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A05429 Summary:

BILL NOA05429
 
SAME ASNo Same As
 
SPONSORCusick
 
COSPNSRPeoples-Stokes, Colton, Bichotte, Santabarbara, D'Urso, Morinello
 
MLTSPNSR
 
Amd 139-f, St Fin L; amd 106-b, Gen Muni L
 
Provides for release of subcontractor's retainage held by a public owner or contractor sixty days after substantial completion of work.
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A05429 Actions:

BILL NOA05429
 
02/12/2019referred to governmental operations
02/15/2019enacting clause stricken
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A05429 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5429
 
SPONSOR: Cusick
  TITLE OF BILL: An act to amend the state finance law and the general municipal law, in relation to release of subcontractor's retainage   PURPOSE OR GENERAL IDEA OF BILL: This bill amends the general municipal law and the state finance law to provide for an early release of retainage on public jobs.   SUMMARY OF PROVISIONS: Section 1 amends section 139-f (2) of the state finance law by adding the sentence, "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, no later than 60 days from the completion and acceptance by the public owner of the subcontractor's work." Section 2 amends section 106-b (2) of the general municipal law by adding the sentence, "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 no later than 60 days from the completion and accept- ance by the public owner of the subcontractor's work." Section 3 provides an immediate effective date and shall apply to all contracts entered into on or after such effective date.   JUSTIFICATION: Currently, subcontractors who have finished their work on a public job must wait until the entire project is complete before receiving their retainage. This creates hardships for subcontractors who must finance their work in advance and wait for unreasonably long periods of time for payment. Line item listing and early release of retainage will cure this unfairness and will insure subcontractor's payment within a reasonable time, thereby avoiding potential payment disputes and liens on the job.   PRIOR LEGISLATIVE HISTORY: 2017-2018: A.5344-A - Died in Assembly Governmental Operations/S.5238-A - Senate Rules; 2015-2016: A.4266 - Died in Assembly Governmental Operations/S.2924 - Passed Senate; 2013-2014: A.1660 - Died in Rules/ S.1974 - Passed Senate; 2012: A.5024 - Died in Assembly Governmental Operations; 2010: A.2372 - Died in Assembly Governmental Operations.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: This act shall take effect immediately and shall apply to all contracts entered into on or after such effective date.
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A05429 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5429
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    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:
 
     1    Section 1. Subdivision 2 of section 139-f of the state finance law, as
     2  amended  by  section 16 of part MM of chapter 57 of the laws of 2008, is
     3  amended to read as follows:
     4    2. Payment by contractors to  subcontractors.  Within  seven  calendar
     5  days of the receipt of any payment from the public owner, the contractor
     6  shall  pay  each of his subcontractors and materialmen the proceeds from
     7  the payment representing the value of the work performed and/or  materi-
     8  als furnished by the subcontractor and/or materialman and reflecting the
     9  percentage  of  the  subcontractor's work completed or the materialman's
    10  material supplied in the requisition approved by  the  owner  and  based
    11  upon  the  actual  value  of  the  subcontract or purchase order less an
    12  amount necessary to satisfy any claims, liens or judgments  against  the
    13  subcontractor or materialman which have not been suitably discharged and
    14  less any retained amount as hereafter described. Failure by the contrac-
    15  tor  to  pay any subcontractor or materialman within seven calendar days
    16  of the receipt of any payment from the public owner shall result in  the
    17  commencement  and accrual of interest on amounts due to such subcontrac-
    18  tor or materialman for the  period  beginning  on  the  day  immediately
    19  following the expiration of such seven calendar day period and ending on
    20  the  date on which payment is made by the contractor to such subcontrac-
    21  tor or materialman. Such interest payment shall be the sole responsibil-
    22  ity of the contractor, and shall be paid at  the  rate  of  interest  in
    23  effect  on  the date payment is made by the contractor.  Notwithstanding
    24  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
 
