Utility and Transportation Contractor February 2015 by UTCA

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Utility and Transportation Contractor, FEBRUARY 2015

President’s Message As we enter into the New Year I can’t help but quote Yogi Berra, it seems “like déjà vu all over again”. At the time this magazine is going to print, fixing the soon to be insolvent Transportation Trust Fund (TTF) seems to be only a fraction closer than it was two months ago. To be honest, at times it seems further apart now than it did in 2014. In his recent State of the State Address, Governor Christie failed to mention the dire situation facing the TTF and New Jersey’s citizens. In fact, the only mention of transportation in his address was that New Jersey has a “world class transportation network”. Unfortunately it is hard to justify this statement when one considers the conditions of our roads and in light of the recent news concerning the Prospect Street Bridge in Dover, the Morris Avenue Bridge in Summit and the Route 3 Bridge in Secaucus. All three of these bridges were recently closed by the NJDOT for safety concerns and in one case the fear one of those bridges would collapse if a fire truck drove over it! Commissioner Jamie Fox has been warning New Jerseyans that there are hundreds more bridges in New Jersey that also raise safety concerns and we need to address the funding crisis or we will be shutting more and more bridges across the State. At the UTCA January General Membership Meeting, Senate President Steve Sweeney spoke and offered an outline to fix to the TTF. UTCA Executive Director Anthony Attanasio, along with members of the UTCA Executive Committee, recently met with Assembly Majority Leader Lou Greenwald, who also agreed that the right path for NJ is a long term fix to the TTF. Both of these men urged us to not accept a temporary fix as every stakeholder is at the table now. Now is the time to fix the TTF once and for all. We have been told that we have bi-partisan support in both the Assembly and the Senate, which leaves one person who ultimately wields the most power (that is the power of the pen), and that is our Governor. He has the ability to do what is needed for New Jersey, and that is to fix the problem once and for all so that we do not have to

address this for many years to come. It is time to stop the political rhetoric and to do what’s right for our children and the future of NJ’s economic viability. There is a crisis in Washington D.C. as well when it comes to transportation funding. The national highway trust fund goes broke in May and so far Congress has not been able to come up with a long term solution on infrastructure funding. If the Governor does intend to run for President, as many speculate he will, he should solve the state’s transportation funding crisis with a long term, robust and sustainable renewal. If he doesn’t, and does what past administrations have done and simply kicks the can down the road, how as an industry can we expect that he will do the right thing on the national level? Switching gears I would like to congratulate the George Harms Construction Company on 55 years in the construction industry and the EIC Group, LLC on beginning its second decade in business. We wish both companies continued success in the upcoming years. In this issue is a special article published by the UTCA staff honoring Jerry Liguori, a long time board member and past president of the UTCA and a legend in the industry. Jerry will be greatly missed. I would like to thank all who turned out for the General Membership Meeting in January. We hope that you all enjoyed the new format which aims to shorten our program so that you can spend more quality time networking with each other and more importantly additional time home with your families. Finally, we would like to remind everyone that 2015 is the 50th anniversary of the UTCA. In recognition of the milestone this year’s convention will be held at the Borgata Hotel Casino & Spa in Atlantic City this October.

Best regards,

Scott Lattimer

Utility and Transportation Contractor, FEBRUARY 2015

FEBRUARY 2015 Volume XL, Number 1

Contents Features

Published Bimonthly During 2015 Office Address: 1670 Route 34 North Farmingdale, NJ 07727 Mailing Address: PO Box 728 Allenwood, NJ 08720 (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org Publisher: Robert A. Briant, Jr. Editor: Michael DeVito Editorial Contributors: Michael DeVito Anthony Attanasio Dan Neville Helene Nasdeo Advertising Manager: Helene Nasdeo Photographer: Michael DeVito Cover Photo: Image Up

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George Harms Construction Completes 55 Years In Construction Insurance Pricing Is Stabilized, But Beware Of Other Challenges Are Your Best Executives Starting To Review The Job Market? Gennaro Liguori: 1938-2014 Traffic Lines Provides Services At Vietnam Veteran’s Memorial EIC Group Begins Second Decade In Business We Need To Fund Transportation To Grow Our Economy

Departments 2 18 35 55 62 70 75

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President’s Message Accounting Corner Safety Perspective Legal Dig Legislative News Financial Overview Labor Relations

Production/Graphics: Lauren Hagan Helene Nasdeo

Circulation: Helene Nasdeo Printed By: American Plus Printers Affiliations: ARTBA Clean Water Construction Coalition Water Infrastructure Network

Cover Pictured on the cover is the management team at George Harms Construction.

UTILITY AND TRANSPORTATION CONTRACTOR (ISSN 0192-4843) is published six times a year by the Utility and Transportation Contractors Association of New Jersey, 1670 Highway 34 North, Farmingdale, NJ 07727. Periodical postage paid at Farmingdale, NJ and additional mailing offices. POSTMASTER: Send address changes to UTILITY AND TRANSPORTATION CONTRACTOR, PO Box 728, Allenwood, NJ 08720.

Utility and Transportation Contractor, FEBRUARY 2015

Cover Story

George Harms Construction Completes 55 Years In Construction George Harms Construction Company Remains One Of New Jersey’s Most Successful Contractors

Firm Operates Five Different Divisions In The Construction Industry

n 2010, when the UTCA acknowledged George Harms Construction’s 50th Anniversary, we highlighted about an overly ambitious teenager that envisioned his ultimate career goals, who then had the fortitude, determination and good fortune to bring them to fruition. Now five years later, George Harms Construction remains one of New Jersey’s most successful contractors. Upon the establishment of his firm, George Harms focused on excavation work and then eventually began pursuing water and sewer pipe installations, mostly in northern and central New Jersey. In 1980, when GHC reached its 20 year milestone, the firm diversified into the highway construction field. During the 1980’s, in addition to constructing major road and bridge projects for the NJDOT on Route 130 and Route 295, GHC also constructed a solid waste reclamation facility for the County of Monmouth, completed runway reconstruction at the United States Naval Air Station in Pomona, and landfill projects for Burlington County in Florence and for the United States Army at Fort Dix. Moving into the 1990’s, successful completion of

numerous NJDOT projects followed on Route 24, Route 129, Route 9, Routes 21/78, Routes 1 & 9, Route 1, Whitehead Road and Interstates I295/I195. In the early 2000’s, GHC impressively completed a NJDOT project on Route 1 & 130 which required the construction of four bridges and included the installation of nine Mechanically Stabilized Earth Walls, as well as earthwork, grading and interchange upgrades. Despite the intricacies of this fast-track project, the GHC team completed its construction in only 20 months! During the construction of this project, GHC was awarded the largest contract ever awarded by the NJDOT at that time. The $114.6 million project was on the Route 35 Victory Bridge which became New Jersey’s first precast

This Design Build contract extended the Hudson Bergen Light Rail System to 8th Street in Bayonne, NJ.

Widening construction proceeds along Southbound Parkway shown here. 4

concrete segmental bridge. GHC built both northbound and southbound bridges over the Raritan River, measuring 3,970 feet in length. The construction included 440 foot long balance cantilever main spans over the navigational channel which set a record in the United States for this type of construction. GHC has also exhibited its expertise on various rail projects, undertaking construction projects for AMTRAK, Conrail and Utility and Transportation Contractor, FEBRUARY 2015

The recently completed Interchange 6 project above included construction of seven new bridge structures spanning over the widened NJ Turnpike.

