S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5344--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 8, 2017
                                ___________
 
 Introduced by M. of A. CUSICK, PEOPLES-STOKES, D'URSO, MORINELLO, SANTA-
   BARBARA,  SEPULVEDA, COLTON, BICHOTTE -- 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 release of subcontractor's retainage
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 2 of section 139-f of the state finance law, as
 amended  by  section 16 of part MM of chapter 57 of the laws of 2008, is
 amended to read as follows:
   2. Payment by contractors to  subcontractors.  Within  seven  calendar
 days of the receipt of any payment from the public owner, the contractor
 shall  pay  each of his subcontractors and materialmen the proceeds from
 the payment representing the value of the work performed and/or  materi-
 als furnished by the subcontractor and/or materialman and reflecting the
 percentage  of  the  subcontractor's work completed or the materialman's
 material supplied in the requisition approved by  the  owner  and  based
 upon  the  actual  value  of  the  subcontract or purchase order less an
 amount necessary to satisfy any claims, liens or judgments  against  the
 subcontractor or materialman which have not been suitably discharged and
 less any retained amount as hereafter described. Failure by the contrac-
 tor  to  pay any subcontractor or materialman within seven calendar days
 of the receipt of any payment from the public owner shall result in  the
 commencement  and accrual of interest on amounts due to such subcontrac-
 tor or materialman for the  period  beginning  on  the  day  immediately
 following the expiration of such seven calendar day period and ending on
 the  date on which payment is made by the contractor to such subcontrac-
 tor or materialman. Such interest payment shall be the sole responsibil-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00257-02-7

 A. 5344--A                          2
 
 ity of the contractor, and shall be paid at  the  rate  of  interest  in
 effect  on  the date payment is made by the contractor.  Notwithstanding
 any other provision of law to the contrary, interest shall  be  computed
 at  the  rate established in paragraph (b) of subdivision one of section
 seven hundred fifty-six-b of the general business  law.  The  contractor
 shall  retain  not  more  than  five  per  centum of each payment to the
 subcontractor and/or materialman except that the contractor  may  retain
 in  excess  of  five per centum but not more than ten per centum of each
 payment to the subcontractor provided that  prior  to  entering  into  a
 subcontract  with the contractor, the subcontractor is unable or unwill-
 ing to provide a performance bond and a labor and material bond, both in
 the full amount of the subcontract, at the request  of  the  contractor.
 However, the contractor shall retain nothing from those payments repres-
 enting  proceeds  owed  the  subcontractor  and/or  materialman from the
 public owner's payments to the contractor for the remaining  amounts  of
 the  contract balance as provided in subdivision one of this section. If
 the contractor has failed to submit a requisition  for  payment  of  the
 remaining amounts of the contract balance within ninety days of substan-
 tial completion as provided in subdivision one of this section, then any
 clause  in  the subcontract between the contractor and the subcontractor
 or materialman which states that  payment  by  the  contractor  to  such
 subcontractor  or materialman is contingent upon payment by the owner to
 the contractor shall be deemed invalid. Within seven  calendar  days  of
 the  receipt  of  payment  from the contractor, the subcontractor and/or
 materialman shall pay each of his subcontractors and materialmen in  the
 same  manner  as  the  contractor  has paid the subcontractor, including
 interest as herein provided above. Nothing provided herein shall  create
 any  obligation  on the part of the public owner to pay or to see to the
 payment of any moneys to  any  subcontractor  or  materialman  from  any
 contractor  nor  shall  anything  provided  herein  serve  to create any
 relationship in contract or otherwise, implied or expressed, between the
 subcontractor or materialman and the public owner.  NOTWITHSTANDING  ANY
 OTHER  PROVISION  OF  THIS SECTION OR OTHER LAW, ANY RETAINAGE HELD BY A
 PUBLIC OWNER OR CONTRACTOR REPRESENTING RETAINAGE FOR A  SUBCONTRACTOR'S
 WORK  SHALL BE RELEASED, LESS TWO TIMES THE VALUE OF ANY REMAINING ITEMS
 TO BE COMPLETED BY THE SUBCONTRACTOR AND AN AMOUNT NECESSARY TO  SATISFY
 ANY  CLAIMS, LIENS OR JUDGMENTS AGAINST THE SUBCONTRACTOR OR MATERIALMAN
 WHICH HAVE NOT BEEN SUITABLY DISCHARGED NO LATER THAN  SIXTY  DAYS  FROM
 THE COMPLETION AND ACCEPTANCE BY THE PUBLIC OWNER OF THE SUBCONTRACTOR'S
 WORK.
   §  2.  Subdivision 2 of section 106-b of the general municipal law, as
 amended by section 15 of part MM of chapter 57 of the laws of  2008,  is
 amended to read as follows:
   2.  Payment  by  contractors  to subcontractors. Within seven calendar
 days of the receipt of any payment from the public owner, the contractor
 shall pay each of his subcontractors and materialmen the  proceeds  from
 the  payment representing the value of the work performed and/or materi-
 als furnished by the subcontractor and/or materialman and reflecting the
 percentage of the subcontractor's work completed  or  the  materialman's
 material  supplied  in  the  requisition approved by the owner and based
 upon the actual value of the  subcontract  or  purchase  order  less  an
 amount  necessary  to satisfy any claims, liens or judgments against the
 subcontractor or materialman which have not been suitably discharged and
 less any retained amount as hereafter described. Failure by the contrac-
 tor to make any payment, including any remaining amounts of the contract
 balance as hereinafter described, to any  subcontractor  or  materialman

