ROBEX Q2 2019

BUILDERS EXCHANGE OF ROCHESTER, NEW YORK • SINCE 1888

ROBEX Q2•2019

ADMAR

Making Room for the Future at 330 Metro Park Homeleasing

Improving the Lives of Residents and Communities

Rochester

The Real Deal for Economic Development

Smart Technology Threat or Solution?

This issue of ROBEX Magazine is dedicated to Dick Ash and his commitment to the Rochester Construction Industry

Q2•2019

12

Features Sub-Contractors Default Insurance What You Should Know

22 Rochester: The Real Deal for Economic Development

An update from GRE’s President Matt Hurlbutt

28

Smart Technology

34

Company Profile

46

Construction Tax Update

16

Is a Cybersecurity Threat and Solution

Homeleasing: Improving the Lives of Residents and Communities

A Brief Overview

54 Tribute Remembering Dick Ash

6

A Message from the President

8

A Letter from the Chairman

10

Junior Builders Exchange

42

Opinion

54

Meet Courtney Lafferty

Far Left Fantasy & New York's Economy

Project profile 16

ADMAR Construction Equipmant & Supplies

4

Opens Their New Flagship 42,000-square-foot Facility

ROBEX Staff and Board of Directors

56

New Members

60

Index of Advertisers

34

On the Cover: Admar's new facility includes a wash bay for large equipment. www.robex.com

Quarter 2 • 2019 — ROBEX

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ROBEX

Quarter 2 • 2019

BX STAFF

BOARD OF DIRECTORS

President Aaron Hilger

Executive Committee Chairman Kevin Cannan A.A.C. Contracting

Vice President, Marketing & Operations Kim Gaylord Planroom Manager & Membership Director Corrine Taylor Accounting Manager Taryn Deinhart Research & Communication Manager Mariel Fedde Planroom Reporter Nicole Gissendanner Planroom Coordinator Liz Durkee Executive Assistant Jenna Kraeger

Vice Chairman Robert Morgan Upstate Roofing & Painting Secretary Melissa Geska U.S. Ceiling Corporation Treasurer Victor E. Salerno O’Connell Electric Company Immediate Past Chair Curtis Peterson Monroe Piping & Sheet Metal Inc.

Board Members Traci Adolph Samson Fuel David Cooper Rose & Kiernan Mike D’Hont Western New York Floor Co. Anthony DiTucci DGA Builders LLC Kevin Foy M&T Bank Ed Kurowski, Jr. The Pike Company Courtney Lafferty JBX Chairman LeChase Construction Mike Mallon LeChase Construction Mark Mancuso Flower City Habitat for Humanity

Builders Exchange of Rochester 180 Linden Oaks Suite 100 Rochester, NY 14625 P (585) 586-5460 F (585) 586-1580 info@robex.com robex.com

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ROBEX — Quarter 2 • 2019

The Builders Exchange of Rochester was founded in 1888 by visionaries dedicated to Rochester, New York’s commercial development market.

Today, the exchange has more than 600 members and affiliates, and serves the commercial, industrial and governmental construction industry in Western and Central New York. ROBEX © 2019 is distributed three times each year to all members on a complimentary basis.

David Mehalick Harris Beach Daniel Mossien Mossien Associate Architects Brian O’Shell Ajay Glass Walter Parkes O’Connell Electric Company Timothy Pullis Brown & Brown of Rochester Norbert Rappl Retired 2 Star General Comac Building Supply Randy Sickler SWBR Architects Gary Squires Manning, Squires, Hennig Co. Inc.

Publisher Fahy-Williams Publishing PO Box 1080, 171 Reed St. Geneva, NY 14456 P (800) 344-0559 F (315) 789-4263 To advertise contact Tim Braden at (800) 344-0559, tbraden@fwpi.com

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ROBEX — Quarter 2 • 2019

marks my 16th year leading Builders Exchange. When I was hired in 2003 some of the board members worried that I would leave too quickly to have an impact. I committed at the time for five years, which seemed pretty reasonable to all involved. Sixteen years later, I enjoy what I do even more than I did back then. The board and I have found a great fit and I feel very fortunate to still be leading such a strong, vibrant organization.

The Builders Exchange board has been amazingly supportive over my tenure. One of the biggest supporters, of Builders Exchange and my role was Dick Ash, CEO of CP Ward. Dick joined the board in 1980 (I was six!) and was active until his passing earlier this year. He was a stalwart advocate for our industry and would do anything he could to help make our community a better place. Dick was one of my go to people, always ready to help no matter what the topic.

His contributions and friendship will be greatly missed by all he touched. Rest in peace dear friend.

2019 started off strong in our market. Many members reported record level backlogs. Bidding is also at a high point. In early March there were over 430 projects in the planroom for a couple weeks. Those levels have not been seen since 2008. This is a good indicator of the health of the industry, which we believe will be strong into 2021. There is considerable market uncertainty past that point. Tax issues and the legislature’s march to the left has the potential to dramatically slow the private market. In addition, declining state tax revenue may also slow public construction. Along with many other associations, Builders Exchange is working hard on these basic economic issues with the upstate delegation. We hope to mitigate any costly moves by the New York City focused democrats but are realistic about the forces that are pushing the democratic party. Let’s all hope that the leadership is able to contain the worst policies of the far left.

With a strong market comes additional discussions about workforce. Many contractors experienced workforce constraints last year. There is no reason to expect that this year will be different. An aging workforce and shrinking population are difficult demographic trends. In addition, despite the current strong market, we have not experienced sustained economic growth. It is very difficult to add new workers if we need to wait for current workers to retire. It is also difficult to add new workers if we only have sustained employment for part of the year. With these issues in mind, Builders Exchange is working to provide additional resources to our members. Look for us to have a more active presence at career fairs and educational days. We will also be hosting career events and greatly expanding the information about the many career & technical programs on our website. We are also considering ways to link job seekers with members.

Please feel free to contact me if you have any ideas or programs that you would like to share. We appreciate your involvement in what we do and feedback on what we find.

Enjoy the spring season and the strong construction market!

Aaron Hilger President & CEO

www.robex.com

A letter from the CHAIRMAN

A

pril 2019 and the start of another construction season. This season is starting out busier than we have seen in years. The planroom has steadily had more than 400 projects for the last month. Once winter decides to leave, it will be exciting to see all the projects come to life.

The industry lost a dear friend and colleague earlier this year with Dick Ash’s passing. Dick left his mark everywhere he went and always knew how to make people smile. His family of companies can be seen doing work all over our area. This edition of ROBEX is in memory of Dick Ash.

I’m excited to be involved with the Workforce Development initiative that ROBEX is putting in motion. As we all know, there is a significant shortage of workers in all construction jobs. The initiative is a combined effort by a variety of board members and industry professionals to make sure that we have the right tools in place to encourage a career in the trades. From website updates to different events, you will see a variety of initiatives come to life in the coming months.

Our first event is a Construction Career Day on May 21st. This free event for students, educators and parents will feature a jobsite tour, panel discussion and job fair. The goal is to expose everyone to the careers that exist in construction. The panel will be representative of the different trades available and how employees have the potential to work their way up from a job in the field to a leadership position. The job fair will give students a chance to talk with companies hiring today, and some companies may have positions open in the future. The ROBEX team will be reaching out to local BOCES, guidance counselors and more to encourage them to attend. I challenge all of you to reach out to anyone you know and tell them about the ROBEX Construction Career Day.

We hope to have this event for many years to come. If your company is interested in participating, please reach out to Jenna at ROBEX to reserve your spot.

I encourage members to take a look at the social media and website program that ROBEX offers. Their team will assist with creating or updating your website, creating and posting on social media for a monthly fee. AAC has taken advantage of these services for several months. Our team doesn’t have the knowledge or time to be posting on social media. The ROBEX team maps out a strategic calendar and posting schedule to provide your company visibility. The posts don’t always have to be focused on work – take time to focus on your team and the fun things they do.

What’s important today is that you have a presence on social media and are posting regularly. Also, make sure your website stays up-to-date and current as you develop your social-media strategy.

I hope to see some of you at the annual ROBEX golf tournament on June 6th or the clambake on September 19th. Don’t forget about the free summer cookouts at the ROBEX office. It’s a great way to network, catch up with old friends, and have a great lunch!

My term as board chair is nearing an end. In July, we will have a new executive board and I will become immediate past chairman. My departure is bittersweet – ROBEX has seen tremendous growth in programs and membership over the last few years. It will be exciting to see where ROBEX goes in the next few years.

That also means you will get to hear from a new chairman in the next issue.

Take care and best wishes for a great 2019 and beyond!