NJ Transit, which included construction of high level platforms at rail stations in Red Bank, Woodbridge and Hazlet, as well as for the Hudson Bergen Light Rail system. The latter project was a Design Build contract and included the design and construction of a single track extension measuring 4,500 linear feet in length. Other facets of this $58.3 million project involved a new station and platform that required a historical replication of the original station structure.

bridges, one measuring 528 feet, and the 880 foot mainline flyover bridge. This project was completed in 2012. In more recent years, GHC has completed additional projects of note such as the NJ Turnpike Widening Program, Interchange 6 Project. This $113 million project was one of the larger projects in the Widening Program and reconstructed Interchange 6 and two local bridges over the NJ Turnpike. The project included drilled shafts, stone columns, MSE retaining wall construction, and installation of large curved steel girders and box beams over the Turnpike. A second sizeable NJ Turnpike project is nearing completion. Contract P200.199 is part of the Garden State Parkway Widening Program. This $84 million project includes staged demolition and construction of eight steel girder bridges that carry the Parkway over local roads, temporary bridges, foundation piles, drilled shafts, and MSE retaining wall construction. Currently, GHC is working on the $101 million NJDOT Rt.35 Restoration Project, located in Ocean County, with the end goal of “Restoring the Shore” from Super Storm Sandy. Additionally, the GHC team is working on two Monmouth County projects, the Emergency Repair to the Historic Timber Bridge over the Glimmerglass in Manasquan, and a Concrete

The main span of the Victory Bridge extends over the navigational channel and at the time, was a record setting span for balance cantilever style construction.

The new southbound Parkway bridge over Church Road is shown partially completed and open to traffic, while construction of the new northbound structure is underway.

Three other significant DOT projects were successfully completed in the first part of the twenty-first century. The September 11 Memorial Bridge on Route 70 over the Manasquan River in Monmouth and Ocean Counties and the $141.2 million Route 52 viaduct project in Ocean City/Somers Point. The third project performed during this time frame was the $200 million NJDOT Route 1 & 9 St. Paul Viaduct project. With another record-setting DOT contract, Harms completed construction of 11 bridges and installation of 45 retaining walls in the vicinity of Tonnelle Avenue and the Pulaski Skyway in Jersey City. The two longest bridges on this project were the mainline viaduct Utility and Transportation Contractor, FEBRUARY 2015

Deck and Structural Steel Repair Project to the Oceanic Bridge in Rumson. While GHC’s founder, George Harms, remains active with the firm, serving as Chairman of the Board, he relinquished his title and associated responsibilities of Chief Executive Officer, to his eldest son Rob in 2011. Rob, along with longtime employee Tom Hardell, GHC’s President and Chief Operating Officer, oversees the Company’s day to day operations. Additional key members of GHC’s management team are Kevin Harms, Gary Abadrabo, Jeff Brantly, Jim Duffe, Kathy Duffe, Carlos Fernandes, Jason Hardell, Dan Healey, Doug Longmuir and Ed Panuska. George Harms and his employees have been long-time active members of UTCA as well. George Harms served as President in 1976-1977 and was a Board Member into the 1980’s. GHC has been represented on the UTCA Board for approximately 40 years with Ed Nyland following George Harms on the Board and continuing with Tom Hardell who is currently an officer with the association. GHC’s employees have been members of various UTCA committees and task forces, and GHC has always 5

“stepped up” when called for legislative events, meetings with government officials and legal challenges. George Harms was also involved in one of the key decisions that shaped UTCA’s success. George was part of the team that interviewed and hired the late Bob Briant, Sr. as the first fulltime employee of the association. It was this decision that proved to be the catalyst for the dramatic growth and achievements experienced by UTCA during its history. George Harms also served as a regional vice president for the National Utility Contractors Association in the 1970’s and several of his key people have served with the American Road and Transportation Builders Association (ARTBA). Currently, Rob Harms is a member of the ARTBA Board of Directors and he has participated in the ARTBA Young Executive Development Program (YEDP). In fact several other members of the Harms firm have also completed YEDP training including Jim Duffe, Ed Panuska, Dan Healey and Jason Hardell. George Harms and his company have achieved much success in the 55 years since its inception. The impressive history of

the company’s beginning will last forever and the future is sure to hold new ambitions led by Rob Harms, supported by the Harms Family, and GHC’s current leadership. As a team, they are dedicated to continue George’s vision and possibly even pursuing a vision of their own.

On the Route 1 and 130 project, construction of this re-engineered interchange was performed at an impressive pace, despite the challenges of working around the heavy traffic volumes.

Utility and Transportation Contractor, FEBRUARY 2015

INSURANCE PRICING IS STABILIZED, BUT BEWARE OF OTHER CHALLENGES By: Carl Bloomfield, The Graham Company For all the challenges of doing business as a contractor in the current regulatory and economic environment, there has been one area that has been generally favorable to contractors – obtaining competitively priced insurance coverage that offers broad protection. However, despite somewhat stable pricing in the market, exclusive of New York, there are still some challenges to be aware of. Workers Compensation Costs The cost of Workers Compensation insurance remains one area where there is consistent pricing pressure. Almost everyone is aware of increasing health care costs and this has a direct impact on your Workers Compensation insurance. In addition, an aging workforce and a higher dependence on prescription drugs are causing systematic cost increases. Insurance companies have been trying to dig out of the hole that was left during the Great Recession where written premiums were at their lowest levels in over a decade, which resulted in some of the highest loss ratios on record. At one point during the Great Recession, for every $1.00 written in premium, the insurance industry was spending almost $1.20 in claims, administrative and operating costs. By applying consistent rate pressure for several years, at the end of 2013 the industry was only spending about $1.01 for every $1.00 collected in premiums. That is a remarkable turnaround, but unfortunately it was achieved on the backs of policyholders who paid higher rates. And despite the improved results, we are continuing to see insurance companies take a much harder stance on Policy Audits and Class Codes. Insurance companies, along with the State Workers Compensation Bureaus, have been much more diligent in making sure payrolls are assigned to the correct Class Codes. This has caused some insureds to experience a significant increase in Workers Compensation costs retroactively, which has not been contemplated in their bid pricing. Workers Compensation insurance is going to remain a challenge for years to come. 12

Unfavorable Case Law Courts across the country continue to challenge liability coverage provided for construction risks. Some cases are at odds with the traditional understanding of how policies are interpreted and how coverage is provided. Various jurisdictions seemingly have a different viewpoint on how an occurrence is defined and how the primary versus excess limits apply. By messing with the definition of an occurrence, the courts have turned on its head what we would traditionally expect a General Liability policy to cover in the areas of Faulty Workmanship and Resulting Damage. In addition, state anti-indemnity statutes that limit the amount of contractual risk that can be transferred are being extended to also limit the additional insured coverage being required of subcontractors. This was described last year in a series called, “Contractual Risk Transfer.” The resulting lack of clarity and understanding you might have with respect to the risks you may be assuming or transferring for any given project can impact your business. It is no longer only important to make sure your contracts are well-written and combined with broad liability coverage, but now it is equally important to understand the jurisdictions in which you are working and their interpretations of insurance policies. Additional Insured Coverage One of the standard insurance provisions in any contract is the requirement to add other parties as an Additional Insured. As discussed in the “Contractual Risk Transfer” series, Additional Insured endorsements have gone through a transition over the past several years. There are hundreds of different variations of Additional Insured endorsements in use, each with its own pitfalls. One of the specific growing concerns related to Additional Insured coverage are endorsements that require a direct contract requirement between the contractor and the Additional Insured in order for coverage to apply. Oftentimes a contract between two parties also Utility and Transportation Contractor, FEBRUARY 2015

requires numerous other entities be included as Additional Insureds, such as various governmental entities, engineering firms, funding sources, etc. Additional Insured endorsements requiring a direct contract agreement between all the various parties named in a contract in order for coverage to apply present a significant obstacle for these various other entities to obtain the coverage they are expecting from the contractor. In the event these other parties are relying on this Additional Insured coverage and it is not there, the contractor can be faced with uninsured claims, breach of contract suits and a lost customer. Horizontal versus Vertical Exhaustion Many jurisdictions have weighed-in on how the various limits and insurance carriers will apply to a loss given the numerous parties typically involved in a construction project. Whether the limits must be applied vertically (beginning with the primary coverage and moving into excess coverage) or on a horizontal basis (all primary insurance available for all parties involved must be exhausted first before an excess policy will apply) can differ by jurisdiction. As a result, many contracts are including a requirement for the subcontractors to carry $2,000,000 per occurrence limit with a $4,000,000 aggregate limit on the general liability policies. This is especially the case in a jurisdiction like New York which looks for horizontal exhaustion of limits in excess policies. By requiring subcontractors to carry higher primary limits, this insulates the owner’s and general contractor’s primary policy limits in the event of a claim that horizontal exhausts. At a time when insurance companies are looking to restrict or tightly manage their exposures, many are seeking to get significant dollars for these additional primary limits. This issue of horizontal versus vertical exhaustion is even causing some large general contractors and owners to dictate which Umbrella Liability insurance companies their subcontractors can do business with because of the particular position that insurance companies have regarding the exhaustion of limits during a claim scenario involving Additional Insureds. This can obviously present an issue

