Bill Text: NY S07664 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to payment in construction contracts; specifies the meaning of "substantial completion" for the purposes of requisition payments in construction contracts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2020-12-15 - APPROVAL MEMO.45 [S07664 Detail]
Download: New_York-2019-S07664-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7664 IN SENATE 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: 1 Section 1. Subdivision 1 of section 139-f of the state finance law, as 2 added by chapter 769 of the laws of 1978, is amended to read as follows: 3 1. Payment by public owners to contractors. The contractor shall peri- 4 odically, in accordance with the terms of the contract, submit to the 5 public owner and/or his agent a requisition for a progress payment for 6 the work performed and/or materials furnished to the date of the requi- 7 sition, less any amount previously paid to the contractor. The public 8 owner shall in accordance with the terms of the contract approve and 9 promptly pay the requisition for the progress payment less an amount 10 necessary to satisfy any claims, liens or judgments against the contrac- 11 tor which have not been suitably discharged and less any retained amount 12 as hereafter described. The public owner shall retain not more than five 13 per centum of each progress payment to the contractor except that the 14 public owner may retain in excess of five per centum but not more than 15 ten per centum of each progress payment to the contractor provided that 16 there are no requirements by the public owner for the contractor to 17 provide a performance bond and a labor and material bond both in the 18 full amount of the contract. The public owner shall pay, upon requisi- 19 tion from the contractor, for materials pertinent to the project which 20 have been delivered to the site or off-site by the contractor and/or 21 subcontractor and suitably stored and secured as required by the public 22 owner and the contractor provided, the public owner may limit such 23 payment to materials in short and/or critical supply and materials 24 specially fabricated for the project each as defined in the contract. 25 When the work or major portions thereof as contemplated by the terms of 26 the contract [are substantially completed] has reached substantial 27 completion which, for the purposes of this section, shall mean the state 28 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. LBD00020-02-0S. 7664 2 1 with the public owner is sufficiently complete in accordance with the 2 contract so that the public owner may occupy or utilize the work for its 3 intended use; provided further, that "substantial completion" shall 4 apply to the entire project or a portion of the entire project if the 5 contract with the public owner provides for occupancy or use of a 6 portion of the project, the contractor shall submit to the public owner 7 and/or his agent a requisition for payment of the remaining amount of 8 the contract balance. Upon receipt of such requisition the public owner 9 shall approve and promptly pay the remaining amount of the contract 10 balance less two times the value of any remaining items to be completed 11 and an amount necessary to satisfy any claims, liens or judgments 12 against the contractor which have not been suitably discharged. As the 13 remaining items of work are satisfactorily completed or corrected, the 14 public owner shall promptly pay, upon receipt of a requisition, for 15 these remaining items less an amount necessary to satisfy any claims, 16 liens or judgments against the contractor which have not been suitably 17 discharged. Any claims, liens and judgments referred to in this section 18 shall pertain to the project and shall be filed in accordance with the 19 terms of the applicable contract and/or applicable laws. 20 § 2. Subdivision 1-a of section 139-f of the state finance law is 21 renumbered subdivision 1-b and a new subdivision 1-a is added to read as 22 follows: 23 1-a. Not later than forty-five business days after the date when the 24 project has reached substantial completion, the public owner shall 25 submit to the contractor a written list describing all remaining items 26 to be completed by the contractor. Not later than seven calendar days 27 after receiving a written list describing all remaining items to be 28 completed by the contractor, the contractor shall submit to each subcon- 29 tractor from whom the contractor is withholding retainage a written list 30 of all remaining items required to be completed by the subcontractor. 31 Such list may include items in addition to those items on the public 32 owner's list. 33 § 3. Subdivision 1 of section 106-b of the general municipal law, as 34 amended by chapter 661 of the laws of 1992, paragraphs (a) and (c) as 35 amended by chapter 98 of the laws of 1995, is amended to read as 36 follows: 37 1. Payment by public owners to contractors. (a) The contractor shall 38 periodically, in accordance with the terms of the contract, submit to 39 the public owner and/or his agent a requisition for a progress payment 40 for the work performed and/or materials furnished to the date of the 41 requisition less any amount previously paid to the contractor. The 42 public owner shall in accordance with the terms of the contract approve 43 and promptly pay the requisition for the progress payment less an amount 44 necessary to satisfy any claims, liens or judgments against the contrac- 45 tor which have not been suitably discharged and less any retained amount 46 as hereafter described. The public owner shall retain not more than five 47 per centum of each progress payment to the contractor except that the 48 public owner may retain in excess of five per centum but not more than 49 ten per centum of each progress payment to the contractor provided that 50 there are no requirements by the public owner for the contractor to 51 provide a performance bond and a labor and material bond both in the 52 full amount of the contract. The public owner shall pay, upon requisi- 53 tion from the contractor, for materials pertinent to the project which 54 have been delivered to the site or off-site by the contractor and/or 55 subcontractor and suitably stored and secured as required by the public 56 owner and the contractor provided, the public owner may limit suchS. 