Kevin Cannan A.A.C. Contracting 8

ROBEX — Quarter 2 • 2019

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Junior Builders Exchange

Sharpening our

Core Values

Networking, Professional Development and Community Outreach

by Courtney Lafferty, JBX Chairman

I

n a fast-paced workplace, everyone dreams of achieving the everelusive work/life balance. However, in today’s society, the pursuit for balance remains an enigma. Gwen Mazza and her team at enSpirit LLC illustrated the importance of putting all your energy and focus into whatever you’re doing at that moment, whether it be in a meeting or simply putting your phone away while spending time with family. This is one of the many lessons Mazza taught us during our fall leadership series.

Looking back, it is easy to see how successful 2018 was for the Junior Builders Exchange (JBX).

Behind the example and leadership of past Chairman Mark Mancuso, we saw the development of strong company sponsorships, an engaged and energized membership, and the addition of many new events.

Due in part to high participation in the many events held, including

the Annual Volleyball Tournament and Kickball Tournament, we were able to donate more than $5,000 to local organizations such as the ACE Mentorship Program, Habitat for Humanity, ROCovery and the URMC Mary Parks Asthma Center.

2019 marks a new era. Mark left big shoes to fill when he moved up to the Builders Exchange Board and passed the baton to me. As the youngest and first chairwoman of the JBX, it is my goal to empower young professionals, to cultivate future leaders, and to nurture passion for our industry. I intend to do this with unbridled energy through increased networking, professional development, and community involvement opportunities. I believe JBX can be used as a vehicle to instill authenticity and passion in other likeminded rising stars within our community, and foster professional growth for the next wave of leaders in our industry.

I am excited to announce that JBX will be hosting an expansive professional development program full of quarterly seminars on topics such

as construction safety, construction finance & law, public speaking, and leading industry technology this year.

It is our hope that when paired with networking events, these educational seminars will promote relationships between junior- and senior-level members in the industry, thus bridging the generation gap. Stay tuned for more details and dates as we expand this initiative.

This momentum continues into our networking events. As usual, our Annual Volleyball Tournament in February was a success. Congrats to the winners, LeChase, and big thanks to all our sponsors: O’Connell Electric, the Bonadio Group, Christa Construction, Harter Secrest & Emery, and Shuler Haas Electric.

April 25th is our 12th Annual Bowling Tournament at Radio Social.

We hope it sells out again this year!

In May, JBX will be cohosting a jobsite tour of the region’s biggest YMCA, in Pittsford (also known as the Regional Campus for Healthy Living) with the Pike Company, CFMA, CSI and DBIA. I encourage you all to check

2019 Annual JBX Volleyball Tournament at Hotshots 10

ROBEX — Quarter 2 • 2019

www.robex.com

Below Top: 2019 JBX Volleyball Tournament Winners - LeChase Construction; Below Bottom: JBX Kickball for a Cause donates proceeds to Habitat for Humanity it out and join us for drinks at the Pittsford Pub afterwards.

September 5th marks our 24th Annual JBX Golf Tournament, which will once again be raising funds for the URMC Mary Parkes Asthma Center. If you would like to learn more about the tournament or donate a silent auction item, please contact Susan Parkes-McNally @susan.parkesmcnally@oconnellelectric.com.

Interested in learning more about JBX and how you can get involved? Attend our Open Board Meeting and Happy Hour in the fall – this is the perfect opportunity to meet the JBX Board and know if JBX is a good fit for you. Similarly, I hope to see you all at my favorite event, the Annual Kickball Tournament at Ellison Park on October 12th. Will Concord Electric and T-Bell take home the trophy again?

Other upcoming events include curling and a brewery tour.

Lest we forget, community outreach is another core value of the Junior Builders Exchange; one we will continue to focus on.

While we plan on participating and hosting events such as Habitat for Humanity Build Days, I am eager to publicize that all our event proceeds will be donated to the Cystic Fibrosis Foundation (CFF) this year. CF is a rare, life-threatening genetic disease that affects the lungs and digestive system.

There are 30,000 individuals in the United States who suffer from CF. That being said, there are roughly 180 individuals in Rochester alone! The CF Foundation’s mission is to cure CF and to provide all people who suffer from the disease the opportunity to lead full and healthy lives. We are excited for this collaboration, and feel grateful to work in a community that has the desire and willpower to do something bigger than ourselves.

Overall, this is a very exciting time for the Junior Builders Exchange. As we sharpen the JBX core values – networking, professional development and community outreach – I am excited to see the cascading effect it has on our industry’s sustained growth. It is my hope that JBX aids visionary Millennials striving for a work/life balance as their careers blossom.

I would like to thank everyone at the Builders Exchange and on the JBX board for their dedication, creativity and enthusiasm. Together, we are transforming the industry’s culture and people into passionate professionals through empowerment, responsibility and commitment to the trade and our community. www.robex.com

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Insurance

SUB-CONTRACTORS INSURANCE (SDI)

by Timothy W. Pullis, ARM Senior Account Executive Brown & Brown of NY, Inc

SDI

was created in the mid-1990's

by Zurich NA Surety. It was known then and now as SubGuard which, for the first time, offered an alternative to traditional Surety Bond guarantees for a subcontractor’s or prime contractor’s completion of a designated construction contract.

Unlike Surety Bonds, which are a three-party contract between principal, obligee and surety, SDI was a new insurance product comprised of a two-party contract between a general contractor (GC) and insurer, purchased by the GC to ensure the performance, or a subcontractor within a predetermined timeframe or policy period. The original subguard policy that pioneered this new form of insurance coverage has since been joined by other commercial insurers offering similar policies to protect GCs from default by prime subcontractors subject to policy coverage terms, limits, deductibles and copayments.

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ROBEX — Quarter 2 • 2019

SDI is underwritten by an insurer supplying the coverage, based on a prequalification process required from all subcontractors to be included on the SDI policy. An application and supporting data will be submitted to the insurer to measure underwriter acceptance of the subcontractor’s eligibility to be insured under the scope of the SDI policy. The coverage afforded by the policy protects GC against default by the prime subcontractor by allowing the GC to replace the subcontractor subject to subsequent legal review. In order for coverage to be triggered, the GC must satisfy deductible obligations and/or copayments made part of the policy and, prove that it has paid its subcontractor. SDI may allow the GC more latitude to declare a default of a covered subcontractor in the absence of a Surety relationship by virtue of the two-party contractual relationship between the contractor and the insurer; declaring (continueed on page 14)

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may give the GC greater control over deciding and managing the default process when compared to the Surety instrument’s coverage response. SDI does not provide financial protection to owners, subcontractors or lower tier subs and material suppliers because of potential contractual limitations associated with the direct contract between prime subcontactor and the GC.

Should a default action be commenced, the cost to complete the contractual obligations of the subcontractor, as well as resulting defective and/or faulty workmanship, is also included within the definition of a covered loss. SDI products are not subject to filed and regulated forms in the coverage territories where they are sold, allowing the insurers’ greater flexibility

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ROBEX — Quarter 2 • 2019

in the rates and premiums that they charge. A default action commenced by an insured GC first requires that the GC will pay the first claim and then seek indemnification from the insurer once the deductible and copayments have been satisfied.

As a result, any potential shortterm economic burden rests with the GC.

The SDI policy may be cancelled by the insurer for cases of material misrepresentation or nonpayment of the policy premium. Often, subcontractors that are covered by an SDI policy prior to the policy cancellation may remain covered for their particular contractual obligations.

In situations where desirable subcontractors cannot obtain Surety credit, SDI may offer

an acceptable alternative to provide contractual performance and, unlike a traditional Surety performance guarantee, the burden of responsibility for resolving default issues rests solely with the GC and insurer.

SDI is most suitable for large GCs with comprehensive subcontractor prequalification programs and adequate administrative staffing to manage the SDI oversight in house for all enrolled subcontractors for projects within the multiyear policy term. Today, there are multiple insurers offering forms of Subcontractor Default policies, which has created competition within this specialized industry niche, allowing qualified GCs to shop for the most favorable pricing and available policy limits.

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Project Profile

Final preparations for ADMAR’s new flagship customer showroom were made before the equipment was moved in.

ADMAR,

one of DiMarco Group’s family of companies, is the largest independently owned provider of construction equipment and supplies to general contractors, major mechanical contractors, landscapers, municipalities and doit-yourselfers throughout New York, Ohio and Pennsylvania. One of the keys to ADMAR’s sustained business growth has been a commitment to continual updates and additions to its fleet, resulting in a cutting-edge inventory of more than 10,000 equipment selections from 50-plus

manufacturers. In recent years, its Rochester-based operations have co-located with several other DiMarco Group companies at 1950 Brighton Henrietta Town Line Road.