Utility and Transportation Contractor, FEBRUARY 2015

if your Umbrella Liability insurance company is on one of the “forbidden lists,” because now you will have to go and get a project specific Excess policy. The former could make your bid uncompetitive compared to another contractor who does not have to go get that project specific Umbrella policy because their insurance is with an approved insurance company. Employment Practices Liability An area of exposure that probably doesn’t get a tremendous amount of attention in the contracting community is Employment Practices. Unfortunately, New Jersey is usually regarded as the second worst state in the country, only behind California, in terms of the legal regulatory environment and Employment Practice claim activity. This is causing many insurance companies to either pull out of the state completely or significantly increase both premiums and deductible levels. This is a problem that is not going away anytime soon and most contractors don’t have robust Human Resource Departments to adequately address Employment Practice issues. Contractors and their insurance brokers should be aware of these potential insurance-related issues that are prevalent in today’s marketplace. This way you will be able to take a proactive approach to addressing these issues before it costs you a job or places an unnecessary financial burden on your business. About the Author: Carl Bloomfield is a Vice President at The Graham Company, the largest property and casualty insurance brokerage in the Mid-Atlantic region. He joined The Graham Company in 2006 and is the co-leader of the Construction Division. As a leader of the Construction Division, Bloomfield spearheads The Graham Company’s involvement in several construction industry organizations, including the Utility & Transportation Contractors Association, Associated General Contractors, General Contractors Association of New York, New Jersey Asphalt Pavement Association, the Contractors Association of Eastern Pennsylvania and the

General Building Contractors Association of Pennsylvania. Carl can be reached at cbloomfield@grahamco.com or 215-701-5420.

Utility and Transportation Contractor, FEBRUARY 2015

Accounting Corner

WHAT IS YOUR CONSTRUCTION COMPANY WORTH? By: Jack Callahan, CohnReznick I’ve been given the privilege, each February, to write an article for the UTCA magazine. Falling as it does, in the beginning of each year, I often find myself in a reflective mood, looking back at last year, and also looking to the year ahead. The construction industry has come through another difficult year with uncertain times still to come. However, I believe the industry is growing stronger and that the demand for your work has been highlighted at the highest levels of state and federal government agencies. One thing is certain – there will be change, and those contractors that have a strong management team and team of trusted advisors will be positioned to recognize the change, and profit from it. This year, CohnReznick participated as an advisor in transitioning ownership for one of our oldest clients. A new generation of the family has stepped in to allow the founders to move on to new challenges and opportunities. The process and structure was put in place over an extended period of time, and the end result has been very positive. In going through the process we reviewed the various strategies to value a utility constructor, and the specific dynamics that need to be taken into consideration. I encourage each of you to have a discussion with your co-owners regarding where you stand in the life cycle of your business, and to evaluate whether or not you have an honest assessment of what your company is worth. If a contractor is considering a liquidity event, there are various scenarios that can be used. Some of the traditional methods include: · Sale to family members · Sale to key management · Sale to an ESOP 18

· Sale to a competitor · Sale to a new player in the market · Sale to an international contractor · Sale to private equity investor · Liquidation or partial liquidation of corporate assets Each of these options offers both opportunities and downsides. However, in the end, owners must do some soul searching and a value assessment of what is most important to you and your family. Some factors to consider include: · Am I looking to maximize my value? · Do I want to preserve the corporate name and culture? · Are there key employees I would like to provide for? · Do we have a management team or family that are up to the challenge to effectuate a smooth and effective transition? It is my belief that the first step is truly understanding what the construction company is worth to both the owners and their families. This is both a monetary and a subjective issue. Many of our clients, and the members of this industry, define themselves by their businesses. Their family, social, business, and even charitable contacts all intertwine. How deeply will selling off all or part of your business affect your personal and social life? Not an easy question, but one you need to give serious consideration to. There are the critical financial factors to consider. You need to assess the amounts of salaries and benefits and related business income drawn from the business. You then have to look at your personal lifestyle and budget going forward. Do you know how much you will need to maintain the lifestyle you and your family have grown accustomed to? Will the proceeds from the sale along Utility and Transportation Contractor, FEBRUARY 2015

with your other business ventures provide you with the ability to continue that lifestyle into retirement? With this information in mind you can begin the process of evaluating the worth of your business. Another very difficult concept to keep in mind is whether the value you desire is achievable in the current market. For instance, utility contracting companies are difficult to raise capital for. There are not many investors who can get past the competitive bid environment and the tight margins. That said, there have been several contractors, both large and midsized, that have found strategic investors. As trusted advisors, we have had the opportunity to get involved in a number of these transactions, and can share some of that experience and insight. The business valuation process looks to three basic concepts in arriving at a value: · In its simplest terms the Asset Based approach analyzes the orderly liquidation value of the business. Of course, in construction little is simple and the ability for a contractor to effectively wind down jobs and liquidate assets can cause a significant erosion in the realizable value of those assets. · The Market Based approach looks to comparative merger and acquisition activity. On public company deals this information is readily available, but very few contractors operate in the public environment. · The Income Based method is the one more likely to be used as this determines a value based on an income capitalization method. How much could an investor expect to earn from their investment in your business? This is the more detailed and subjective approach but the one most likely to be utilized. There is no set standard as to a value based on a multiple of earnings. Every deal has its own terms and conditions which is why it is first critical for the owners to set their own expectations and understand their internal value to the business. Your advisors or an independent valuation firm can help provide insight on value, however, it is then up to the owners to decide their long-term plans and vision for the succession of the business. In the end, many hard questions need to be asked and answered, but

with a little guidance, you’ll be able to make the necessary decisions for a successful transition. To effectively prepare a contractor for a liquidity event or ownership transition and to realize the value that you would look to achieve, you need to plan and structure the deal well in advance. Reacting to a critical event such as a difficult contract, new competition, or a serious life event such as death, disability, or divorce is not the time to begin the process. Have the discussions now and start the thought process even if there are no present plans. I think you will find it very enlightening. About The Author: Jack A. Callahan, CPA, is a CohnReznick partner and the Firm’s Construction Industry Practice Leader. He can be reached at jack.callahan@cohnreznick.com or 732380-8685.

Continued from Page 35 * Written compliance programs for use of Respirators, medical exams, worker training and record keeping should already be in place for employers that expose workers at or above the PEL. * Employers can choose to measure their workers’ exposure to silica and independently decide which dust controls work best in their workplaces, or the proposed rule also anticipates that some methods will be acceptable to be used in lieu of dust sampling. Example of a Flexible Alternative for Construction: Protecting Against Dust from Stationary Masonry Saws- Courtesy OSHA. You can use a saw with a built-in system that applies water to the saw blade. The water limits the amount of dust that gets into the air. The employer wouldn’t need to measure the amount of dust in the air, but if a worker used the saw for more than four hours per day, they would also need a half-mask respirator. If a worker used the saw for four hours or less per day, no respirator would be needed. If any worker needs to use a respirator 30 or more days a year, he or she would need to be offered a medical exam. Utility and Transportation Contractor, FEBRUARY 2015

Remember, the key to prevent silica related illness is to keep dust out of the air. * Identify work that may generate dust and plan work to provide for elimination or reduction of dust at the source. * Provide worker training so they can understand the risks and how to effectively protect themselves from exposure * Identify effective work processes and equipment that limit dust creation and ensure all workers use them consistently * Conduct air monitoring to measure actual exposure and ensure controls are effective. * Ensure workers do not take silica home with them – utilize proper PPE and decontamination methods.

