Construction Outlook July 2013

A publication of the Utility Contractors’ Association of New England, Inc.

JULY, 2013

MWRA Annual Water Quality Report Test Results Confirm Water Quality is Excellent

• The New Phase I Environmental Site Assessment Standard • PPACA Gives Employers New Incentive to Move Forward on Wellness

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OFFICERS President AL MORTEO FED. CORP. President Elect TONY BORRELLI Celco Construction Corp.

Treasurer JOHN OUR Robert B. Our Co., Inc. Secretary PAUL SCENNA Albanese D&S, Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. JEFF BARDELL Daniel O’Connell’s Sons, Inc. VINCENT BARLETTA Barletta Heavy Division MICHAEL BISZKO, III Biszko Contracting Corp.

STEVEN COMOLETTI P. Caliacco Corp.

MAUREEN DAGLE Dagle Electrical Const., Corp.

ADAM DeSANCTIS DeSanctis Ins. Agency, Inc. THOMAS DESCOTEAUX R. H. White Const. Co., Inc. JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. MARCO GIOIOSO P. Gioioso & Sons, Inc. BILL IRWIN C.J.P. & Sons Const. Co., Inc. PHIL JASSET Honorary Board Member BILL KEAVENEY A. R. Belli, Inc. ROBERT LEE J. F. White Contracting Co. RYAN McCOURT McCourt Construction Co. RICHARD PACELLA, JR. R. M. Pacella, Inc. LOUIS SCHOOLCRAFT Ti-SALES, Inc. ANNE KLAYMAN Executive Director

JULY, 2013

IN THIS ISSUE 5 President’s Message:

UCANE Promotes Safety, Safety, and More Safety

7 Legislative Update:

• UCANE Secures Language to Provide Cost Adjustment Clauses in Final Conference Committee Report on FY’14 Budget • Legislature Passes FY’14 Budget; Finishes off FY’13 by Passing Final Supplemental Budget • Legislation Holding State Agency Employers to OSHA Standards Heard by Joint Committee on Labor and Workforce Development • Job Growth in MA Stalled According to MassBenchmarks Report • MA Clean Energy Center Hires New Business Development Manager for Water Innovation

17 Environmental Viewpoint:

The New Phase I Environmental Site Assessment Standard

20 MWRA Annual Water Quality Report...Test Results Confirm Water Quality is Excellent 33 Abigail Our Rose Awarded Cape & Plymouth Business’ 40 Under 40 Award 35 HD Supply Waterworks Branch Hosts Training for Contraband-Sniffing Dogs 37 Save the Date...UCANE’s 59th Gala Banquet 39 Benefits & HR Strategies:

PPACA Gives Employers New Incentive to Move Forward on Wellness

45 CWCC Update and June 2013 Insights 46 UCANE Sponsors Mystic River Herring Run & Paddle 49 American Jobs for America’s Heroes 51 Financial Management:

• The Paradox of Long-Term Care Insurance • Trim Steep New Taxes With a Charitable Trust • Funding a Small Business Succession Plan

Editor: Anne Klayman, Associate Editor: Suzanne Savage, Graphic Designer: Sherri Klayman Construction Outlook Chairman: Al Morteo Editorial Board: Al Morteo, Tony Borrelli, John Our and Paul Scenna CONSTRUCTION OUTLOOK published monthly by the Utility Contractors’ Association of New England, Inc., 300 Congress Street, Suite 101, Quincy, MA 02169; Tel: 617.471.9955; Fax: 617.471.8939; E-mail: aklayman@ucane.com; Website: www.ucane.com. Statements of fact and opinion are those of the authors alone and not necessarily those of UCANE and the Construction Outlook editorial board and staff.

Subscriptions are included in dues payments for UCANE members. Presorted Standard postage paid at Abington, MA. POSTMASTER, please send form #3579 to Construction Outlook, Crown Colony Office Park, 300 Congress Street, Suite 101, Quincy, MA 02169.

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OYEE TO EMPL ATTACH N UP CARD W-4 SIG ANT IMPORT RD CO RE SAFETY

RS’ ACTO ONTR ITY C CIATION INC. ASSO GLAND, N EW E OF N

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UCANE Promotes Safety, Safety, and More Safety

or as long as I’ve been a UCANE member, one of the primary goals of this Association has been to educate and promote a safe workplace for our members and their employees. From what I’ve been told, our industry wasn’t always that way. During the 50s & 60s, as our service men and women returned home after the war and our country’s infrastructure issues were being addressed, the number of construction accidents and deaths increased significantly. The public and Congress took note that some uniform workplace rules were definitely necessary.

In one of their findings, Congress found that “personal injuries and illnesses arising out of work situations impose a substantial burden upon, and are a hindrance to, interstate commerce in terms of lost production, wage loss, medical expenses, and disability compensation payments.” Another interesting finding, as detailed by Congress, was “encouraging joint labor-management efforts to reduce injuries and disease arising out of employment.”

As a result, Congress passed the “Occupational Safety & Health Act of 1970” to assure safe and healthy conditions for working men and women. The Act also authorized enforcement of standards developed under the Act; assisted States to assure safe working conditions; and provided for research, education, and training in occupational safety. Through this Act, and under the Labor Department, the Occupational Safety and Health Administration (OSHA) was formed.

Over the next few years, OSHA published “29 CFR 1926” which covered construction in general. At about that time, UCANE became seriously involved in safety issues affecting the underground utility industry, specifically our members’ work involving trenching and excavation, and confined space entry. Through seminars taught by OSHA trained presenters, members were encouraged to update their company safety manuals and implement federally mandated workplace rules. The concept of having a competent person on each work site was emphasized,

JULY, 2013

as was having each employee learn more about safe working habits and to be on the lookout for hazardous situations. Later, OSHA and UCANE signed a cooperative agreement to underscore the importance of safety issues to our members, their employees, and our industry. From that time forward, UCANE has maintained a professional relationship with this federal agency.

Each year, OSHA personnel work with members of our Safety Committee to update UCANE’s Safety Manual with the latest regulations. Safety Manuals are included as part of our Annual Industry Directory and made available to members as a guide for their company safety programs. UCANE also publishes Pocket Safety Manuals which our members can have personalized. These Pocket Safety Manuals are distributed to their employees who are required to read and carry with them during work hours. Member companies are also encouraged to participate in the OSHA Worksite Inspection Program whereby OSHA personnel inspect a worksite for violations and notify the owner of any problems.

The effort to promote worksite safety is ongoing and we are truly proud of our Association’s efforts to keep member companies focused on this issue. A safe jobsite has many benefits, not the least of which is a safe workforce. It has been said before, but is so true…if we all do our job and “think safety and work safely” there will be fewer accidents and injuries. For owners there is another incentive, specifically, a company that has a comprehensive safety plan usually has lower medical, insurance, and workers compensation rates. This adds up to higher profitability and a stronger, more competitive company.

For more than 35 years, UCANE has emphasized SAFETY, SAFETY, and more SAFETY. I am confident that our members have gotten the message and will continue to educate their employees year after year. n

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UCANE Secures Language to Provide Cost Adjustment Clauses in Final Conference Committee Report on FY’14 Budget

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uilding off the support of Senate President Therese Murray, Senate Ways and Means Chair Stephen Brewer, and Senator James Timilty to include cost adjustment language in contracts for road, bridge, water, and sewer projects, the Conference Committee on the fiscal year 2014 budget included the same language as part of its final report. Accordingly, the language is part of the FY’14 budget proposal that went to Governor Patrick for his approval, veto, or amendment.

