S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    880
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 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
 amended by a chapter of the laws of 2020, amending the state finance law
 and the general  municipal  law  relating  to  payment  in  construction
 contracts,  as  proposed in legislative bills numbers S.7664 and A.9117,
 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.
                                                            LBD07166-01-1

 S. 880                              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 [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 suffi-
 ciently 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] ARE  SUBSTAN-
 TIALLY COMPLETED, 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, as
 added by a chapter of the laws of 2020, amending the state  finance  law
 and  the  general  municipal  law  relating  to  payment in construction
 contracts, as proposed in legislative bills numbers S.7664  and  A.9117,
 is amended to read as follows:
   1-a.  Not  later than forty-five business days after the date when the
 project has reached substantial completion, AS SUCH TERM IS  DEFINED  IN
 THE  CONTRACT OR AS IT IS CONTEMPLATED BY THE TERMS OF THE CONTRACT, 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] FIVE BUSINESS  days  after  receiving  a  written  list
 describing  all  remaining  items to be completed by the contractor, the
 contractor shall submit to each subcontractor 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 a chapter of the laws of 2020, amending the state finance law
 and the general  municipal  law  relating  to  payment  in  construction
 contracts,  as  proposed in legislative bills numbers S.7664 and A.9117,
 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

 S. 880                              3
 
 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 [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  cooper-
 ative 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 accordance with the contract documents so the
 school district can occupy or utilize the project or portion thereof for
 its intended use] ARE  SUBSTANTIALLY  COMPLETED,  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  remain-
 ing  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 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.  Notwith-
 standing the foregoing, where the public owner is other than the city of
 New  York and is a municipal corporation which requires an elected offi-
 cial 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, AS SUCH TERM IS DEFINED IN
 THE CONTRACT OR AS IT IS CONTEMPLATED BY THE TERMS OF THE CONTRACT,  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]  FIVE  BUSINESS  days  after  receiving a written list

 S. 880                              4
 
 describing all remaining items to be completed by  the  contractor,  the
 contractor  shall  submit to each subcontractor 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
 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.
   (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 speci-
 fied in paragraph (a) of this subdivision, the interest provided for  in
 paragraph  (c) of this subdivision shall not begin to accrue and payment
 shall not be due, until ten days after receipt of the state funds. Noth-
 ing 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 bene-
 fit  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 on the same date and in the same
 manner as a chapter of the laws of 2020, amending the state finance  law
 and  the  general  municipal  law  relating  to  payment in construction
 contracts, as proposed in legislative bills numbers S.7664  and  A.9117,
 takes effect.