Bill Text: NY A06572 | 2017-2018 | General Assembly | Amended


Bill Title: Relates to payment in construction contracts; specifies the meaning of "substantial completion" for the purposes of requisition payments in construction contracts.

Spectrum: Moderate Partisan Bill (Democrat 7-1)

Status: (Introduced - Dead) 2018-06-19 - reported referred to rules [A06572 Detail]

Download: New_York-2017-A06572-Amended.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                         6572--A
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                      March 9, 2017
                                       ___________
        Introduced  by  M.  of  A.  CUSICK,  ZEBROWSKI, HOOPER, COOK, CASTORINA,
          MAGNARELLI, BICHOTTE -- Multi-Sponsored by -- M. of A. MAGEE  --  read
          once  and  referred  to  the  Committee  on Governmental Operations --
          recommitted to the Committee on Governmental Operations in  accordance
          with  Assembly  Rule  3, sec. 2 -- committee discharged, bill amended,
          ordered reprinted as amended and recommitted to said committee
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08047-03-8

        A. 6572--A                          2
     1  owner  and  the  contractor  provided,  the  public owner may limit such
     2  payment to materials in  short  and/or  critical  supply  and  materials
     3  specially  fabricated  for  the project each as defined in the contract.
     4  When  the work or major portions thereof as contemplated by the terms of
     5  the contract  [are  substantially  completed]  has  reached  substantial
     6  completion which, for the purposes of this section, shall mean the state
     7  in  the  progress  of the project when the work required by the contract
     8  with the public owner is sufficiently complete in  accordance  with  the
     9  contract so that the public owner may occupy or utilize the work for its
    10  intended  use;  provided  further,  that  "substantial completion" shall
    11  apply to the entire project or a portion of the entire  project  if  the
    12  contract  with  the  public  owner  provides  for  occupancy or use of a
    13  portion of the project, the contractor shall submit to the public  owner
    14  and/or  his  agent  a requisition for payment of the remaining amount of
    15  the contract balance.  Upon receipt of such requisition the public owner
    16  shall approve and promptly pay the  remaining  amount  of  the  contract
    17  balance  less two times the value of any remaining items to be completed
    18  and an amount necessary  to  satisfy  any  claims,  liens  or  judgments
    19  against  the  contractor which have not been suitably discharged. As the
    20  remaining items of work are satisfactorily completed or  corrected,  the
    21  public  owner  shall  promptly  pay,  upon receipt of a requisition, for
    22  these remaining items less an amount necessary to  satisfy  any  claims,
    23  liens  or  judgments against the contractor which have not been suitably
    24  discharged. Any claims, liens and judgments referred to in this  section
    25  shall  pertain  to the project and shall be filed in accordance with the
    26  terms of the applicable contract and/or applicable laws.
    27    § 2. Subdivision 1-a of section 139-f of  the  state  finance  law  is
    28  renumbered subdivision 1-b and a new subdivision 1-a is added to read as
    29  follows:
    30    1-a.  Not  later than forty-five business days after the date when the
    31  project has reached  substantial  completion,  the  public  owner  shall
    32  submit  to  the contractor a written list describing all remaining items
    33  to be completed by the contractor. Not later than  seven  calendar  days
    34  after  receiving  a  written  list  describing all remaining items to be
    35  completed by the contractor, the contractor shall submit to each subcon-
    36  tractor from whom the contractor is withholding retainage a written list
    37  of all remaining items required to be completed  by  the  subcontractor.
    38  Such  list  may  include  items in addition to those items on the public
    39  owner's list.
    40    § 3. Subdivision 1 of section 106-b of the general municipal  law,  as
    41  amended  by  chapter  661 of the laws of 1992, paragraphs (a) and (c) as
    42  amended by chapter 98 of the  laws  of  1995,  is  amended  to  read  as
    43  follows:
    44    1.  Payment  by public owners to contractors. (a) The contractor shall
    45  periodically, in accordance with the terms of the  contract,  submit  to
    46  the  public  owner and/or his agent a requisition for a progress payment
    47  for the work performed and/or materials furnished to  the  date  of  the
    48  requisition  less  any  amount  previously  paid  to the contractor. The
    49  public owner shall in accordance with the terms of the contract  approve
    50  and promptly pay the requisition for the progress payment less an amount
    51  necessary to satisfy any claims, liens or judgments against the contrac-
    52  tor which have not been suitably discharged and less any retained amount
    53  as hereafter described. The public owner shall retain not more than five
    54  per  centum  of  each progress payment to the contractor except that the
    55  public owner may retain in excess of five per centum but not  more  than
    56  ten  per centum of each progress payment to the contractor provided that

