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President’s Message   New Year, new you as the saying goes - 2017 is shaping up to be transformative for our industry, and I believe that we are on the verge of very exciting times. In spite of its challenges, 2016 was certainly a year of change that I think gave us plenty of reasons for a renewed sense of hope for infrastructure construction.   Federally, President Trump, his cabinet, and both parties in Congress have made one point very clear: infrastructure is major priority for this administration and the legislature. At the state level, we finally have new revenue that will stabilize our state transportation capital fund and for the first time ever, NJ has committed to an eight-year transportation capital plan. That being said, now that funding for the TTF has been secured, what are we doing now as an association… the answer is everything else!   The heavy lifting for TTF now revolves around the process of getting funds appropriated and projects on the street for bid. UTCA has been actively meeting with NJDOT executives to gain a better understanding of the claims process as well as timing, and monies that will be spent in fiscal year 2017. In this way, our role as taxpayer advocates will be magnified as we work to ensure that the new funds are spent wisely to maximize benefits to the State of New Jersey. All indications are that NJDOT has an aggressive plan for fiscal 2017, which includes a backlog of both heavy construction and pavement projects affected by the TTF shutdown. Additionally, there have been very encouraging meetings with NJTRANSIT in regards to their capital plan. The new proposal thankfully includes projects receiving federal Hurricane Sandy resiliency funding, which is finally beginning to flow after years of stagnation.

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  UTCA is also in the beginning stages of a statewide utility initiative, educating elected officials, industry allies, and the community on state needs, best practices, and funding and financing options available through the NJ Environmental Infrastructure Trust. Similarly, UTCA recently backed state legislation that will require local governments and authorities to get a cost estimate from the NJEIT prior to bid. Through these efforts, the NJ utility market should present a healthy and robust program over the upcoming years.   I would also like to acknowledge Stone Hill Contracting on celebrating their 35th year in construction, as well as Sita Construction, which just completed its 25th year in business. Congratulations on establishing two well respected firms in our industry!   And last but not least, a very special shout out to four gentlemen that have dedicated decades of their time and knowledge to our Association and to our UTCA Board of Directors. To Juan Gutierrez, George Helmer, Frank Renda, and Roger Wuestefeld, we THANK YOU for your years of service!   Finally, I want to wish everyone the best of luck in 2017. Let’s make this year a successful and productive one!

Best regards,

Jim Coddington Utility and Transportation Contractor, FEBRUARY 2017


FEBRUARY 2017

Contents

Volume XLII, Number 1

Published Bimonthly During 2017 Office Address: 1670 Route 34 North Farmingdale, NJ 07727 Mailing Address: PO Box 728 Allenwood, NJ 08720 (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org Publisher: Robert A. Briant, Jr. Editor: Helene Nasdeo

Features 5 12 24 57 91 91

Stone Hill Contracting Celebrates 35 Years In Construction Sita Construction Celebrates 25 Years In Business UTCA Commends Retired Board Members Cyber Attacks & Identity Theft Protection Allied Oil Hosts Free Lunch Central Jersey Think Tank

Editorial Contributors: Anthony Attanasio Zoe Baldwin Dan Neville Advertising Manager: Helene Nasdeo Photographer: Image Up Cover Photo: Image Up Production/Graphics: Lauren Hagan Helene Nasdeo Circulation: Helene Nasdeo

Departments 2 35 45 60 70 78 85

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

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, standing left to right, Bryan Mott, Dan Ballard, Valerie Rudan, Julie Harman, Michael Mallek, Robert McIntyre. Sitting left to right are David Mott and Sam Mott.

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Cover Story

STONE HILL CONTRACTING CELEBRATES 35 YEARS IN CONSTRUCTION

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By: Anthony Attanasio, Executive Director

  am Mott, founder of Stone Hill, begins our discussion about his company with an abrupt assurance. “Stone Hill’s transition of leadership is in full swing.” It’s almost as if he’s trying to convince himself as much as he is me, but not for a lack of faith in the future of the company. Sam’s confidence and pride in the team he has built is immediately apparent any time he speaks of his son David, his nephew Bryan, Bob McIntyre, and Mike Mallek, the four individuals who will run the company in his stead. It’s letting go of the past that presents the greatest hurdle; it’s the thought of moving on from the successful business he built with his brother Max. Much more than just the business itself, it’s the history. The early years of struggle, the hard-fought victories, and most of all, the memories of his brother and partner through all of it, who passed away far too young in 2015 at the age of 64. “He was my kid brother. Whatever it was I was doing, his attitude was, ‘I can do that too’… And he did!”   Sam and Max’s journey began in rural Bradford County Pennsylvania, raised by a father who held a degree in poultry husbandry from Penn State University - a fitting trade to master in their part of Pennsylvania - but had always wished he had earned a civil engineering degree instead. During Sam’s formative years, Sam’s father tried his hand at many industries including poultry and dairy, before strip-mining piqued his interest in construction. When it came time for college, Sam chose to follow his father’s dreams instead of his footsteps and graduated from Penn State in 1966 with a Bachelor’s Degree in Civil Engineering.   Sam immediately went to work for Peter Kiewit Sons Co. (PKS), where he worked on various highway projects across the tristate area. Sam worked in NY, PA, and DE as an estimator, a project engineer, and as a superintendent. While working on a job

