S T A T E   O F   N E W   Y O R K
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                                 9868--A

                          I N  A S S E M B L Y

                             April 20, 2016
                               ___________

Introduced by M. of A. CUSICK -- read once and referred to the Committee
  on  Governmental  Operations  --  committee  discharged, bill amended,
  ordered reprinted as amended and recommitted to said committee

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:

  Section 1. Subdivision 1 of section 139-f of the state finance law, as
added by chapter 769 of the laws of 1978, is amended to read as follows:
  1. Payment by public owners to contractors. The contractor shall peri-
odically, in accordance with the terms of the contract,  submit  to  the
public  owner  and/or his agent a requisition for a progress payment for
the work performed and/or materials furnished to the date of the  requi-
sition,  less  any  amount previously paid to the contractor. The public
owner shall in accordance with the terms of  the  contract  approve  and
promptly  pay  the  requisition  for the progress payment less an amount
necessary to satisfy any claims, liens or judgments against the contrac-
tor which have not been suitably discharged and less any retained amount
as hereafter described. The public owner shall retain not more than five
per centum of each progress payment to the contractor  except  that  the
public  owner  may retain in excess of five per centum but not more than
ten per centum of each progress payment to the contractor provided  that
there  are  no  requirements  by  the public owner for the contractor to
provide a performance bond and a labor and material  bond  both  in  the
full  amount  of the contract. The public owner shall pay, upon requisi-
tion from the contractor, for materials pertinent to the  project  which
have  been  delivered  to  the site or off-site by the contractor and/or
subcontractor and suitably stored and secured as required by the  public
owner  and  the  contractor  provided,  the  public owner may limit such
payment to materials in  short  and/or  critical  supply  and  materials
specially  fabricated  for  the project each as defined in the contract.
When the work or major portions thereof as contemplated by the terms  of
the  contract  [are  substantially  completed]  HAS  REACHED SUBSTANTIAL
COMPLETION WHICH, FOR THE PURPOSES OF THIS SECTION, SHALL MEAN THE STATE

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

                                                           LBD13154-03-6

A. 9868--A                          2

IN THE PROGRESS OF THE PROJECT WHEN THE WORK REQUIRED  BY  THE  CONTRACT
WITH  THE  PUBLIC  OWNER IS SUFFICIENTLY COMPLETE IN ACCORDANCE WITH THE
CONTRACT SO THAT THE PUBLIC OWNER MAY OCCUPY OR UTILIZE THE WORK FOR ITS
INTENDED  USE;  PROVIDED  FURTHER,  THAT  "SUBSTANTIAL COMPLETION" SHALL
APPLY TO THE ENTIRE PROJECT OR A PORTION OF THE ENTIRE  PROJECT  IF  THE
CONTRACT  WITH  THE  PUBLIC  OWNER  PROVIDES  FOR  OCCUPANCY OR USE OF A
PORTION OF THE PROJECT, the contractor shall submit to the public  owner
and/or  his  agent  a requisition for payment of the remaining amount of
the contract balance.  Upon receipt of such requisition the public owner
shall approve and promptly pay the  remaining  amount  of  the  contract
balance  less two times the value of any remaining items to be completed
and an amount necessary  to  satisfy  any  claims,  liens  or  judgments
against  the  contractor which have not been suitably discharged. As the
remaining items of work are satisfactorily completed or  corrected,  the
public  owner  shall  promptly  pay,  upon receipt of a requisition, for
these remaining items less an amount necessary to  satisfy  any  claims,
liens  or  judgments against the contractor which have not been suitably
discharged. Any claims, liens and judgments referred to in this  section
shall  pertain  to the project and shall be filed in accordance with the
terms of the applicable contract and/or applicable laws.
  S 2. Subdivision 1-a of section 139-f of  the  state  finance  law  is
renumbered 1-b and a new subdivision 1-a is added to read as follows:
  1-A.  NOT  LATER  THAN  FOURTEEN CALENDAR DAYS AFTER THE DATE WHEN THE
PROJECT HAS REACHED  SUBSTANTIAL  COMPLETION,  THE  PUBLIC  OWNER  SHALL
SUBMIT  TO  THE CONTRACTOR A WRITTEN LIST DESCRIBING ALL REMAINING ITEMS
TO BE COMPLETED BY THE CONTRACTOR. NOT LATER THAN  SEVEN  CALENDAR  DAYS
AFTER  RECEIVING  A  WRITTEN  LIST  DESCRIBING ALL REMAINING ITEMS TO BE
COMPLETED BY THE CONTRACTOR, THE CONTRACTOR SHALL SUBMIT TO EACH SUBCON-
TRACTOR FROM WHOM THE CONTRACTOR IS WITHHOLDING RETAINAGE A WRITTEN LIST
OF ALL REMAINING ITEMS REQUIRED TO BE COMPLETED  BY  THE  SUBCONTRACTOR.
SUCH  LIST  MAY  INCLUDE  ITEMS IN ADDITION TO THOSE ITEMS ON THE PUBLIC
OWNER'S LIST.
  S 3. Subdivision 1 of section 106-b of the general municipal  law,  as
amended  by  chapter  661 of the laws of 1992, paragraphs (a) and (c) as
amended by chapter 98 of the  laws  of  1995,  is  amended  to  read  as
follows:
  1.  Payment  by public owners to contractors. (a) The contractor shall
periodically, in accordance with the terms of the  contract,  submit  to
the  public  owner and/or his agent a requisition for a progress payment
for the work performed and/or materials furnished to  the  date  of  the
requisition  less  any  amount  previously  paid  to the contractor. The
public owner shall in accordance with the terms of the contract  approve
and promptly pay the requisition for the progress payment less an amount
necessary to satisfy any claims, liens or judgments against the contrac-
tor which have not been suitably discharged and less any retained amount
as hereafter described. The public owner shall retain not more than five
per  centum  of  each progress payment to the contractor except that the
public owner may retain in excess of five per centum but not  more  than
ten  per centum of each progress payment to the contractor provided that
there are no requirements by the public  owner  for  the  contractor  to
provide  a  performance  bond  and a labor and material bond both in the
full amount of the contract. The public owner shall pay,  upon  requisi-
tion  from  the contractor, for materials pertinent to the project which
have been delivered to the site or off-site  by  the  contractor  and/or
subcontractor  and suitably stored and secured as required by the public
owner and the contractor provided,  the  public  owner  may  limit  such

