S T A T E   O F   N E W   Y O R K
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                                 6315--A
    Cal. No. 810

                            I N  S E N A T E

                               (PREFILED)

                             January 6, 2016
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
  when printed to be committed to the Committee on Finance  --  reported
  favorably  from  said  committee,  ordered to first and second report,
  ordered to a third reading, amended and ordered  reprinted,  retaining
  its place in the order of third reading

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.

              

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13154-02-6

S. 6315--A                          2

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
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

S. 6315--A                          3

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, 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

S. 6315--A                          4

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
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.