Utility and Transportation Contractor, FEBRUARY 2015

ARE YOUR BEST EXECUTIVES STARTING TO REVIEW THE JOB MARKET? As Economy Brightens, Be Ready To Reward & Retain Your Key Employees

By: Bob Damato, Partner, RDA Benefit Services A recent article in USA Today highlighted one of business owners’ greatest concerns: American workers are on the move again. A recent trend shows valuable workers are switching jobs in greater numbers, taking advantage of recent economic growth and a more dynamic labor market to bank additional compensation. “Quitters,” a term coined by USA today, are becoming more common in industries where skilled workers are in high demand. In recent years, many of these workers, especially those in technology and engineering, as well as high level executives, have experienced slow growth in their sectors, resulting in salary and bonus freezes. Losing key employees can cripple a small business, leading to uncertainty for business owners in the short and long term future. In the last 6 months, a number of our clients have asked how they can provide a solution for this growing issue of attracting, retaining, and rewarding the best executives in the company to ensure that they remain satisfied and loyal until they are ready for retirement. A very good, simple solution is to design Bonus Plans that will continue to reward these key executives for many years. One of the best examples of this type of compensation is a “REBA” plan. What is a “REBA” Plan? The “REBA” Plan, a Restricted Executive Bonus Arrangement (Section 162) plan, is a supplemental retirement plan. According to IRS tax laws, an owner can hand-pick a few key executives and would not to have to provide this benefit to any other employees in the company. While owners can offer a qualified retirement plan for all full time workers, they can also set up this non-qualified “REBA” plan for key executives in the company. And it is simple and flexible to set up. The annual REBA bonuses to the executives are an expense to the company and the executives pay the tax on the bonus. The owner can also provide a “Double Bonus” to these top executives Utility and Transportation Contractor, FEBRUARY 2015

to make sure they won’t have to pay the tax out of their pocket on the annual REBA bonus. In addition, the employer is exempt from annual IRS reporting and ERISA requirements. The cash asset of the plan is owned by the employee, not the employer, and the beneficiary would be the employee’s family or a trust. Additionally, if the executive leaves the company before the vesting schedule reaches 100%, the cash value in the plan goes back to the employer. Commonly called a “Golden Cuff” plan, it is designed to make sure these executives have a strong incentive to stay with their company until they reach retirement age. How to Set Up a “REBA” Plan In an agreement between the company and the executives, the owner would lay out a vesting schedule just like in a qualified 401(K) plan or a pension plan. A REBA plan is unique because the owner can design the vesting schedule however they choose. When the executives become 100% vested, then the executives have access to the assets in the plan. The assets in the plan are also protected from creditors or any litigation situation because the employee owns the assets, not the company. There are also a number of different assets you can place into this “REBA” plan, such Stocks, Bonds, Annuities and Cash Value Life Insurance. Each asset has its advantages and disadvantages but the employer chooses which assets to use. If you would like to learn more about the Restricted Executive Bonus Plan (REBA) plan, please feel free to contact Bob Damato, Partner, at RDA Benefit Services LLC at 855-693-0772 or bob@rdabenefits.com.

Utility and Transportation Contractor, FEBRUARY 2015

Gennaro Liguori 1938 - 2014 On Veteran’s Day of last year, the construction industry mourned the loss of a true industry icon. Gennaro “Jerry” Liguori passed away on that day at the age of 76, ironically on a day that America celebrates those who served our country, which Jerry had done. Many industry representatives took the opportunity to visit with Jerry in his last days and he was still able to regale them with his legendary knack for storytelling. A legion of UTCA and construction people attended his funeral mass on November 15. 2015 at St. Thomas More Church in Manalapan. Gennaro Liguori was born in the Bronx in 1938 to the late Ciro Liguori and Anna Migliucci Liguori. In his youth, he fondly recalled trips to Jones Beach as well as working in his father’s restaurant. It was during these years that he became acquainted with the construction industry, working as a water boy on heavy highway construction projects. This early experience would lead Jerry to eventually make construction his career of choice. Obviously this was the correct choice as Jerry became a well-known and successful construction executive, culminating with his induction into the New Jersey Construction Industry Hall of Fame in 2012. Jerry Liguori was an avid sports fan, and was especially fond of the New York Yankees and the New York Giants. In his younger days, he was a standout athlete at Christopher Columbus High School where he enjoyed success as both a baseball player and football player and also lettered in track. Following high school, he attended West Chester Community College before his service in the United States Army. In his later years, Jerry joked that his orders were to report to Paris, which he interpreted as Parris Island, South Carolina. He quickly realized that he was scheduled to serve in Paris France! Following his four year stint in the army, Jerry landed his first construction job on the Cross Bronx Expressway. A short time later, he became a Project Superintendent for Slattery Construction Utility and Transportation Contractor, FEBRUARY 2015

and was involved in many signature projects for the firm including the completion of foundations for the original World Trade Center. In fact, following the bombing of the Twin Towers in 1993, Jerry Liguori was called upon to assist in the assessment of the damage due to his expert knowledge in the original construction. His career then took him to Schiavone Construction where he served as a Project Manager and eventually as a Vice President. His term at Schiavone saw the successful completion of many large and complicated projects including the 63rd Street subway tunnel. He then returned to the Slattery firm which was then known as Slattery Skanska. In 2003, Jerry established Gennaro Construction Consulting in which he utilized his experience and expertise to aid other contractors. Gennaro Liguori served on the UTCA Board of Directors for many years and he also chaired the Labor Committee. He became the association’s President during 1997-1998. Following his service to the Board of Directors, he was given the status of “Director Emeritus” and then received the aforementioned Hall of Fame induction. Jerry Liguori leaves behind his wife of 53 years, Gloria, as well as their five children Laura, Linda, Jerry, Louis and Michael, the latter two who also embarked on a career in construction. He is also survived by his cherished grandchildren Michelle, Joseph, Nicholas and Christopher. He will be missed by his countless friends, colleagues, business associates and golf buddies, all too numerous to name. He will be remembered for his caring nature, professionalism, amazing story-telling ability and generosity. Those of us that knew him were proud to call him “friend”. On behalf of the UTCA Officers, Directors, Membership and Staff, we offer a heartfelt tribute to this incredible man. Photo Caption: Gennaro Liguori receives his Hall Of Fame Award from Joe Walsh in 2012.

