S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7664
 
                             I N  S E N A T E
 
                             February 4, 2020
                                ___________
 
 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
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD00020-02-0

 S. 7664                             2
 
 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
 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

 S. 7664                             3
 
 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
 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

 S. 7664                             4
 
 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.