Assembly Bill A10147

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                10147--A
                                                        Cal. No. 762

                          I N  A S S E M B L Y

                              March 5, 2010
                               ___________

Introduced  by M. of A. BRODSKY -- read once and referred to the Commit-
  tee on Corporations, Authorities and Commissions -- passed by Assembly
  and delivered to the Senate, recalled from the Senate, vote  reconsid-
  ered,  bill  amended,  ordered  reprinted,  retaining its place on the
  order of third reading

AN ACT to amend the public authorities law,  in  relation  to  providing
  that  subcontractors on New York city school construction projects who
  file mechanics' liens shall not  be  entitled  to  payment  protection
  through the authority

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 6 of section 1735  of  the  public  authorities
law,  as added by chapter 738 of the laws of 1988, is amended to read as
follows:
  6. The authority shall provide in its construction, erection or alter-
ation contracts which implement a five year educational facilities capi-
tal plan a provision that shall require each contractor to  make  prompt
payment to its subcontractors performing each subdivision of work listed
in  subdivision three of this section. Within seven calendar days of the
receipt of any payment from the authority, the contractor shall  pay  to
each  such  subcontractor  that  portion of the proceeds of such payment
representing the value of the  work  performed  by  such  subcontractor,
based  upon the actual value of the subcontract, which has been approved
and paid for by the authority, less an amount necessary to  satisfy  any
claims, liens or judgments against the subcontractor which have not been
suitably  discharged  and  less any amount retained by the contractor as
provided herein. For such purpose, the subcontract may provide that  the
contractor  may  retain not more than five per centum of each payment to
the subcontractor or not more than ten per centum of each  such  payment
if prior to entering into the subcontract the subcontractor is unable or
unwilling  to  provide,  at the request of the contractor, a performance
bond and a labor and material bond both in the  amount  of  the  subcon-
tract.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD16288-03-0

A. 10147--A                         2

  At  the  time of making a payment to the contractor for work performed
by the subcontractors set forth in subdivision three  of  this  section,
the  authority  shall  file  in  its  office for review a record of such
payment.  If any such subcontractor shall notify the authority  and  the
contractor  in  writing that the contractor has failed to make a payment
to it as provided herein and the  contractor  shall  fail,  within  five
calendar  days  after receipt of such notice, to furnish either proof of
such payment or notice that the amount claimed by the  subcontractor  is
in dispute, the authority shall withhold from amounts then or thereafter
becoming  due  and  payable  to  the contractor, other than from amounts
becoming due and payable to the contractor  representing  the  value  of
work approved by the authority and performed by other subcontractors and
which  the  contractor  is required to pay to such subcontractors within
seven calendar days as herein provided, an amount equal to  ONE  HUNDRED
FIFTY  PERCENT  OF  that portion of the authority's prior payment to the
contractor which the subcontractor claims to be due it, shall remit  the
amount when and so withheld to the subcontractor and deduct such payment
from the amounts then otherwise due and payable to the contractor, which
payment  shall, as between the contractor and the authority, be deemed a
payment by the authority to the contractor. In the event the  contractor
shall  notify  the  authority  as  above  provided that the claim of the
subcontractor is in dispute, the authority shall withhold  from  amounts
then  or  thereafter  becoming  due and payable to the contractor, other
than from amounts becoming due and payable to the contractor  represent-
ing  the  value of work approved by the authority and performed by other
subcontractors and which the contractor  is  required  to  pay  to  such
subcontractors  within seven calendar days as herein provided, an amount
equal to ONE HUNDRED FIFTY PERCENT OF that portion  of  the  authority's
prior payment to the contractor which the subcontractor claims to be due
it  and deposit such amount when and so withheld in a separate interest-
bearing account pending resolution of the dispute,  and  the  amount  so
deposited  together with the interest thereon shall be paid to the party
or parties ultimately determined to be entitled thereto,  or  until  the
contractor and subcontractor shall otherwise agree as to the disposition
thereof.  In  the  event  the  authority  shall  be required to withhold
amounts from a contractor for the benefit of more than  one  subcontrac-
tor, the amounts so withheld shall be applied to or for such subcontrac-
tors  in  the order in which the written notices of nonpayment have been
received by the authority, and if more than one such notice was received
on the same day, proportionately based upon the amount  of  the  subcon-
tractor  claims received on such day.  NOTWITHSTANDING THE FOREGOING, IN
LIEU OF WITHHOLDING SUCH AMOUNT OR AMOUNTS IN  DISPUTE,  THE  CONTRACTOR
MAY  POST  A  BOND  OR OTHER FORM OF UNDERTAKING GUARANTEEING PAYMENT OF
SUCH DISPUTED  AMOUNTS.  Nothing  herein  contained  shall  prevent  the
authority  from  commencing an interpleader action to determine entitle-
ment to a disputed payment in accordance with section one  thousand  six
of the civil practice law and rules, or any successor provision thereto.
IN THE EVENT THE AUTHORITY DOES NOT WITHHOLD THE REQUIRED AMOUNTS WITHIN
SIXTY DAYS AFTER THE WRITTEN NOTIFICATION FROM THE SUBCONTRACTOR REGARD-
ING  FAILURE  OF  THE  CONTRACTOR TO MAKE PAYMENT, THE SUBCONTRACTOR MAY
FILE A LIEN UNDER ARTICLE TWO OF THE LIEN LAW AS THE SOLE REMEDY IN LIEU
OF THE REMEDY PROVIDED UNDER THIS SUBDIVISION.
  Payment to a subcontractor  shall  not  relieve  the  contractor  from
responsibility  for the work covered by the payment. Except as otherwise
provided, nothing contained herein shall create any  obligation  on  the
part  of  the  authority  to  pay  any subcontractor, nor shall anything

A. 10147--A                         3

provided herein serve to create any relationship in contract  or  other-
wise, implied or expressed, between the subcontractor and the authority.
  The  provisions  of  this  subdivision  shall not be applicable to the
subcontractors of a contractor whose contract is limited to the perform-
ance of a single subdivision of work listed in subdivision three of this
section.
  S 2. This act shall take effect immediately, provided however that the
amendments to section 1735 of the public authorities law made by section
one of this act shall not affect  the  expiration  and  repeal  of  such
section and shall be deemed repealed therewith.