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. LBD08047-03-8A. 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 thatA. 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.