As is well known, certain state agencies in the Commonwealth and around the nation, generally, already include mandatory contract cost adjustment language (i.e., economic adjustment clauses) within their contracts with contractors. In the Commonwealth, the Massachusetts Department of Transportation (MassDOT) historically includes language-advising contractors of the availability of price adjustment in the event of an increase or decrease in the price of fuel, steel, concrete, or asphalt. The filed language, which is similar to language that was included in projects funded under the 2008, 2011, and 2012 Transportation Bond Bills (and the 2013 ch.90 piece), will require cost adjustment clauses for road, bridge, water, and sewer projects when there is a greater than 5% increase or decrease in the product cost.

In adopting this language, Conference Committee members recognized that cost adjustment clauses: (a) lead to lower bid prices; (b) provide greater contractor stability; (c) promote greater competition from contractors; (d) lead to fewer bid JULY, 2013

retractions; and (e) can benefit the awarding authority in the event of a cost decrease.

Simply put, cost adjustment clauses create a “win-win” scenario for contractors and awarding authorities alike – meaning residents and businesses benefit as well.

As mentioned previously, the Governor must now weigh in on this and other matters that comprise the 293-page budget proposal. (Governor Patrick had not acted on this when our magazine went to print.)

On behalf of all UCANE members, we thank the Conference Committee members (House Ways and Means Chairman Brian Dempsey, House Ways and Means Vice Chairman Stephen Kulik, Ranking Minority Member Viriato deMacedo, Senate Ways Chairman Stephen Brewer, Senate Ways and Means Vice Chairman Jen Flanagan, and Ranking Minority Member Michael Knapik) and their respective staffs as well as the filed House bill sponsor, Representative Antonio F.D. Cabral and his staff for their work on this matter. continued on page 9

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Legislative Update continued from page 7

Legislature Passes FY’14 Budget; Finishes off FY’13 by Passing Final Supplemental Budget

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the emissions banking program, the auto-related state implementation program, and the low emission vehicle program among other items.

• Safe Water Drinking Act. The Conference Committee addressed line-item 22502000 with an appropriation of $1,485,185.

• Watershed Management Program.

The Conference Committee essentially level funded line-item 2800-0101 at $1,010,223.

• Stormwater Management. The Conference Committee stuck to the Governor’s recommended appropriation to line-item 2800-0401 for stormwater management, funding it at $405,042.

This is a slight increase over FY’13 funding.

• Underground Storage Tank Cleanup.

Several line-items appropriated funds for the following: • For underground storage tank reimbursements to parties that have remediated spills of petroleum products $10 million (1232-0100).

• For the Underground Storage Tank Petroleum Cleanup Fund Administrative Review Board $1,444,826 (1232-0200).

• For the expenses of the hazardous waste cleanup and underground storage tank programs $13,611,481 (2260-8870).

Another item of interest that made the Conference Committee report was language eliminating the requirement that the Comptroller approve all payments for change orders. The Governor will have ten days to adopt, reject, or amend various provisions of the budget Call Your Nearest GENALCO Warehouse proposal.

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s reported in the previous article, the Conference Committee on the FY’14 budget released its final report on June 30. Contained in the FY’14 budget were the following items of interest: • Rate Relief. The Conference Committee funded the rate relief line-item (1231-1000) at a $1 million appropriation. This represents almost a doubling of the appropriation from the previous year before it was wiped clean through the Governor’s 9C cuts.

• WPAT Contract Assistance. The Conference Committee set the appropriation at $62.8 million for the Water Pollution Abatement Trust line-item (1599-0093). This is in line with the Governor’s recommendation ($63 million) and represents an increase of just over $1 million from FY’13.

• DEP Administration. The Conference Committee set funding for line-item 22000100 at a $28,354,269 appropriation. If approved by the Governor, this would represent a $2 million increase to DEP administration.

• Administration and Implementation of Federal Clean Air Act. The Conference Committee went with the Senate’s recommended appropriation of $841,297 to the DEP through line-item 2220-2220 for the state administration and implementation of the Clean Air Act, including the operating permit program,

JULY, 2013

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Legislative Update continued from page 9

Legislation Holding State Agency Employers to OSHA Standards Heard by Joint Committee on Labor and Workforce Development

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he Joint Committee on Labor and Workforce Development heard from a broad coalition of state employees, union leaders, and workers’ compensation insurers about legislation that would give state employees the same health and safety protections private workers are given by the federal Occupational Safety and Health Act (OSHA). In addition, a number of individuals testified in favor of enacting standards for workplace hazards not currently covered by OSHA. Passed in the early 1970s, OSHA contained provisions that gave states the option of enacting legislation that would give public employees the same protections as private employees.

The Commonwealth, however, opted not to adopt OSHA for state workers.

The Massachusetts Coalition for Occupational Safety and Health (MassCOSH) has led the charge to adopt the federal OSHA standards for public employees for a number of years. Last session, the legislation was given a favorable recommendation by the same committee before “timing out” in the House Ways and Means Committee. MassCOSH’s, www.masscosh.org, stated objective

is to “unite workers, unions, and community groups with environmental and health activists, to end dangerous work conditions, to organize for safe, secure jobs, and to advocate for healthy communities.” Through training, technical assistance, and building community/labor alliances, MassCOSH mobilizes its members and develops leaders in the movement to end unsafe work conditions.

Testifying at the legislative hearing, Joe Dorant, President, Massachusetts Organization of State Engineers & Scientists (MOSES) stated, “State employees do jobs that are just as or more dangerous than those in the private sector. This legislation is an essential step toward instituting safety measures that will prevent needless workplace injuries, illnesses, and deaths. It is a tremendous opportunity to provide state workers the same protections that private employees enjoy.” It is anticipated that the Joint Committee on Labor and Workforce Development will again issue a favorable report to this legislation. The legislation’s prospects for passage this session is unclear.

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Legislative Update continued from page 11

Job Growth in Massachusetts Stalled According to MassBenchmarks Report

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ccording to MassBenchmarks, a publication of the Donahue Institute at the University of Massachusetts, a strengthening housing market and consumer spending on automobiles are helping to improve the state’s economy, but higher federal taxes combined with significant federal spending cuts are serving as a drag on growth, according to area economists. According to the State House News Service coverage of the report’s release, the report’s summary cites “considerable stress” in the state’s labor market. The report finds that “[w]hile the state’s jobless rate is a full point below the national rate, rising numbers of people in Massachusetts are working part-time, but want to work full-time or have not looked for a job in the last four weeks, but would take one if offered.” MassBenchmarks reported gross state domestic product growth slowed to a 1% annualized rate in April and May, with employment growth in Massachusetts “virtually stalled,” a situation reflected in the state’s withholding tax collections. Also, export activity in Massachusetts was down more

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MA Clean Energy Center Hires New Business Development Manager for Water Innovation

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n June 22, 2013 a Boston Globe article by posed by water scarcity and climate change. During two years as a Peace Corps volunteer in Bolivia, he Erin Ailworth, titled “Hire shows Mass. is also worked in a remote Amazon village to improve committed to water tech sector” spotlighted access to safe water. He holds masters degrees Michael Murphy, who was hired in April by the Masfrom the Monterey Institute of International Studies sachusetts Clean Energy Center (MassCEC) as the in Business Administration and Environmental Policy Business Development Manager for Water Innovawhile also holding a Bachelor of Science degree in tions. A central theme of the article is that MassBiology. n CEC’s hiring demonstrates the “expanding role of the state’s increasing efforts to develop a new innovation sector to complement its renowned biotechnology, high tech, and alTHE DRISCOLL DIFFERENCE: ternative energy industries. As the global population grows, demanding more food and energy, water is projected to become an increasingly precious resource — and commodity.”