By mid-2017, ADMAR needed to make a change. President Joel DiMarco notes, “We simply outgrew our space. The availability of 330 Metro Park, which is adjacent to our current location, presented itself as a tremendous opportunity to acquire the space we needed to operate more efficiently and grow in a cost-effective way. The new site’s close proximity enabled us to leave our heavy equipment yard where

it was, but gain much faster access to major roadways. It also opened up new options for better meeting customer needs, now and into the future.”

In conjunction with architectural firm SWBR and DiMarco Constructors, ADMAR undertook a complete renovation of the 42,000-square-foot facility.

Plans included construction of a flagship customer showroom, an ultramodern equipment shop and warehouse to service and repair large equipment, and training space to support its own personnel and industry associations.

Inventory in the showroom is rotated based on construction seasons. www.robex.com

Quarter 2 • 2019 — ROBEX

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Project Profile

The team developed an integrated design-build approach to effectively use the existing structure, making the facility re-use cost effective for ADMAR.

The existing roof, however, posed an enormous structural challenge: it was too low to accommodate the heavy equipment that would be moving in and out of the facility.

After the mechanicals were in place, DiMarco Constructors successfully raised the roof by 9 feet on a 25,000-square-foot section of the building, a massive engineering feat. Additional sitework included clearing land to make space for equipment storage, earthwork, retention ponds and drainage piping. Data/telecom and electric services were installed underground to maintain equipment clearance requirements, and a new paved roadway was constructed to connect the new property to the current equipment yard.

Corporate citizenship has always been important to DiMarco Group, and minimizing the environmental impact was a critical factor in the design plans for 330 Metro Park. The renovated facility features energy-efficient LED lighting and state-of-the-art, programmable environmental

Left, top to bottom: The rental counter sales team works behind new pod stations.

The showroom features a sitting area with refreshments for customers.

High ceilings accommodate large construction equipment.

Opposite page: Tall windows provide daylighting for an inviting atmosphere.

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ROBEX — Quarter 2 • 2019

www.robex.com

Project Profile

Above: The roof was raised 9 feet on 25,000 square feet of the building.

The expansive service area includes ample room for large equipment.

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ROBEX — Quarter 2 • 2019

controls, including HVAC. In addition, waste oil from equipment is used to provide heat for the service area.

The new customer showroom represents one of the most impressive parts of the renovated facility. Close proximity to ADMAR’s corporate headquarters makes this showroom a flagship for the company, and an ideal place to test new approaches for enhancing the customer experience. Its open and airy design features LED lighting, and provides ample space for large equipment displays. Plans include digital technologies and large display screens to demonstrate equipment, common applications

and technical specifications.

Evan Brumm, ADMAR VP of operations, comments, “One of the most exciting parts of this project was the participation of multiple generations of the DiMarco family.

From grandfathers to grandsons, a family member was always on site, contributing design ideas to better prepare the finished product for day-to-day operations, as well as for future growth.”

After a build-out that took just under one year, ADMAR opened the doors to the new facility in December 2018. Built for efficiency and designed for growth, 330 Metro Park should serve the company’s needs for years to come.

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ROBEX — Quarter 2 • 2019

and Businesses

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T

here are so many advantages to running a company in and around Rochester.

• It offers easy access to major markets. In fact, it’s located within 500 miles of one-third of the U.S. and Canadian populations.

• You and your employees have short commutes to work – 21.6 minutes on average, according to the Census Bureau.

• With 19 local colleges, Rochester offers a vast and talented labor pool. Thanks to the 19,000 or so highly skilled graduates they produce every year, Rochester is ranked first for degrees in STEM programs, third for degrees in engineering and engineering-related fields, and fifth for degrees in computing and information sciences, based on per-capita analysis by the U.S. Department of Education.

But we’re preaching to the choir. ROBEX magazine readers already operate their businesses here. You experience the benefits every day.

So does Matt Hurlbutt, president and CEO of Greater Rochester Enterprise (GRE). But he boasts about the benefits every day, especially to companies outside the region. It’s his job. He and his team at GRE, the area’s 17-year-old economic development organization, are tasked with attracting new capital investments, wealth and new jobs throughout the nine-county region. With 20 project “wins” in 2018, accompanied by more than 1,500 new jobs and 2,600 retained jobs, Matt and GRE have a pretty strong track record.

“Bausch + Lomb’s investment of 100 new jobs is big, and then we look at companies like LiveTiles and Employee Channel, which are new to the region and expanding,” Matt said in January, in an interview with WROC-TV. “LiveTiles has a $17 million investment, 500 new jobs planned. Employee Channel is going to hire about 30 and they could very well move past that. We’ve got companies like Optimax and Rochester Precision Optics expanding, and IEC Electronics and Cantel Medical also expanding in the region, so that’s great.”

We recently caught up with Matt to hear about the projects he’s working on for 2019 and they ways they impact Rochester builders. Here is what he told us.

ROBEX: What do you hope to accomplish this year?

Matt Hurlbutt: I always hope that we can surpass the previous year. We did in both 2017 and 2018, and 2019 has started out well.

LiDestri Food and Drink is building a new facility thanks to a new joint venture with Crop’s, a frozen fruit and vegetable company in Belgium. LiDestri also operates facilities in New Jersey and California, but with to $8 million in grants and tax credits from New York State in exchange for job creation commitments, the company chose to expand here. They plan to create 80 to start, with 120 total over the next five years.

Hickey Freeman is also expanding to make dress shirts, creating 80 new jobs here.

Boston-based tech firm Catalant Technologies has found a home at NextCorps in the Sibley Building. The company’s cofounder did a recruitment test to see what kind of software development talent he would attract here, and was blown away by

www.robex.com

Quarter 2 • 2019 — ROBEX

23

the quality of people who responded.

He believes he can build a team in Rochester very quickly.

Does that kind of human resource give Rochester an edge over other communities?

The Greater Rochester, NY region has a multitude of competitive assets that have attracted investments from fast growing hightech companies, including Brand Networks, CloudCheckr, Datto, Paychex, and OFD Foods. Talent, technology innovations and an entrepreneurial spirit are just a few of the reasons companies invest and create jobs here.

What do you consider your greatest success story to date?

It’s tough to pick only one. New construction for American Packaging Corporation, Optimax, OFD Foods, IDEX, IEC Electronics and LiDestri

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ROBEX — Quarter 2 • 2019

Greater Rochester Enterprise’s leader, Matt Hurlbutt, and numerous economic development partners celebrate Bausch + Lomb’s expansion in the City of Rochester.

Food and Drink all represent great recent successes for our region.

The project pipeline has increased greatly over the past three years and we look forward to wins across advanced manufacturing, food and beverage processing, business services, software and information technology, and optics, photonics and imaging.

What’s been your biggest challenge?

We need to improve time to market for site development and

construction throughout the region, including infrastructure and utility preparation to deliver a deeper set of competitive options that meet a company’s timeline. Competing states and regions that have market-ready sites close deals, attract new capital investment and new jobs.

How can we facilitate stronger, more inclusive collaboration within our community?

The GRE team collaborates every day with companies, universities,

www.robex.com

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not-for-profit organizations, and government officials throughout our nine-county region as well as New York State. We also recognize the importance of a strong working relationship with construction experts, developers and the building trades to support new construction for businesses expanding in the Greater Rochester region. Our goal is to deliver a state of the art, unified approach to regional economic development.

What’s the key to keeping the younger generation in the area?

Community leaders must invest in infrastructure and quality of life assets to create vibrant places that can compete with major metropolitan areas. We also need to raise awareness of the numerous jobs available right now in our region that can support an exceptional quality of

The GRE staff life. We plan to work with a variety of partners across the region to promote those opportunities in order to help companies grow.

What’s your outlook for the next 10 years?

It difficult to predict where we’ll be in 10 years, but if the past year is any indicator of future success, I’m very optimistic. Building on our strengths in a diverse set of industries from advanced manufacturing, food and beverage manufacturing to

software and information technology and optics, photonics and imaging, I believe the Greater Rochester region can be a model of economic development success for an innovation-based economy.

What’s the number-one thing you want to people to say about Rochester?

That The Greater Rochester, NY region is the real deal with the resources you need to grow your business. It’s where smart people live and smart businesses grow.

Superior Resources Superior Resources to to Manage Manage YourYour RisksRisks and and Improve YourYour Bottom Line.Line.

