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.