S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5238--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              March 16, 2017
                                ___________
 
 Introduced  by Sens. DeFRANCISCO, YOUNG -- read twice and ordered print-
   ed, and when printed to be committed to the Committee  on  Finance  --
   recommitted to the Committee on Finance in accordance with Senate Rule
   6,  sec. 8 -- 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 release of subcontractor's retainage
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 2 of section 139-f of the state finance law, as
 amended by section 16 of part MM of chapter 57 of the laws of  2008,  is
 amended to read as follows:
   2.  Payment  by  contractors  to subcontractors. Within seven calendar
 days of the receipt of any payment from the public owner, the contractor
 shall pay each of his subcontractors and materialmen the  proceeds  from
 the  payment representing the value of the work performed and/or materi-
 als furnished by the subcontractor and/or materialman and reflecting the
 percentage of the subcontractor's work completed  or  the  materialman's
 material  supplied  in  the  requisition approved by the owner and based
 upon the actual value of the  subcontract  or  purchase  order  less  an
 amount  necessary  to satisfy any claims, liens or judgments against the
 subcontractor or materialman which have not been suitably discharged and
 less any retained amount as hereafter described. Failure by the contrac-
 tor to pay any subcontractor or materialman within seven  calendar  days
 of  the receipt of any payment from the public owner shall result in the
 commencement and accrual of interest on amounts due to such  subcontrac-
 tor  or  materialman  for  the  period  beginning on the day immediately
 following the expiration of such seven calendar day period and ending on
 the date on which payment is made by the contractor to such  subcontrac-
 tor or materialman. Such interest payment shall be the sole responsibil-
 ity  of  the  contractor,  and  shall be paid at the rate of interest in
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00257-03-7

 S. 5238--A                          2
 
 effect on the date payment is made by the contractor.    Notwithstanding
 any  other  provision of law to the contrary, interest shall be computed
 at the rate established in paragraph (b) of subdivision one  of  section
 seven  hundred  fifty-six-b  of the general business law. The contractor
 shall retain not more than five  per  centum  of  each  payment  to  the
 subcontractor  and/or  materialman except that the contractor may retain
 in excess of five per centum but not more than ten per  centum  of  each
 payment  to  the  subcontractor  provided  that prior to entering into a
 subcontract with the contractor, the subcontractor is unable or  unwill-
 ing to provide a performance bond and a labor and material bond, both in
 the  full  amount  of the subcontract, at the request of the contractor.
 However, the contractor shall retain nothing from those payments repres-
 enting proceeds owed  the  subcontractor  and/or  materialman  from  the
 public  owner's  payments to the contractor for the remaining amounts of
 the contract balance as provided in subdivision one of this section.  If
 the  contractor  has  failed  to submit a requisition for payment of the
 remaining amounts of the contract balance within ninety days of substan-
 tial completion as provided in subdivision one of this section, then any
 clause in the subcontract between the contractor and  the  subcontractor
 or  materialman  which  states  that  payment  by the contractor to such
 subcontractor or materialman is contingent upon payment by the owner  to
 the  contractor  shall  be deemed invalid. Within seven calendar days of
 the receipt of payment from the  contractor,  the  subcontractor  and/or
 materialman  shall pay each of his subcontractors and materialmen in the
 same manner as the contractor  has  paid  the  subcontractor,  including
 interest  as herein provided above. Nothing provided herein shall create
 any obligation on the part of the public owner to pay or to see  to  the
 payment  of  any  moneys  to  any  subcontractor or materialman from any
 contractor nor shall  anything  provided  herein  serve  to  create  any
 relationship in contract or otherwise, implied or expressed, between the
 subcontractor  or materialman and the public owner.  NOTWITHSTANDING ANY
 OTHER PROVISION OF THIS SECTION OR OTHER LAW, ANY RETAINAGE  HELD  BY  A
 PUBLIC  OWNER OR CONTRACTOR REPRESENTING RETAINAGE FOR A SUBCONTRACTOR'S
 WORK SHALL BE RELEASED, LESS TWO TIMES THE VALUE OF ANY REMAINING  ITEMS
 TO  BE COMPLETED BY THE SUBCONTRACTOR AND AN AMOUNT NECESSARY TO SATISFY
 ANY CLAIMS, LIENS OR JUDGMENTS AGAINST THE SUBCONTRACTOR OR  MATERIALMAN
 WHICH  HAVE  NOT  BEEN SUITABLY DISCHARGED NO LATER THAN SIXTY DAYS FROM
 THE COMPLETION AND ACCEPTANCE BY THE PUBLIC OWNER OF THE SUBCONTRACTOR'S
 WORK.
   § 2. Subdivision 2 of section 106-b of the general municipal  law,  as
 amended  by  section 15 of part MM of chapter 57 of the laws of 2008, is
 amended to read as follows:
   2. Payment by contractors to  subcontractors.  Within  seven  calendar
 days of the receipt of any payment from the public owner, the contractor
 shall  pay  each of his subcontractors and materialmen the proceeds from
 the payment representing the value of the work performed and/or  materi-
 als furnished by the subcontractor and/or materialman and reflecting the
 percentage  of  the  subcontractor's work completed or the materialman's
 material supplied in the requisition approved by  the  owner  and  based
 upon  the  actual  value  of  the  subcontract or purchase order less an
 amount necessary to satisfy any claims, liens or judgments  against  the
 subcontractor or materialman which have not been suitably discharged and
 less any retained amount as hereafter described. Failure by the contrac-
 tor to make any payment, including any remaining amounts of the contract
 balance  as  hereinafter  described, to any subcontractor or materialman
 within seven calendar days of the receipt of any payment from the public