Improve Bottom At USI, we have construction specialists At USI, we have construction specialists that that combine proprietary analytics, broad broad combine proprietary analytics, experience and national resources to create experience and national resources to create a customized insurance program to improve a customized insurance program to improve your your total total cost of risk. usLet show how cost ofLet risk. us you show you how the right plan and the right partner can help the right plan and the right partner can help protect your most valuable assets.

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www.robex.com

WE WE DELIVER DELIVER CONCRETE CONCRETE ADVICE ADVICE

Bonadio’s Construction Division serves over 250 clients in the construction Bonadio’s Construction Division serves 250 clients in the construction industry throughout New York State andover beyond. industry throughout New York State and beyond.

From taxes to wealth management to succession planning, construction company owners often find substantial From taxes to wealth management succession planning, construction company owners often find substantial overlap between their professionaltolives and their personal financial plans.

We’re well versed in helping you overlap between their professional lives and their personal financial plans.

We’re well versed in helping navigate the complexity, look out for your business and your heirs, and protect everything you’ve workedyou for. navigate the complexity, look out forCPAs, your business and your heirs, and protect everything you’ve worked for.

The specialists on our team include, tax specialists, valuation experts, engineers, CCIFPs, CITs, Certified The specialists on and our team include, tax Advisors. specialists, valuation experts, engineers, CCIFPs, CITs, Certified Fraud Examiners, Certified Exit CPAs, Planning Fraud Examiners, and Certified Exit Planning Advisors.

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Technology

Smart

Technology

Is a Cybersecurity Threat and Solution

by Michael Montagliano, CISSP, Chief Technology Officer, iV4

F

UD (fear, uncertainty, and doubt) is difficult to avoid when discussing today’s cybersecurity landscape. I have been reporting on the state of security for 18 years now and each year the message, unfortunately, doesn’t improve. In fact, predictions for 2019 demonstrate an ever-escalating threat potential.

But first, let’s step back and look at how much has changed over the years. According to the National Vulnerability Database there were only two vulnerabilities listed in 1988. It grew by 50 percent in 1989 to three. Things moved along slowly, staying in the hundreds until around 2000, when vulnerabilities first cleared 1,000 and then spiked in 2006 to 6,000 plus. This number stayed level for the next 10 years, and then something changed in 28

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2017. Exponential reporting of vulnerabilities went through the roof with more than 14,000 in 2017 and close to 16,000 in 2018.

So, it was only inevitable that the first challenge organizations face is the sheer volume of vulnerabilities that has grown rapidly since the ’80s.

The second challenge organizations face is that the complexity of malicious attacks has increased.

Cloud technologies have brought many useful tools to companies across all industries big and small, for manipulation and analysis of information through technologies such as Artificial Intelligence (AI), Machine Learning, and Data Analytics. Throughout history, advancements in technology (nuclear energy, the internet) have been a double-edged sword bringing enormous benefits, but also malicious actors taking advantage of these tools for personal gain.

The security predictions for 2019 find hackers will be using many of the following tools.

Smart Polymorphic Malware

AI-based malware can hunt down specific targets inside a company, hide from antivirus, and spread rapidly and uncontrollably across a network. It can also mutate itself at will in order to unleash multiple attacks at the same time.

This year at iV4, our Incident Response team has already dealt with this new breed of malware known as Emotet.

Predictive Password Guessing

Using machine learning and AIBots, hackers are collecting profiles of users who have been previously breached, and leveraging all of their publicly available information on the internet to predict what passwords they will use. If a person loses a couple of passwords to data www.robex.com

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Technology

breaches over the years, that person could be forever vulnerable to password attacks in the future.

Bot Extortion

The next generation of ransomware will be “brand extortion.” We have seen the effect of misinformation through social media by nation states for political gain, and the next step for hackers are threats to review bomb organizations if money isn’t exchanged. By posting negative posts or reviews online, hackers can undermine and possibly ruin a company’s reputation. A recent attack on CheapAir, a flight price comparison website, is the perfect example. Cybercriminals threatened to launch a search engine optimization (SEO) attack on the company unless it paid them

off. When CheapAir refused, the criminals followed through on their threat and unleashed a flood of negative reviews via bots.

to detect a breach, the more time a hacker has to move laterally across the network and compromise more systems.

How to close the cybersecurity gaps these threats expose To understand your security posture, it takes an understanding of three key metrics.

1. Do you have Recovery Time Objectives (RTOs) defined for your systems and data? RTOs stand for the amount of acceptable downtime for each system or category of systems (construction management, human resources, estimating, etc.) as defined in minutes, hours, or days.

3. Mean-Time to Respond (MTR), the amount of time it takes after detection to launch countermeasures to eradicate the threat.

The longer each of these values takes, the less likely it is that you will hit your Recovery Time Objective – meaning recovery from a security incident may take weeks or months instead of hours.

Here’s a three-step process to update and optimize your security posture 1. Understand your data Classification and tagging of your information is the first step in knowing what is important to your company and how to protect

2. Mean-Time to Detection (MTD), defined as the amount of time it takes to detect malicious activity on your network. The longer it takes

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valuable intellectual property. New tools such as Azure Information Protection (AIP) can automate the classification, labeling, establishing of rule sets for how data is handled, alerted, and reported on to give organizations visibility into information flows.

2. Visibility into malicious activity is a key component in reducing MTD and MTR Security automation through the use of Security Information and Event Management (SIEM), Microsoft Advanced Threat Protection (ATP) and Cloud App Security (CAS) tools can provide proactive alerting, dashboards, and reporting.

3. Integrating and Optimizing Organizations can continue running their IT departments and innovating for the future, while at the same time handling the increasing workload around security operations, by using analytics and machine learning to gain context for data across the enterprise. This will allow resource constrained IT security teams to augment their human knowledge and expertise.

How this all applies to the construction industry

In my experience, many in the construction sector think the threats other industries face, like financial and healthcare, don’t apply to them. In reality, it’s the opposite. The construction sector is a prime example of an industry that possesses large amounts of data that would be desirable to any hacker. Information such as building specifications, architectural drawings, materials pricing, profit/loss data, employee information, and banking records can all be used against you. In addition, since construction can be a lucrative and high-cashflow business, hackers are using ransomware more than ever to extort cash.

www.robex.com

According to HUB International, “The construction industry lags behind others when investing in high-level security and keeping up with current threats, and hackers are well aware and take advantage.”

Cybersecurity is an ever-

evolving threat, and new technology will continue to introduce new issues. Now more than ever, it is essential to develop a comprehensive security strategy that protects your business and your customers.

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Company Profile

DEVELOPMENT | CONSTRUCTION | MANAGEMENT

Warfield Square is a Home Leasing community located on East Main Street in Rochester.

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www.robex.com

Home Leasing’s mission is to improve the lives of its residents and the community in which it works.

www.robex.com

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Company Profile

DEVELOPMENT | CONSTRUCTION | MANAGEMENT

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ROBEX — Quarter 2 • 2019

www.robex.com

Home Leasing is a Rochester-based real estate development company specializing in the development, construction and property management of affordable housing.

History

Founded in 1967 by twin brothers Nelson and Norman Leenhouts, Home Leasing grew into a substantial real estate business with a diversified portfolio of singlefamily homes, apartments, and commercial properties.

After years of success, Nelson and Norman formed Home Properties, which became a public company in 1994 and was listed on the New York Stock Exchange.

During that time, the company’s portfolio grew to more than 50,000 apartments in 12 states, including 10,000 affordable units. From 1994 until 2005, Nelson and Norman served as joint CEOs of Home Properties.

In 2004, the brothers ended their services as co-CEOs of Home Properties and began to focus on their respective family-owned businesses. In 2006, Home Leasing split all the housing and commercial business lines, with Norman’s family forming Broadstone Real Estate with all the commercial properties.

Nelson’s family retained the Home Leasing name and concentrated on multifamily housing development, construction and property management. www.robex.com

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Company Profile

DEVELOPMENT | CONSTRUCTION | MANAGEMENT

The first development of Rochester’s Inner Loop East Transformation , Charlotte Square on the Loop, is a mixed-income apartment community currently under construction.

Construction

In 2008 Home Leasing Construction LLC was established to coordinate and manage all construction services for Home Leasing projects as well as for thirdparty construction. In 2015 Home Leasing grew to include an in-house development team.

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Home Leasing Construction LLC offers services to a wide range of developers, including for-profit and not-for-profit affordable housing developers and commercial real estate developers, from new construction of multifamily residential to adaptive reuse of historic buildings, and from

rehabilitation of existing projects to commercial projects and renovations.

