S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2394
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2019
                                ___________
 
 Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Finance
 
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00020-01-9

 S. 2394                             2
 
 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
 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. 2394                             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 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.
   (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. 2394                             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.
   § 4. This act  shall  take  effect  immediately  and  shall  apply  to
 contracts entered into on and after such effective date.