 S. 5238--A                          3
 
 owner shall result in  the  commencement  and  accrual  of  interest  on
 amounts  due  to such subcontractor or materialman for the period begin-
 ning on the day immediately  following  the  expiration  of  such  seven
 calendar  day  period and ending on the date on which payment is made by
 the contractor to such subcontractor or materialman. Such interest shall
 be the sole responsibility of the contractor, and shall be paid  at  the
 rate  of  interest in effect on the date payment is made by the contrac-
 tor. Notwithstanding any other provision of law to the contrary,  inter-
 est shall be computed at the rate established in paragraph (b) of subdi-
 vision  one of section seven hundred fifty-six-b of the general business
 law. The contractor shall retain not more than five per centum  of  each
 payment to the subcontractor and/or materialman except that the contrac-
 tor  may  retain  in excess of five per centum but not more than ten per
 centum of each payment to  the  subcontractor  provided  that  prior  to
 entering  into  a  subcontract with the contractor, the subcontractor is
 unable or unwilling to provide a performance bond and a labor and  mate-
 rial  bond  both in the full amount of the subcontract at the request of
 the contractor. However, the contractor shall retain nothing from  those
 payments representing proceeds owed the subcontractor and/or materialman
 from  the  public  owner's  payments to the contractor for the remaining
 amounts of the contract balance as provided in subdivision one  of  this
 section.  If  the  contractor  has  failed  to  submit a requisition for
 payment of the remaining amounts of the contract balance  within  ninety
 days  of  substantial  completion as provided in subdivision one of this
 section, then any clause in the subcontract between the  contractor  and
 the  subcontractor  or  materialman  which  states  that  payment by the
 contractor to such  subcontractor  or  materialman  is  contingent  upon
 payment  by  the owner to the contractor shall be deemed invalid. Within
 seven calendar days of the receipt of payment from the  contractor,  the
 subcontractor  and/or  materialman  shall pay each of his subcontractors
 and materialmen in the same  manner  as  the  contractor  has  paid  the
 subcontractor,  including  interest  as herein provided above.   Nothing
 provided herein shall create any obligation on the part  of  the  public
 owner to pay or to see to the payment of any moneys to any subcontractor
 or  materialman  from  any contractor nor shall anything provided herein
 serve to create any relationship in contract or  otherwise,  implied  or
 expressed,  between  the  subcontractor  or  materialman  and the public
 owner.  NOTWITHSTANDING ANY OTHER PROVISION OF  THIS  SECTION  OR  OTHER
 LAW,  ANY  RETAINAGE  HELD  BY A PUBLIC OWNER OR CONTRACTOR REPRESENTING
 RETAINAGE FOR A SUBCONTRACTOR'S WORK SHALL BE RELEASED, LESS  TWO  TIMES
 THE  VALUE  OF  ANY REMAINING ITEMS TO BE COMPLETED BY THE SUBCONTRACTOR
 AND AN AMOUNT NECESSARY  TO  SATISFY  ANY  CLAIMS,  LIENS  OR  JUDGMENTS
 AGAINST  THE  SUBCONTRACTOR  OR MATERIALMAN WHICH HAVE NOT BEEN SUITABLY
 DISCHARGED NO LATER THAN SIXTY DAYS FROM THE COMPLETION  AND  ACCEPTANCE
 BY THE PUBLIC OWNER OF THE SUBCONTRACTOR'S WORK.
   §  3.  This  act  shall take effect immediately and shall apply to all
 contracts entered into on or after such effective date.