NY State Senate Bill 2009-S7365

Senate Bill S7365

Signed By Governor

2009-2010 Legislative Session

Relates to the payment protection afforded certain subcontractors on New York city school construction projects

download bill text pdf

Archive: Last Bill Status - Signed by Governor

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Sep 17, 2010	signed chap.523
Sep 07, 2010	delivered to governor
Jun 29, 2010	returned to senate passed assembly ordered to third reading cal.762 substituted for a10147a
Jun 18, 2010	referred to corporations, authorities and commissions delivered to assembly passed senate
Jun 14, 2010	amended on third reading 7365a
Jun 14, 2010	vote reconsidered - restored to third reading substitution reconsidered
May 12, 2010	substituted by a10147
May 11, 2010	advanced to third reading
May 10, 2010	2nd report cal.
May 05, 2010	1st report cal.506
Mar 31, 2010	referred to corporations, authorities and commissions

Votes

- Jun 18, 2010 - Floor Vote
  S7365
  
  58
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  4
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 18, 2010
      
      aye (58)
      
      Adams
      
      Addabbo Jr.
      
      Alesi
      
      Aubertine
      
      Bonacic
      
      Breslin
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Duane
      
      Espada
      
      Farley
      
      Flanagan
      
      Foley
      
      Fuschillo
      
      Griffo
      
      Hannon
      
      Hassell-Thompson
      
      Huntley
      
      Johnson
      
      Johnson
      
      Klein
      
      Krueger
      
      Kruger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Leibell
      
      Libous
      
      Little
      
      Marcellino
      
      Maziarz
      
      McDonald
      
      Montgomery
      
      Nozzolio
      
      Onorato
      
      Padavan
      
      Parker
      
      Peralta
      
      Perkins
      
      Ranzenhofer
      
      Robach
      
      Saland
      
      Sampson
      
      Savino
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Squadron
      
      Stachowski
      
      Stavisky
      
      Stewart-Cousins
      
      Thompson
      
      Valesky
      
      Volker
      
      Winner
      
      Young
      
      excused (4)
      
      Golden
      
      Morahan
      
      Oppenheimer
      
      Schneiderman
  May 5, 2010 - Corporations, Authorities And Commissions Committee Vote
  S7365
  
  3
  
  Aye
  
  1
  
  Nay
  
  1
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Corporations, Authorities And Commissions Committee Vote: May 5, 2010
      
      aye (3)
      
      Perkins
      
      Ranzenhofer
      
      Squadron
      
      nay (1)
      
      Dilan
      
      aye wr (1)
      
      Larkin

Bill Amendments

Original

A (Active)

2009-S7365 - Details

See Assembly Version of this Bill:: A10147
Law Section:: Public Authorities Law
Laws Affected:: Amd §1735, Pub Auth L

2009-S7365 - Summary

Provides that subcontractors on New York City school construction projects who file mechanics' liens shall not be entitled to payment protection through the authority.

2009-S7365 - Sponsor Memo

                                 BILL NUMBER:  S7365

 TITLE OF BILL :
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


 PURPOSE :
To eliminate double withholding of payments to contractors on New York
City School Construction Authority construction contracts.

 SUMMARY OF PROVISIONS :
Amends Section subparagraph 6 of Section 1735 of Public Authorities
Law to clarify situations relative to contractors failure to pay
certain subcontractors on New York City School Construction Authority
Work in that the special payment protections are intended to be used
in lieu of a lien filing and not in addition to such filing.

 JUSTIFICATION :
When the New York City School Construction Authority was created,
special payment protections were granted to the mechanical and
electrical subcontractors in order that the SCA would be free of the
requirements of the wicks Law. One of those protections was to allow
those subcontractors to seek help from the SCA where, it was alleged

that the general contractor had failed to pay the subcontractor
timely.  That help would include the withholding of money due and
owing the general contractor in order that the subcontractor may be
paid directly or for the money to be placed in escrow pending
resolution of a dispute.  In practice, however, some subcontractors
have sought such assistance from the SCA in addition to the filing to
mechanic's liens. Those liens carry with them the obligation on the
part of the owner to withhold 1 1/2 times the amount of lien from
payment to the contractor in addition to the special withholding
called for in Section 1735. This double withholding places a
tremendous financial burden on the contractor, partially where the
matter is in dispute, and would, in fact, cause cash flow problems to
other subcontractors on the project. This legislation would correct
his matter and require the subcontractor to choose between the lien
and the special protections granted in 1735. As these protections are
superior to the filing of a lien, it is likely that the choice will be
for the protections granted herein.