7664 3 1 payment to materials in short and/or critical supply and materials 2 specially fabricated for the project each as defined in the contract. 3 When the work or major portions thereof as contemplated by the terms of 4 the contract [are substantially completed] has reached substantial 5 completion which, for the purposes of this section, shall mean, for 6 public owners other than school districts and boards of cooperative 7 educational services, the state in the progress of the project when the 8 work required by the contract with the public owner is sufficiently 9 complete in accordance with the contract so that the public owner may 10 occupy or utilize the work for its intended use and shall mean, for 11 school districts and boards of cooperative educational services, is the 12 date the partial or final certificate of substantial completion of the 13 project which is the date certified by the architect or engineer when 14 the construction is code compliant and substantially complete in accord- 15 ance with the contract documents so the school district can occupy or 16 utilize the project or portion thereof for its intended use, the 17 contractor shall submit to the public owner and/or his agent a requisi- 18 tion for payment of the remaining amount of the contract balance. Upon 19 receipt of such requisition the public owner shall approve and promptly 20 pay the remaining amount of the contract balance less two times the 21 value of any remaining items to be completed and an amount necessary to 22 satisfy any claims, liens or judgments against the contractor which have 23 not been suitably discharged. As the remaining items of work are satis- 24 factorily completed or corrected, the public owner shall promptly pay, 25 upon receipt of a requisition, for these items less an amount necessary 26 to satisfy any claims, liens or judgments against the contractor which 27 have not been suitably discharged. Any claims, liens and judgments 28 referred to in this section shall pertain to the project and shall be 29 filed in accordance with the terms of the applicable contract and/or 30 applicable laws. Where the public owner is other than the city of New 31 York, the term "promptly pay" shall mean payment within thirty days, 32 excluding legal holidays, of receipt of the requisition unless such 33 requisition is not approvable in accordance with the terms of the 34 contract. Notwithstanding the foregoing, where the public owner is other 35 than the city of New York and is a municipal corporation which requires 36 an elected official to approve progress payments, "promptly pay" shall 37 mean payment within forty-five days, excluding legal holidays, of 38 receipt of the requisition unless such requisition is not approvable in 39 accordance with the terms of the contract. 40 (b) Not later than forty-five business days after the date when the 41 project has reached substantial completion, the public owner shall 42 submit to the contractor a written list describing all remaining items 43 to be completed by the contractor. Not later than seven calendar days 44 after receiving a written list describing all remaining items to be 45 completed by the contractor, the contractor shall submit to each subcon- 46 tractor from whom the contractor is withholding retainage a written list 47 of all remaining items required to be completed by the subcontractor. 48 Such list may include items in addition to those items on the public 49 owner's list. 50 (c) Each public owner other than the city of New York which is 51 required to make a payment from public funds pursuant to a contract and 52 which does not make such contract payment by the required payment date 53 shall make an interest payment to the contractor on the amount of the 54 contract payment which is due unless failure to make such contract 55 payment is the result of a lien, attachment, or other legal process 56 against the money due said contractor, or unless the amount of theS. 7664 4 1 interest payment as computed in accordance with the provisions set forth 2 hereinafter is less than ten dollars. Interest payments on amounts due 3 to a contractor pursuant to this paragraph shall be paid to the contrac- 4 tor for the period beginning on the day after the required payment date 5 and ending on the payment date for those payments required according to 6 this section and shall be paid at the rate of interest in effect on the 7 date when the interest payment is made. Notwithstanding any other 8 provision of law to the contrary, interest shall be computed at the rate 9 equal to the overpayment rate set by the commissioner of taxation and 10 finance pursuant to subsection (e) of section one thousand ninety-six of 11 the tax law. A pro rata share of such interest shall be paid by the 12 contractor or subcontractor, as the case may be, to subcontractors and 13 materialmen in a proportion equal to the percentage of their pro rata 14 share of the contract payment. Such pro rata share of interest shall be 15 due to such subcontractors and materialmen only for those payments which 16 are not paid to such subcontractors and materialmen prior to the date 17 upon which interest begins to accrue between the public owner and the 18 contractor. Such pro rata shares of interest shall be computed daily 19 until such payments are made to the subcontractors and materialmen. 20 [(c)] (d) For projects of a public owner other than the city of New 21 York, if state funds directly related to and which have been budgeted 22 for the construction of the project for which the payment is due have 23 not been received prior to the expiration of the thirty or forty-five 24 days specified in paragraph (a) of this subdivision, the interest 25 provided for in paragraph [(b)] (c) of this subdivision shall not begin 26 to accrue and payment shall not be due, until ten days after receipt of 27 the state funds. Nothing in this paragraph shall prevent the public 28 owner from approving the requisition, subject to receipt of the state 29 funds. State funds shall mean monies provided to the public owner by the 30 state, its officers, boards, departments, commissions, or a public 31 authority and public benefit corporation, a majority of the members of 32 which have been appointed by the governor or who serve as members by 33 virtue of holding a civil office of the state, or a combination thereof. 34 § 4. This act shall take effect immediately and shall apply to 35 contracts entered into on and after such effective date.
