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Utility and Transportation Contractor, AUGUST 2014

President’s Message When we take into account the simplest things in our daily lives, such as doing the right thing by others, is that courage? I guess we would have to define courage in order to answer that question. One of the many definitions of courage is to do something in the face of fear, pain or grief. Our everyday lives are filled with all of these things. Think of the working Mom and Dad who make a decision to send their children to a university that they know they can’t afford but recognize that it is what’s best for them? They work longer hours and sacrifice for their families to make it work. Now let’s look to our politicians and the courage they show. Are decisions made because they will promote the State’s people and prosperity? Or are their decisions based on how it will affect a party line, their next term election, or maybe a step up the ladder? We ask these questions as we watch neighboring states make policy decisions and adjustments to grow jobs and increase prosperity in their states. Maybe they see New Jersey as an easy target to knock off with our staggering regulatory and tax structures put in place by the New Jersey legislature. You would think that our politicians would recognize this as an easy fix that the Democrats and Republicans could come to agreement on for the betterment of New Jersey residents. Political courage seems to be measured today by the size of your PAC. New Jersey’s infrastructure is one place courage has lacked since the mid1980’s. Both Republican and Democrat Legislatures have failed to display courage to fund the desperately needed investments in our infrastructure systems since the original Transportation Trust Fund had been put in place by Governor Tom Kean. Courage is not looting money from a supposed constitutionally protected fund. Courage is protecting it and growing it. Courage is not taking hard earned income and floating loans out 30 years to pay for a project with a life of 6 years. The average household would not finance a car that has a 6 year life span for 30 years. So why would Legislators do this to our State? Courage is not putting taxpayers on the hook for 30-year $1.2 billion annual debt service payments, when the State only takes in $930 Million in annual revenue. Yet it keeps going on the same way. Courage is stopping these irresponsible actions by our Legislature! Future courage would be putting actions in place for a TTF that would grow with the State’s needs. Courage would be keeping infrastructure money for direct investment in infrastructure projects. Courage would be doing the right thing with our money. I believe we send elected officials to Trenton to do a job. We don’t ask politicians to save our lives or do heroic acts. Is doing your job a show of courage when it’s the right thing to do? Courage would be doing the right thing without thought of how it’s going to fare for your political career. Now let’s take the question of Courage to the State’s TTF. Everyone in the Legislature, from the bottom to the top, knows the dire needs of the State’s Transportation system. Yet we haven’t seen the real courage required to make a difference and we just see the same bad policy repeatedly taken with our tax

money and pushing the problem down the road further to the next person in line. On the Governor’s desk at this time is A-2268, the Transportation Infrastructure Bank bill. This measure would create a bank to allow Municipalities, and Counties access to funding for transportation infrastructure projects without having to go for the typical costly funding methods used in the past. This comes from the very successful history of the NJ Environmental Infrastructure Trust that has been in place since 1986. This Trust Fund Bank is one of the Country’s most efficient and successful government lending institutions. With a relatively small staff, they have the ability to annually fund up to $1.2 billion in water and sewer related projects. Bringing this kind of creativity and efficiency to our roads and bridges would only be a plus to the tax payer. We feel optimistic having both Democrat and Republican Legislators bringing this bill to the Governor’s desk as a step toward showing some political courage. The next step at this point will be addressing the TTF in this manner and working in a bi-partisan fashion to get it done. This may not be the most popular move for both parties but will finally show some courage in moving forward. The UTCA has been hard at work to bring solutions and ideas to our Legislators and educating them on just how dire this issue is to our State’s economic future. The legislation for the naming of the Robert A. Briant Sr. Bridge on Route 71 has also reached the Governor ’s desk and awaits signing. We would like to recognize one of our contractor members, West Bay Construction, on reaching a milestone of 20 years in business. In addition, we would like to recognize True & Associates on 30 years serving the construction Industry with Insurance and Bonding needs. I would also like to thank both firms for years of continued support to the UTCA. I would like to welcome our incoming President Scott Lattimer of Clyde Lattimer & Sons. Scott is very passionate about our industry and has already been working very hard to serve this industry. Scott has been a regular going to Washington DC on numerous occasions meeting with our congressional leaders to represent our industry. He has also attended many visits to Trenton and other Legislators representing the UTCA Membership. I know Scott will be a great leader and I look forward to helping him as he takes on the role as President of the UTCA. Lastly I would like to thank the UTCA Board of Directors and the membership for their support throughout my term. It was a pleasure working with the UTCA staff who is always professional and courteous and can’t do enough to assist our membership. It was a great experience being the President this year and I thank everyone for your support.

Best regards,

Harry Chowansky Utility and Transportation Contractor, AUGUST 2014

AUGUST 2014 Volume XXXIX, Number 4

Contents Features

Published Bimonthly During 2014 Office Address: 1670 Route 34 North Farmingdale, NJ 07727 Mailing Address: PO Box 728 Allenwood, NJ 08720 (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org Publisher: Robert A. Briant, Jr.

10 19 43 48 63 74

Editor: Michael DeVito

Editorial Contributors: Michael DeVito Anthony Attanasio Dan Neville

West Bay Construction Completes Twenty Years In Construction Two Doors Of Protection - Part 2 Why An “I Love You” Will Is Not Enough ERISA & Healthcare Compliance: The Sleeping Giant Is Now Awake True & Associates Celebrates Thirty Years In Business Scott Lattimer UTCA President Elect Maximizing Your Social Security Benefits Garden State Precast Unveils Stormwater Bioretention Filtration System

4 4 48

Advertising Manager: Helene Nasdeo Photographer: Michael DeVito Cover Photo: Image Up Production/Graphics: Lauren Hagan Helene Nasdeo Circulation: Helene Nasdeo

Departments 2 17 22 31 37 54 70

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

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

Cover Pictured on the cover left to right are Linda Corradetti, Frank Corradetti, Kevin Blevin and Robert Jones.

Utility and Transportation Contractor, AUGUST 2014

Cover Story

West Bay Construction Completes Twenty Years In Construction Professional South Jersey Firm Provides Quality Construction

fter Frank Corradetti, P.E. graduated from Rutgers University with a degree in civil engineering, he worked for a local contractor in the Washington, D.C. area. Two years later, he was able to utilize this experience to achieve employment for Ole Hansen & Son. The Hansen firm was one of the most established heavy and utility construction firms in South Jersey. During his time at Hansen, Frank handled numerous projects for the firm and earned the position of vice president. In the early 1990â€™s, the Hansen Company decided to close its construction division to focus on its other business entities. With the valuable knowledge and work experience from his years at Hansen, Frank Corradetti decided to found his own construction firm in 1994. The establishment was initially started in Somers Point, NJ by Frank and his wife Linda, a fellow Rutgers University graduate with her own degree in engineering. The new firm focused on utility construction during its early years and performed its first project on Route 168 as a subcontractor

to South State. During its first year in business, West Bay completed a dozen projects as both a general contractor and a subcontractor. The firm performed utility work, site work, sidewalk installations and concrete repairs in Atlantic and Cape May Counties. A short time later, the contractor also began working in Camden, Gloucester and Cumberland Counties. The firmâ€™s capabilities expanded during this time to include timber bridge foundations, structural concrete and pedestrian bridge construction. Other early projects included water main installations in Brigantine and utility improvements on NJ Turnpike Service Plazas at Interchanges 4 and 6.

Pictured from the left are Kristin Corradetti, Rich Roesch, Dylan Skinner and Jake Lewkowski.

West Bay installs bridge and pedestrian rails on the Route 52 project. 4

West Bay has completed several recreational projects over the past twenty years. The company started this type of work in 1997 with the completion of a $300,000 athletic field project for the Wildwood Crest Board of Education. The firm also constructed the Veterans Memorial Park in Pleasantville. In 2014, West Bay completed a design/build project for the US Air Force by constructing two playgrounds for child day care centers at the Joint Base McGuireDix-Lakehurst. Utility and Transportation Contractor, AUGUST 2014

In recent years, West Bay has carved a niche with the completion of numerous military contracts including the US Coast Guard and Joint Base MDL. One of the first of these projects included the construction of pump station foundations in Wildwood for the U.S. Coast Guard. Later, the company successfully completed a bulkhead repair where they drove steel sheet piles for the USCG Station Indian River in Delaware. West Bay successfully completed a project located at the main entrance of the United States Coast Guard Training Center in Cape May, NJ. This project consisted of the demolition of existing fence/gates and the installation of a new high security gate/fence featuring new masonry walls, concrete flatwork and a vehicle inspection area. Projects for the US Coast Guard have also included the demolition and replacement of a floating dock in Barnegat Light, NJ and the installation of navigational range towers on the Delaware River. Additionally, West Bay completed a $750,000 renovation at the US Coast Guard Base in Cape May, where it rehabilitated the gymnasium.