The construction team delivers quality and diligent work during the pre-construction phase to ensure that constructability issues are identified and addressed. During the construction phase, Home Leasing

www.robex.com

From left: Tony D’Arpino, Megan Houppert, Cathy Sperrick, Jeff Leenhouts, Nelson Leenhouts, Bret Garwood, Sarah Struzzi

Construction LLC is thorough in every aspect of construction administration for the project, from initiation through completion.

History

There are now three generations of the Leenhouts family at Home Leasing. The company employs more than 140 people, and its central

offices are located in downtown Rochester. The management portfolio includes communities throughout New York, Pennsylvania and Maryland.

In 2017, Home Leasing’s 50th year, the company became a Certified Benefit Corporation (B Corp). Achieving this status is a demonstration of a very high

standard met by the company and is fully aligned with the core values of Home Leasing and the Leenhouts family. There are just over 2,600 B Corps in the world, with about half located in the United States and only 136 in New York State. Home Leasing is the first real estate development company and the first construction company certified in New York State.

Sheet Metal Workers’ Local Union # 46 244 Paul Road Rochester NY 14624 (585) 254-9151 www.smw46.com

Fabricators and Installers of Metal & Air Systems: HVAC Systems Architectural Metal Work • HVAC Service & Controls Testing & Balancing • Residential, Commercial, Institutional & Industrial “Quality Craftsmanship through training and high safety standards.”

Servicing the Upstate New York Counties of: Livingston, Monroe, Ontario, Seneca, Wayne and Yates.

Troy R. Milne – Business Manager Tommaso Piccininni – Business Representative

www.robex.com

Mark Miller – President & Training Director Patrick T. Skrip – Marketing Representative

Quarter 2 • 2019 — ROBEX

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Company Profile

NOTHNAGLE Drilling Inc. 1821 Scottsville-Mumford Road Scottsville, New York 14546

www.nothnagledrilling.com • Line Drilling/Relief Holes for Rock Excavation - Speed up Hoe Ram Activities!

• Vacuum Excavation Services for - Utility Locating - Pre Clear Excavation Areas • Post Holes and Fence Holes up to 18” dia.

• Rock Anchors and Toe Pins • Geotechnical & Environmental Soil Sampling • Monitoring, Remediation, Dewatering Wells • Geothermal Well Fields • Blast Hole Drilling • Pressure Grouting

Pictured is the community room at Farmington on the Creek, a Home Leasing community located in Farmington, NY.

Call to Discuss all your Drilling Needs!

Office: (585) 538-2328 Fax: (585) 538-2357

What's Next?

Home Leasing plans to remain a privately-owned family business for generations. In March of 2019, Home Leasing announced the appointment of Bret Garwood as Chief Executive Officer. Nelson Leenhouts remains at the company as Chairman of the board of advisors. Company growth and operations will continue to be guided by a Family Council and an Advisory Board who provides outside expertise.

Home Leasing has several development, construction and property management ventures on the horizon.

Currently, Home Leasing has nine projects under construction with five affordable housing community applications under review by the State of New York, and many more concepts are being evaluated.

Home Leasing is building the first development of Rochester’s Inner Loop East Transformation, Charlotte Square on the Loop. This development is an affordable apartment community that completes Home Leasing’s vision for Charlotte Street in Rochester’s East End. It creates a diversified neighborhood comprised of market rate apartments, individually-owned townhomes with residents all living and sharing the same spaces.

Since its conception, Home Leasing has operated with its mission to “improve the lives of its residents and the communities in which it works” at the forefront of each decision. Through its development, construction and property management divisions, Home Leasing delivers high-quality housing for communities and other developers and will continue to do so for years to come.

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www.robex.com

MASTERY IN

PROVEN PERFORMANCE IN PRECISION HIGH REACH DEMOLITION POWERFUL

VERSATILE

CONTROLLED

Opinion

Far Left Fantasy

L

ike many other urban dominated areas of the country, New York politics has taken a sharp turn to the far left. The Democratic takeover of the state Senate has not produced the drama of their tenure in 2009.

However, the change has performed as expected politically with the early part of the legislative session becoming a progressive high point.

Issues from women’s rights to gun control and immigration to LGBTQ

New York’s Economy

protections have dominated the discussions. None of these issues are core to Builders Exchange or our members. In the overall scheme of the state’s budget, they also don’t really cost anything either, so they don’t hurt the economy or job creation. The bigger problem is that none of these issues help the state improve its economic climate or create jobs. They make progressives feel good, while our economy lags and job creators leave upstate.

The more concerning part of the session is taking place now, with an upside-down state budget, characterized clearly by a shrinking tax base, being passed on time. Messy fights about spending money we don’t have on Medicaid or schools, or tax increases like congestion pricing dominated the debate. Spending on Medicaid or schools is not bad, but it is certainly hard to maintain with limited economic growth. There is nothing

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ROBEX — Quarter 2 • 2019

www.robex.com

in the state budget that deals with creating a better business climate – however the legislature did manage to find $100 million to fund their reelection campaigns.

After the budget we will need to deal with other issues that are very costly. The nouveau socialists driving Democratic Party ideology seem to have forgotten a few basic history lessons. Socialism is a failed ideology that many of our grandparents and great-grandparents came to the United States to escape from. The failure of the Soviet Union and Eastern Europe provide clear examples. Or consider the liberalization that had to occur in China for their country to become an economic superpower. Today, Russia and China are autocratic, but they certainly are not socialist.

If history takes too much effort, perhaps a review of the dire situation in Venezuela would be helpful.

The complete failure of the state, from squandering natural resources to feed its people, is telling. Even Sweden and Norway, the left’s darling “socialist economies” are not actually socialist. They are free markets with high tax rates that have liberalized over time (become more capitalistic), because a socialist model failed. Both rank in the top 30 free economies in the world, at 19 and 26 compared to the United States’ 14th spot. State takeover of industry, in whatever its form, has proven to be an ineffective economic model.

Why does this matter in New York? Economic development and healthcare. First, the far left in New York is celebrating Amazon abandoning their plans to expand in New York. While many don’t like corporate incentives, they are a fact of life so long as one state is willing to do them. Some on the far left think we have “saved” $3 billion that can now be spent on social issues.

Too bad that money only was there to be used if the state made the $27 billion that Amazon brought to the

www.robex.com

table. This is a perfect example of the fantasy of the far left – basic math does not matter. Added to this corporate hostility is taxation. There are 49 other states that New Yorker’s can live in. We lead the country in migration out because of tax rates and business climate. Increasing marginal rates or increasing the “millionaires’ tax” will just drive more to leave.

New York is a great state; reality is you don’t have to live here to build a company or participate in the financial markets – any job can be virtual. This is the second fantasy of the left – ignoring economic reality.

As taxes increase, job creators – developers, company owners, and entrepreneurs – make choices about where to live and invest. The top 1 percent of taxpayers already pays 50 percent of the state’s income taxes.

Why would they want to pay more and how is that possibly not their “fair” share? The top 10 percent of taxpayers in the state, with incomes starting at $132,000, pay a whopping 79.5 percent of the state’s income taxes. The top 20 percent, with incomes starting at just over $82,000, pay 92 percent of the state’s income taxes. Maybe it is time to rethink our spending.

The other area on which this matters in New York is healthcare.

There has been substantial interest in a state takeover of the health system in New York for years.

It has gone by many names, but it is still essentially the same – government, not private insurance or patients and their doctors, will control care. Proponents proclaim all sorts of savings from taking “profit” out of the system, lower reimbursement rates for doctors, and “best practices” leading to better medical outcomes. The first is unlikely, because all of the backoffice work of healthcare still has to get done. Anyone who has been to the DMV recently probably has good insight into how efficient the state is in processing paperwork. Lower

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Opinion reimbursement rates mean that doctors leave their practice, offsite facilities close and hospitals limit capacity. None of those sound like good outcomes. Medical decisionmaking, the last item, is not perfect today, nor will it be in a new system. The average wait time for orthopedic surgery in Canada is 39 weeks (and most in Canada purchase supplemental coverage, which New York lawmakers want to prevent). In the U.K. it was over six months, which prompted regulatory changes to get it down to 18 weeks (which has not fully being met). The point is, we expect to wait a very short time in New York, not most of a year to fix a bad knee or hip. We also expect to decide as a family, with our doctors and insurers, about grandma’s end-of-life care.

We don’t expect the state to tell us if she gets to live for another month or not.

A full discussion of single-payer health care would take considerably more space. Without that, we can focus simply on the tax issue. Single-payer legislation in New York contemplates an increase in state income tax rates ranging from an additional 12 to 16 percent. If you were already a top earner, you would pay a new rate of 24.82 percent in state income tax (more if you live in New York City). Those tax rates only pay for about two-thirds of the

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ROBEX — Quarter 2 • 2019

proposal, so other taxes would have to go up – none of which can be deducted on your Federal taxes. The only certainty that we have about single payer is that it will bankrupt the state, and most of the people in the top 20 percent will likely find jobs elsewhere. Those are the same people that pay 92 percent of the income tax today. Singlepayer is a fantasy, from its promised benefits to costs, especially when there are 49 other states to choose from.

