S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6572--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               March 9, 2017
                                ___________
 
 Introduced  by  M.  of  A.  CUSICK,  ZEBROWSKI, HOOPER, COOK, CASTORINA,
   MAGNARELLI, BICHOTTE -- Multi-Sponsored by -- M. of A. MAGEE  --  read
   once  and  referred  to  the  Committee  on Governmental Operations --
   recommitted to the Committee on Governmental Operations in  accordance
   with  Assembly  Rule  3, sec. 2 -- 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08047-03-8

 A. 6572--A                          2
 
 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
 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.
   § 2. Subdivision 1-a of section 139-f of  the  state  finance  law  is
 renumbered subdivision 1-b and a new subdivision 1-a is added to read as
 follows:
   1-A.  NOT  LATER THAN FORTY-FIVE BUSINESS 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.
   § 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

 A. 6572--A                          3
 
 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, 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 FORTY-FIVE BUSINESS 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.

 A. 6572--A                          4
 
   (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
 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.
   §  4.  This  act  shall  take  effect  immediately  and shall apply to
 contracts entered into on and after such effective date.