Utility and Transportation Contractor, FEBRUARY 2015

Safety Perspective

SILICA AND WORKER SAFETY By: Ken Bodgan, J.A. Montgomery Risk Control, An Affiliate Of Conner Strong & Buckelew OSHA is proposing two standards to protect workers from exposure to respirable crystalline silica - one for construction, and the other for general industry and maritime. This is a proposed rule, it is not yet a regulation. There is currently no date set for implementation of any of the changes proposed. Despite our awareness of the hazards from silica since the 1700s, as well as silica safety campaigns from US DOL in 1938 “stop silicosis”, and the 1996 “It’s Not Just Dust,” many workers continue to inhale silica dusts on the jobsite that will result in their loss of ability to work and for some, to breathe. By breathing air contaminated with microscopic particles of crystalline silica, thousands of workers will be diagnosed with silicosis and many hundreds will die. Hazardous silica dusts are created during cutting, chipping, grinding, drilling, and crushing and handling most common masonry materials such as brick, block, concrete, stone and sand. These exposures put workers at risk for silicosis, lung cancer, COPD and kidney disease. Silicosis can occur after very short exposures to very high level of silica dust. Various sources regard a 1930s tunnel project in West Virginia as the Hawk’s Nest tunnel tragedy, by attributing silica exposure to the deaths of between 16 and 25 percent of the tunnel workforce within 5 years…500-750 workers out of 3,000, dead within 5 years! Chronic silicosis – the most common type - usually occurs after a latency period of 10 or more years of exposure. Both forms of the disease result in lung scaring and irreversible disability or death. OSHA states that 300 construction workers will die from silicosis each year – 10% of those diagnosed with the disease. Utility and Transportation Contractor, FEBRUARY 2015

Major Provisions for OSHA’s Proposed Construction Standard * Requirement to sample for silica if exposures may be at or above an action level of 25 ìg/m3 * Reduce respirable crystalline silica exposures by half, to the PEL of 50 ìg/m3 * Limit workers’ access to areas with exposures above the PEL; * Utilize dust control methods to reduce silica in the air – i.e. use water, vacuum shrouds, other * Provide respirators to workers exposed at or above the PEL; * Medical exams-including chest X-rays and lung function testsevery three years * Worker Training and Record Keeping of workers’ silica exposure and medical exams. What will change from the current standard? * The proposed rule will reduce the allowable exposure to half of the current PEL for crystalline silica. (currently 100 ìg/m3 for quartz) * Many employers do not establish a restricted access area for silica generating work. * NJ Dry cutting law (NJSA 34:5-182) already prohibits the dry cutting or grinding of masonry materials, effectively mandating the use of dust control methods at the source. Continued On Page 19 35

Utility and Transportation Contractor, FEBRUARY 2015

Traffic Lines Provides Services At Vietnam Veteran’s Memorial On December 19, 2014, UTCA member Traffic Lines responded to a request to put the finishing touches on the new parking lot that showcases the recently restored 1964 Bell UH-1D, Iroquois helicopter, also known as the Huey. Under the direction of Francisco “Paco” Castineira, the firm’s foreman on the project, Traffic Lines placed new striping for the parking lot which is located next to the educational building and museum for the Vietnam Veteran’s Memorial in Holmdel, NJ. The work was completed in one day!

Traffic Lines personnel complete striping of the parking lot at the Vietnam Veteran’s Memorial.

A number of UTCA contractors had completed construction for the display of the Huey helicopter. In 2013, the Foundation contacted the association for assistance in the construction of the base and support system for the display of the Huey. UTCA members J. Fletcher Creamer & Son, HC Constructors, IEW Construction Group, Black Rock Enterprises, Renda Roads, Stavola Contracting and Aspen Landscaping donated time and material for the project. Harry Chowansky of HC Constructors served as the unofficial general contractor on the construction activities for the project. The memorial also received an enormous amount of assistance from the Heavy & General Construction Laborers Union Local 472. Through the leadership of Anthony Oliveira, Don Hibbs and Joe Scerbo, nearly three dozen union members donated their time to help construct this plaza. In February 2013, a group of veteran volunteers, many of them Vietnam Era helicopter pilots and maintenance technicians, began the restoration of the Huey that is now on display outside the Memorial’s museum. The crew donated 8,000 hours of service time to restore the Huey.

Utility and Transportation Contractor, FEBRUARY 2015

WITHUMSMITH+BROWN CELEBRATES 40 YEARS IN BUSINESS

Utility and Transportation Contractor, FEBRUARY 2015

Featured Article EIC GROUP BEGINS SECOND DECADE IN BUSINESS

Firm Provides Support Services To Contractors

n 2004, three enterprising gentlemen made the decision to pool their vast experience and form their own firm. These three people, Michael Marks, PE, David Newkirk, PE and James Gow, PLS, became acquainted during their years with Lichtenstein Engineers. Once the new firmâ&#x20AC;&#x2122;s office location was selected in Fairfield, NJ, Mr. Marks began operation of the entity in the Summer of 2004. Within six months he was joined by his partners Newkirk and Gow.

Pictured left to right are Zeus Wu, EIT, John Montemarano, PE, Zachery Peart, EIT, Gary Sorkin, PE and Anthony Drozdowski, PE.

EIC Group LLC provides civil engineering, professional land surveying services and structural engineering, however its largest scope of business is contractor support services/engineering. In its first decade in operation, the firm has a proven record of accomplishment and has worked for some of the top heavy highway contractors in New Jersey. The firm provided services for almost every contractor that performed work on the massive NJ Turnpike widening program 42

between exits 6-9. EIC provided construction support engineering services on this 25 mile long, $2.5 billion widening project. Services provided included temporary structure design, lift analysis and design, sheeting design, shielding design, and the development of structure erection and demolition plans. In total, EIC provided services on 14 of the 23 construction contracts and prepared erection plans for over 80 structures, a significant majority of all of the bridges in the project.

The companyâ&#x20AC;&#x2122;s founders, David Newkirk, PE, James Gow, PLS and Michael Marks, PE are pictured left to right.

EIC also provided services on the first two contracts for the Route 7 Wittpenn Bridge. On the first contract, the company designed an innovative plan to use a single crane to tilt, lift and set caisson cages, some of which measured eight feet wide by 130 feet long. Usually the procedure requires the use of two or three cranes. The firm also provided material handling services, precast fender erection and walkway design as well as other services for Conti Utility and Transportation Contractor, FEBRUARY 2015

Technology for ten years. Newkirk has managed the design of a wide variety of civil engineering projects, ranging from miles of roadways and large industrial and institutional site plan designs, to residential developments and single family lot development plans, and is knowledgeable in the land use regulation and permitting processes. James Gow, PLS, became licensed as a Professional Land Surveyor in 1992. He has many years of surveying experience in a wide variety of tasks, including boundary, topographic and hydrographic surveys, as well as layout of projects ranging from bridges and miles of highways to small buildings and additions. Gow also has a NICET certification for construction inspection.

Pictured above are Danny Gow, Donna Morgan and Linda Germanton.

Enterprises who was the general contractor on the project. On the second Wittpenn contract, EIC was enlisted to assist the prime contractor, Union Paving and Construction, and its subcontractor, Structural Services. The company provided erection plans on contract two among its services. Working with Archer Steel, the firm designed and developed the erection plans for Route 3 over the Passaic River bridge replacement project. This heavily traveled structure required the development of unique temporary cantilever beam supports at the piers to facilitate the staged construction. EIC provided services for Conti Enterprises on the Wittpenn bridge project.

On this Turnpike project, EIC served the needs of Archer Steel.