The socialist fantasy in New York and in the Democratic Party will right itself over time. The energy behind this effort will falter as most Americans do not want the state to take over the economy, destroy economic growth with environmental regulation, control health care or spend trillions on new programs.

The question in New York is how far down the path will we go and how much harm will we do our state in the process? Hopefully, experienced leaders who have read a little history will slow down the progressive impulses.

Those who have not studied history are doomed to repeat it. Prime Minister Thatcher offers a good lesson: “The problem with socialism is, eventually, you run out of other people’s money.” If we are not careful, we may also run out of people.

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Financial

Construction Tax Update

by Adam Thaine, CPA Partner, The Bonadio Group Rochester office

N

ormally near the end of the year, I sit down with all of my contractor clients and dig into their numbers to try and come up with strategies to mitigate their income tax coming due. Typically, this consists of trying to find ways to defer income, accelerate expenses, or favorably change character of gains. Hard enough to do, but in general, this was a fairly straightforward endeavor.

Nearly a year ago, the Tax Cuts and Job Act was signed and threw the tax world for a loop. For a tax bill that was sold as a means to simplify income tax filings for the masses, it did the exact opposite in regard to filings for business entities, as well as their owners.

For anyone that thought Congress rushed the Affordable Care Act, the speed in which this bill was written and passed was impressive. Unfortunately, the bill reads as if it was put together too hastily and leaves many important questions unanswered.

In cases where the law is unclear, regulations get written in order to clarify Congress’s intent. While we recently received more than 430 pages of regulations dealing with one component of the bill, we are still

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Choice of Entity

Details: Corporate tax rates were cut from a maximum of 35 percent down to 21 percent, making C-Corporations more tax friendly. However, double taxation still exists as shareholders taking a dividend from the company would still need to report that as income.

Individual tax rates were slashed overall and came down from a high of 39.6 percent to 37 percent. In order to compete with corporate tax rates, business income from a pass-through may qualify for a 20-percent deduction (see discussion later in this article), effectively getting a maximum tax rate of around 30 percent.

Takeaway: In general, pass-through entities are still going to give the better tax answer to most owners.

However, any company that will not qualify for the 20-percent deduction or one which plans on being in a growth phase for a long period of time (no dividends going out to owners) may want to consider switching to a C-Corporation structure.

The ultimate fly in the ointment on this analysis is that tax law today may not be tax law for a long period of time. Constantly changing control in D.C. is evident, and views vary drastically between the two parties.

199A 20-percent PASS-through deduction

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Golisano Children’s Hospital | Rochester, NY Y

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46

waiting with bated breath for additional guidance to come in. Until that occurs, we are left to guide our clients as best we can. While the devil is definitely in the details when discussing tax law, until we have more certainty, I am taking a big picture stance with my clients. The following are the big ticket items I will be discussing and strategizing for this yearend.

ROBEX — Quarter 2 • 2019

Details: Net business income (capital gains and investment income are excluded) from pass-through entities may qualify for a 20-percent deduction. This deduction is based off data at the entity level, but is claimed on the individual owner’s tax return. If the

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Financial individual has income over $415K ($207.5K if single) the deduction is subject to additional limitations.

For these individuals, the deduction relating to a particular entity cannot exceed 50 percent of wages from that entity or 25 percent of wages plus 2.5 percent of the cost of certain qualifying fixed assets from that entity. In general, this calculation is done on an entity by entity basis, so the wages or cost of qualified fixed assets from one business cannot be utilized on another. In addition, individuals over this income benchmark cannot claim a deduction on business income from certain industries (service-based businesses such as accountants, attorneys, etc.)

Takeaway: Pass-through entities with owners that expect to exceed

$415K of income ($207.5K if single) should make sure they have enough wages and/or fixed assets in order to fully take advantage of the 20-percent deduction. If need be, consider taking steps to increase wages (accelerate bonuses) or decrease income to ensure there is no limitation on the deduction, or else have the individual get under the income thresholds.

taxable income plus depreciation, amortization, and interest expense.

Any interest disallowed carries into the following year and is added into that year’s calculation. Starting in 2022, depreciation and amortization will not be added back to income when calculating the interest cap.

Real property trades or businesses (of which construction qualifies) can elect out of limitation.

The downside to electing out is that they must depreciate their fixed assets at a slower rate and may lose out on the ability to expense assets immediately under bonus depreciation provisions.

Business Interest Limitation

Details: Companies with a threeyear average of gross receipts exceeding $25 million (commonly controlled entities need to be aggregated into this calculation) are subject to limitations on the amount of interest that can be deducted. The amount of interest allowable is capped at 30 percent of

Construction Management Construction Construction Management Management

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Takeaway: Business owners with multiple entities may need to revisit how they are leveraged. For example, if they have multiple businesses with lines of credit but

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ROBEX — Quarter 2 • 2019

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they are out heavily on one line, they may want to borrow some on the others to reduce the one in order to spread the related interest charge out.

Anyone who qualifies to elect out will need to decide if being limited on future depreciation is a good enough price to pay in order to deduct all interest expense today.

Limitation on use of business losses

Details: Individual taxpayers must divide their income between personal and business related.

If there is an overall net loss on business activities, there is a cap of $500,000 that can be utilized to offset personal activity income.

So, if someone were to have capital gains of $1,000,000 from the sale of stock within their personal

brokerage account and $800,000 of loss from their construction passthrough entity, they would still have to pay tax on $500,000 of income.

The $300,000 of loss not utilized carries forward to the following year and becomes part of that year’s business loss limitation calculation.

Takeaway: This adds one more layer of complexity to tax planning.

For anyone with business losses, they need to try and avoid going over $500K of personal income.

For example, if they are close, they should have a discussion with their broker not to trigger any additional capital gains.

Loss carryovers

Details: Corporate, as well as individual taxpayers, are no longer

allowed to take losses created in a year and carry them backwards to get a refund of prior income tax paid. Instead, losses carry forward only. To add salt to the wound, any loss that carries forward can only offset 80 percent of income generated in a future year.

Takeaway: Rather than aiming to wipe away all profits, taxpayers may be motivated to get as close to $0 income in order to avoid not having full utilization of a loss in the following year. Why make a large expenditure on 12/31/18 if it is going to create a loss that has limitations for future usage, while the same expenditure on 1/1/19 would fully offset all 2019 income?

Depreciation

Details: Section 179 (allowing for

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49

Financial

immediate expensing of qualifying capital assets such as equipment) and Bonus Depreciation have been around for several years, allowing for the ability to accelerate depreciation deductions. The maximum Section 179 deduction has been increased to $1 million and bonus depreciation increased to 100 percent.

Takeaway: With the exception of the purchase of real property and building improvements, the new depreciation rules will allow most taxpayers to immediately write off all their fixed asset acquisitions.

Hewitt Young provides customers and partners with the highest quality, energy efficient, and most affordable electrical solutions.

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Personalized quality service that is beyond comparison • Accounting Services • Audits, Reviews and Compilations • Bookkeeping/Write-Up • Cash Flow & Budgeting Analysis • Financial Statements • Forensic Accounting • Business Consulting • Business Entity Selection • Business Succession Planning • Business Valuations • Buying & Selling a Business

• Debt & Financing Services • Fraud Prevention & Detection • Retirement Planning • Asset Protection • Bankruptcies • Expert Witness Services • Litigation Support • Mergers & Acquisitions • Estate & Trust Tax Preparation • IRS Representation • Sales Tax Services

Errol Jaufmann • Rick Centola Errol@j-ccpa.com • Rick@j-ccpa.com 585-248-3630

50

ROBEX — Quarter 2 • 2019

Accounting method

Details: Companies with a three-year average of gross receipts exceeding $25 million (commonly controlled entities need to be aggregated into this calculation) are eligible to change the way they account for construction contracts away from percentage of completion recognition. Instead they can account for these contracts on a cash basis (recognize contract revenue when received) or completed contract basis (recognize job profit only when a job is finished).

Takeaway: Qualifying companies should switch accounting methods to take advantage of using a method that would allow for significant deferral of income. As with much of the changes in this tax act, this will make taxes more complicated.