Entrance Canopy is completed at the Joint Base McGuire-DixLakehurst.

Projects at the Joint Base have included construction of parking lots, pavement rehabilitation and fuel containment structures to contain spilled fuel from escaping into the environment. The design and installation of a new brick paver walkway, with a custom made US Air Force emblem, was installed in an existing concrete trough at the Joint Base. Milling and paving of airfield Taxiway aprons, along with the installation of airplane tie-down anchors and grounding rods, have been completed to support the Department of Defense’s operations. West Bay has also performed design/build projects for the military. In 2010, the firm installed an animal control fence around active runways at Lakehurst Naval Base (now known as Joint Base McGuire-Dix-Lakehurst). On this $1.9 million project, West Bay installed five miles of chain link fence around the runways to prevent local wildlife from impeding air traffic. In 2012, the company completed the rehabilitation of an inert warehouse which was used to store non-explosive equipment at Naval Weapons Station Earle. This design/build contract required the warehouse rehab along with the rebuilding of a loading dock/railroad platform along-side the historic structure. The company also has extensive utility work experience, including clients such as PSE&G and local municipalities. These projects have also included concrete repairs, drainage improvements and road repairs. In June, West Bay completed the rehabilitation of the Sugar Hill Bridge in Mays Landing for the County of Atlantic. Utility and Transportation Contractor, AUGUST 2014

A playground is constructed for the U.S. Air Force at the Joint Base McGuire-Dix-Lakehurst.

Additionally, several subcontracting contracts were completed for IEW Construction Group involving bridge deck spall repairs, drainage installations, site improvements and bridge rehabilitation. Since the early days of the firm, West Bay has expanded its geographic reach to include the entire State of New Jersey and areas of Delaware and Eastern Pennsylvania. The firm has performed work for the NJDOT, NJ Turnpike Authority, Ocean County Utilities Authority, Hamilton Township MUA, New Jersey American Water Company, Garden State Parkway, Army Corps of Engineers, USCG, FAA, NJ Air National Guard and the Department of the Navy. West Bay has performed subcontracting projects for many UTCA members firms including, Henkels & McCoy, A.E. Stone, Arawak Paving, R.E. Pierson Construction, South State, IEW Construction Group and several others. The largest contract completed to date was a $4.5 million project to install bridge railings for Route 52 Constructors. After starting the firm in Somers Point, Frank and Linda Corradetti moved to another location in Linwood and then purchased property in Absecon about three years ago. It was on this property that the firm built its current office and established a new construction yard. A long-time key employee for West Bay is Kevin Blevin who serves as the company’s superintendent. Blevin has been with the contractor for approximately 17 years. Other employees who have contributed to West Bay’s success include field foreman Bob Jones and Project Engineer, Richard Roesch. West Bay Construction performs more than half of its projects as a general contractor, while the balance of its work is comprised of subcontracting projects. In its twenty years in business, the firm has proven to be a successful and reliable contractor with an excellent reputation in the heavy highway utility construction arena. It has completed water, sewer and drainage installations, soil and erosion control projects, land clearing and grubbing services, bulkhead and coffer dam construction, roofing, painting, pier repairs, slope stabilization, dredging, concrete repairs, masonry work, sheeting and shoring, bridge work, and installation of fencing, guiderail and lighting, in addition to “going green” projects such as solar light installs. The company is also a material supplier of structural bridge products, sand, gravel and topsoil. Other services include design for structural and civil construction projects and for site improvements as well as for architectural renovations. Frank Corradetti can look at his firm’s accomplishments with pride as it celebrates twenty years in construction. Congratulations to Frank and Linda Corradetti! 5

Utility and Transportation Contractor, AUGUST 2014

TWO DOORS OF PROTECTION PART 2 By: Carl Bloomfield, The Graham Company In the last issue I set the stage to talk about the importance of Contractual Risk Transfer as an essential part of an effective risk management program, specifically indemnification and Additional Insured Status. Now, let’s continue the conversation on indemnification in greater detail and address pitfalls surrounding this risk transfer mechanism. To briefly recap, the word “indemnify” means to make compensation to another for hurt, loss or damage. There are three levels of indemnification – broad, intermediate and limited form: Broad Form Indemnity – “… even for, and if caused in whole or in part by, any act, omission, or negligence of the indemnified parties.” Broad Form Indemnity requires one party to assume the obligation to pay for another party’s liability even though that other party is solely at fault. One of the key indicators an indemnity agreement is Broad Form is the inclusion of the phrase “caused in whole or in part.” One of the most common examples of a claim scenario where Broad Form Indemnity could come into play is when one of your injured employees sues the owner of the project to attempt to get an additional pay out beyond the workers’ compensation benefits they received from you. Injured employees are barred from suing their employer if workers’ compensation insurance has been provided, so they sue the owner of the job alleging that the owner was 100 percent negligent and caused their injury. The owner of the project is going to argue that they were not 100 percent at fault and they will tender the claim back to you. Since the employee’s allegation is that the owner is solely at fault, a Broad Form Indemnity would be required to respond to the owner’s tender of the claim to you. Unfortunately, it takes 10

many years and thousands of dollars of legal fees to ultimately determine liability in a case. Without coverage for Broad Form Indemnity, you may have to pay out of pocket until this determination is made by the court. Intermediate Form Indemnity – “… even for, and if caused in part by, any act, omission, or negligence of the indemnified party.” Intermediate Form indemnifies a party for its own negligence, except if that party is solely at fault. A key indicator an indemnity agreement is Intermediate Form is the inclusion of the phrase “caused in part.” Notice the difference between this wording and that of Broad Form Indemnity. The omission of the word “whole” is what keeps this from being Broad Form, and what is left being covered is the partial negligence of the party seeking indemnity. Granted, partial negligence can be as much as 99 percent. Limited Form Indemnity – “… but only to the extent caused by the negligent acts or omissions of the party providing the indemnification.” Limited Form is not really indemnity at all since it does not indemnify a party for its own negligence. The key phrase to look out for with Limited Form is “only to the extent.” Validity of Indemnity Provisions There are many considerations that must be taken into account to ultimately determine the validity of an indemnity provision. Indemnity agreements are almost always much more complicated than the basic examples listed above because they detail all the various parties who are owed indemnity and what caused these parties to be owed indemnity. In my experience, most indemnity agreements provide such extreme detail and extemporaneous information, that the agreement becomes unclear and Utility and Transportation Contractor, AUGUST 2014

counterproductive to its intended purpose. Furthermore, some indemnity agreements will include variations of all three forms of indemnity listed above, further complicating the matter. Almost universally, the courts mandate that indemnification provisions must be “clear and unequivocal.” If the provision is not clear, it could be stricken altogether leaving you with no indemnity. State-by-State Case In most states, the courts require an affirmative assumption of the indemnitee’s negligence. In other words, the indemnity provision must plainly say what the indemnitee is being indemnified for. In other words, it should say something like “… for their own negligence.” Often times, the enforceability of an indemnity provision rests on the use or omission of a single word – the word “for.” Lastly, Anti-Indemnity Statutes limit the types of indemnity that are allowed in each state. Most states do not allow Broad Form Indemnity for construction contracts. This is true for New York, in some situations, and always true in New Jersey, but it is not true in Pennsylvania. New York does not allow Broad Form Indemnification for construction contracts, but does permit enforcement of indemnification agreements where the indemnitee’s liability is based on the strict liability provisions of Labor Law 240(1). This caveat regarding indemnification of Labor Law 240(1) claims is a significant risk management protection for any company that utilizes subcontractors in New York. Most likely companies don’t have their indemnity agreements written appropriately for New York because generally Broad Form Indemnity is not permitted for construction contracts. It is important to note that Broad Form Indemnity is allowed for non-construction contracts in most states. Even though the majority of the contracts you enter into are related to construction, every business enters agreements with suppliers, banks, consultants, etc. that are not subject to the anti-indemnity statutes. Operations in Multiple States Many contractors operate in multiple states, yet they only have one standard subcontract agreement. With no uniformity between the states on what is permitted and what is not permitted with regard to indemnity, your company could be unnecessarily exposed to additional risk because of an inadequate or noncompliant subcontract agreement in that neighboring state. For example, if a New Jersey-based contractor crosses into Pennsylvania, their subcontract agreement may not require Broad Form Indemnity from its subcontractors because New Jersey doesn’t permit it, or the indemnity provision may not meet Pennsylvania’s strict standards regarding a positive affirmation of the indemnitee’s negligence being assumed by the indemnitor. A different scenario, but equally problematic, is if a New Jersey-based contractor’s Subcontractor Agreement requires Broad Form Indemnity for a contract within the state. If the indemnity was challenged in court, the provision would certainly get stricken and what is left would essentially be Limited Form Indemnity only. Therefore it is important to be aware of the state specific anti-indemnity statutes, as well as the different