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Environmental Viewpoint Robin L. Main, Esq.

Rhiannon Campbell, Esq.

Hinckley Allen, LLP

The New Phase I Environmental Site Assessment Standard Note: Robin L. Main is a Partner in Hinckley Allen’s litigation group and co-chair of the firm’s environmental practice group. Rhiannon A. Campbell is an Associate in Hinckley Allen’s litigation and environmental practice groups. Samantha J. Chu is a Summer Associate at Hinckley Allen and a J.D. Candidate at the University of Connecticut School of Law.

The Environmental Protection Agency (“EPA”) is presently reviewing an update to the Environmental Site Assessment standard proposed by the American Society of Testing Materials (“ASTM”). Pending EPA approval, the ASTM is expected to release the new Phase I Environmental Site Assessment standard (“E 1527-13”) in the fall of 2013.

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n Environmental Site Assessment (“ESA”) is a report prepared by an Environmental Professional (“EP”) before a property or site is transferred. An ESA identifies potential or existing environmental contamination liabilities, also known as Recognized Environmental Conditions (“RECs”).

Completion of a Phase I ESA report is the first step in the environmental due diligence process for a site and may create a safe harbor for a prospective purchaser and his or her lenders. Standards for performing a Phase I ESA are established by the ASTM and then promulgated by the EPA. In 2005, the ASTM released the most recent “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (“E 1527-05”). E 1527-05 defines good commercial and customary practice in the U.S. for conducting an environmental site assessment of real estate for RECs. The anticipated early fall 2013 release of E 1527JULY, 2013

13, replacing E 1527-05, will affect EPs and end users of Phase I ESA reports. This update will include significant changes clarifying and expanding the Phase I ESA Process and will encompass three key revisions regarding RECs, vapor migration, and agency file review.

First, E 1527-13 proposes to revise definitions of RECs and Historic RECs (“HRECs”) and introduce a Controlled RECs (“CRECs”) definition. The REC definition will be streamlined to remove inconsistencies with the EPA’s All Appropriate Inquiry (“AAI”) rule. An HREC will be defined as an REC where past releases of hazardous substances or petroleum products are addressed to the satisfaction of applicable regulatory authority. A CREC will be introduced as a REC where hazardous substances or petroleum products are allowed to remain in place subject to certain required controls. Collectively, these changes aim to distinguish risky RECs from minimally risky RECs. continued on page 19

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Environmental Viewpoint continued from page 17 Second, E 1527-13 seeks to clarify the inclusion of vapor migration in the Phase I ESA investigation process. “Migrate/Migration” will refer to the movement of hazardous substances or petroleum, both solid and liquid, at the surface or subsurface level.

Thus, vapor migration will be considered no differently than contaminated groundwater migration in a Phase I investigation.

The final key revision of E 1527-13 concerns agency file review. Under the proposed revision, in the event an EP’s government records search indicates a target site or its adjoining properties have

a record of hazardous material waste or petroleum product release, the EP may review federal, state, and local regulatory files for those contaminated properties. If an EP elects not to review these files, he or she must document any justifications for not conducting a file review in the Phase I ESA Report on the target property.

With the release of the new Phase I ESA standard soon approaching, all are advised to stay informed and keep apace with any information or materials issued by the ASTM. n

We are proud to have created the new website for UCANE As a way of saying thank you we are offering a special UCANE members discount on new Website & Social Media projects.

Walter Osterman, President direct line 561.301.3150 www.SocialMavens.com

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MWRA Annual Water Quality Report Test Results Confirm Water Quality is Excellent

T

he Massachusetts Water Resources Authority has begun mailing its Annual Water Quality Report to every household in its service area.

For 2012, MWRA again met every federal and state drinking water standard. The hundreds of thousands of tests taken during the year confirm that the quality of MWRA’s water is excellent.

MWRA hopes the report will encourage residents to drink local tap water and highlights its environmental benefits and low cost compared to bottled water.

“Bottled water is convenient when you’re on the road and is a healthy alternative to sugary drinks,” said MWRA executive director Fred Laskey. “But at less than penny a gallon, tap water is the cleanest, safest, and most cost effective alternative.”

20

The report also includes important information on how to reduce the risk of lead in drinking water. Although the water itself is lead-free, lead can get into tap water through home plumbing and even some brass water fixtures. System-wide, the MWRA has been below the Lead Action Level for the past nine years.

Required under the federal Safe Drinking Water Act, the report is distributed to over 850,000 homes in the MWRA service area.

Community-specific inserts also provide information about municipal water systems.

The reports are being mailed through the end of June. Look for it in your mailbox.

This report and the reports from the Partially Supplied Communities and the Chicopee Valley Aqueduct Communities are available at www.mwra.com.

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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Where Does Your Water Come From?

Dear Customer, I am pleased to share with you the results of our annual water quality testing. MWRA takes hundreds of thousands of tests each year, and for 2012, we again met every federal and state drinking water standard.

System-wide, we have been below the Lead Action Level for the past nine years. Please read the additional information from your city or town water department for more information on your local water system.

MWRA continues to work to make the water system even better. Construction of a new covered storage tank in Stoneham and improved ultraviolet disinfection facilities at the Carroll Treatment Plant in Marlborough are currently underway. And, with the completion this spring of the rehabilitation of the Hultman Aqueduct, we now have full redundancy from the treatment plant into the distribution system for the first time.

This is a vast improvement to the water system and will ensure the delivery of water in the event of a major break, like the one that occurred in May 2010.

This report describes where your water comes from, how it is treated and delivered, and the steps we take to ensure its quality. Please take a moment to read it so that you can share our confidence in your drinking water.

In 2012, MWRA again received the Drinking Water Excellence Award from the Massachusetts Department of Environmental Protection. Some of the best drinking water in the country is delivered straight to your home. When you have a choice, we hope you drink locally!

Your water comes from the Quabbin Reservoir, about 65 miles west of Boston, and the Wachusett Reservoir, about 35 miles west of Boston. These reservoirs supply wholesale water to local water departments in 51 communities. The two reservoirs combined supplied about 200 million gallons a day of high quality water to consumers in 2012.

The Quabbin and Wachusett watersheds are naturally protected with over 85% of the watersheds covered in forest and wetlands. To ensure safety, the streams and reservoirs are tested often and patrolled daily by the Department of Conservation and Recreation (DCR).

Rain and snow falling on the watersheds - protected land around the reservoirs - turn into streams that flow to the reservoirs. This water comes in contact with soil, rock, plants, and other material as it follows its natural path to the reservoirs. While this process helps to clean the water, it can also dissolve and carry very small amounts of material into the reservoir. Minerals from soil and rock do not typically cause problems in the water. But, water can also transport contaminants from human and animal activity. These can include bacteria, viruses, and fertilizers - some of which can cause illness. The test data in this report show that these contaminants are not a problem in your reservoirs' watersheds.

