S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5429
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 12, 2019
                                ___________
 
 Introduced  by M. of A. CUSICK, PEOPLES-STOKES, COLTON, BICHOTTE, SANTA-
   BARBARA, D'URSO, MORINELLO -- 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 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-
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08836-01-9

 A. 5429                             2
 
 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
 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-

 A. 5429                             3
 
 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.