Utility and Transportation Contractor, AUGUST 2014

standards each state requires to have an enforceable indemnity provision so that you can properly craft your contracts with your subcontractors. Otherwise, you may be surprised with the level of indemnity your company is afforded at the exact time you need it. Insurance Considerations You may recall from Part I of this article that I mentioned indemnification is not insurance. However, most insurance policies will back up the indemnity obligations that are placed on your company as long as the duty to provide that indemnity is rooted in an “insured contract.” The phrase “insured contract” is a defined term in most insurance policies and includes things such as a contract to lease a premises, an easement or license agreement, an obligation to indemnify a municipality, or any other contract which requires you to assume the tort liability of another party to pay for bodily injury or property damage. Take note that the definition of an insured contract limits coverage to pay for bodily injury or property damage. The standard unendorsed commercial general liability insurance policy’s wording provides Broad Form Indemnification coverage. Even though the commercial general liability policy provides coverage for the broadest form of indemnity, not all indemnity obligations are covered by insurance. For example, many indemnity agreements require you to indemnify another party for “any and all claims.” This is overly broad and would include things that are excluded from your liability policy such as property damage that is expected or intended from the standpoint of the insured. “Any and all claims” means things such as fines and penalties, employment disputes, copyright and patent infringement and breach of contract. It would also include things like personal injury, which is specifically excluded by the Contractual Liability Exclusion in Coverage B of the general liability policy. In recent years, we have seen more and more insurance companies try to amend the definition of an “insured contract” in attempts to limit the scope of coverage their policies provide for indemnity agreements. Some carriers try to amend the policy to provide Intermediate Form Indemnity and some strive for Limited Form. Without insurance coverage to back up an indemnity agreement, your company’s balance sheet is exposed to a potential significant uninsured event. The topic of indemnification is a difficult one to master. Get your insurance broker and attorney involved so that your company is properly protected and utilizing this risk transfer mechanism to the fullest extent possible. About The Author: Carl Bloomfield is a Producer at The Graham Company, the largest property and casualty insurance brokerage in the Mid-Atlantic region. As a leader of the Construction Division, Bloomfield spearheads The Graham Company’s involvement in several construction industry organizations, including the Utility & Transportation Contractors Association, Associated General Contractors, General Contractors Association of New York, New Jersey Asphalt Pavement Association, the Contractors Association of Eastern Pennsylvania and the General Building Contractors Association of Pennsylvania. Carl can be reached at cbloomfield@grahamco.com or 215-701-5420.

Utility and Transportation Contractor, AUGUST 2014

Financial Overview

GREAT EXPECTATIONS: IS YOUR BANK MEETING YOURS? By: William J. Ruckert, Provident Bank In Charles Dickens’ masterpiece Great Expectations, Pip’s secret wealthy benefactor, who pulls him from his lowly social station and turns him into a gentleman of sophistication and idle days, seems exactly like what he is: fiction. But in the real world, you should enjoy a relationship with your bank that is marked by the same generosity and life-simplifying benefits. If you’re shaking your head in disbelief, your financial institution may not be adequately serving your needs. Now that the 2014 season is in full swing—and your company is a buzzing hive of grading, bulldozing, dredging, erecting, excavating, paving, etc. — ask yourself if your bank helped you plan well for the year. Were your prepared or are you completely overwhelmed amid the flurry? Are there gaps in your cash flow? Are you wringing your hands over funding/finishing the next project? Life doesn’t have to be this way. As a business owner, you should have great expectations of your banker, including: Open and active lines of communication: Everyone knows that a successful relationship is founded on trust and communication. An excellent banking partner will be accessible and honest and maintain a comprehensive, refined understanding of your current and projected financial position. Moreover, your banker should always be available to offer sound financial advice about everything from a specific product to high-level strategy. Positive interaction with your business partners: The best bankers play nice with others: in this case, your business partners. It’s crucial that your banker maintains open and active lines of communication with them, especially the all-important accountant. It’s the accountant’s bookkeeping/financial statements that the bank relies on to determine the circumstances of your borrowing relationship. Utility and Transportation Contractor, AUGUST 2014

Constructive analysis and forecasting: Your bank should use your company’s financial statements to assess its performance throughout the year. This will help you make adjustments to your budgeting and planning. It also allows the financial institution to forecast your needs in the upcoming year and consider how to best meet those needs, whether through a loan or line of credit. Industry expertise: Any banker worth his salt should know his or her way around the construction industry and stay up to date with its current events. Your banker should provide considerable experience, serving a variety of entities within the industry and providing insight to those on the periphery. Depend on him or her to be intimately familiar with trends, market performance, seasonal fluctuations and superior financial solutions to overcome those obstacles particular to your company. Creative solutions: Your financial institution should be a onestop-shop for both your credit and non-credit needs. Certainly, it provides creative, value-added lending products— appealing alternatives to traditional financing, including: term loans, equipment loans, equipment backed revolvers and capital expenditure lines of credit. But it also offers additional business services, including cash management, estate planning and business succession. Now do you believe you should have a generous and lifesimplifying banking relationship? If you think that your financial institution may be giving you the short shrift, it’s time to consider Provident, a bank whose customers matter. For more information about Provident Bank’s expectation-satisfying services, please contact the author.

Utility and Transportation Contractor, AUGUST 2014

WHY AN “I LOVE YOU” WILL IS NOT ENOUGH By: Kevin Ellman, CFP, CEO, Wealth Preservation Solutions This year, the federal exemption for estate taxes is $5,340,000 per person. A married couple can therefore leave up to $10,680,000 to the next generation WITHOUT incurring federal estate taxes. This is good news because it means that the vast majority of households will have no federal estate taxes to contend with. However, this doesn’t mean that you shouldn’t protect your assets. Given the large estate tax exemption, many families have chosen to forego sophisticated Estate Planning. They believe, “If we don’t have to worry about taxes, why do we need anything more than a simple will?” The truth is that taxes are not the only threat to your estate and Asset Protection is NOT just for the super wealthy. Suppose you have managed to accumulate an estate totaling $3,000,000, consisting of your home, investments, IRAs and life insurance. If you are like most people, you have the most common type of will, the “I love you will.” It says, “I leave all my assets to my spouse, and upon the death of my spouse, our assets go to our lovely children.” This seems straight forward and protective enough, but is it? Let’s examine two of the most common potential pitfalls of failing to protect your assets properly. Although it is an unpleasant thought, what would happen if your son or daughter were to get married and then, some day, get divorced? In America, over 50% of first marriages end up in divorce and almost 60% of second marriages fail as well. It is entirely possible that the assets you spent a lifetime accumulating could end up with your future ex-son or daughter-in-law, or, as we say in the trade, a future “outlaw.” Another unattractive but realistic scenario is a situation in which a spouse passes away, leaving all of the assets to the surviving spouse. What would happen if the surviving spouse remarries and subsequently dies or gets divorced? Without the proper planning, some or all of the family assets could end up with the new wife or husband, thereby inadvertently disinheriting the children. If you are anything like the people I speak to at my seminars across the country, your answer to both of these scenarios is probably, “NO WAY DO I WANT THAT TO HAPPEN!” If this is how you feel, then you need to incorporate Asset Protection into your Estate Plan. Again, most people think Asset Protection is just for the super wealthy, but that is not true. Almost everyone can benefit from putting a “moat” around their assets to protect them from future “outlaws.”