The Department of Environmental Protection (DEP) has prepared a Source Water Assessment Program report for the Quabbin and Wachusett Reservoirs.

The DEP report commends DCR and MWRA on the existing source protection plans, and states that our “watershed protection programs are very successful and greatly reduce the actual risk of contamination.”

MWRA follows the report recommendations to maintain the pristine watershed areas. continued on page 23

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MWRA continued from page 21

continued on page 25

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MWRA continued from page 23

27.

continued on page 27 JULY, 2013

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MWRA continued from page 25

City of Boston BOSTON WATER AND SEWER COMMISSION

Public Water Supply # 3035000

980 Harrison Avenue Boston, MA 02119 617-989-7000 www.bwsc.org Dear Customer: This report is an annual update on the quality of drinking water supplied to you by Boston Water and Sewer Commission (BWSC) in partnership with Massachusetts Water Resources Authority (MWRA). BWSC purchases water from MWRA for distribution to homes and businesses within the City of Boston. This report provides detailed information on the MWRA’s system, and how the water delivered to Boston meets federal and state testing guidelines.

BWSC remains dedicated to protecting our customers’ access to clean drinking water and in 2011, for the third consecutive year, the Massachusetts Department of Environmental Protection Drinking Water Programs honored BWSC with its Public Water System Award. This award recognizes the outstanding efforts of BWSC to comply with the EPA’s regulations concerning the nation’s public drinking water supplies.

BWSC continues to be concerned about the presence of lead in tap water and vigilantly monitors lead levels in our drinking water. We test twenty-five homes once a year, and we are pleased to report that since 2007, the Boston lead sampling results have remained below the EPA Lead Action Level of 15 ppb. In 2012, the test results were 11.6 ppb at the 90th percentile. BWSC continues its efforts to replace lead service lines, thereby improving overall water quality. Please see Page 5 for more information about lead in tap water.

Although private lead service lines represent less than 4% of BWSC’s service connections, BWSC continues to provide the Lead Replacement Incentive Program, which offers owners of eligible properties the opportunity to replace private lead service lines. This program offers homeowners financial assistance to offset a portion of the total cost of the lead service replacement. For more information about this program, contact the BWSC Lead Hotline at 617-989-7888 or visit our website at www.bwsc.org.

BWSC and MWRA test over 60 samples each week for total coliform. The EPA requires that no more than 5% of samples in a month may be positive. Boston had 1.1% positive results in December 2012. All follow-up samples were clear, and this was not a concern.

In addition to efforts to maintain high water quality, Boston Water and Sewer Commission strives to provide our customers with a reliable water system and the best possible water. The rehabilitation and replacement of old pipes reduces the occurrence of water main breaks and leaks.

Routine maintenance, an aggressive leak detection program, and the replacement of hydrants and valves also improve overall system efficiency.

Any questions regarding the information in this letter may be directed to BWSC’s Communications and Community Services Department at (617) 989-7000.

Henry F. Vitale Acting Executive Director/CFO

continued on page 29

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Abigail Our Rose

C

Awarded Cape & Plymouth Business’ 40 Under 40 Award

ape & Plymouth Business’ 40 Under 40 Awards spotlight the region’s top young business leaders who excel in their industry and show dynamic leadership. This program honors distinguished businesspeople under the age of 40 who have made a mark in our region at an extraordinarily young age. These top young business leaders excel in their industry and show dynamic leadership characteristics. The winners have started companies, found success at a young age at established businesses and made nonprofits stronger.

The 2013 class is exceptional in many ways, showing the diversity of paths to success in our region.

Working in conjunction with the Cape Cod Young Professionals and South Shore Young Professionals, hundreds of nominees have been culled down to the 40 individuals who best exemplified an entrepreneurial spirit, commitment to community service and potential to positively contribute to the future of our region.

Career background/highlights: I am part of the third generation of the Robert B. Our Company, working hard to maintain our reputation while growing and changing with the times. My career highlight so far was receiving a degree in my profession. I was the first to achieve this honor in my family. My degree has been the impetus to propel me to greater heights.

Community involvement: I am involved in the Cape Cod Commercial Hook Fishermen’s Association, CCYP, and Utility Contractors’ Association of New England.

Biggest professional success: My biggest professional success so far was managing a high-profile project under extreme time constraints and public scrutiny.

The project was finished on time and under budget.

If you weren’t in the career you’re in, what would you be doing? If I was not in the family construction business, I would love to be a nurse.

Age: 31 Title: Construction Manager Company: Robert B. Our Company Education: Bachelor’s in Construction Management at Wentworth Institute of Technology

What’s the best thing about your job? The best part of my job is working on something different every day, and seeing Cape Cod and the Islands from a different perspective. We do work in many sectors, giving me the opportunity to meet many people.

What’s something about you that would surprise people? I love to garden, and am a proud mom of two!

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HD Supply Waterworks Branch Hosts Training for Contraband-Sniffing Dogs

L

ast month HD Supply Waterworks’ Dedham, MA branch hosted a training session for explosive- and contraband-sniffing dogs.

The opportunity presented itself when an exCIA, ex-Marine private contractor working with the U.S. State Department scouted the branch property and thought it would be an excellent training environment for his dogs – most of which have served tours of duty in Iraq and Afghanistan.

In the aftermath of the Boston Marathon bombings this past April, HD Supply Waterworks Branch Manager Dick Madden was more than willing to host the training.

“It was a natural fit,” said Madden. “I know how supportive our company has been toward the military, and their teams were appreciative to have a real-world training facility including pipes, hydrants, and valves typical of most jobsites.”

Random samples of bomb-making materials, explosives, and contraband were hidden around both the branch office and yard, and three highly trained dogs and four handlers spent time working with the dogs to pick up scents and keep their skills fresh.

“Our Waterworks team was very proud to be a part of this project in support of our military,” added Dick. n

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BENEFITS & HR TRATEGIES

Timothy P. Doherty Managing Director of Health & Welfare Benefits Pinnacle Financial Group

PPACA Gives Employers New Incentive to Move Forward on Wellness The Patient Protection and Affordable Care Act (PPACA) is pushing many employers to redefine what wellness means to their employees by putting a price tag on ignoring it.

W

orkplace wellness has already evolved from feel-good, internal public relations initiatives to more practical and measurable programs that genuinely facilitate improved health. The payoff for employers who actively promote real wellness initiatives such as preventive screenings, fitness programs, etc., has been estimated to save as much as $3 to $6 for every $1 invested after 2-5 years.

As the pressure to control health care costs intensifies for both employers and employees, wellness is now a line item that has moved up in priority and leverage, with significant cost discounts attached that employers and employees will find hard to ignore.

“The pendulum has swung,” says Michael Demman, CEO of SimplyWell, a third party wellness consultant based in Omaha, NE. “Employers are now saying ‘If we’re going to subsidize your health care, then you’ve got to have some skin in the game.’”

According to Demman, employers have moved from a “carrot” approach in wellness to more of a “stick” approach, mostly due to the fact that the majority of employees are not making the necessary changes to improve their health and lower health care costs. The PPACA gives employers a slightly bigger stick to work with. In other words, a significant discount on employee contributions should prove to be a more meaningful driver for participation in wellness programs.

JULY, 2013

How Did We Get Here?

In 2006, 10 years after it was initially enacted, HIPAA was amended to include non-discrimination wellness provisions. These guidelines allowed employers to promote and reward wellness programs that were directly related to specific “health-related standards,” so long as five requirements were met: 1. The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor is limited – generally, it must not exceed 20% of the cost of employee-only coverage under the plan. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 20% of the cost of the coverage in which an employee and any dependents are enrolled.