A. 9868--A                          3

payment  to  materials  in  short  and/or  critical supply and materials
specially fabricated for the project each as defined  in  the  contract.
When  the work or major portions thereof as contemplated by the terms of
the  contract  [are  substantially  completed]  HAS  REACHED SUBSTANTIAL
COMPLETION WHICH, FOR THE PURPOSES OF  THIS  SECTION,  SHALL  MEAN,  FOR
PUBLIC  OWNERS  OTHER  THAN  SCHOOL  DISTRICTS AND BOARDS OF COOPERATIVE
EDUCATIONAL SERVICES, THE STATE IN THE PROGRESS OF THE PROJECT WHEN  THE
WORK  REQUIRED  BY  THE  CONTRACT  WITH THE PUBLIC OWNER IS SUFFICIENTLY
COMPLETE IN ACCORDANCE WITH THE CONTRACT SO THAT THE  PUBLIC  OWNER  MAY
OCCUPY  OR  UTILIZE  THE  WORK  FOR ITS INTENDED USE AND SHALL MEAN, FOR
SCHOOL DISTRICTS AND BOARDS OF COOPERATIVE EDUCATIONAL SERVICES, IS  THE
DATE  THE  PARTIAL OR FINAL CERTIFICATE OF SUBSTANTIAL COMPLETION OF THE
PROJECT WHICH IS THE DATE CERTIFIED BY THE ARCHITECT  OR  ENGINEER  WHEN
THE CONSTRUCTION IS CODE COMPLIANT AND SUBSTANTIALLY COMPLETE IN ACCORD-
ANCE  WITH  THE  CONTRACT DOCUMENTS SO THE SCHOOL DISTRICT CAN OCCUPY OR
UTILIZE THE PROJECT  OR  PORTION  THEREOF  FOR  ITS  INTENDED  USE,  the
contractor  shall submit to the public owner and/or his agent a requisi-
tion for payment of the remaining amount of the contract balance.   Upon
receipt  of such requisition the public owner shall approve and promptly
pay the remaining amount of the contract  balance  less  two  times  the
value  of any remaining items to be completed and an amount necessary to
satisfy any claims, liens or judgments against the contractor which have
not been suitably discharged. As the remaining items of work are  satis-
factorily  completed  or corrected, the public owner shall promptly pay,
upon receipt of a requisition, for these items less an amount  necessary
to  satisfy  any claims, liens or judgments against the contractor which
have not been suitably  discharged.  Any  claims,  liens  and  judgments
referred  to  in  this section shall pertain to the project and shall be
filed in accordance with the terms of  the  applicable  contract  and/or
applicable  laws.  Where  the public owner is other than the city of New
York, the term "promptly pay" shall mean  payment  within  thirty  days,
excluding  legal  holidays,  of  receipt  of the requisition unless such
requisition is not approvable  in  accordance  with  the  terms  of  the
contract. Notwithstanding the foregoing, where the public owner is other
than  the city of New York and is a municipal corporation which requires
an elected official to approve progress payments, "promptly  pay"  shall
mean  payment  within  forty-five  days,  excluding  legal  holidays, of
receipt of the requisition unless such requisition is not approvable  in
accordance with the terms of the contract.
  (b)  NOT  LATER  THAN  FOURTEEN  CALENDAR DAYS AFTER THE DATE WHEN THE
PROJECT HAS REACHED  SUBSTANTIAL  COMPLETION,  THE  PUBLIC  OWNER  SHALL
SUBMIT  TO  THE CONTRACTOR A WRITTEN LIST DESCRIBING ALL REMAINING ITEMS
TO BE COMPLETED BY THE CONTRACTOR. NOT LATER THAN  SEVEN  CALENDAR  DAYS
AFTER  RECEIVING  A  WRITTEN  LIST  DESCRIBING ALL REMAINING ITEMS TO BE
COMPLETED BY THE CONTRACTOR, THE CONTRACTOR SHALL SUBMIT TO EACH SUBCON-
TRACTOR FROM WHOM THE CONTRACTOR IS WITHHOLDING RETAINAGE A WRITTEN LIST
OF ALL REMAINING ITEMS REQUIRED TO BE COMPLETED  BY  THE  SUBCONTRACTOR.
SUCH  LIST  MAY  INCLUDE  ITEMS IN ADDITION TO THOSE ITEMS ON THE PUBLIC
OWNER'S LIST.
  (C) Each public owner other  than  the  city  of  New  York  which  is
required  to make a payment from public funds pursuant to a contract and
which does not make such contract payment by the required  payment  date
shall  make  an  interest payment to the contractor on the amount of the
contract payment which is due  unless  failure  to  make  such  contract
payment  is  the  result  of  a lien, attachment, or other legal process
against the money due said contractor,  or  unless  the  amount  of  the

A. 9868--A                          4

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