Utility and Transportation Contractor, AUGUST 2014

Let’s review two steps you can take to design a trust that protects the assets FOR your children, not FROM them: 1)

Consider leaving assets to your spouse in what is called a QTIP trust. In simplest terms, this trust gives your spouse all income generated for the remainder of the spouse’s life and access to principal under certain circumstances. Thereafter, the trust ensures that the assets ultimately go to the children of your marriage and NOT any future exspouse. 2) Consider leaving your assets in an Asset Protection trust for your children forever. This accomplishes two important goals: *As with most trusts, you can appoint a “friendly” and “trustworthy” trustee to do the right thing by your kids. In many cases, you can appoint more than one trustee, and you can even have your children be trustees for each other. *A second benefit of an Asset Protection Trust is that it may not be necessary to take money out of the trust at all. Most trusts are structured to allow children to receive income and principal at ages 25, 30, and 35. However, what happens if they get divorced at 40? Depending on how they have handled their money, it is entirely possible that the future “outlaw” could end up with half of “your” money. Many folks don’t realize that a trust can own almost anything. You can buy a house, a car, a business or mutual funds in a trust. And, you don’t need to take the money out of the trust in order to invest it. This way, if anything goes wrong, the money is safeguarded.

An Asset Protection Trust is like having a “moat” around your money, protecting it from the claims of disgruntled ex-spouses, creditors and even the IRS. About The Author: Kevin Ellman is the CEO of Wealth Preservation Solutions, LLC. Kevin oversees investment portfolio design and management for the firm’s clients. As a financial advisor, he has provided the full array of financial, estate and retirement planning services to business owners, families, executives and individuals for over 25 years.

Utility and Transportation Contractor, AUGUST 2014

Accounting Corner

BUSINESS OWNERS BEWARE: THE APPLICATION OF THE NEW INVESTMENT INCOME TAX RELATING TO THE SALE OF BUSINESS ASSETS DEPEND ON FACTS AND CIRCUMSTANCES By: Jill Johnson, CPA, McGuigan Tombs & Company Business owners often ask the question, how much tax will I have to pay if I sell my business assets for $X,XXX and what will my net proceeds actually be? The answer to their question has changed dramatically since 2012. The American Taxpayer Relief Act of 2012 and the Affordable Care Act of 2011 (otherwise known as Obamacare) included tax increases that do, in fact, effect a business owner’s potential tax liability who wishes to sell business assets. But does the additional 3.8% tax on “net investment income”apply to a business owner on their exit transaction? Not in every case. The 3.8% “Investment Income” Tax As part of the Affordable Care Act of 2011, (effective January 1, 2013) an additional 3.8% tax now applies to individuals on their “net investment income” (NII). Net investment income tax is imposed by section 1411 of the Internal Revenue Code. NII generally includes income from interest, dividends, rents and royalties. In addition, business profits and gains from the sale of business assets are also considered investment income if the business is a “passive activity” with respect to the business owner. Conversely, those same business profits and gains would not be net investment income if the business owner’s participation is that from a non-passive activity. This potentially creates a unique planning opportunity for the business owner as illustrated below. The net investment income tax will apply to individuals that have net investment income in addition to modified adjusted gross income over the following thresholds: 22

Filing Status Married filing jointly Married filing separately Single Head of Household

Threshold Amount $250,000 $125,000 $200,000 $200,000

It is applied to the lesser of the amount of net investment income or the amount by which total income exceeds the thresholds above. For example, assume there is a married couple filing a joint tax return with combined wages of $220,000 and other investment income consisting of interest, dividends, and capital gains of $100,000. They would incur an additional net investment income tax of $2,660 under the Affordable Care Act ($320,000 - $250,000)* 3.8%). What kind of gains are included in Net Investment Income? Some of the most common examples of capital gains that are taken into account in computing your net investment income are gains from the sale of stocks, bonds, and mutual funds (as well as capital gain distributions from mutual funds). Gains from the sale of investment real estate including gains from the sale of second home that is not a primary residence. Gains from the sale of an interest in partnerships and S Corporations to the extent that the partner or shareholder was a “passive owner”. If any of these gains cannot be offset by capital losses, the examples above would be included in the calculation of net investment income. “Passive Owner” Rules Utility and Transportation Contractor, AUGUST 2014

It is important for a business owner to understand the 3.8% tax specifically applies to business income and gains from the sale of business assets if the business is a “passive activity” with respect to the business owner. If the business owner is not involved in the business on a regular, continuous and substantial basis, then the business will be considered a passive activity. If there are two or more partners in the business, each individual partner will have to determine their involvement in the business separately. So what constitutes a non-passive participation level (ie. material participation)? Generally, if you work more than 500 hours a year in the business, if you perform most of the services in the business or if you can demonstrate a consistent work history in the business, this is considered material participation. The Internal Revenue Service provides specific tests on determining whether the activity is non-passive, including guidelines on the amount of time that is spent working. Thus, any income or gains from an owner’s material participation activity will not be included as part of the net investment income calculation. 3.8% Tax applied to your sale proceeds Let’s assume that in 2014 two 50% business owners have decided to sell their company’s assets (an S Corporation) for a gain of $6

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million. In addition, in 2014 they have $1 million of net profit. After determining that the first owner is a “non-passive” participant in the business, the owner’s pass-through income from the profits for the year, in addition to his percentage of the gain from the sale,will not be subject to the 3.8% investment tax. Let’s assume the second owner’s participation is passive in the business. In this case, both the flow through income for the year and the gain associated with the businesssale will be subject to the 3.8% tax. At the end of the day, the net investment income tax is still a very new concept, and the final regulations are complex. However, it is important for business owners to understand how this 3.8% tax may affect them if they sell the business assets. As in the example used above, the 3.8% investment tax could have a very meaningful impact on the business owner’s sale proceeds. About The Author: Jill A. Johnson, is a partner at McGuigan Tombs & Company, PC, CPA’s, a full service CPA firm located in Manasquan, New Jersey serving a wide variety of construction, manufacturing, consulting and high net worth clients throughout the tri-state area.

Utility and Transportation Contractor, AUGUST 2014

Legal Dig

A BAD IDEA FOR PUBLIC CONTRACTORS By: Steven Brawer, Association Legal Counsel One of the most insightful comments attributed to Mark Twain, perhaps the foremost social and political commentator in American history, is that the public is safest when Congress is not in session. Based upon a bill recently passed by the New Jersey Senate and General Assembly, the citizens of this state likewise are best served when our Legislature is far away from Trenton. Senate Bill No. 1038, entitled the “Wage Transparency Act,” supplements the Prevailing Wage Act and requires firms entering contracts with a public body in New Jersey to “provide a report to the Commissioner of Labor and Workforce Development * * * of information regarding the gender, race, job title, occupational category, and total compensation of every employee of the employer employed in the State in connection with the contract.” The legislation goes on to require employers to provide an update to the public owner “each time there is a significant change in any of the information that the employer is required to report * * * or other significant change in employment status, including, but not limited to, medical leave of 12 weeks or more, hiring, termination for any reason, a change in part-time or full-time status, or a change in ‘employee’ or ‘contractor’ status.” Updates are to be provided “whenever payroll records are required to be submitted” pursuant to the Prevailing Wage Act and the information submitted “shall be made available by the commissioner to the Division on Civil Rights in the Department of Law and Public Safety, and, upon request, provided to anyone who is Utility and Transportation Contractor, AUGUST 2014

or was an employee of the employer during the period of any of the contracts between the employer and any public body, or any authorized representative of the employee.” While the burdensome record keeping requirements imposed by S-1038 are straightforward, it is difficult to understand what the proposed law is intended to accomplish. According to press reports at the time the bill was adopted by the Assembly last April, the chairwoman of the Assembly Women and Children Committee lauded the legislation as a tool to fight gender wage discrimination — but insofar as the Prevailing Wage Act applies to all employees engaged in public work regardless of gender, there is no apparent reason why the imposition of onerous prevailing wage record keeping and reporting requirements on contractors will address gender wage discrimination. Moreover, there does not appear to be any record of women who work on prevailing wage jobs being paid less than their male counterparts. All this suggests that in reality S-1038 is a piece of overreaching remedial legislation that doesn’t address a real-world problem. The Wage Transparency Act is awaiting action by the Governor before it becomes law, and it is hoped that Governor Christie will recognize that the bill is a bad idea which does nothing to solve the problem of gender wage discrimination and only serves to make it even more rigorous and expensive to perform public construction work in New Jersey.