Some may be familiar with Alternative Minimum Tax (AMT). For those who aren’t, in reality there are two tax systems – Regular Tax and AMT – in which taxpayers calculate their tax under each set of rules and pay tax on the larger of the two. For AMT purposes, contracts are required to be calculated on the percentage of completion method so any method change made would not apply under this calculation. This takes away some of the advantage to making these switches, but income deferral would still apply to most taxpayers. It just becomes burdensome to estimate the true benefit. For C-Corporations, this tax act removed AMT (still applies to individuals) so any that qualify will want to take advantage of this provision.

Astute readers will notice that taking advantage of one of these changes will impact calculations on others.

Accounting method and depreciation changes may allow for the ability to manage income within certain thresholds, but taxpayers and their advisors will need to put some thought towards what income level gives them the most benefit.

Normally, attempting to create as big of a tax loss as possible would give the best tax answer. With (continued on page 52) www.robex.com

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Financial

(continued from page 50)

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Matthews & Fields is a Trus-Joist engineered wood stocking dealer, with an experienced in-house designer, extensive knowledge of code changes effecting floors and the know how to get the most value out of your next build!

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ROBEX — Quarter 2 • 2019

net operating losses now only offsetting a maximum of 80 percent of income in following years, it may give a better overall answer to create additional income in the current year. With the wage limitation attached to the 20-percent pass-through deduction, it may be beneficial to recognize an even amount of income over a period of years versus a situation in which a large amount of income is pushed out of one year and into another. This would happen if there are not enough wages to fully get the 20-percent deduction in years with large amounts of income. Overall, you may want to pay tax earlier rather than give up this deduction on a portion of the company profit.

Overall, this bill creates significant complexity for anyone trying to budget their income tax burden, and will certainly create additional administration for taxpayers and their practitioners.

The information presented here is meant to give a brief overview of the main provisions of the tax bill, but each section has additional nuance and details not outlined in this article that will need to be adhered to. The good news is that with complexity comes opportunity. It’s a brave new world out there for tax navigation, but with some proper planning, taxpayers should experience significant savings.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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A full-service construction company committed to producing exceptional building quality for committed ourcommitted development clients.

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Rest in Peace

Dick Ash

by Joe Scanlon

D

ick Ash, executive chairman of C. P. Ward, Inc., passed away with his family at his side on Friday, January 11, after a brief illness. He was 81 years old. Dick Ash started as a foreman with C. P. Ward in 1964 and became its president in 1976. He became executive chairman in 2016.

Dick Ash grew up on a large farm in Henrietta where his father was in charge of the dairy herd. Here, Dick learned the value of hard work, which he exemplified in both his work life and his personal life. He was typically at his desk before dawn until close of business.

Dick lived a comfortable lifestyle while leading a major construction company successfully for decades.

He served on a number of boards of directors, including the Rochester Builders Exchange, the Advisory Board for Engineering Students at Alfred Technical College, and many other civic and professional organizations.

We Build Value You'll find us quietly working behind the scenes for General, Electrical and Heavy Highway Contractors.

We also provide Full Site Services for Commercial and Industrial Owners and Developers.

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Sanitary & Storm Sewer, Water Main & Services, Electrical Conduit & Duct Banks, Electrical Vaults, Site Lighting, Light Bases, 24hr Waterline & Electric Repairs

Clearing, Excavation & Earthwork, Storm Drainage, Road & Parking Lots for New Construction, Expansions & Facilities Maintenance

In-place & Precast Concrete, Concrete Pads, Foundations, Sidewalks, Curbs & Gutters, Catch Basins, Retaining Walls, Bollards, Underground Tank Installation

We Provide These and Many Other Services.

850 St Paul St, Ste 20 Rochester, NY 14605 585-393-1001 www.CRFCivil.com Info@CRFCivil.com

Safely 54

ROBEX — Quarter 2 • 2019

•

Building

•

Better www.robex.com

His passions included conquering the slopes at the Swain Ski Resort for decades, and flying Whiskey 7, the World War II troop carrier at the Geneseo Warplane Museum. Just last summer, Dick piloted Whiskey 7 and delivered paratroopers to the jump site while large crowds cheered them on. His personal pride and joy, the Waco bi-plane, was a museum piece collectible, which he flew from the Perry-Warsaw Airport whenever he had a chance.

Dick procured several antique trucks for the company, which exemplified the history of C. P. Ward.

He loved to show them off.

SAFETY

A few years ago he assembled a team of talented people and produced a history book of the company, “C. P. Ward: The First Hundred Years.” It chronicls the growth of the company from its beginning in 1913 to the present day.

Dick Ash led by example, and practiced one virtue that few leaders master: “praise in public, discipline in private.” Dick treated everyone he met as an equal – never as a subordinate. This trait won him the respect of everyone he met, whether they were a laborer in a trench or a college president at a social function.

His personal phone number was on all C. P. Ward literature, and

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SECURITY

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people and public agencies all over New York State knew that. If they had an emergency, Dick Ash would “mobilize the troops” to help a customer – or a friend – as soon as he knew of the problem.

Dick was a kind-hearted, hard-working person with legions of grateful customers, respectful coworkers, admiring contemporaries and close friends. Years ago, the United States Army promoted the slogan “Be all that you can be.” Dick Ash lived every day “being all that he could be.”

Go in peace, Dick. You have earned your rest.

SERVICE

Helping to protect Central and Western New York’s most successful businesses, school districts and universities for more than 30 years.

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Quarter 2 • 2019 — ROBEX

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new members ROBEX would like to welcome our newest members AEY Enterprises, Inc. 1607 Commons Parkway Macdeon, NY 14502 Ph (315) 597-2188 Allstate Roofing & More, LLC 565 Blossom Rd, Suite G2 Rochester, NY 14610 Ph (585) 400-7663 AmBuild Company, LLC 6605 Pittsford-Palmyra Rd, Suite E10 Fairport, NY 14450 Ph (585) 223-0187

AquaTight Coatings 14 Cherry Road Rochester, NY 14624 Ph (585) 236-0716

AP Plumbing 1195 Ridgeway Avenue Rochester, NY 14615 Ph (585) 216-3058

Capstone Information Technologies 656 Kraeg Road Pittsford, NY 14534 Ph (585) 546-4120

Cardwell Construction Co. 955 Buffalo Rd, Suite 9 Rochester, NY 14624 Ph (585) 328-7930 Corporate Floors USA, Inc. 7307 South Lake Road Bergen, NY 14416 Ph (585) 494-6013 Dixon Schwabl Advertising 1595 Moseley Road Victor, NY 14564 Ph (585) 383-0380 Enterprise Truck Rental 248 Buell Road Rochester, NY 14624 Ph (585) 233-6912 Focus Flooring Group Inc. Po Box 407 Canandaigua, NY 14424 Ph (585) 944-1092

• General Contractor •

Genesee Valley Construction, LLC 7923 RT 19A Portageville, NY 14536 Ph (585) 567-4735

585-352-4410

www.dci-team.com Educational • Industrial • Recreational • Retail

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ROBEX — Quarter 2 • 2019

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Han-Tek, Inc. 100 Rawson Road, Bldg. 220 Victor, NY 14564 Ph (585) 208-6608

North American Stone, Inc. 1358 East Ridge Road Rochester, NY 14621 Ph (585) 266-4060

Heartland Payroll 90 Linden Oaks, Suite 110 Rochester, NY 14625 Ph (585) 738-1301

Oasis Finishes Inc. 888 Long Pond Rd Rochester, NY 14626 Ph (585) 563-6586

Iron Workers Local 33 154 Humboldt Street Rochester, NY 14610 Ph (585) 288-2639

On The Mark Utility Locating 1280 Scottsville Rd., Suite 60 Rochester, NY 14624 Ph (585) 434-3399

Isaac Heating & Air Conditioning, Inc. 50 Holleder Parkway Rochester, NY 14615 Ph (585) 546-1400

Pro Temp Mechanical 12 Amity St Spencerport, NY 14559 Ph (585) 349-3758

J. Kozel & Son/Tool Ranch 1150 Scottsville Road Rochester, NY 14624 Ph (585) 436-9807

Profeta Painting PO Box 10466 Rochester, NY 14610 Ph (585) 671-0010

J.B. Sterling Construction, LLC 303 Macedon Center Road Fairport, NY 14450 Ph (585) 425-4120

Rapid Recovery 386 Timothy Lane #12 Ontario, NY 14519 Ph (585) 250-7999

membership directory update Upstate Roofing & Painting 1300 Brighton-Henrietta TL Rd, Rochester, NY 14623 Ph (585) 272-8050

Building partnerships isn’t by chance.

It’s by LeChase.

For over 75 years, our drive to be the premier provider of construction services has inspired us to aim for perfection in everything we do. That’s how we consistently deliver excellence for our clients, our communities and our company.