The three founders of EIC Group, LLC have approximately 80 years of combined experience in the construction industry. Michael Marks, PE, is a graduate of Rutgers University where he received a degree in Civil Engineering. He then received his Masters in Civil Engineering from Massachusetts Institute of Technology (MIT). Following his education, Marks began his career at Lichtenstein where he was the head of the firm’s bridge department in the State of New Jersey. He started the contractor services group while at Lichtenstein, continues to utilize these skills at EIC, and has assisted contractors in the design of erection plans, cofferdams, bridge rollins, jacking, shielding and ground anchors. David Newkirk, PE, is a Civil Engineering graduate of NJIT. During his tenure at Lichtenstein, he was the lead staff person of the site engineering division and also served as the Director of Information Utility and Transportation Contractor, FEBRUARY 2015

The three principals have assembled a talented team to service its client base. Anthony Drozdowski serves as the project manager for EIC and has more than 20 years of construction industry experience. He has worked with many highway and bridge contractors throughout the northeast. Prior to joining EIC, he headed the construction engineering department at Lichtenstein Engineers. The company’s engineering department includes Gary Sorkin, PE, John Montemarano, PE, Zeus Wu, EIT, and Zach Peart, EIT. Other key employees of the firm are Donna Morgan, CAD Draftsperson, Danny Gow, survey rodman, and Linda Germanton, Office Administrator. EIC Group’s clients have been some of the most successful contractors in the heavy highway construction industry. Included on this list are Anselmi & DeCicco, Archer Steel, B. Anthony Construction, A. Servidone Construction, Caldwell Marine, Crisdel Group, J. Fletcher Creamer & Son, D’Annunzio & Sons, Edward Kraemer and Sons, Ferreira Construction, George Harms Construction, Green Construction, James J. Anderson Construction, J.H. Reid General Contractor, JCM Group, Johnson Brothers, Joseph M. Sanzari Co., Kyle Conti Construction, Midlantic Construction, Primer Construction, Kiska Construction, Ritacco Construction, Sparwick Construction, Structural Services, Tarheel Enterprises, Tutor Perini Corp., Tully Construction, Union Paving and Construction, Weeks Marine and Conti Enterprises. The firm has also worked with suppliers and engineering firms such as Jersey Precast, HNTB, Weidlinger Associates, Acrow Bridge, KLJ Engineers, Skyline Steel and Veritas Steel. In order to avoid the potential for conflict of interest, EIC concentrates its 43

efforts on the construction industry and typically does not work directly for agencies. Outside of New Jersey, the company has performed work in approximately 20 states including Kentucky, Wisconsin, Florida, North Dakota and Minnesota. One of those projects was the Sorlie Memorial Bridge over the Red River in Grand Forks North Dakota and E. Grand Forks, Minnesota. EIC worked as a subconsultant to KLJ Engineers for the North Dakota and Minnesota Departments of Transportation. The firm performed an in depth inspection and rating of this two span, 570' long Parker truss bridge. EICâ&#x20AC;&#x2122;s findings and analysis permitted the states to save and rehabilitate this historic structure rather than replace it as originally planned, saving over $20 million and preserving the unique span for future generations. Other services provided on this project included detailed analysis of critical gusset plates, evaluation of the feasibility of raising the bridge to avoid flooding issues, and preparation of a preliminary design for a potential steel replacement structure. With such credentials listed above, it is easy to see why the firm grew quickly in its first decade in business. They are becoming known as the â&#x20AC;&#x153;problem solversâ&#x20AC;? that contractors, fabricators and consultants turn to when they have a difficult engineering issue to overcome. We can expect many more years of service to the construction industry from this very capable company.

EIC assisted Union Paving and Structural Services on the second Wittpenn bridge project.

Utility and Transportation Contractor, FEBRUARY 2015

TRUE & ASSOCIATES CELEBRATES 30 FRENCH & PARRELLO CELEBRATES YEARS IN 40 YEARS IN BUSINESS BUSINESS Geotechnical Engineering Firm Expands Services Throughout The Years

Utility and Transportation Contractor, FEBRUARY 2015

Legal Dig

NEW JERSEY’S STATUTE OF REPOSE: A KEY DEFENSE TO CONTRACTOR’S LONG-TERM LIABILITY By: Paul T. Fader, Association Legal Counsel New Jersey’s Statute of Repose (“Statute”), which was enacted in 1967, provides construction industry participants with a powerful defense to long-term liability 1. The Statute bars claims against an entity involved in a construction project filed more than 10 years after substantial completion of its work. This Statute was enacted in order to curtail indefinite exposure to liability by private entities and is not limited by the date of claim accrual or the date of claim discovery. Rather, it is triggered by the mere passage of time. In order for a construction industry participant to gain protection under the Statute, there must exist the following conditions: (1) a deficiency in the design, planning, surveying, supervision, or construction of an improvement to real property; (2) more than 10 years must have lapsed since substantial completion of the services upon which liability is predicated; and (3) the alleged injury or damage must have arisen out of a defective and unsafe condition in an improvement to real property. 2 Although the Statute applies to Government claims, it is applied differently from private claims. It does not apply to a governmental action where (1) a warranty, guaranty or other contract expressly provides for a longer effective period, (2) there was willful misconduct, gross negligence or fraudulent concealment in connection with the performance of the improvement to real property, or (3) the construction industry participant has entered into a contract to provide environmental or asbestos remediation services. In 1999, the New Jersey Supreme Court broadly interpreted an “improvement to real property” to include an alteration, modification or addition that (1) enhances the use of the property; (2) involves an expenditure of labor or money; (3) is more than a mere repair; (4) adds value to the property; and (5) is permanent in nature.3 The term “improvement to real property,” incorporates Utility and Transportation Contractor, FEBRUARY 2015

structural improvements, which are required for the structure to actually function as intended.4 In Daidone v. Buterick Bulkheading, 191 N.J. 577, 560 (2007), the New Jersey Supreme Court held that the Statute’s clock begins to run as of the date each potential beneficiary of the Statute completes its portion of services on the project, even if the whole of the project is not then complete. This “multiple triggers” ruling is problematic. For example, the Statute’s 10-year period may have lapsed for a general contractor’s subcontractors, but the general contractor may remain exposed, with the result that the general contractor is barred from pursuing a claim for indemnification against its subcontractors. In light of the multiple trigger dates, it is important that all beneficiaries of the Statute endeavor document the date of substantial completion of their services. The general contractor ought to press for timely issuance of a certificate of substantial completion and, where it disagrees with such certificate, it ought to document such disagreement. Where the date of substantial completion is obscure, the Court will likely use the issue date of the certificate of occupancy. 5 Needless to say, the Statute’s beneficiaries need to retain such project records as it will allow them to establish a timeline to bar long-term liability. Update: In my Legal Dig Article in the December 2014 UTCA Magazine I wrote about the Terminal Construction Corporation v. County of Bergen case and how it may open the door for the conditional acceptance of materially defective bids and noted that the case was pending on appeal. Since that time, the plaintiff dismissed its appeal. Unfortunately, the trial court’s opinion remains in tact and may be used as guidance by other courts hearing similar matters. 55

Utility and Transportation Contractor, FEBRUARY 2015

WE NEED TO FUND TRANSPORTATION TO GROW OUR ECONOMY By: Senate President Steve Sweeney I am extremely appreciative to have an organization like UTCA committed to working together on one of the most important priorities facing the State of New Jersey, which is the need to repair, rebuild and upgrade our transportation infrastructure. The only way to get this work done is by properly funding the Transportation Trust Fund and I want you to know – that as I write this — I am pushing hard to provide $2 billion a year in dedicated funds exclusively to the TTF. It was a pleasure to speak at your General Membership Meeting on January 8 th and share some ideas with you on creating a real, long-term plan to get transportation and utility contractors to work. This requires more than short-term, stop-gap measures that rely on unfunded programs with no revenue source. As I said that evening, we must make real investments in our infrastructure to give New Jersey’s residents the transportation network they deserve and to create real, good-paying jobs for our workforce. We all recognize the state’s transportation infrastructure is in critical need of improvement, as conditions of our highways, roadways, bridges and mass transit system have suffered from neglect in recent years — compromising the safety and efficiency of a system that is absolutely critical to the state’s economy. I have been traveling the state to remind everyone that the investment in transportation is critical to economic growth. Our transportation system is our competitive advantage in a region with 60 million people. I have been very clear as I traveled around our state – reminding our leaders and citizens that New Jersey is a logistics state first and foremost and our transportation system is critical for business and commerce. In short, the infrastructure is the lifeblood of the New Jersey economy. You understand that, and that is why I am so proud to work with you. But, statewide, the American Society of Civil Engineers has reported that 651 of the 6,554 bridges in New Jersey (9.9%) are considered structurally deficient and 1,717 (26.2%) are considered