Utility and Transportation Contractor, AUGUST 2014

Labor Relations

SUCCESSOR LIABILITY FOR WAGE & HOUR VIOLATIONS WHAT EVERY CONTRACTOR NEEDS TO KNOW By: Jill Tobia Sorger, Esq., Partner, Tobia & Sorger A recent Third Circuit Court of Appeals decision has changed the legal landscape regarding a successor company’s liability for alleged wage and hour violations of its predecessor under the Fair Labor Standards Act (“FLSA”). Prior to the Court’s decision, a successor company would have only been held accountable for the acts of its predecessor in certain limited circumstances, most of which were easily avoidable by structuring the purchase transaction as an asset sale. However, the Third Circuit’s decision adopts a lower standard that significantly broadens a successor’s exposure to liability for its predecessor’s alleged FLSA violations and potentially opens the door to expand successor liability as it relates to other federal and state employment law claims as well. Accordingly, UTCA Contractors contemplating purchasing the assets of another company should pay careful attention to this significant change in the law. A “Lower Bar” To Imposing Successor Liability: In its decision, the Third Circuit expressly rejected the New Jersey state law test for determining whether a successor should be held liable for its predecessor’s debts and obligations. Under New Jersey law, factors such as whether the successor expressly agrees to assume the predecessor’s debts and liabilities or whether the transaction was entered into to allow the predecessor to fraudulently avoid responsibility for its liabilities and debts are relevant in making the determination. However, instead of applying this test, the Court decided that the significantly less stringent federal common law should be followed. In order to impose liability on a successor, federal common law only requires an analysis of the following three factors: “(1) continuity in operations and workforce of the successor and predecessor employers; (2) notice to the successor-employer Utility and Transportation Contractor, AUGUST 2014

of its predecessor’s legal obligations; and (3) ability of the predecessor to provide adequate relief directly.” The Third Circuit left little doubt of its intent to lower the bar to imposing successor liability by explaining that it was imposing the less stringent standard to prevent FLSA offenders from avoiding liability by simply selling its assets to another company, which successor company in turn decides not to assume said liabilities, and then dissolving itself. It is also important to note that the Third Circuit’s decision followed precedent from the Fifth and Seventh Circuit Court of Appeals. The Fifth and Seventh Circuits have imposed the federal “default rule” on successor liability with regard to not only the FLSA but also to federal discrimination claims and claims for unpaid pension contributions. Accordingly, as these Courts have gone to great lengths to prevent both the predecessor and successor companies from avoiding federal employment law liabilities in asset purchases, it is reasonable to assume that the Third Circuit will follow their lead. Advice for UTCA Contractors: The tough business climate facing construction contractors lends itself to an increase in asset purchases in the industry as the assets of failing or insolvent companies are often purchased by stronger companies. In light of the recent Third Circuit decision, any UTCA Contractor contemplating such an asset purchase should consult legal counsel and strengthen its due diligence process to not only ascertain potential employment claims but also to consider adjusting the asset purchase price since there is a substantially increased likelihood that successor liability will be imposed no matter what steps are taken to prevent the same. 37

Utility and Transportation Contractor, AUGUST 2014

WITHUMSMITH+BROWN CELEBRATES 40 YEARS IN BUSINESS

Utility and Transportation Contractor, AUGUST 2014

ERISA & HEALTHCARE PLAN COMPLIANCE: The Sleeping Giant Is Now Awake

By: Nancy Damato, Partner, RDA Benefit Services The Employer Income Security Act (ERISA) became law in 1974. It changed the reporting and disclosure standards for employee benefit plans sponsored by private sector employers, including corporations, partnerships and sole proprietors. Plans subject to ERISA include pension plans, health and disability insurance, death benefits, unemployment benefits, vacation benefits, holiday and severance pay plans, pre-paid legal services, scholarship funds, apprenticeship and training programs and employer-operated day care centers.

Why should companies comply with ERISA? Until now, these requirements have largely been unenforced in the benefits area. Since the passing of PPACA (the Patient Protection and Affordable Care Act), the Department of Labor has added over a thousand new agents to audit benefit plans. The Employee Benefits Security Administration (EBSA) is the enforcement arm of the Department of Labor. Their goal is to audit all businesses over the next 5 years. And last year alone, EBSA recovered $1.6 billion in fines and penalties.

Who must comply with ERISA? ERISA requirements apply to all size groups—there is NO small group exception! And the purpose is to protect the interests of participants and beneficiaries in these private sector employee benefit plans. ERISA regulates the responsibilities of plan fiduciaries and plan administration. It prohibits discriminatory practice when granting plan benefits to qualified individuals. There also must be timely delivery of: plan documents, summary of plan descriptions (SPDs), as well as required annual notices, such as COBRA, HIPAA, and WHCRA (Women’s Health and Cancer Rights Act) and other documents as required by ERISA. A common misconception is that carrier provided booklets and certificates satisfy ERISA. These items alone NEVER satisfy ERISA requirements. ERISA also requires employers with 100 or more participants to annually report certain information to the Department of Labor on Form 5500 and prepare a Summary Annual Report.

What are the penalties if companies don’t comply with ERISA? Penalties to employers vary for non-compliance of the ERISA requirements—fines up to $110 per day per violation, payable to the employee, for failure to deliver an SPD within 30 days after an employee’s request. Late filing of a Form 5500 can result in penalties up to $1,100 per day. Criminal penalties can also be imposed on any individual or company that willfully violates any requirement of Title I of ERISA, starting at $100,000 per conviction. The time to become compliant is before any audit or lawsuit occurs. Being aware of compliance requirements, having complete documentation and polices in place are the best way to be prepared for an audit. For more information on ERISA compliance matters, please feel free to contact Nancy Damato, RDA Benefit Services LLC at 855-693-0772.

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The information provided in this article is intended as an overview of ERISA compliance and is for informational purposes only. The employer should consult with a legal or other professional advisor before commencing a course of action.

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Featured Article

TRUE & ASSOCIATES CELEBRATES 30 YEARS IN BUSINESS

ong-time UTCA member True & Associates was founded in 1984 by Thomas True just seven years after his graduation from Villanova University with a degree in Business Administration. The firm was established after he purchased two small local agencies in Mountainside and Westfield. The fledging company focused mainly on the construction industry. Since those early days, Tom has guided the organization to become a full service, multiline insurance and surety agency with products and services focused on the needs of the construction industry. Today, True & Associates is licensed in 30 states and has offices in Westfield, Clinton and New York City. Tom True built an organization that includes many seasoned professionals in different areas of insurance and surety services.

Successful Insurance Agency Began With Focus On Construction Industry

Leading that list is Bill Dougherty who joined the firm a decade ago and serves as the Executive Vice President and COO for the agency. Prior to joining True & Associates, Bill spent nearly 30 years in senior management positions with national insurance carriers heading their US marketing division. He was operationally responsible for one billion in insurance premiums in the Northeast. Bill is the current Chairman of the New Jersey Subcontractors Association.

Pictured left to right are Amanda Nigro, Ellisa True and Mary D’Amato, seated, and Joe Roskey, Lisa Anderson, Wes Anderson and Susan Lojo, standing.

True & Associates employees are pictured outside the firm’s Westfield office. 48

The management team begins with Frank Purdue who is the Senior Vice President of the Sales Division and has been with True for 29 years. Erin True, Tom’s wife, is the Vice President of Operations and has been with the firm for 13 years. Her background is property and casualty retail underwriting, combined with her experience on Utility and Transportation Contractor, AUGUST 2014

Pictured left to right are representatives from the surety department, Chelsea Oddi, Sandra Pace, Marc Michalewsky and Sandy Amory.

Pictured in one of the executive offices are Bill Dougherty and Tom True, seated, and Frank Purdue, Logan True and Erin True.

the carrier side with Crum and Forster Insurance Company. Marc Michalewsky is the firm’s Vice President for Surety Operations as well as the Chief Financial Officer. Marc has been with the True team since 2002. Previous to joining the firm, Marc was an underwriting supervisor at a Division of Kemper Insurance Company and was responsible for handling the New York and New Jersey territory. We asked Tom what are the drivers behind the success of an independent insurance agent –

- It begins with being the most knowledgeable professional in your field and maintaining that advantage through the years to assure the procurement of the best coverage, price or bond line for our clients. - Quality relationships with the insurance and surety carriers at all levels are necessary to be confident we can negotiate limits, coverage, terms and conditions that define a superior program.