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Flower City Monitor Services Ltd. Office: (585) 262-3072 Fax: (585) 262-3383 Cell: (585) 503-6944 Email: fcmsl@frontier.com NYS MWBE Certified • DOT DBE Certified A NY NJ Diversity Supplier • A Section 3 Company

Contact: Bob Morgan

bob@upstateroofingandpainting.com Commercial Roofing: Whether it's roofing for new construction or existing buildings, flat roofs or sloped, Upstate does it all. And because we have a system \for every roofing need, we can do what's precisely right for you.

Commercial Painting: We are ready to provide a level of service tailored to meet your personal needs. Whether your need is painting, papering, interior or exterior, our team of experts will be prepared to exceed your expectations.

www.robex.com

58 Jay Street, Rochester, New York 14608, United States Quarter 2 • 2019 — ROBEX

57

New Members

Restoration Concrete LLC 69 Woodlands Way Brockport, NY 14420 Ph (585) 993-3939

YOUR #1 SOURCE FOR BUILDING MATERIALS • • • • •

Brick Veneer Stone Gas Fireplaces Masonry Supplies Hardscapes – pavers, retaining walls, landscape lighting

734 Ridgeway Avenue, Rochester, New York 14615

Rochester Earth Materials 27 Irvington Drive North Chili, NY 14514 Ph (585) 303-0119 R-Options, Inc 30 Industrial Park Circle, Suite 1 Rochester, NY 14624 Ph (585) 366-4125 Serviam Construction LLC 2304 Broad Ave. Altoona, Pennsylvania 16603 Ph (814) 283-4695 Spin Rite Inc. 30 Dubelbies Lane Rochester, NY 14622 Ph (585) 266-5200 Sweeting Enterprises 87 Gary Drive Brockport, NY 14420 Ph (585) 637-6811

(585) 458-7745 | Millerbrick.com The Western New York Floor Company, Inc. 103 Potomac St. Rochester, NY 14611

Established 1958 wnyfloor.com Phone (585) 527-9400 Fax (585) 527-9403

MAPLE • SYNTHETIC • RUBBER • GYMNASIUM FLOORS • INDOOR TRACKS WEIGHT ROOMS • PERFORMANCE DANCE & AEROBIC FLOORS COMMERCIAL WOOD & RESILIENT FLOORING Andy Smith, President • asmith@wnyfloor.com Mike D’Hont, Vice President • mdhont@wnyfloor.com

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ROBEX — Quarter 2 • 2019

Titusville Fabricators 700 Blaw Avenue, Suite 300 Pittsburgh, Pennsylvania 15238 Ph (412) 826-8140 Victor Excavating & Landscape 784 Old Dutch Road VIctor, NY 14564 Ph (585) 742-3243 Vincent Lighting Systems 6161 Cochran Rd Suite D Solon, Ohio 44139 Ph (800) 922-5356 www.robex.com

index of advertisers

Q2•2019

We would like to thank our advertisers for supporting ROBEX Magazine.

AAC Contracting........................................................................aac-contracting.com........................................8 Admar Supply Co Inc..................................................................... admarsupply.com......................................59 Advanced Thermal Technologies.................................. advancedthermaltech.com..............Inside front cover Altra Rental & Supply......................................................................... altrarental.com................................ 32-33 B & L Wholesale Supply.................................................................. blwholesale.com........................................9 Bonadio & Co.......................................................................................... bonadio.com......................................27 Brown & Brown Insurance of New York Inc........................... bbnyinsurance.com......................................51 C & A Pavement Markings............................................capavementmarkinginc.com......................................43 C.P. Ward.................................................................................................. cpward.com........................................7 Christa Construction............................................................................... christa.com......................................48 CIAR.................................................................................................................... ciar.biz......................................62 CRF Civil.....................................................................................................crfcivil.com......................................54 Danforth .............................................................................................. jwdanforth.com......................................46 DeCarolis Truck Rental........................................................................decarolis.com......................................11 DiPasquale Construction.....................................................................dci-team.com......................................56 Emergent Safety Supply.................................................................... stub-ease.com......................................44 EPS Buildings..................................................................................epsbuildings.com........................................6 Ernstrom & Dreste.....................................................................................ed-llp.com......................................42 Five Star Equipment.............................................................. fivestarequipment.com............. Inside back cover Flower City Monitor Services.................................. flowercitymonitorservices.com......................................57 Frederico Demolition........................................................... fredericodemolition.com......................................41 Haylor Freyer & Coon................................................................................haylor.com......................................30 Hewitt Young Electric..................................................................... hewittyoung.com......................................50 Hojack Park........................................................................................ hojackpark.com........................................8 Home Leasing Construction...........................................................homeleasing.net......................................53 Jaufmann & Centola................................................................................. j-ccpa.com......................................50 Lakeside Building Products...................................... lakesideroofingandsiding.com......................................21 LB Bonds & Insurance.......................................................................... lbbonds.com......................................43 LeChase Construction...........................................................................lechase.com......................................57 Lovell Safety Management Co.........................................................lovellsafety.com....................... Back cover Matthews & Fields Lumber Company.............................................. mflumber.com......................................52 Miller Brick Co....................................................................................millerbrick.com......................................58 Nothnagle Drilling.....................................................................nothnagledrilling.com......................................40 O'Connell Electric Co................................................................oconnellelectric.com......................................45 Piedmont Equipment..................................................... piedmontequipmentinc.com......................................31 Profeta Painting..........................................................................profetapainting.com......................................52 Roadtek.......................................................................................... roadtekpaving.com......................................11 60

ROBEX — Quarter 2 • 2019

Please let our advertisers know you saw their ad in this issue.

Rochester Davis-Fetch Corp.................................................... davisfetchcorp.com......................................24 Rochester Laborers Local #435........................................................... local435.org......................................25 RSMP...................................................................................................... rsmpnews.net......................................29 Samson Fuel......................................................................................samsonfuel.com........................................5 Sessler Environmental Services..................................................... sesslerenv.com......................................47 SMART Local 46...................................................................................... smw46.com......................................39 Upstate Roofing & Painting..................................... upstateroofingandpainting.com......................................40 US Ceiling Corp.............................................................................................. usi.com......................................14 USI.................................................................................................................... usi.com......................................26 Weckesser Brick Co.................................................................. weckesserbrick.com......................................49 Welker Mojsej & Delvecchio........................................................... welkercpas.com......................................61 West Fire Systems.................................................................... westfiresystems.com......................................55 Western New York Floor Co.................................................................wnyfloor.com......................................58 Window Repair Systems................................................. windowrepairsystems.com......................................15 World Wide Bonding Agency.......................................................... wwbagency.com......................................61

With a vested interest in your success, trust us to give you the best service possible!

Tax Preparation • Full Service Accounting Bookkeeping • CFO/Controller Services Business Valuations ROBEX members receive a complimentary, one-hour consultation.

Call (585)292-1041 to get started.

1200 Jefferson Road, Suite 300, Rochester, NY 14623 www.robex.com

Quarter 2 • 2019 — ROBEX

61

Meet

Leeann

Graduated from Alden High School Lives in Wolcott, NY 30 years of experience Loves to work in her garden Has worked on hundreds of local construction projects Enjoys vacationing with family to Myrtle Beach

Leeann is happy to work for a union contractor that is a member of the Construction Industry Association of Rochester.

When you hire a union contractor, you’re working with the industry’s most knowledgeable and highly skilled workforce that will deliver the highest level of quality workmanship, while ensuring your project will be completed on time and on budget.

It all adds up to a contractor partner that is committed to providing the best return on your project investment.

See what hiring a union contractor can do for your next project.

Visit ciar.biz.

Leeann DeNoto Rochester Davis Fetch Local 150

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SYRACUSE, NY 315-452-4560

WWW.FIVESTAREQUIPMENT.COM

EXPERIENCED. EQUIPPED. READY.

COST-EFFECTIVE, RISK-FREE COVERAGE FROM THE EXPERTS WITH OVER 80 YEARS OF EXPERIENCE. Join a Lovell Safety Group guaranteed cost program and share your group’s underwriting profits.

As a member, you get:

Call Lovell today for a free, no-obligation quote on your Workers’ Comp Insurance.

• Cash-flow savings through high advance discounts • Substantial savings from consistent dividends • Improved experience ratings • Safety programs resulting in fewer accidents and higher productivity • Early medical intervention and return-to-work strategies

Safety Pays Dividends Lovell Safety Management Co., LLC 110 William Street New York, NY 10038-3935 212-709-8600 1-800-5-LOVELL www.lovellsafety.com