Bill Text: NY A03552 | 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 5-0)

Status: (Introduced) 2019-06-20 - substituted by s2394 [A03552 Detail]

Download: New_York-2019-A03552-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          3552
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 29, 2019
                                       ___________
        Introduced  by M. of A. CUSICK, BICHOTTE, COOK, MAGNARELLI, ZEBROWSKI --
          read once and referred to the Committee on Governmental Operations
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00020-01-9

        A. 3552                             2
     1  the  contract  [are  substantially  completed]  has  reached substantial
     2  completion which, for the purposes of this section, shall mean the state
     3  in the progress of the project when the work required  by  the  contract
     4  with  the  public  owner is sufficiently complete in accordance with the
     5  contract so that the public owner may occupy or utilize the work for its
     6  intended use; provided  further,  that  "substantial  completion"  shall
     7  apply  to  the  entire project or a portion of the entire project if the
     8  contract with the public owner  provides  for  occupancy  or  use  of  a
     9  portion  of the project, the contractor shall submit to the public owner
    10  and/or his agent a requisition for payment of the  remaining  amount  of
    11  the contract balance.  Upon receipt of such requisition the public owner
    12  shall  approve  and  promptly  pay  the remaining amount of the contract
    13  balance less two times the value of any remaining items to be  completed
    14  and  an  amount  necessary  to  satisfy  any  claims, liens or judgments
    15  against the contractor which have not been suitably discharged.  As  the
    16  remaining  items  of work are satisfactorily completed or corrected, the
    17  public owner shall promptly pay, upon  receipt  of  a  requisition,  for
    18  these  remaining  items  less an amount necessary to satisfy any claims,
    19  liens or judgments against the contractor which have not  been  suitably
    20  discharged.  Any claims, liens and judgments referred to in this section
    21  shall pertain to the project and shall be filed in accordance  with  the
    22  terms of the applicable contract and/or applicable laws.
    23    §  2.  Subdivision  1-a  of  section 139-f of the state finance law is
    24  renumbered subdivision 1-b and a new subdivision 1-a is added to read as
    25  follows:
    26    1-a. Not later than forty-five business days after the date  when  the
    27  project  has  reached  substantial  completion,  the  public owner shall
    28  submit to the contractor a written list describing all  remaining  items
    29  to  be  completed  by the contractor. Not later than seven calendar days
    30  after receiving a written list describing  all  remaining  items  to  be
    31  completed by the contractor, the contractor shall submit to each subcon-
    32  tractor from whom the contractor is withholding retainage a written list
    33  of  all  remaining  items required to be completed by the subcontractor.
    34  Such list may include items in addition to those  items  on  the  public
    35  owner's list.
    36    §  3.  Subdivision 1 of section 106-b of the general municipal law, as
    37  amended by chapter 661 of the laws of 1992, paragraphs (a)  and  (c)  as
    38  amended  by  chapter  98  of  the  laws  of  1995, is amended to read as
    39  follows:
    40    1. Payment by public owners to contractors. (a) The  contractor  shall
    41  periodically,  in  accordance  with the terms of the contract, submit to
    42  the public owner and/or his agent a requisition for a  progress  payment
    43  for  the  work  performed  and/or materials furnished to the date of the
    44  requisition less any amount  previously  paid  to  the  contractor.  The
    45  public  owner shall in accordance with the terms of the contract approve
    46  and promptly pay the requisition for the progress payment less an amount
    47  necessary to satisfy any claims, liens or judgments against the contrac-
    48  tor which have not been suitably discharged and less any retained amount
    49  as hereafter described. The public owner shall retain not more than five
    50  per centum of each progress payment to the contractor  except  that  the
    51  public  owner  may retain in excess of five per centum but not more than
    52  ten per centum of each progress payment to the contractor provided  that
    53  there  are  no  requirements  by  the public owner for the contractor to
    54  provide a performance bond and a labor and material  bond  both  in  the
    55  full  amount  of the contract. The public owner shall pay, upon requisi-
    56  tion from the contractor, for materials pertinent to the  project  which