Pictured left to right are Jeanette Solano, Vinny Marie Smith and Gail Pecoriello.

We have always devoted our time and service to the Construction Industry Associations to be certain we understand all aspects of your business. We have to understand the client’s needs before we can underwrite a program for their operation. - Finally, we focus on the prevention of losses and proactive management of claims through the coordinated efforts of our Construction Safety Professionals and Claims Management Team. The commitment to safety is the driver of insurance costs, and this is paramount to an affordable insurance program.

The past 30 years have seen True & Associates grow into a formidable, responsive and client-oriented insurance agency. Over the years, the firm has cultivated relationships throughout the construction industry along with their professional support system. They currently service over 500 construction clients. Their dedication to the construction industry has earned True & Associates its most recent honor, the 2014 New Jersey Subcontractors Association’s “Associate Member of the Year” Award. Utility and Transportation Contractor, AUGUST 2014

Additional employees from the company are seen in a recent picture at the True & Associates headquarters.

True & Associates is committed to providing its clients with real solutions to their insurance challenges. Today the agency employs 47 insurance professionals and writes in excess of $60 million in premiums. Tom True’s vision to one day found his own agency certainly has come to fruition. The relationships he and his associates have built over the years have been the cornerstone of their success. Congratulations to True & Associates on your 30th anniversary! 49

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Safety Perspective

THE WHY OF SAFETY By: Ray Master, Director Of Loss Prevention & Risk Control, Construction Risk Partners, LLC Board Room Conversation Board Member 1: “How do we convince our project teams to really take safety seriously? I care about people and don’t want to see anyone get hurt.” Board Member 2: “Exactly. And I don’t care what the costs. We need to give our people in the field everything they need to work safely. These workers have families.” Crew of Workers Standing in a Lane Closure on a Busy Highway Worker 1: “These people don’t care about us. They just say they want us to be safe so their insurance premiums don’t go up.” Worker 2: “Yea, they are just covering their butts so we can’t sue them. They really don’t care about us.” Worker 3: “No kidding –when there is an accident, they blame it on us anyway.” Worker 4: “Sure they care – just look at the schedule. Minimum three days of work compressed into one shift.” If you have spent any time dealing with safety in the construction industry, you may have come across the debate regarding the justification for safety. Why do we put safety measures in place? Is it right thing to do (we care about people) or the smart thing to do (it’s good for the business)? In taking either position, who is right? Which position is the more powerful position to come from when trying to gain commitment for a safety initiative from management or when seeking to increase worker safety buy-in at the field level? The purpose of this article is to offer the perspective that both positions are equally important and both can be used regardless of who you are or who you are having a conversation with. In fact, the justification for safety becomes a stronger proposition when 54

you can articulate both perspectives to workers AND management alike. Likewise, as many companies migrate toward popular notions of sustainability and corporate social responsibility, doing the right thing starts to sound like the smart thing and vice versa. The author offers that this conflict of opinion can best be addressed by viewing the situation as a polarity. In other words, it is not an “either/or” argument but a “both/and” phenomena. The concepts are interdependent. This article draws directly from the work of polarity management popularized by Barry Johnson and applied to safety by JMJ Associates, Rosa Carrillo and others. Background on Polarity Management Polarities are ongoing, chronic issues that are unavoidable and unsolvable. Attempting to address them with traditional problem solving skills only makes things worse (i.e., there is only one right answer). Some examples of polarities in organizations include the following: decision to decentralize or centralize decision making; focus on the task or the individual; maintaining continuity or pushing for change. A classic metaphor for polarity is breathing. The questions as to whether inhaling or exhaling is more important in breathing illustrates the concept beautifully: both are important – it just becomes a matter of timing. The phenomena of interdependent opposites (dilemmas, paradoxes, polarities) is very important. There is significant competitive advantage for those leaders, teams, or organizations that can distinguish between a problem to solve (“Either/Or” thinking) and a polarity to manage (“Both/And” thinking) and are effective with both. The Right Thing vs. the Smart Thing Breaking down this debate as a polarity is a matter of understanding the upside (values) and downside (fears) of both Utility and Transportation Contractor, AUGUST 2014

arguments. Although it might seem obvious, writing them down is a great way to help clarify each position. Start with the upside: Right Thing – Upside · Allows for the expression of care and concern for people · Builds on a collective value of the organization · Employees feel good about the work they are doing · Safety expressed as a core value · Workers see their intrinsic value to the organization Smart Thing – Upside · Appeals to management’s commercial instincts · Builds a strong business case for safety · Safety staff viewed as strategic partners · Facilitates safety as an integrated aspect of company business · Workers see their intrinsic value to the organization As these two debates are interdependent, one must learn to manage the tension between the two arguments rather than seeing them as opposing sides. This is all great when only just looking at the upside. The downside of each position cannot be ignored as these are real perceptions of people. Perceptions that are rooted in fears – fears which breed resistance. Right Thing – Downside · Perceived as management speak – shallow words · “Talking the Talk” · All companies are saying this these days · Flavor of the Month Smart Thing – Downside · Reducing people to numbers · It’s a cold way of looking at safety · Safety will be threatened in the face of competing business commitments · Perception that we don’t care about people – it is strictly business around here As mentioned, preference to either side of the debate is a combination of values and fears. The reasons a person or group prefers one argument over another is they value the upside of their preferred position and/or they fear the downside of the opposite. When individuals or groups are in conflict over opposite positions, it is important to recognize that there are conflicting values and fears that are in tension. Both sides will naturally want to move toward their values and away from their fears. With a polarity to manage, the focus on either side of the debate alone is not sustainable. Any effort to move from the down side of one to the upside of the other with the assumption that the upside of the other is the “right answer” will generate its own resistance (Johnson 2005). As managers, why do we perceive that workers are the problem to control? Often, much of the effort at upper management to “do the right thing” gets lost as that effort migrates down through the organization and lands in the realities of the front line. In construction, where projects operate with slim margins and resource constraints, it is easy to see how “they don’t care” can become the mantra of the workforce. To add to the difficulty, there still exists a strong blame culture in the construction industry. Hindsight bias creeps into our incident investigation process and inevitably points the blame at workers who obviously should have just followed the procedure – procedures often created by office-bound people, who might never do the work but get to dictate the best methods to others who will (Dekker 2014). This oversimplification of incident cause often leaves a bad taste in the mouths of those closest to the Utility and Transportation Contractor, AUGUST 2014

incident scene who’s main fault was to inherit the work planned by managers - work that managers reinforce as having been perfectly planned when they blame those that execute it and things go wrong. As workers, why do we perceive management really doesn’t care about us? Often, workers don’t speak up when issues about the safety of the work surface in the field. In one study, the perception that “safety rules that do not make sense” was identified as the second largest issue undermining safety (Carrillo 2011). Trades people describe such rules as “knee-jerk” reactions and a “dumbing down” of their knowledge and experience (Sardone & Wong 2010). I am always amazed at hearing the opinion of workers from surveys and studies. Yet, in almost every pre-start or tool box meeting I have attended, very few if any workers have anything to say. Wouldn’t the “smart thing to do” be to actively voice one’s opinion in real-time so as to have a direct influence on the work at hand? Management is constantly drilling workers use “Stop Work Authority” yet most workers do not. Rather, they tend to internalize risk taking and schedule pressure as if they are rites of passage or test of courage for new workers to be indoctrinated into. Down from 50,000 feet Bringing it down to the reality of the day-to-day, here are some practical things that can be done to bridge the gap: For managers: · On your next site visit, attend a pre-start or tool box meeting and express why safety matters to you · Have 1:1 conversations with workers about how they perceive management’s efforts in safety · Make human error the starting point of your next incident investigation rather than the conclusion For Project Teams: · Get input from the workforce when planning the next safety-critical activity · Focus your safety efforts as a responsibility to the workforce rather than an accountability to upper management · Promote a just culture on site (responsibility and accountability without blame) For Workers: · Speak up at the next pre-start or tool box meeting by sharing a personal story about safety · Take a new guy under your wing. Veterans are encouraged to share their knowledge · Offer to participate in incident investigation teams · Use Stop Work Authority to pause the work when there are safety questions or uncertainty As safety leaders, our job is to shape perception. Whether you are a crew foreman, project manager, ironworker, safety director, COO or shop steward, the opportunities to influence those around you are constantly in front of you. Maximizing those opportunities by having impactful conversations is key. Your impact may be a function of your ability to articulate the “why” of safety as it occurs for you and to listen and understand the “why” of others. Is safety the right thing to do? Is it the smart thing to do? Managing polarities is essential for one generation to pass key, socialization elements of its culture on to the next generation (Johnson 2005). If we ever expect to pass this industry on to the next generation in a safer state then we received it, it critical that we realize that we are all saying the same thing.