 LEGISLATIVE HISTORY :
S.2725 (2008)

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately.

2009-S7365 - Bill Text download pdf

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

                                  7365

                            I N  S E N A T E

                             March 31, 2010
                               ___________

Introduced  by Sen. SQUADRON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and Commissions

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.
  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

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

                                                           LBD16288-01-0

S. 7365                             2

payment.    [If] IN LIEU OF FILING A LIEN PURSUANT TO ARTICLE TWO OF THE
LIEN LAW, 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 that portion
of the authority's prior payment to the contractor which the subcontrac-
tor claims to be due it, shall remit the amount when and so withheld  to
the  subcontractor  and deduct such payment from the amounts then other-
wise 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 authori-
ty 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 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 calen-
dar days as herein provided, an amount equal  to  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
subcontractor, the amounts so withheld shall be applied to or  for  such
subcontractors  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 subcontractor claims received on such day. Nothing herein  contained
shall  prevent  the  authority from commencing an interpleader action to
determine entitlement to a disputed payment in accordance  with  section
one  thousand  six of the civil practice law and rules, or any successor
provision thereto.
  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
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.

2009-S7365A (ACTIVE) - Details

See Assembly Version of this Bill:: A10147
Law Section:: Public Authorities Law
Laws Affected:: Amd §1735, Pub Auth L

2009-S7365A (ACTIVE) - Summary

Provides that subcontractors on New York City school construction projects who file mechanics' liens shall not be entitled to payment protection through the authority.

2009-S7365A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7365A

TITLE OF BILL:
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

PURPOSE:
To eliminate double withholding of payments to contractors on New York
City School Construction Authority construction contracts.

SUMMARY OF PROVISIONS:
Amends subparagraph 6 of Section 1735 of Public Authorities
Law to clarify situations relative to contractors failure to pay
certain subcontractors on New York City School Construction Authority
Work in that the special payment protections are intended to be used
in lieu of a lien filing and not in addition to such filing.

JUSTIFICATION:
When the New York City School Construction Authority was created,
special payment protections were granted to the mechanical and
electrical subcontractors in order that the SCA would be free of the
requirements of the Wicks Law. One of those protections was to allow
those subcontractors to seek help from the SCA where, it was alleged

that the general contractor had failed to pay the subcontractor timely.
That help would include the withholding of money due and owing the
general contractor in order that the subcontractor may be paid
directly or for the money to be placed in escrow pending resolution
of a dispute.
In practice, however, some subcontractors have sought such assistance
from the SCA in addition to the filing to mechanic's liens. Those
liens carry with them the obligation on the part of the owner to
withhold 1 1/2 times the amount of lien from payment to the
contractor in addition to the special withholding called for in
Section 1735. This double withholding places a tremendous financial
burden on the contractor, partially where the matter is in dispute,
and would, in fact, cause cash flow problems to other subcontractors
on the project. This legislation would correct his matter and require
the subcontractor to choose between the lien and the special
protections granted in 1735. As these protections are superior to the
filing of a lien, it is likely that the choice will be for the
protections granted herein.

LEGISLATIVE HISTORY:
S.2725 (2008)

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

2009-S7365A (ACTIVE) - Bill Text download pdf

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

                                 7365--A
    Cal. No. 506

                            I N  S E N A T E

                             March 31, 2010
                               ___________

Introduced  by Sen. SQUADRON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and  Commissions -- reported favorably from said committee, ordered to
  first and second report, ordered to a third  reading,  substituted  by
  Assembly  Bill No. 10147, substitution reconsidered and vote reconsid-
  ered, restored  to  third  reading,  amended  and  ordered  reprinted,
  retaining its place in 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

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

                                                           LBD16288-02-0

S. 7365--A                          2

bond  and  a  labor  and material bond both in the amount of the subcon-
tract.
  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

S. 7365--A                          3

provided, nothing contained herein shall create any  obligation  on  the
part  of  the  authority  to  pay  any subcontractor, nor shall anything
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.

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