2. The program must be reasonably designed to promote health and prevent disease.

3. The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.

4. The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining the reward to any individual for whom it is unreasonably difficult continued on page 41

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Benefits & HR Strategies continued from page 39 due to a medical condition, or medically inadvisable, to satisfy the initial standard.

5. The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).

Source: Dept. of Labor, Employee Benefits Security Administration

Enter PPACA… The PPACA, going into effect January 1, 2014, offers new rules regarding outcome-based “rewards” that should get the attention of a much broader spectrum of employee, all of whom at least share a desire to not leave significant sums of money on the table.

Under the old rules, employers could introduce a premium reduction of 20% for participation in a wellness program. The new rules allow employers to use a 30% premium reduction, and if the employer includes a non-smoker incentive, they can get the premium reduction as high as 50%.

Example: The annual premium for employee-only coverage at ABC Co. will be $6,000 ($4,500 paid by employer, $1,500 paid by employee contribution). The employer offers a $600 incentive for employees to meet

certain health-related standards such as taking a physical and taking action (such as enrolling in a weight loss program). This discount is compliant with both HIPAA and PPACA because the total amount of the incentive, $600, does not exceed the 30% limit calculated from the employee’s total coverage (30% x $6,000 = $1,800 limit).

"Requirement" is the New "Incentive" For more and more employers, leveraging outcome-based incentives like the one used in our example is becoming increasingly prevalent as a means to mitigate ever-escalating premiums and shift more ownership of costs into the hands of employees.

A small but growing number of companies are taking it even further: According to a 2012 employer survey by Fidelity Investments and the not-for-profit National Business Group on Health, the percent of employers requiring employees to participate in health improvement programs in order to be eligible for medical benefits at all is trending steadily upward.

In 2011, 7% of companies required completion of a health risk assessment. In 2012, 10% of companies required it – a 30% increase.

A highly-publicized case of mandated health screenings involved Rhode Island-based CVS. CVS continued on page 43

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Benefits & HR Strategies continued from page 41 required all employees to take a company-funded health screening or forgo a $600 discount (“reward”) in employee contribution costs. Supporters of this approach state that if individuals pay more for life insurance when they pursue activities classified as higher risk such as motorcycling or parachuting, or more for auto insurance when they’re at fault for making poor driving decisions, then it follows that they should pay more for health insurance if they make health-related choices that put them more at risk.

Latest PPACA Guidelines on Wellness Incentive Discounts Address Affordability of Coverage An important development in wellness incentives vis-a-vis PPACA is the recent IRS declaration that employers may not assume all employees will earn the wellness incentive for the purpose of determining affordability. Since all employees are eligible for the wellness incentive, most employers were expecting they could use the discounted premium as the baseline for calculating the 9.5% affordability requirement.

Clarification on the guidelines states that incorporating the wellness incentive into the affordability calculation will not be an option.

The exceptions to this new rule are discounts related to tobacco use cessation incentives. Essentially, the IRS divided wellness incentives into two buckets: those aimed at reducing tobacco use and those that don’t. When determining affordability, employers are allowed to use the discounted premium related to tobacco use for all employees – essentially assuming all employees qualify for the discount for tobacco cessation. In other words, this is an indirect means of enacting a surcharge on employees who do use tobacco but who don't participate in any smoking cessation assistance programs.

Employers are Starting to Shift Into Gear While the most recent guidelines seem to simultaneously increase clarification and confusion with regard to wellness discounts and affordability, the fact remains that wellness incentive discounts can help both employers and employees make a dent in their health care costs when leveraged properly.

2014 is not so many calendar pages away anymore.

If you were considering whether or not to implement a wellness program before, the ability to offset everincreasing premiums through wellness incentive programs should be a compelling reason to investigate them more seriously with your benefits consultant. n

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Clean Water Construction Coalition Update and June 2013 Insights

By Robert A. Briant, Jr., CWCC Chairman and Sante Esposito, Federal Advocates Inc.

Coalition Washington, D.C. Fly-In Report

M

embers from approximately 11 CWCC Chapters traveled to Washington, D.C. in early June to meet with Congressional representatives to discuss a number of important infrastructure funding bills supported by the Coalition. During the Coalition’s Breakfast meeting, Sante Esposito, Federal Advocates Inc. and Bob Briant, Jr. reviewed the Coalition’s legislative objectives and talking points.

The Coalition’s Luncheon attendees were briefed

by Jonathan Pawlow, counsel and lead staff person of the House Transportation and Infrastructure’s Subcommittee on Water Resources and Environment.

Mr. Pawlow indicated that his Subcommittee will also review legislation to reauthorize the Clean Water Act in the near future.

Senate Majority Leader Reid Reaches Out to CWCC to Assist With “Rebuild America Act”

E

arlier this year, Senator Majority Leader Harry Reid (D-NV) convened a meeting of a small group of “infrastructure entities” including the Clean Water Construction Coalition. The purpose of the meeting was to brief attendees on a “sense of the Senate” concerning an infrastructure bill that the Leader wanted to introduce at the start of the 113th Congress and to request that the Coalition obtain co-sponsors to coincide with the bill’s introduction.

The Leader wanted to introduce the bill, because of the importance of infrastructure to the economy and overall quality of life. Per his request, Federal Advocates, on behalf of the Coalition, reached out to various senators. Given less than a week between the meeting and bill introduction, including a Federal holiday as well, the Coalition was able to secure cosponsorship of 9 of the senators. When introduced,

JULY, 2013

the bill, “Rebuild America Act” (S-4) had 14 senate co-sponsors – again, 9 via the Coalition. Subsequent to introduction of the legislation, the Leader deferred further co-sponsor activity on the bill due to other priorities that he had to address. On Tuesday, June 4, the Coalition was again contacted by his office with a request to once again seek co-sponsors.

We ask that the Coalition members reach out to their senators who are not co-sponsors on the bill. We will keep you advised of developments on our end. The following Coalition senators have already signed on: Boxer (CA), Brown (OH), Durbin (ILL), Feinstein (CA), Gillibrand (NY), Kobuchar (MN), Lautenberg (NJ), Levin (MI), and Schumer (NY). Our thanks to Sante and Michael Esposito for their efforts on behalf of the CWCC!

T

FY14 Appropriations

he Coalition supports the highest possible FY14 funding levels for the Clean Water and Safe Drinking Water SRF’s. Included in the President’s FY14 Budget is $1.095B for the Clean Water SRF and $817M for the Safe Drinking Water SRF. Of the funds requested for the CWSRF, not less than 20% are specified for green infrastructure projects. Of the funds requested for the SDWSRF, not less than 10% are specified for green infrastructure projects, water or energy efficiency improvements, or other environmentally innovative activities. From both SRF’s, up to 5% of the funds are specified for various section grants and between 20-30% to be used for forgiveness subsidies. In all, the funding levels proposed for both programs in the President’s Budget are significantly lower than his FY13 Budget and the FY13 enacted levels. Accordingly, the Coalition continues to focus its FY14 funding efforts on the Congress and primarily the Senate Appropriations Committee. The House Appropriations Committee has begun markup on some of the FY14 bills (Homeland Security and Military Construction/Veterans). continued on page 47

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46

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Update continued from page 45

Clean Water/Safe Drinking Water Reauthorization Bill

T

he Coalition supports expeditious enactment of a Clean Water/Safe Drinking Water SRF Reauthorization Bill. Staffs of both the Senate Environment and Public Works Committee and the House Committee on Transportation and Infrastructure have advised the Coalition that after enactment of the Water Resources Development Act (WRDA) reauthorization bill, the Committees would then turn their attention to the clean water and safe drinking water reauthorization effort. Pending that, the Coalition supports legislation to reauthorize both Funds.

