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Legislative Memo

Frank Kerbein
Director, Center for Human Resources
T 518.465.7511
www.bcnys.org

BILL:

S.2931 (Libous)/ A.796 (Braunstein)

Support

SUBJECT:

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project

 

DATE:

June 18, 2015

 

The Business Council opposes S.2931 / A.726 that would amend the state's finance law and general municipal law and eliminate the small retainage upon acceptance of materials delivered to a construction site.

The long time practice of retaining payment of a small percentage of the cost of project materials by the owner of a construction project until the project is substantially complete is the target of this legislation.

Retainage acts as a form of insurance on construction projects to insure that delivered and installed materials meet specific requirements for quality and performance. It is usually held until substantial completion of the construction project and is then released along with the final payment to the contractor.

The use of retainage insures that disputes over incorrect or defective materials are resolved quickly, helping to keep projects on time and within budget.  The enactment of this legislation unnecessarily undermines the right of contract between private parties. 

No specific problems with this historic practice have been articulated by supporters of this bill so we wonder why the legislature is even considering it.

For these reasons, The Business Council opposes this legislation and respectfully urges that it not be enacted by the New York State Legislature.