        A. 6572--A                          3
     1  there are no requirements by the public  owner  for  the  contractor  to
     2  provide  a  performance  bond  and a labor and material bond both in the
     3  full amount of the contract. The public owner shall pay,  upon  requisi-
     4  tion  from  the contractor, for materials pertinent to the project which
     5  have been delivered to the site or off-site  by  the  contractor  and/or
     6  subcontractor  and suitably stored and secured as required by the public
     7  owner and the contractor provided,  the  public  owner  may  limit  such
     8  payment  to  materials  in  short  and/or  critical supply and materials
     9  specially fabricated for the project each as defined  in  the  contract.
    10  When  the work or major portions thereof as contemplated by the terms of
    11  the contract  [are  substantially  completed]  has  reached  substantial
    12  completion  which,  for  the  purposes  of this section, shall mean, for
    13  public owners other than school  districts  and  boards  of  cooperative
    14  educational  services, the state in the progress of the project when the
    15  work required by the contract with  the  public  owner  is  sufficiently
    16  complete  in  accordance  with the contract so that the public owner may
    17  occupy or utilize the work for its intended  use  and  shall  mean,  for
    18  school  districts and boards of cooperative educational services, is the
    19  date the partial or final certificate of substantial completion  of  the
    20  project  which  is  the date certified by the architect or engineer when
    21  the construction is code compliant and substantially complete in accord-
    22  ance with the contract documents so the school district  can  occupy  or
    23  utilize  the  project  or  portion  thereof  for  its  intended use, the
    24  contractor shall submit to the public owner and/or his agent a  requisi-
    25  tion  for payment of the remaining amount of the contract balance.  Upon
    26  receipt of such requisition the public owner shall approve and  promptly
    27  pay  the  remaining  amount  of  the contract balance less two times the
    28  value of any remaining items to be completed and an amount necessary  to
    29  satisfy any claims, liens or judgments against the contractor which have
    30  not  been suitably discharged. As the remaining items of work are satis-
    31  factorily completed or corrected, the public owner shall  promptly  pay,
    32  upon  receipt of a requisition, for these items less an amount necessary
    33  to satisfy any claims, liens or judgments against the  contractor  which
    34  have  not  been  suitably  discharged.  Any  claims, liens and judgments
    35  referred to in this section shall pertain to the project  and  shall  be
    36  filed  in  accordance  with  the terms of the applicable contract and/or
    37  applicable laws. Where the public owner is other than the  city  of  New
    38  York,  the  term  "promptly  pay" shall mean payment within thirty days,
    39  excluding legal holidays, of receipt  of  the  requisition  unless  such
    40  requisition  is  not  approvable  in  accordance  with  the terms of the
    41  contract. Notwithstanding the foregoing, where the public owner is other
    42  than the city of New York and is a municipal corporation which  requires
    43  an  elected  official to approve progress payments, "promptly pay" shall
    44  mean payment  within  forty-five  days,  excluding  legal  holidays,  of
    45  receipt  of the requisition unless such requisition is not approvable in
    46  accordance with the terms of the contract.
    47    (b) Not later than forty-five business days after the  date  when  the
    48  project  has  reached  substantial  completion,  the  public owner shall
    49  submit to the contractor a written list describing all  remaining  items
    50  to  be  completed  by the contractor. Not later than seven calendar days
    51  after receiving a written list describing  all  remaining  items  to  be
    52  completed by the contractor, the contractor shall submit to each subcon-
    53  tractor from whom the contractor is withholding retainage a written list
    54  of  all  remaining  items required to be completed by the subcontractor.
    55  Such list may include items in addition to those  items  on  the  public
    56  owner's list.

        A. 6572--A                          4
     1    (c)  Each  public  owner  other  than  the  city  of New York which is
     2  required to make a payment from public funds pursuant to a contract  and
     3  which  does  not make such contract payment by the required payment date
     4  shall make an interest payment to the contractor on the  amount  of  the
     5  contract  payment  which  is  due  unless  failure to make such contract
     6  payment is the result of a lien,  attachment,  or  other  legal  process
     7  against  the  money  due  said  contractor,  or unless the amount of the
     8  interest payment as computed in accordance with the provisions set forth
     9  hereinafter is less than ten dollars. Interest payments on  amounts  due
    10  to a contractor pursuant to this paragraph shall be paid to the contrac-
    11  tor  for the period beginning on the day after the required payment date
    12  and ending on the payment date for those payments required according  to
    13  this  section and shall be paid at the rate of interest in effect on the
    14  date when the  interest  payment  is  made.  Notwithstanding  any  other
    15  provision of law to the contrary, interest shall be computed at the rate
    16  equal  to  the  overpayment rate set by the commissioner of taxation and
    17  finance pursuant to subsection (e) of section one thousand ninety-six of
    18  the tax law. A pro rata share of such interest  shall  be  paid  by  the
    19  contractor  or  subcontractor, as the case may be, to subcontractors and
    20  materialmen in a proportion equal to the percentage of  their  pro  rata
    21  share  of the contract payment. Such pro rata share of interest shall be
    22  due to such subcontractors and materialmen only for those payments which
    23  are not paid to such subcontractors and materialmen prior  to  the  date
    24  upon  which  interest  begins to accrue between the public owner and the
    25  contractor.  Such pro rata shares of interest shall  be  computed  daily
    26  until such payments are made to the subcontractors and materialmen.
    27    [(c)]  (d)  For  projects of a public owner other than the city of New
    28  York, if state funds directly related to and which  have  been  budgeted
    29  for  the  construction  of the project for which the payment is due have
    30  not been received prior to the expiration of the  thirty  or  forty-five
    31  days  specified  in  paragraph  (a)  of  this  subdivision, the interest
    32  provided for in paragraph [(b)] (c) of this subdivision shall not  begin
    33  to  accrue and payment shall not be due, until ten days after receipt of
    34  the state funds. Nothing in this  paragraph  shall  prevent  the  public
    35  owner  from  approving  the requisition, subject to receipt of the state
    36  funds. State funds shall mean monies provided to the public owner by the
    37  state, its officers,  boards,  departments,  commissions,  or  a  public
    38  authority  and  public benefit corporation, a majority of the members of
    39  which have been appointed by the governor or who  serve  as  members  by
    40  virtue of holding a civil office of the state, or a combination thereof.
    41    §  4.  This  act  shall  take  effect  immediately  and shall apply to
    42  contracts entered into on and after such effective date.
feedback