     1  at  the  rate established in paragraph (b) of subdivision one of section
     2  seven hundred fifty-six-b of the general business  law.  The  contractor
     3  shall  retain  not  more  than  five  per  centum of each payment to the
     4  subcontractor  and/or  materialman except that the contractor may retain
     5  in excess of five per centum but not more than ten per  centum  of  each
     6  payment  to  the  subcontractor  provided  that prior to entering into a
     7  subcontract with the contractor, the subcontractor is unable or  unwill-
     8  ing to provide a performance bond and a labor and material bond, both in
     9  the  full  amount  of the subcontract, at the request of the contractor.
    10  However, the contractor shall retain nothing from those payments repres-
    11  enting proceeds owed  the  subcontractor  and/or  materialman  from  the
    12  public  owner's  payments to the contractor for the remaining amounts of
    13  the contract balance as provided in subdivision one of this section.  If
    14  the  contractor  has  failed  to submit a requisition for payment of the
    15  remaining amounts of the contract balance within ninety days of substan-
    16  tial completion as provided in subdivision one of this section, then any
    17  clause in the subcontract between the contractor and  the  subcontractor
    18  or  materialman  which  states  that  payment  by the contractor to such
    19  subcontractor or materialman is contingent upon payment by the owner  to
    20  the  contractor  shall  be deemed invalid. Within seven calendar days of
    21  the receipt of payment from the  contractor,  the  subcontractor  and/or
    22  materialman  shall pay each of his subcontractors and materialmen in the
    23  same manner as the contractor  has  paid  the  subcontractor,  including
    24  interest  as herein provided above. Nothing provided herein shall create
    25  any obligation on the part of the public owner to pay or to see  to  the
    26  payment  of  any  moneys  to  any  subcontractor or materialman from any
    27  contractor nor shall  anything  provided  herein  serve  to  create  any
    28  relationship in contract or otherwise, implied or expressed, between the
    29  subcontractor  or materialman and the public owner.  Notwithstanding any
    30  other provision of this section or other law, any retainage  held  by  a
    31  public  owner or contractor representing retainage for a subcontractor's
    32  work shall be released, less two times the value of any remaining  items
    33  to  be completed by the subcontractor and an amount necessary to satisfy
    34  any claims, liens or judgments against the subcontractor or  materialman
    35  which  have  not  been suitably discharged no later than sixty days from
    36  the completion and acceptance by the public owner of the subcontractor's
    37  work.
    38    § 2. Subdivision 2 of section 106-b of the general municipal  law,  as
    39  amended  by  section 15 of part MM of chapter 57 of the laws of 2008, is
    40  amended to read as follows:
    41    2. Payment by contractors to  subcontractors.  Within  seven  calendar
    42  days of the receipt of any payment from the public owner, the contractor
    43  shall  pay  each of his subcontractors and materialmen the proceeds from
    44  the payment representing the value of the work performed and/or  materi-
    45  als furnished by the subcontractor and/or materialman and reflecting the
    46  percentage  of  the  subcontractor's work completed or the materialman's
    47  material supplied in the requisition approved by  the  owner  and  based
    48  upon  the  actual  value  of  the  subcontract or purchase order less an
    49  amount necessary to satisfy any claims, liens or judgments  against  the
    50  subcontractor or materialman which have not been suitably discharged and
    51  less any retained amount as hereafter described. Failure by the contrac-
    52  tor to make any payment, including any remaining amounts of the contract
    53  balance  as  hereinafter  described, to any subcontractor or materialman
    54  within seven calendar days of the receipt of any payment from the public
    55  owner shall result in  the  commencement  and  accrual  of  interest  on
    56  amounts  due  to such subcontractor or materialman for the period begin-

        A. 5429                             3
 
     1  ning on the day immediately  following  the  expiration  of  such  seven
     2  calendar  day  period and ending on the date on which payment is made by
     3  the contractor to such subcontractor or materialman. Such interest shall
     4  be  the  sole responsibility of the contractor, and shall be paid at the
     5  rate of interest in effect on the date payment is made by  the  contrac-
     6  tor.  Notwithstanding any other provision of law to the contrary, inter-
     7  est shall be computed at the rate established in paragraph (b) of subdi-
     8  vision one of section seven hundred fifty-six-b of the general  business
     9  law.  The  contractor shall retain not more than five per centum of each
    10  payment to the subcontractor and/or materialman except that the contrac-
    11  tor may retain in excess of five per centum but not more  than  ten  per
    12  centum  of  each  payment  to  the  subcontractor provided that prior to
    13  entering into a subcontract with the contractor,  the  subcontractor  is
    14  unable  or unwilling to provide a performance bond and a labor and mate-
    15  rial bond both in the full amount of the subcontract at the  request  of
    16  the  contractor. However, the contractor shall retain nothing from those
    17  payments representing proceeds owed the subcontractor and/or materialman
    18  from the public owner's payments to the  contractor  for  the  remaining
    19  amounts  of  the contract balance as provided in subdivision one of this
    20  section. If the contractor  has  failed  to  submit  a  requisition  for
    21  payment  of  the remaining amounts of the contract balance within ninety
    22  days of substantial completion as provided in subdivision  one  of  this
    23  section,  then  any clause in the subcontract between the contractor and
    24  the subcontractor or  materialman  which  states  that  payment  by  the
    25  contractor  to  such  subcontractor  or  materialman  is contingent upon
    26  payment by the owner to the contractor shall be deemed  invalid.  Within
    27  seven  calendar  days of the receipt of payment from the contractor, the
    28  subcontractor and/or materialman shall pay each  of  his  subcontractors
    29  and  materialmen  in  the  same  manner  as  the contractor has paid the
    30  subcontractor, including interest as herein  provided  above.    Nothing
    31  provided  herein  shall  create any obligation on the part of the public
    32  owner to pay or to see to the payment of any moneys to any subcontractor
    33  or materialman from any contractor nor shall  anything  provided  herein
    34  serve  to  create  any relationship in contract or otherwise, implied or
    35  expressed, between the  subcontractor  or  materialman  and  the  public
    36  owner.    Notwithstanding  any  other provision of this section or other
    37  law, any retainage held by a public  owner  or  contractor  representing
    38  retainage  for  a subcontractor's work shall be released, less two times
    39  the value of any remaining items to be completed  by  the  subcontractor
    40  and  an  amount  necessary  to  satisfy  any  claims, liens or judgments
    41  against the subcontractor or materialman which have  not  been  suitably
    42  discharged  no  later than sixty days from the completion and acceptance
    43  by the public owner of the subcontractor's work.
    44    § 3. This act shall take effect immediately and  shall  apply  to  all
    45  contracts entered into on or after such effective date.
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