 A. 5344--A                          3
 
 within seven calendar days of the receipt of any payment from the public
 owner  shall  result  in  the  commencement  and  accrual of interest on
 amounts due to such subcontractor or materialman for the  period  begin-
 ning  on  the  day  immediately  following  the expiration of such seven
 calendar day period and ending on the date on which payment is  made  by
 the contractor to such subcontractor or materialman. Such interest shall
 be  the  sole responsibility of the contractor, and shall be paid at the
 rate of interest in effect on the date payment is made by  the  contrac-
 tor.  Notwithstanding any other provision of law to the contrary, inter-
 est shall be computed at the rate established in paragraph (b) of subdi-
 vision one of section seven hundred fifty-six-b of the general  business
 law.  The  contractor shall retain not more than five per centum of each
 payment to the subcontractor and/or materialman except that the contrac-
 tor may retain in excess of five per centum but not more  than  ten  per
 centum  of  each  payment  to  the  subcontractor provided that prior to
 entering into a subcontract with the contractor,  the  subcontractor  is
 unable  or unwilling to provide a performance bond and a labor and mate-
 rial bond both in the full amount of the subcontract at the  request  of
 the  contractor. However, the contractor shall retain nothing from those
 payments representing proceeds owed the subcontractor and/or materialman
 from the public owner's payments to the  contractor  for  the  remaining
 amounts  of  the contract balance as provided in subdivision one of this
 section. If the contractor  has  failed  to  submit  a  requisition  for
 payment  of  the remaining amounts of the contract balance within ninety
 days of substantial completion as provided in subdivision  one  of  this
 section,  then  any clause in the subcontract between the contractor and
 the subcontractor or  materialman  which  states  that  payment  by  the
 contractor  to  such  subcontractor  or  materialman  is contingent upon
 payment by the owner to the contractor shall be deemed  invalid.  Within
 seven  calendar  days of the receipt of payment from the contractor, the
 subcontractor and/or materialman shall pay each  of  his  subcontractors
 and  materialmen  in  the  same  manner  as  the contractor has paid the
 subcontractor, including interest as herein  provided  above.    Nothing
 provided  herein  shall  create any obligation on the part of the public
 owner to pay or to see to the payment of any moneys to any subcontractor
 or materialman from any contractor nor shall  anything  provided  herein
 serve  to  create  any relationship in contract or otherwise, implied or
 expressed, between the  subcontractor  or  materialman  and  the  public
 owner.    NOTWITHSTANDING  ANY  OTHER PROVISION OF THIS SECTION OR OTHER
 LAW, ANY RETAINAGE HELD BY A PUBLIC  OWNER  OR  CONTRACTOR  REPRESENTING
 RETAINAGE  FOR  A SUBCONTRACTOR'S WORK SHALL BE RELEASED, LESS TWO TIMES
 THE VALUE OF ANY REMAINING ITEMS TO BE COMPLETED  BY  THE  SUBCONTRACTOR
 AND  AN  AMOUNT  NECESSARY  TO  SATISFY  ANY  CLAIMS, LIENS OR JUDGMENTS
 AGAINST THE SUBCONTRACTOR OR MATERIALMAN WHICH HAVE  NOT  BEEN  SUITABLY
 DISCHARGED  NO  LATER THAN SIXTY DAYS FROM THE COMPLETION AND ACCEPTANCE
 BY THE PUBLIC OWNER OF THE SUBCONTRACTOR'S WORK.
   § 3. This act shall take effect immediately and  shall  apply  to  all
 contracts entered into on or after such effective date.