On May 8, with 27 co-sponsors on a bipartisan basis, Representative Timothy Bishop (D-NY) introduced a bill that would amend the Clean Water Act to establish a Federal trust fund to finance improvements to publicly owned treatment works. H.R. 1877, the Water Quality Protection and Job Creation Act, would also authorize $13.8 billion over five years for the Clean Water Act State Revolving Loan Fund (SRF) program. The SRF monies would be available to states and municipalities to build publicly-owned treatment works, repair or replace decentralized wastewater treatment systems, reduce water demand through conservation efforts, manage non-point source pollution, and adopt energy conservation measures.

Another $600 million would be authorized over five years to assist municipalities in managing storm water through green infrastructure and other approaches to controlling runoff from urban areas. The bill would require a state or municipal government to award all contracts for architectural, engineering, surveying, and other design services for projects funded by the legislation with the Federal qualifications-based selection (QBS) process under the Brooks-Architect Engineers Act of 1972.

Legislation of Interest MERKLEY S.335 – The Water Infrastructure Finance and Innovation Act of 2013.

T

he bill, introduced on February 14, has one co-sponsor. It was referred to the Senate Environment and Public Works Committee (EPW).

It authorizes the Administrator of FEMA to make a direct loan, including a subordinated loan or a loan guarantee to an eligible entity to carry out various water projects. Merkley is a member of EPW and the WIFIA issue was addressed/included in the Committee’s WRDA bill.

Status Update: No change since the last report.

CAPPS H.R. 765 - The Water Infrastructure Resiliency and Sustainability Act of 2013.

T

he bill, introduced on February 15, has no cosponsors and was referred to the Subcommittee on Water and Power of the House Natural Resources Committee. It requires the Administrator of the EPA to establish the Water Resiliency and Sustainability Programs to provide grants to owners or operators of water systems for programs or projects to increase the resiliency or adaptability of the systems to any ongoing or forecasted changes to the hydrologic conditions of a U.S. region.

Status Update: Sixteen co-sponsors added since the last report. n

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JULY, 2013

John E. Merchant, CPA

Cullen, Murphy & Co., P.C.

IN THIS ISSUE • The Paradox of Long-Term Care Insurance • Trim Steep New Taxes With a Charitable Trust • Funding a Small Business Succession Plan

Smart Tax, Business & Planning Ideas from y

The Paradox of Long-Term Care Insurance

E

The Paradox of Long-Term Care Insurance

yeing 21st century America rationally, long-term care (LTC) insurance would seem to be an idea whose time has come. Life expectancy is increasing, so more people will reach a point where they’ll decline physically or mentally and, thus, will require constant help. One recent study found that direct health care expenses for dementia, including nursing home stays, were $109 billion in 2010—greater than the cost of care for heart disease or cancer.

Medicare covers medical but not custodial care; Medicaid is available only to the impoverished. That should leave a need for LTC insurance, a need that companies in a free enterprise economy would rush to meet.

Logical or not, LTC insurance seems to be sputtering. Major insurance companies are trimming policy features or raising prices—or both. Some insurers are dropping out of the LTC market altogether.

For consumers, though, the need for LTC insurance still exists. Indeed, this year may be the time to buy, while certain policy attributes are still available.

JULY, 2013

Medica but not cu Medicaid i to the imp should leav LTC insur that compa enterprise rush to me Logical insurance s sputtering companies policy feat prices—or Age-Old Problems insurers ar Some of the woes now facing LTC insurance can the LTC m be traced to the relative newness of this coverage.

For con The first policies were introduced in the 1960s, with the need fo some major insurers launching their product lines in still exists. the 1970s and even the 1980s. They expected subEyeing 21st century America rationally, may be the time to buy, stantial “lapse rates,” meaning that many consumers long-term care (LTC) insurance attributes are still would pay premiums for a fewwould years andpolicy then stop seem to be an idea whose time has come. paying before collecting any benefits. In practice, Age-old Life expectancy is increasing, more aging lapse rates have been scantsobecause consum- problems Some of the people willonto reachtheir a point whereso they’ll ers held policies, insurers are facing a woes now f insurance decline physically or mentally and, thus, future in which they’ll be obligated to pay more claimscan be traced newness of this coverage will require constant help. One recent than they anticipated. policies were introduced studyWith foundLTC that insurance, direct healthcompanies care face claims with some expenses for dementia, including nursing many years in the future. Therefore, they primar-major insurer product lines in the 197 home stays,the were $109 billion 2010—in high ily invest premiums theyincollect quality, long-term 1980s.yield They expected su greater thanbonds. the costToday, of care long-term for heart Treasuries a meager 2%–3%, whereas the costs ofrates,” long-term meaning that man disease or cancer. continued on page 53

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Financial Management continued from page 51 care are increasing in the neighborhood of 5% a year. Insurers caught in this squeeze essentially see three choices: raise premiums that consumers pay, trim the benefits offered in LTC policies, or drop out of the LTC business.

Final Fling?

None of the choices mentioned in the previous paragraph are good news for consumers. If fewer companies offer LTC policies, the lack of competition is likely to keep prices high and policy benefits low.

Nevertheless, some observers believe that this is a good time to buy LTC insurance.

Why? Because policy changes typically must be approved by state regulators, and such approval might take many months. For example, LTC policies now are usually gender neutral. That is, men and women pay the same price for comparable coverage.

However, women live longer than men, on average, and industry data shows that women have been more likely to receive benefits from LTC policies.

Therefore, LTC insurers are applying for rate changes that would charge women more than men.

According to the American Association for Long-Term Care Insurance, women probably will pay 20%–40% more than men for coverage once the new rates are in effect, so women in the market for this coverage might want to act soon. (Men, on the other hand, may decide to wait to see if their premiums come down.)

Beyond gender-based pricing, future LTC policies may be more expensive with fewer benefits than those currently on the market. Insurers are starting to require physical exams for applicants, which could make LTC insurance more costly for people with medical conditions. This year could be a window of time to buy LTC coverage at a relatively modest price before new rules take effect. continued on page 55

Trusted Advice Proper Policies • “Qualified” long-term care (LTC) insurance policies can deliver tax benefits.

• To be qualified, the policy must meet several criteria. It must be guaranteed renewable, for instance.

• Qualified LTC policies also cannot have a cash surrender value, must contain certain restrictions on refunds of premiums, and generally cannot cover expenses that Medicare covers.

• You can include some or all of the premiums you pay for a qualified LTC policy as medical expenses on your tax return. Age-based limits apply. In 2013, the per-person caps on includible expenses range from $360, if you are 40 or younger, up to $4,550, if you’re 71 or older.