Utility and Transportation Contractor, FEBRUARY 2015

functionally obsolete. The ASCE report also estimated that driving on roads in need of repair costs New Jersey motorists $3.476 billion a year in extra vehicle repairs and operating costs – $601 per motorist. We cannot continue to go on like this. Government as its most basic function should be able to provide a safe and effective means of transportation. We are failing to do that right now. That’s why I called upon top transportation experts last month to develop a comprehensive long-range transportation plan for the state. The UTCA has been working closely with my team, and we appreciate and value your organization’s perspective and contributions. The Legislature stands ready and willing to work with the governor to fund a real plan and I hope we have a plan by the time this article goes to print. We are willing to explore any and all solutions. But there are three priorities that I am committed to and that I am fighting for: that at least $2 billion is generated each year, that every penny is dedicated to transportation, and that funding for municipalities and counties is doubled. We have kicked the can down the road for so long that we have officially run out of road. Senate President Steve Sweeney represents the Third Legislative District, which includes portions of Gloucester and Cumberland counties and all of Salem County. First elected to the New Jersey Senate in 2001, Senator Sweeney has been reelected four times. He was chosen by the Democratic Majority to lead the Senate in the 214th Legislature in 2009, and took the oath as Senate President on January 12, 2010. Senate President Sweeney entered public service after his daughter was born with Down syndrome. He was horrified at the manner in which individuals with disabilities were treated and set out to make a difference not just in his daughter’s life, but in lives of those in his community. Follow Senate President Sweeney @NJSenatePres

Utility and Transportation Contractor, FEBRUARY 2015

Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Executive Director Happy New Year from the UTCA legislative team. Several key pieces of legislation saw action in December and January on which we want to provide an update. The most important initiative facing our industry is the renewal of the broken Transportation Trust Fund. The UTCA Executive Committee, along with CEO Bob Briant and Executive Director Anthony Attanasio continued to meet throughout the months of December and January with members of the legislature and staff from Governor Christie’s office. We continually seek to both educate them on the dire need for a robust renewal but to also take part in the crafting of a plan. As soon as there is legislation to review, the UTCA will provide analysis and advocacy in order to fight for the best possible outcome for the industry and the State. Legislation that would allow for Private Public Partnerships (P3), S2489 passed the State Senate 35-1. The bill has now been referred to the Assembly State & Local Government Committee. This legislation would permit certain government entities to enter into public private partnership agreements with private entities to undertake certain building and transportation infrastructure projects. UTCA’s P3 Task Force met to discuss the legislation and to produce amendments that are necessary to protect the industry and the taxpayer. The UTCA was able to secure many of our amendments including: requiring P3 proposals from at least two private entities before consideration; adding additional “resident” contractor language; addition of a long-range maintenance bond requirement by the concessionaire and several more. However, there is still more work to do including introducing a reasonable threshold for when a project is eligible for a P3 and forbidding public funding as a source or guarantee for P3 projects. The intent of this legislation is to advance large scale projects (i.e. light rail expansion, freight rail expansion, etc.) which traditional funding sources such as the 62

TTF and/or municipal and county budgets can no longer support. The UTCA believes that current transportation funding sources should be protected and that P3 projects should solely rely on new revenue. The UTCA recently met with Assembly Majority Leader Lou Greenwald (Prime Sponsor of the Assembly version of this bill) and will be meeting with senior members of the Governor’s office to continue seeking additional amendments. The focus is to maximize the full potential of P3s without harming NJ based businesses. Permit Extension Act - A3815. This legislation was passed by the Assembly 66-1-8, the Senate passed it 31-5, and it has been sent to the Governor for his signature. This bill pushes back the expiration date of current permit approvals to December 31, 2015. The legislation includes clarification of the phrase “extension area” to ensure that approvals in these areas remain valid. The UTCA supports this legislation as a necessary continuation of the Permit Extension Act of 2008, which was previously extended in 2010 and 2012. The poor economic climate has severely affected the state’s banking, real estate and construction sectors. Businesses cannot easily obtain financing under existing economic conditions and in some cases are forced to delay scheduled projects that have already been approved by a government entity and granted permits. Such delays result in some of these permits expiring before the projects are completed. Given that the permit application process is extremely time consuming and expensive, it makes sense to allow additional time for stalled projects to be completed. The UTCA worked as part of a broad coalition to ensure this bill’s passage. Buy America-Public Projects using products made with US goods-S1811. This bill passed in the Assembly 43-24-7, and 27-4 in the Senate. The bill has been sent to the Governor for his signature. This bill requires government contractors to use goods made in the United States; and it requires businesses that receive Utility and Transportation Contractor, FEBRUARY 2015

government contracts or government assistance to disclose job exportation information. This legislation, while well intentioned, will slow public projects and add dramatically to the contractor’s compliance costs. Additionally, these requirements would create more red tape, would stall decisions and could jeopardize relations with New Jersey’s international trade partners. Finally, the bill, in its current form, could potentially conflict with federal “Buy America” provisions which could jeopardize federal funding on transportation projects. The UTCA coordinated with the State Chamber of Commerce, the NJ Business & Industry Association and the New Jersey Department of Transportation in opposing this legislation and are urging the Governor not to sign this bill into law. The Water Infrastructure Protection Act-A3628, which had already passed the Assembly 45-27-5 passed the State Senate 2116, and has been sent to the Governor for his signature. This bill authorizes municipalities and municipal, county, and regional utilities authorities to lease or sell their water or wastewater assets to a private entity, without a referendum, if an emergent condition exists. This legislation will provide local decision makers with an alternative mechanism and assessment based on the needs of the jurisdiction. The UTCA believes that a less cumbersome and bureaucratic process will improve the state’s valuable water infrastructure system. The UTCA was able to secure several crucial amendments that benefit the industry and worked closely with a coalition of business, utility companies and labor to aid the passage of this bill including a last minute push to secure the 21st vote in the Senate. A3042, is a bill that requires contractors on public projects to provide wage information to the owners of the projects on a specific

schedule, to maintain records for a period of time; and for DOL to inspect for prevailing wage compliance. This bill had previously required contractors to submit certified payrolls within 5 days of payment to employees. The UTCA was able to secure an amendment that changed the reporting requirement from 5 days to 10 business days in line with regularly scheduled pay periods. This bill has been introduced to the Assembly Labor Committee. Finally, A3548, is a bill which would require local governments and authorities seeking to finance an environmental infrastructure project costing $1,000,000 or more to request, from the New Jersey Environmental Infrastructure Trust (EIT), an estimate of financing costs if the project were to be funded in whole or in part by the Trust. The bill requires the Trust to make available, online, a form for requests for the financing cost estimate. The estimate will enable the local government unit to evaluate, and other interested parties to consider, the potential savings of financing and interest costs. The UTCA agrees with the sponsors of this legislation that if a municipality or county could realize better financing options through the EIT then they should at a minimum go through the process of seeking this cost estimate. The bill met with strong resistance from the NJ League of Municipalities and the NJ Association of Counties. The UTCA is leading the efforts to work with the bill’s opposition to find common ground and acceptable amendments so that this bill can become law. The UTCA will continue its efforts to secure a robust TTF renewal and will remain a central figure in the legislative process. If you have ideas for current or potential legislation please reach out to the Association.

Continued from Page 75 test with the “economic realities” test (used in all claims brought under the Fair Labor Standards Act). In contrast to the “right to control” and “hybrid” tests, the “ABC test” involves only three criteria, which requires the party challenging the employer-employee relationship to show that: 1. the worker has been and will continue to be free from control or direction over the performance of the service; 2. the service is either outside the usual course of the employer’s business, or the service is performed outside of all the places of business of the employer for which the service is performed; and 3. the worker is customarily engaged in an independently established trade, occupation, profession or business. The Third Circuit noted that “[n]either the New Jersey Supreme Court nor any other New Jersey appellate court has previously determined which employment test applies to claims that arise under the New Jersey Wage Payment Law or the New Jersey Wage and Hour Law.” Since the Third Circuit recognized that the “determination of whether individuals are employees or independent contractors for purposes of New Jersey law may well have a significant impact on the tax revenues collected by the State of New Jersey,” N.J.S.A. § 34:11-4.1, et seq., and the New Jersey Wage and Hour Law, N.J.S.A. § 34:11-56a, et seq.?”

