period beginning on the day after the required payment  date
    17  and  ending on the payment date for those payments required according to
    18  this section and shall be paid at the rate of interest in effect on  the
    19  date  when  the  interest  payment  is  made.  Notwithstanding any other
    20  provision of law to the contrary, interest shall be computed at the rate
    21  equal to the overpayment rate set by the commissioner  of  taxation  and
    22  finance pursuant to subsection (e) of section one thousand ninety-six of
    23  the  tax  law.  A  pro  rata share of such interest shall be paid by the
    24  contractor or subcontractor, as the case may be, to  subcontractors  and
    25  materialmen  in  a  proportion equal to the percentage of their pro rata
    26  share of the contract payment. Such pro rata share of interest shall  be
    27  due to such subcontractors and materialmen only for those payments which
    28  are  not  paid  to such subcontractors and materialmen prior to the date
    29  upon which interest begins to accrue between the public  owner  and  the
    30  contractor.    Such  pro rata shares of interest shall be computed daily
    31  until such payments are made to the subcontractors and materialmen.
    32    (d) For projects of a public owner other than the city of New York, if
    33  state funds directly related to and which have  been  budgeted  for  the
    34  construction  of  the project for which the payment is due have not been
    35  received prior to the expiration of the thirty or forty-five days speci-
    36  fied in paragraph (a) of this subdivision, the interest provided for  in
    37  paragraph  (c) of this subdivision shall not begin to accrue and payment
    38  shall not be due, until ten days after receipt of the state funds. Noth-
    39  ing in this paragraph shall prevent the public owner from approving  the
    40  requisition,  subject  to  receipt of the state funds. State funds shall
    41  mean monies provided to the public owner by  the  state,  its  officers,
    42  boards, departments, commissions, or a public authority and public bene-
    43  fit  corporation, a majority of the members of which have been appointed
    44  by the governor or who serve as members by virtue  of  holding  a  civil
    45  office of the state, or a combination thereof.
    46    §  4.  This  act  shall  take  effect on the same date and in the same
    47  manner as a chapter of the laws of 2020, amending the state finance  law
    48  and  the  general  municipal  law  relating  to  payment in construction
    49  contracts, as proposed in legislative bills numbers S.7664  and  A.9117,
    50  takes effect.
Relates to payment in construction contracts

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