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54 “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 56 “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

JULY, 2013 NOVEMBER, 2009

Financial Management continued from page 53

H

Trim Steep New Taxes With a Charitable Trust

igh-income taxpayers face escalated effective tax rates as a result of new tax laws (see April 2013 Financial Management). Moreover, the higher rates are not limited to athletes, entertainers, and corporate CEOs who regularly collect substantial paychecks and bonuses. Taxpayers who ordinarily are in moderate tax brackets may trigger the new premium rates, surtaxes, and deduction phaseouts in any year when they sell a business, sell investment property, or take portfolio profits.

One strategy can defer these extraordinary gains for years or even decades. This tactic allows you to spread the gains over many years, so you may be able to keep your annual income down and, thus, avoid the extra taxes aimed at the top earners.

If you might face such a situation in the future, consider setting up a charitable remainder trust (CRT) for the asset sales.

his wife, Janice, as income beneficiaries; he instructs the attorney drawing up the trust to have the CRT pay out income as long as either of them is alive. Matt can choose between two modes of payments: • Matt can select an annuity trust, which will pay out a fixed amount each year. That amount must be at least 5% of the initial trust fund.

If Matt sets up the CRT with $1 million of real estate, the trust can pay out at least $50,000 a year to Matt and Janice or to the surviving spouse. When they both die, the assets still in the trust will pass to charities Matt has named.

• Alternatively, Matt can structure his CRT as a unitrust, which will pay out a fixed percentage of the net fair market value of the trust’s assets, valued annually, each year. Again, the minimum is 5%.

Example 2: Suppose Matt decides on a unitrust with a 6% payout rate. The first year, Matt and Janice will receive $60,000: 6% of $1 million. In future years, continued on page 57

Convert Gains Into Income With a CRT, you transfer assets you own into an irrevocable trust. Often, you’d transfer appreciated assets that you plan to sell. For a CRT, you name an income beneficiary or beneficiaries, who will receive cash flow for a specified time period. The beneficiaries could be yourself and your spouse, for example.

You also name one or more charities to receive the remainder interest in the trust—the assets left in the CRT after the income payout period.

Example 1: Matt Reese is about to sell investment property he has owned for many years. He expects to sell the property for $1 million and owe around $350,000 in various federal and state taxes, leaving him $650,000 to invest in securities for his retirement.

Instead, Matt transfers the property to a CRT he has created, and the CRT sells the property for $1 million. As a charitable trust, the CRT will owe no tax on the sale. Thus, the CRT has the full $1 million to reinvest in securities.

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When creating the CRT, Matt names himself and

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Financial Management continued from page 55

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the CRT payout will be more or less than $60,000, depending on whether the trust’s assets have appreciated or lost value. Thus, the unitrust structure offers the potential for more income, over time, but also the risk of reduced income if the CRT value falls.

Deducting the Donation Besides future cash flow, the creator of a CRT also will receive an upfront tax deduction. The deduction will be the present value of the remainder interest in the trust donated to charity after all the payouts to the income beneficiaries. This calculation is based on several factors, including the ages of the income beneficiaries and the CRT payout rate.

Under federal law, for a CRT to be treated as a charitable trust, the value of the expected donation must be at least 10%. If Matt Reese funds a CRT with a $1 million asset transfer, his deduction (the present value of the remainder interest in the trust) must be $100,000. This provision effectively caps a CRT’s income payout—Matt might be able to stipulate a 6% or 7% unitrust lifelong payout for himself and Janet, but not a 12% lifelong payout, if the larger payout leads to a projected remainder interest under $100,000.

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If Matt and Janice Reese receive $50,000 a year from their CRT, that’s the amount of income they will report. Such a relatively modest payout may keep this couple below the annual thresholds for higher taxes, whereas selling the investment property for $1 million in their own names might trigger a much more painful tax bite on the sale.

How will the CRT payout be taxed? That depends on how the money is invested inside the trust. If the trustee buys corporate bonds, for example, the taxable interest income will pass through to the trustee, taxed at high rates. On the other hand, if the trustee invests in growth stocks that generate no income for the trust, the taxable payout will retain the favorable capital gains tax treatment of the investment property sale. continued on page 58

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Did You Know?

C

rowdfunding websites, which solicit funds online for various ventures, raised $2.7 billion world- wide in 2012, up 81% from 2011. Massolution predicts that $5.1 billion will be raised via crowdfunding in 2013. The research and advisory firm sees a shift towards funding startup businesses and small firms rather than social projects, which is currently the most popular category.

Source: Reuters

JULY, 2013

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57

Financial Management continued from page 57

ontinued from page 3

T

Funding a Small Business Succession Plan

www.unitedconcrete.com

uccession: voluntary involuntary. enough, building her company heandJune 2013 issue of Financial The latter could be Management caused by your described to the point where s worth $3 the twoit’key death or severe disability.

In case of million, according to a reliable elements of a succession plan for a uch an involuntary departure from appraisal. Potential buyers privately held company: putting a value our role as head of the company, include relatives, employees, on the business and finding theinright ou’ll want to have someone lined other companies her successor.

Even withindustry those (sometimes two ingrediup to take over right away. You’ll also known as ents, planand can’t want your heirs to behowever, compensateda succession strategic buyers), outsiders bein the considered unless or your equity company (in a success (often called financialyou buyers) he event of your eventually sell getdeath), paid or a you’ll fair price who for hope yourtocompany. want some ongoing cash small flow in your Kay’smight company more money A viable business beforworth orced retirement (due to disability). than they pay her. $1 million, $10 million, or more; where These riskswill should addressed It’s possible thatmuch the buyer thebebuyer be able to get that with a buy-sell agreement between will have $3 million to pay money? or severe disability. In case of such an involuntary deou and a business partner, a key Kay and bid her farewell, parture from your role as head of the company, you’ll mployee, or an outsider. Funding can but that’s often not the case.

Worst Case Scenarios want to have someone lined up to take over right ome from insurance.

In the event In some situations, the buyer away. will You’llthat continue work for alsoKay wantwill your heirs totobe compensated To start considering this issue, you might think of your death,ofthe policy borrow the voluntary money. Then the company during (in a transition for your equity in the company the event of your two typesbeneficiary of business succession: and the buyer an use life insurance proceeds to buy will have to pay off the loan plus period with some financial incentive continued on page 59 involuntary. The latter could be caused by your death our stake from your heir; if you are interest, probably from the company’s to maintain revenues or earnings. disabled, a disability income policy future earnings. In this situation, Other forms of business an provide the cash you’ll receive Kay should see if “clawbacks” are in succession funding may include Custom and Standard fter you’re no longer able to run the the contract—will she have to repay the sophisticated use of trusts, business. money she has already received if the often in pursuit of tax advantages.

Concrete Products... company fails to meet certain future No matter how you intend to sell Our Specialty!

Dollars on departure levels of earnings or revenues? your business, you should read the A buy-sell agreement may not cover In many cases, the buyer might contract carefully, evaluating all the United Concrete Products, Inc. ituations where you want to retire173 Church offer to St. pay Kay over a period of devilish details. You also should have or just leave the company forYalesville, another CT years, rather than make one upfront professional guidance for such a 06492 ine of work. $3 million payment. Frequently, crucial transaction, and our office can Example: Kay Turner reaches an extended payment plan will be help you determine that you’re really Offering a full range of products: ge 66 and decides she has worked structured as an earnout, meaning getting a fair deal. g

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JasonfileLindsey Form 941 for the second quarter of 2013. This due date applies Employers. For Social Security, Medicare, and withheld income jlindsey@unitedconcrete.com only if you deposited the tax for the quarter in full and on time. tax, file Form 941 for the second quarter of 2013. Deposit any Cell 203-464-7667 August 15 undeposited tax. If your tax liability is less than $2,500, you can pay full line ofForproducts at: www.unitedconcrete.com Employers.