Utility and Transportation Contractor, FEBRUARY 2015

Financial Overview

10 NEW YEAR’S RESOLUTIONS FOR YOUR CONTRACTING BUSINESS By: William J. Ruckert, Provident Bank This is the time of year when those New Year’s Resolutions we’ve set out so mightily to do are wearing off. There is something so hopeful about the first of January, something that demands a fresh start. But for most of us, by the time February rolls around, we’ve found ourselves right back in our usual ruts. But not you. Not this year. You will not let your resolve waiver. This is the year you will make resolutions for the health of your business—and stick to them. If you want a leaner, meaner business in 2015, every day remind yourself, I resolve to: 1. Maintain Good Financial Reports. Ensure that your financial reports are Transparent, Timely and Typical. Without these 3 T’s, you’ll find yourself right back on that precarious precipice with your bank, with the jagged rocks of higher interest rates, stringent payment terms, limited borrowing capacity and inflexibility looming below. 2. Improve My Communication Skills. The King of Rock n’ Roll got it wrong; you need to practice a little more conversation please. Good dialogue with your bank, surety agent, sub contractors, and customers puts everyone on the same page and prevents unnecessary problems later. Open and honest communication leads to justification for the existing—or an expanded—borrowing relationship, simplified credit facility renewal and a smoother surety underwriting process. 3. Develop a Strategic Plan. Chart your organization’s course, set priorities and identify ways to grow by conducting a SWOT. Next, assess the industry, measuring its condition, recognizing trends, pinpointing competitors and leveraging your niche. Create an “operations plan” to break down your big goals into bite-sized, actionable steps with clear, realistic deadlines. 70

4. Review My Strategic Plan. A strategic plan is a dynamic, evolving, continual reassessment of your business. Invariably you will encounter detours, potholes and roadblocks, but you should review your plan with senior management at least monthly to keep on track. Make sure you have a grasp on your business’s financial performance and whether your cash flow will be a steady stream. 5. Invest in My Business. Investing in the business may be difficult, especially when there isn’t an immediate and obvious return, but it’s crucial for your company to survive and thrive. Replace that outmoded, rusting excavator, go for the prime real estate you’ve been eyeing! A capital expenditure line of credit (CAPEX LOC) allows you to purchase fixed assets that add long-term value to your business without tying up working capital. 6. Make My Cash Flow, Flow. Gaps in cash flow are the bane of a business owner’s existence, but they can be remedied. Take advantage of your bank’s convenient cash management tools, such as lockbox services and remote deposit capture to improve your cash flow. For a big-picture perspective, use online banking to monitor your daily cash position, project cash flow, analyze trends and make confident borrowing and investing decisions. 7. Manage My Budget. Realistic budgets developed from the bottom up engender the allegiance of all interested parties. When owners and managers work together to set goals, they share the responsibility of meeting those expectations. You should hold discussions at least monthly with each manager to ensure that your targets are being met. If you’re off the mark, you’ll need to make adjustments where appropriate. Your company’s budget should be tied into the Utility and Transportation Contractor, FEBRUARY 2015

aforementioned strategic plan to ensure everyone understands the full year’s goals. 8. Get It in Writing. Explicit contracts are crucial—especially with your subcontractors. They prevent or resolve any dispute. They protect all parties involved. Good contracts should outline the payment schedule, scope of work, date of substantial completion, warranties, dispute resolution alternatives, basis for termination, etc. Get it in writing, and you can’t go wrong. 9. Safeguard Against Fraud. Safeguarding against fraud is no longer an option. How can you afford not to take necessary precautions when the 2014 Report to the Nations on Occupational Fraud and Abuse found that 3.4% of total fraud cases occurred in the construction industry, with a median loss of $300,000 per incident—and that was just check fraud? Help protect yourself in 2015 by relying on your bank’s suite of cash management services, including business online banking, positive pay, remote deposit capture and ACH debit block.

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10. Review My Estate Plan. Estate and succession planning are imperative for the future health of your business and your family. Keep your documents up-todate and designate your intentions for the business after your departure: will it be terminated, transitioned to the next generation or sold? Seek estate administration services to protect, preserve and transfer your accumulated wealth. Your legacy should provide for your family, support your personal beliefs, fulfill philanthropic wishes and reflect the life you lived. About The Author . . .Wm. J. Ruckert III is senior vice president of middle market lending at Provident Bank. Based in Provident’s Iselin office, Ruckert oversees commercial financing for companies with sales of $15 million or more. He holds a bachelor’s degree in business administration from Loyola College in Maryland.

Utility and Transportation Contractor, FEBRUARY 2015

Labor Relations

EMPLOYEE vs. INDEPENDENT CONTRACTOR: THE NEW JERSEY SUPREME COURT WEIGHS IN By: Jill Tobia, Esq., Tobia & Sorger In the last Labor Relations Corner of 2014, this column advised that the New Jersey Department of Labor and Workforce Development (“NJDOL”), along with the Internal Revenue Service (“IRS”), were ramping up their efforts to identify and prosecute the misclassification of employees as independent contractors. On January 14, 2015, the New Jersey Supreme Court, in its decision in Hargrove v. Sleepy’s, LLC, endorsed a test that strongly favors the finding of employee status as opposed to independent contractor status. This ruling, coupled with the already prominent enforcement efforts in New Jersey, is certain to make misclassification of employees one of the most significant issues facing UTCA Contractors in 2015. The “ABC” Test: In Hargrove v. Sleepy’s, the New Jersey Supreme Court was asked to decide the proper test for determining whether an individual should be classified as an employee or independent contractor under the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a et seq. and the New Jersey Wage Payment Law, N.J.S.A. 34:11-4.1 et seq. Over the years, New Jersey courts have applied various fact sensitive tests that, while similar in nature, lead to inconsistent results due to the inherent subjectivity of the factors. Most notably, a “right to control” test, involving twelve separate indicia, was being utilized by many New Jersey courts to evaluate independent contractor status. Also, as noted by this column previously, this “right to control” test and a variety of indicia were also being utilized by auditors to determine employment status. However, with its decision in Hargrove v. Sleepy’s, the New Jersey Supreme Court has endorsed a three (3) factor “ABC” test of which all factors have to be met in order to find independent contractor

Utility and Transportation Contractor, FEBRUARY 2015

status. Accordingly, an individual will be deemed an employee unless an employer can demonstrate that: (1) the employer neither exercised control nor had the ability to control the individual or the completion of the work in question; (2) the individual performed work that was outside of the usual course of the employer’s business or outside the employer’s place of business; and (3) the individual’s work will continue outside of the relationship with the employer. Most significantly, this test requires the satisfaction of all three factors and therefore is more favorable to the finding employee status than status as an independent contractor. Advice for UTCA Contractors: With governmental enforcement efforts in the construction industry already on the rise in New Jersey, all UTCA Contractors need to revisit their independent contractor relationships in light of the New Jersey Supreme Court’s ruling in Hargrove v. Sleepy’s. Legal counsel should be consulted to provide guidance in applying the “ABC” test endorsed by the Court to every independent contractor relationship maintained by the contractor. UTCA Contractors should be mindful of the consequences for even an inadvertent misclassification, including but not limited to liability for unpaid taxes and overtime pay as well as exposure under various state and federal employment laws. Accordingly, this issue should be in the forefront of every UTCA Contractor’s mind as it heads into 2015. The “ABC test,” which has almost exclusively been applied to claims arising under the New Jersey Unemployment Compensation Act. As a comparison to the “right to control” test, the “hybrid test,” which also considers twelve factors, blends the “right to control” Continued on Page 63 75

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