Utility and Transportation Contractor, AUGUST 2014

SCOTT LATTIMER UTCA PRESIDENT ELECT Scott Lattimer, UTCA’s president-elect and president of Clyde N. Lattimer & Son Construction, was elected to serve the association at the UTCA June Membership Meeting. He will begin his service as the organization’s highest elected officer at the September Annual Convention in Atlantic City. Lattimer got his start in construction in 1983 when his father, Clyde Lattimer, founded the company that bears his name. He worked with his father while attending Drexel University where he graduated in 1987 with a Bachelor of Science degree in Civil Engineering. After graduating from Drexel, Scott Lattimer worked full time for the firm. He became president of the contracting entity in 2007 following the death of Clyde Lattimer.

Scott Lattimer is pictured with Bob Briant, Jr. at the UTCA office.

Clyde N. Lattimer & Son Construction has performed many projects in the past three decades including sewer and water main installations, pump station construction, wastewater and water treatment plant work and some small bridge projects. While most of the projects have been completed in South Jersey, Lattimer & Son have performed work in New York, Delaware and Eastern Pennsylvania. The firm is well-known for completing quality construction and has worked for many municipal utility authorities in New Jersey such as the Camden County Municipal Utilities Authority (CCMUA) and the Ocean County Utilities Authority (OCUA). Scott Lattimer has been a member of the UTCA Board of Directors for 13 years, currently serves as Senior Vice President and is an active member of the Labor Committee, Legislative Committee, NJDEP Committee and Membership Development Committee. Scott and his wife Janet reside in Medford, NJ and are the parents of two sons and a daughter. Scott Lattimer, Jr. recently graduated from Penn State with a degree in Civil Engineering and is now employed by PKF Mark III. Twins Rachel and Tim are in college, with Rachel pursuing a degree in education from Montclair State University and Tim following his father and older brother’s example by majoring in Civil Engineering at Penn State.

Utility and Transportation Contractor, AUGUST 2014

Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Managing Director Now that we are well into the summer months the harsh winter seems like a distant memory. Thankfully, the spring and summer have been much kinder to our industry as we have had several legislative successes at both the Federal and State levels. Washington D.C. has not exactly been the land of compromise, bipartisanship and sound policy making as of late. So it was refreshing to have Congress and the President come together in a true bipartisan fashion to pass the Water Resources and Reform Development Act (WRRDA) of 2014. The President signed the bill into law on June 10th. One of the successes of the WRRDA is that it provides funding for various navigation projects including inland waterways, port and harbor maintenance, and river basins and coastal areas. It includes a robust levee safety program and sets “job creation” and “project advancement” as underlying goals and objectives of changes to the current programs and processes. As part of the Clean Water SRF it provides an overhaul of the program by introducing many policy initiatives such as targeted resources for technology innovation, support for integrated planning, and measures to address affordability concerns. It also covers flexibility on interest rates, by allowing states to provide subsidization including negative interest loans under certain conditions. The Clean Water Construction Coalition played a significant role in getting many of these initiatives adopted. The U.S. House of Representatives approved legislation that would avoid an August insolvency of the Highway Trust Fund. Absent of this measure, the national Highway Trust Fund will be out of funds and thousands of federally funded transportation projects will be shut down throughout the United States. The measure, “The Highway and Transportation Act of 2014 (H.R. 5021), will extend the provisions of MAP-21 and provide $10.9 billion for 70

the federal Highway Trust Fund (HTF) program which will allow the funding of transportation projects at current expenditure levels until May 2015. While the measure was overwhelmingly supported by House members, it was widely expressed that the bill was a short term fix and that a long term bill must be adopted to avoid another funding crisis. As of this writing the Senate had not passed a companion measure but is expected to do so shortly. UTCA wishes to thank those of the New Jersey House Delegation who voted yes on H.R.5021. Back home in New Jersey, three very significant pieces of UTCA sponsored legislation are on the Governor’s desk awaiting his signature as this article is being written. Legislation created by the UTCA to establish a state transportation infrastructure bank, a measure that was pocket vetoed by Governor Christie in January, has now passed the State Legislature and is once again awaiting Governor Christie’s action. The bill passed the State Assembly and Senate with support from members on both sides of the aisle. This version of the bill incorporated extensive amendments that were requested by the NJ Department of Transportation, hopefully paving the way for the landmark measure to finally be signed into law. A-3177 (Wisniewski/Gordon) will help local communities begin to address a backlog of crumbling roads and failing bridges by creating a new funding source based on the already successful model of the NJ Environmental Infrastructure Trust. New Jersey will now also be statutorily prepared to receive federal funding earmarked for state infrastructure banks. No new authorities have to be created, and the expertise of existing programs can be utilized for a relatively turn-key operation. UTCA would like to extend its sincere thanks and appreciation to the officials from the Department of Transportation that spent many hours developing these Utility and Transportation Contractor, AUGUST 2014

amendments, as well as the bill sponsors and legislative staff that continued to work tirelessly to get this measure back to the Governor. An important UTCA measure that will protect a company’s private financial information and their ability to take part in the bidding process at the local level recently passed the Legislature by wide margins. A-1794 (O’Donnell/Clifton/Bateman/Van Drew) was approved unanimously by both the State Assembly and Senate, and now awaits action by Governor Christie. Our Association’s legislative committee found that many local governments still require the submission of financial statements in order to bid on a project. There is nothing in the law that specifically permits them to make this private information a mandatory bid item, nor is there any standardization as to the form and type of documentation that must be submitted. It is not surprising, then, that this gray area in the law holds up projects, increases the frequency of bid challenges, and creates a paperwork nightmare for many businesses trying to bid on public work. Financial statements are unnecessary and onerous when it comes to bidding. A contractor already has to go

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through a lengthy process to secure a bid bond for a project. The financial capability that must be demonstrated to secure bonding should be proof enough that they can handle the work. We are pleased that the Legislature overwhelmingly supported this probusiness initiative and look forward to its signing. Legislation to name the Route 71 Bridge between Belmar and Avon (Monmouth County) after Bob Briant Sr., the long-time CEO of UTCA, received final legislative approval this month and awaits the Governor’s approval. Several of the Association’s Board members began this initiative last year in an effort to provide a lasting monument to someone that has worked so hard for the betterment of this industry. The bill received unanimous support throughout the legislative process and is expected to be signed into law this summer. The UTCA remains engaged with the Governor’s office, the legislature, the business and labor communities and other interested parties in constant discussions about a Transportation Trust Fund renewal. We will keep you posted in the months to come about the effort to address this critical issue.