        A. 3552                             3
     1  have  been  delivered  to  the site or off-site by the contractor and/or
     2  subcontractor and suitably stored and secured as required by the  public
     3  owner  and  the  contractor  provided,  the  public owner may limit such
     4  payment  to  materials  in  short  and/or  critical supply and materials
     5  specially fabricated for the project each as defined  in  the  contract.
     6  When  the work or major portions thereof as contemplated by the terms of
     7  the contract  [are  substantially  completed]  has  reached  substantial
     8  completion  which,  for  the  purposes  of this section, shall mean, for
     9  public owners other than school  districts  and  boards  of  cooperative
    10  educational  services, the state in the progress of the project when the
    11  work required by the contract with  the  public  owner  is  sufficiently
    12  complete  in  accordance  with the contract so that the public owner may
    13  occupy or utilize the work for its intended  use  and  shall  mean,  for
    14  school  districts and boards of cooperative educational services, is the
    15  date the partial or final certificate of substantial completion  of  the
    16  project  which  is  the date certified by the architect or engineer when
    17  the construction is code compliant and substantially complete in accord-
    18  ance with the contract documents so the school district  can  occupy  or
    19  utilize  the  project  or  portion  thereof  for  its  intended use, the
    20  contractor shall submit to the public owner and/or his agent a  requisi-
    21  tion  for payment of the remaining amount of the contract balance.  Upon
    22  receipt of such requisition the public owner shall approve and  promptly
    23  pay  the  remaining  amount  of  the contract balance less two times the
    24  value of any remaining items to be completed and an amount necessary  to
    25  satisfy any claims, liens or judgments against the contractor which have
    26  not  been suitably discharged. As the remaining items of work are satis-
    27  factorily completed or corrected, the public owner shall  promptly  pay,
    28  upon  receipt of a requisition, for these items less an amount necessary
    29  to satisfy any claims, liens or judgments against the  contractor  which
    30  have  not  been  suitably  discharged.  Any  claims, liens and judgments
    31  referred to in this section shall pertain to the project  and  shall  be
    32  filed  in  accordance  with  the terms of the applicable contract and/or
    33  applicable laws. Where the public owner is other than the  city  of  New
    34  York,  the  term  "promptly  pay" shall mean payment within thirty days,
    35  excluding legal holidays, of receipt  of  the  requisition  unless  such
    36  requisition  is  not  approvable  in  accordance  with  the terms of the
    37  contract. Notwithstanding the foregoing, where the public owner is other
    38  than the city of New York and is a municipal corporation which  requires
    39  an  elected  official to approve progress payments, "promptly pay" shall
    40  mean payment  within  forty-five  days,  excluding  legal  holidays,  of
    41  receipt  of the requisition unless such requisition is not approvable in
    42  accordance with the terms of the contract.
    43    (b) Not later than forty-five business days after the  date  when  the
    44  project  has  reached  substantial  completion,  the  public owner shall
    45  submit to the contractor a written list describing all  remaining  items
    46  to  be  completed  by the contractor. Not later than seven calendar days
    47  after receiving a written list describing  all  remaining  items  to  be
    48  completed by the contractor, the contractor shall submit to each subcon-
    49  tractor from whom the contractor is withholding retainage a written list
    50  of  all  remaining  items required to be completed by the subcontractor.
    51  Such list may include items in addition to those  items  on  the  public
    52  owner's list.
    53    (c)  Each  public  owner  other  than  the  city  of New York which is
    54  required to make a payment from public funds pursuant to a contract  and
    55  which  does  not make such contract payment by the required payment date
    56  shall make an interest payment to the contractor on the  amount  of  the

        A. 3552                             4
     1  contract  payment  which  is  due  unless  failure to make such contract
     2  payment is the result of a lien,  attachment,  or  other  legal  process
     3  against  the  money  due  said  contractor,  or unless the amount of the
     4  interest payment as computed in accordance with the provisions set forth
     5  hereinafter  is  less than ten dollars. Interest payments on amounts due
     6  to a contractor pursuant to this paragraph shall be paid to the contrac-
     7  tor for the period beginning on the day after the required payment  date
     8  and  ending on the payment date for those payments required according to
     9  this section and shall be paid at the rate of interest in effect on  the
    10  date  when  the  interest  payment  is  made.  Notwithstanding any other
    11  provision of law to the contrary, interest shall be computed at the rate
    12  equal to the overpayment rate set by the commissioner  of  taxation  and
    13  finance pursuant to subsection (e) of section one thousand ninety-six of
    14  the  tax  law.  A  pro  rata share of such interest shall be paid by the
    15  contractor or subcontractor, as the case may be, to  subcontractors  and
    16  materialmen  in  a  proportion equal to the percentage of their pro rata
    17  share of the contract payment. Such pro rata share of interest shall  be
    18  due to such subcontractors and materialmen only for those payments which
    19  are  not  paid  to such subcontractors and materialmen prior to the date
    20  upon which interest begins to accrue between the public  owner  and  the
    21  contractor.    Such  pro rata shares of interest shall be computed daily
    22  until such payments are made to the subcontractors and materialmen.
    23    [(c)] (d) For projects of a public owner other than the  city  of  New
    24  York,  if  state  funds directly related to and which have been budgeted
    25  for the construction of the project for which the payment  is  due  have
    26  not  been  received  prior to the expiration of the thirty or forty-five
    27  days specified in  paragraph  (a)  of  this  subdivision,  the  interest
    28  provided  for in paragraph [(b)] (c) of this subdivision shall not begin
    29  to accrue and payment shall not be due, until ten days after receipt  of
    30  the  state  funds.  Nothing  in  this paragraph shall prevent the public
    31  owner from approving the requisition, subject to receipt  of  the  state
    32  funds. State funds shall mean monies provided to the public owner by the
    33  state,  its  officers,  boards,  departments,  commissions,  or a public
    34  authority and public benefit corporation, a majority of the  members  of
    35  which  have  been  appointed  by the governor or who serve as members by
    36  virtue of holding a civil office of the state, or a combination thereof.
    37    § 4. This act  shall  take  effect  immediately  and  shall  apply  to
    38  contracts entered into on and after such effective date.
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