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more than $500.

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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Financial Management continued from page 58 death), or you’ll want some ongoing cash flow in your forced retirement (due to disability).

These risks should be addressed with a buysell agreement between you and a business partner, a key employee, or an outsider. Funding can come from insurance. In the event of your death, the policy beneficiary can use life insurance proceeds to buy your stake from your heir; if you are disabled, a disability income policy can provide the cash you’ll receive after you’re no longer able to run the business.

Dollars on Departure A buy-sell agreement may not cover situations where you want to retire or just leave the company for another line of work.

Example: Kay Turner reaches age 66 and decides she has worked enough, building her company to the point where it’s worth $3 million, according to a reliable appraisal. Potential buyers include relatives, employees, other companies in her industry (sometimes known as strategic buyers), and outsiders (often called financial buyers) who hope to eventually sell Kay’s company for more money than they pay her.

It’s possible that the buyer will have $3 million to pay Kay and bid her farewell, but that’s often not the case. In some situations, the buyer will borrow the money. Then the buyer will have to pay off the loan plus interest, probably from the company’s future earnings. In this situation, Kay should see if “clawbacks” are in the contract—will she have to repay money she has already received if the company fails to meet certain future levels of earnings or revenues?

In many cases, the buyer might offer to pay Kay over a period of years, rather than make one upfront $3 million payment. Frequently, an extended payment plan will be structured as an earnout, meaning that Kay will continue to work for the company during a transition period with some financial incentive to maintain revenues or earnings.

Other forms of business succession funding may include the sophisticated use of trusts, often in pursuit of tax advantages. No matter how you intend to sell your business, you should read the contract carefully, evaluating all the devilish details. You also should have professional guidance for such a crucial transaction, to help you determine that you’re really getting a fair deal.

Reprinted from CPA Client Bulletin. n

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For all your construction supply needs l Soil

Stabilization l Slope Protection & Erosion Control l Gabions l Pavement Maintenance

l Forming

& Shoring

l Rebar l Road

& Bridge l Concrete Repair & Restoration

www.ahharris.com

JULY, 2013

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

59

E.H. Perkins Construction, Inc. & Subsidiaries P.O. Box 301, Wayland, MA 01778 (508) 358-6161 • (781) 890-6505

-PLANT LOCATIONSQUINN-PERKINS S & G CO. Burlington (781) 272-0200 PANDOLF-PERKINS CO. Sterling (978) 422-8812 • (800) 339-3389 KANE-PERKINS CO. Hudson (978) 562-3436 • (800) 287-3436 GRAVEL • SAND • STONE FILL AND LOAM BITUMINOUS CONCRETE (PAVING) READY-MIX CONCRETE PRECAST CONCRETE PRODUCTS

E

H

P

Equal Opportunity/Affirmative Action Employer

60

Advertisers’ Index ATS Equipment, Inc. ...........................................................32 Adler Tank Rentals ..............................................................30 Boro Sand & Stone Corp......................................................57 Dennis K. Burke, Inc........................................................... 46 Concrete Systems, Inc..........................................................38 Dagle Electrical Construction, Corp....................................26 Darmody, Merlino & Co., LLP............................................53 DeSanctis Insurance Agency, Inc. .......................................56 Dig Safe System, Inc............................................................50 The Driscoll Agency ............................................................15 EJ..........................................................................................42 Eastern States Insurance Agency, Inc..................................41 T. L. Edwards, Inc................................................................47 Ferguson Waterworks...........................................................54 Ford Meter Box Co...............................................................54 Fringe Consulting.................................................................13 Genalco, Inc............................................................................9 Geod Consulting, Inc............................................................52 L. Guerini Group, Inc...........................................................52 HD Supply Waterworks..........................................................4 HD Supply White Cap..........................................................14 A. H. Harris & Sons, Inc. ....................................................59 Hinckley Allen, LLP............................................................16 P. J. Keating Company............................................................8 P. A. Landers, Inc.................................................................33 Lawrence-Lynch Corp..........................................................11 Liddell Brothers Inc............................................................. 24 Lorusso Corp........................................................................56 Lorusso Heavy Equipment, LLC........................................ 40 Mabey, Inc............................................................................19 Mass Broken Stone Company...............................................53 Milton CAT..................................................................... 2 & 3 Norfolk Power Equipment, Inc.............................................43 Our Outhouses, Inc...............................................................55 Palmer Paving Corporation..................................................48 E. H. Perkins Construction Co., Inc.................................... 60 Podgurski Corp.....................................................................50 E. J. Prescott, Inc..............................................Ins. Front Cvr. Rain For Rent-New England.................................................36 Read Custom Soils ...............................................................54 Rodman Ford........................................................................12 Rogers & Gray Insurance Agency, Inc.................................34 Schmidt Equipment, Inc.......................................... Back Cvr. The Scituate Companies.......................................................22 Shea Concrete Products........................................................10 Smith Print............................................................................56 Social Mavens.......................................................................19 Support of Excavation (SOE).................................................6 Sunbelt Rentals/Pump & Power Services........................... 44 Systems Support Corporation...............................................13 Taylor Oil Company.............................................................52 Ti-SALES, Inc. ....................................................................48 Albert J. Tonry & Co., Inc....................................................57 Travelers................................................................................43 Tri-Products, LLC................................................................50 United Concrete Products, Inc. ............................................58 United Rentals Trench Safety........................... Ins. Back Cvr. C. N. Wood Co., Inc. ............................................................18 Woodco Machinery, Inc.......................................................28

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

JULY, 2013

169-B Memorial Drive Shrewsbury, MA 01545 508-842-3790

TThhiinnkkiinngg bbiigg?? TThhiinnkk KK--SSeerriieess

Many of the refinements found in our K-Series Loaders are the product of the brightest minds in nemyeonutsrsfo. uLnodaidneoruo r Kw-Sneerriess aLn oaddu erssearrse sthuecphroadsuyco t ouf tta helkberd ig,hw teestlm tMhaenyinodf uthsetrreyfi— isitnedns eindt,haeninddtuhsteryK— -Syeoruierss. Lisoader owners and users such as you talked, we listened, and the K-Series is the result. Loaded with productivity and uptime-boosting features such as quieter, more tshpaecrioeussuclatb. sL.oEandhaendcewdiQthuapdr-oCdooul™ctsiyvsitteymasn. dMourpetpim e-boosting features such as quieter, more spacious owerful hydraulics. Easier-to-view monitors with expanded functions. And a longer list of coaptbiosn. sE. nThhianknincgedbigQ?uSatodp-Cinotoodl™aysoyrsgtievemuss. aMcaollr,eanpdolw Eaayssiethre-tsoe -JvoihenwDemeroens iwtoillrhsaw eteursfu shlohwyd yoruau alllitchse. w veityh ou thinking K-Series. expanded functions. And a longer list of options. Thinking big? Stop in today or give us a call, and let us show you all the ways these John Deeres will have you thinking K-Series.

Contact us today!

Contact us today!

www.SchmidtEquipment.com www.Sch5mLidotcEaqtiuoinpsment.com Se5rvLinogcaMtiAon&s RI (S8e0rv0i)n9g2M 2-A8& 29R5I (800) 922-8295