Utility and Transportation Contractor, AUGUST 2014

MAXIMIZING YOUR SOCIAL SECURITY BENEFITS By: Roger Boyd, UBS Financial Services As a person approaches retirement age, we advise them to start thinking about how to begin receiving their Social Security benefits. My firm has developed some analytical tools to help a person evaluate their alternatives and I will provide an analysis, free of cost, to any UTCA member or their employees that are age 60 or greater. First, the basics. Social Security has long provided Americans with a source of retirement income intended to last a lifetime. Frequent cost-of-living adjustments (COLA) help ensure that this income will keep pace with inflation. While few high net worth clients intend to rely on Social Security benefits as a meaningful source of retirement income, lifetime benefits can be larger than they might expect; nearly $600,000 on average for a couple who turned 65 in 2010, and significantly more for high earners with longevity.¹ Social Security typically replaces about 40% of an individual’s earned income.² That percentage generally is less -about 28% - for those with higher preretirement income.³ But, as a guaranteed benefit, Social Security can play a role in any retirement income plan, particularly given today’s volatile investment climate and global economic uncertainty. Given widespread concerns about the Social Security program’s future solvency, it may seem ironic to refer to it as the “guaranteed” portion of your retirement income picture. But Social Security actually is on track to meet its obligations to retirees through 2037, after which, unless action is taken to significantly cuts costs, benefits will be reduced by about 25% 4 - and only if no action is taken before then to strengthen the Social Security trust fund. Your Social Security strategy: making choices So, what’s the best way to receive your Social Security benefits? Compared with other retirement planning decisions, choosing how to take Social Security may seem like an easy one. In fact, it can be surprisingly complex – and highly personal. The key is selecting the strategy that maximizes benefits for you and for your spouse, if you’re married. You’ll also need to consider how you and your spouse can coordinate strategies given your relative ages and incomes. If you’re single, the main considerations are when you plan to retire and your life expectancy. Here’s a quick look at some of the choices available. When to start benefits - Age 62 About 74% of today’s retirees start benefits at the earliest possible age, locking in a major reduction compared with 5 benefits at full retirement age. Starting this early may be necessary if you’re in poor health or need the income. But with life expectancies now reaching into the 90’s, delaying benefits can be preferable for many retirees.

Full retirement age (FRA) This is when Social Security will provide you with full benefits. The FRA is used to calculate any reduction in benefits (if taken earlier) or increase (if taken later). FRAs vary based on date of birth; visit ssa.gov to determine your FRA.

Age 70 For each year you delay benefits between FRA and age 70, Social Security adds 7-8% to future benefits, plus the COLA adjustment. That guaranteed annual return can make this alternative very attractive, provided you have longevity. Delaying benefits until age 70 can also provide more income just when you may need it to help cover healthcare expenses.

Break-even age You may want to hedge your decision by identifying the age at which the cumulative benefits from delaying your start date will surpass the cumulative benefits from starting earlier. We can assist you in making this type of calculation.

How to take benefits -

Choosing spousal benefits A lower-earning spouse may select his or her own benefits; spousal benefits (even those of an ex-spouse) of up to 50% of the higher earner’s full benefit (once that spouse files); or a combination equal to the higher amount. Spousal benefits are reduced if the lower earner takes them before reaching FRA.

Combining “step up” and file-and-suspend” strategies This alternative is increasingly popular because it can maximize benefits for both spouses. The lower-earning spouse takes reduced benefits early, then “steps up” to 50% of the higher earner’s full benefit once that spouse reaches FRA and files for benefits. If the higher earner then suspends benefits until a future date – or as late as age 70 – he or she potentially can realize up to a 30% increase in lifetime benefits.

Survivor benefits A spouse can receive reduced survivor benefits at age 60 (or age 50 if disabled). When that spouse reaches FRA, he or she can step up to the higher of full survivor benefits, or his or her full benefits. Note that survivor benefits increase if the higher-earning spouse delays taking benefits.

Utility and Transportation Contractor, AUGUST 2014

Other considerations

Earning income If you work after starting benefits, your monthly payment may be reduced. Before the year you reach FRA, benefit will be reduced $1 for every $2 earned above $15,120 a year. In your FRA year (up until your FRA month), benefits 6 will be reduced $1 for every $3 earned over $40,080. After FRA, working will not reduce benefits. In fact, your benefits will be recalculated to include amounts previously withheld.

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Taxes It’s very likely that a portion of your Social Security benefits will be taxable. We can work with your tax advisor to review your situation and plan accordingly. A fresh start Generally, the decisions, you make about taking Social Security benefits are irrevocable. But if you change your mind after starting to receive benefits, it’s possible to pay back all benefits received to date and reapply at a later age.

Believe it or not, this is just an overview of Social Security. There are a number of sophisticated Social Security strategies you may want to explore. An excellent starting point are calculators on the Social Security Administration website (ssa.gov) that let you and your spouse estimate different benefit amounts at age 62, at full retirement age and at age 70. We’d like to help you take a closer look at your situation and compare strategies side by side, as well as help you integrate your future Social Security strategy into your broader wealth management plan. Please feel free to contact us at your convenience if you would like to discuss this important matter.

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Urban Institute. “Social Security and Medicare Taxes and Benefits Over a Lifetime,” June 2011. Social Security Administration. “Understanding the Benefits,” February 2013 National Academy of Social Insurance. “Social Security Benefits, Finances, and Policy Options: A Primer,” April 2012. Based on estimates from the 2012 Annual Report of the Board of Trustees, SSA. SSA Office of Retirement and Disability Policy. “The Future Financial Status of the Social Security Administration,” 2010. Social Security Administration. “Annual Statistical Supplement, 2011,” February 2012. Social Security Administration. “How Work Affects Your Benefits,” January 2013

As a firm providing wealth management services to clients, we offer both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website at ubs.com/workingwithus. UBS Financial Services Inc. and its affiliates do not provide legal or tax advice. Clients should consult with their legal and tax advisors regarding their personal circumstances. ©UBS 2014. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC About The Author: Roger Boyd, CFP®, of the Boyd Group is a Senior Vice President of UBS Financial Services, Inc., in Wall Township, New Jersey. He has more than 34 years of experience advising clients on wealth and investment management. Roger has been a member of the UTCA since 2008. To take advantage of the Social Security benefit analysis, call The Boyd Group at 732-223-8988 or email Roger at roger.boyd@ubs.com

Utility and Transportation Contractor, AUGUST 2014

GARDEN STATE PRECAST UNVEILS STORMWATER BIORETENTION FILTRATION SYSTEM Americast’s Filterra Units Receive NJDEP Approval As New Jersey seeks new and innovative ways to “go green” in an effort to protect its natural resources, the process of dealing with stormwater can be a challenge. However, a unique stormwater filtration system has been introduced to New Jersey contractors by Garden State Precast. This product, called Filterra, recently received approval from the New Jersey Department of Environmental Protection as well as the

New Jersey Corporation of Advanced Technology (NJCAT), which served as the testing laboratory for the item. Filterra was devised by Larry Coffman who developed the system in conjunction with Americast in 2000. Coffman is known as a stormwater innovator, with many years in planning and stormwater permitting in Prince George’s County, Maryland. Although the product is new to New Jersey, more than 6000 units have been installed in 32 states including Hawaii and additional systems have been utilized in Canada and the United Kingdom since 2001. Filterra has proven to be a popular alternative to stormwater management in urban areas. The process has proven to be a highly efficient method of removing many pollutants such as petroleum, heavy metals, phosphorus, nitrogen, total suspended solids (TSS), and bacteria. While similar to traditional bioretention methods, the Filterra has been able to distinguish itself by optimizing high pollutant removal while using very little space for its placement. This allows for its use in such areas as parking lots, streetscapes, highways, and landscaped areas. The Filterra system is constructed as a concrete container, available in various sizes, with an underdrain system installed in the lower portion of the chamber. Utility and Transportation Contractor, AUGUST 2014

A specially designed filter media mixture, which captures and immobilizes pollutants, is placed in the chamber. This allows for the pollutants to be decomposed, volatilized and captured within the media mixture and the treated water is discharged through the underdrain. A three inch layer of mulch is the final component of the system which is placed on top of the filter mixture. Maintenance on the system is very simple and does not require confined space access. Installation is easy and cost effective, and third party field testing has confirmed that Filterra meets state regulatory requirements for the removal of pollutants. The product also allows for the opportunity to landscape on top of the system which makes for an attractive appearance after installation. The first five projects in New Jersey involved retrofits of existing stormwater systems, with new installations expected in the near future. The product has been used at the Parsippany Police Station, Infall 21, in South Bound Brook , in Lake Hopatcong, at Greenwood Lake in West Milford and at Celebrate the Children in Denville. To learn more about this technology, contact Bill Morris of Garden State Precast at 908-770-6088.

The Filterra unit is shown with decorative landscaping on the Infall 21 project in South Bound Brook.

Pictured at a recent press conference in Parsippany are left to right Anthony Attanasio, UTCA, Ray Pocino, Laborers International Union of North America, Anthony Foxx, USDOT, Bob Briant, Jr., UTCA and Tony Oliveira, Heavy Laborers Local 472.

Utility and Transportation Contractor, AUGUST 2014