in Wilmington, DE, Sam met and worked for Dick Scherr. Dick left PKS and joined Perkins, Kanak, & Foster (PKF) in January of 1969. The two had hit it off, and Dick lobbied Sam to leave Kiewit and join his team. In May of 1969, Sam obliged and began what would be a very successful 12-year run with PKF. It was in this new job that Sam first worked on a treatment plant, foreshadowing Stone Hill’s later reputation as an industry leader in water and wastewater treatment plant construction.   Max Mott joined his brother at PKF after also graduating from Penn State University in 1972. He had spent a summer working for the company and living with Sam and his first wife Pat. The two brothers worked hard and enjoyed much success over the next several years. In 1979, some of PKF’s owners moved on or retired,

Formwork and resteel ready for concrete at the UV Disinfection slab in Warren Twp. Utility and Transportation Contractor, FEBRUARY 2017 5


Setting the reactor vessel of the Biological Odor Control System at the DELCORA (PA) WWTP.

which made Richard Foster President of the Company. Richard in turn named Dick Scherr and Tom Beveridge as Executive VPs, and made Sam Mott a Vice President.   While Sam was grateful for the opportunity, he knew that the future held more for him than just being an Executive of someone else’s company. He told Richard Foster that he appreciated the opportunity, but wanted to start his own business one day. He smiled as he recalled Foster’s reaction. “He looked at me and said, ‘OK, well maybe I’ll help you with that.’ And you know what, he did!”   In 1981, Sam and others bought Stone Hill Contracting from Perkins & Sons. Stone Hill had been an inactive company, but it had a collective bargaining agreement with the United Steelworkers. He purchased the company’s assets and CBA, and set out on his own path in the construction industry. Max stayed behind one more year in order to help ease the transition for PKF and joined Stone Hill in November of 1982. They didn’t have much in the way of equipment or financing but nothing was going to stop the Mott brothers. In 1983, Jimmy Lipo joined the ownership team with a 10% stake in the company. Jimmy was a licensed plumber by trade and for the next 10 years Stone Hill fought to make a name for themselves in the construction market.   In the early 1990s, Stone Hill and Gloucester County MUA became engaged in a rather intense dispute over a $5 million dollar claim over an incinerator project. Stone Hill persevered and the two finally came to a mutual agreement in 1995. 6

  By this point, Sam and Max’s sons, David and Bryan, had joined the business. Both boys began to learn the business from the ground up, working in the field as steelworkers. Bob McIntyre had already completed two stints with the company (1982-1988 and 1990-1992) and Mike Mallek was just completing his first run with the company (1985-1993). By 2005, this core four would all be back in the fold at Stone Hill, but in the meantime, Sam and Max had more challenges to face and victories to win.   In 1998, Stone Hill was at a critical crossroads for the company. If they didn’t land a quality job in short order, things looked bleak. They put a bid in on a bridge job and said if they didn’t get it they would close up shop. The ironic part of that bridge job, which Stone Hill won, and which was highly successful, was that it would be the last transportation project in Sam Mott’s career. While the job kept Stone Hill Contracting in business, it also pushed them down a path that led to their greatest success: exclusively focusing on treatment plant projects.   In 2001, Stone Hill built a very successful Waste Water Treatment Plant in Mt. Pocono for Pennsylvania American Water, but it wasn’t until 2004 that they caught the break that would take the company to the next level. That year, Stone Hill bid on a $4 million treatment plant job to rebuild a Waste Management treatment facility in Morrisville, Pennsylvania. The project was such a success that Stone Hill became a go to contractor for Waste Management. They have handled dozens of projects for Waste Management over the years, including building a $20 million leachate treatment plant. The company began to work almost exclusively on treatment plants, including an incredibly challenging water treatment plant in North Brunswick in 2010-2011, delivering high quality projects for owners every time.   At the end of 2005, Max officially retired but continued on a part time basis helping with estimating and with special project issues and spending the rest of his spare time bugging Sam to go golfing with him. Thus began the next chapter in the Mott brother’s story. Max slowly eased into retirement over the next 4-5 years while he and Sam enjoyed their new found passion of golf. Max and

Setting of the new Thermal Transfer Secondary Heat Exchanger at the BRSA Incinerator project.

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his wife, Beverly would plan vacations around golfing locations and saw a great part of the country while enjoying each other’s company. Max finally fully retired around the time the company completed the North Brunswick job.   Sam and Max had been partners in the business. When Max retired in 2005, Sam became the sole owner of the company, but quickly realized he needed to slowly but surely put the succession plan in place. By 2006, his son David, Max’s son Bryan, Bob McIntyre and Mike Mallek began to buy shares in the company. Sam began to sell shares back to the company in 2009. The new ownership team began to expand the business model as Bob McIntyre really opened new doors to design-build opportunities. With the addition of Mike Mallek, the team was formed and began to take over the various responsibilities of each of the Mott brothers. Robert became Chief Estimator and Director of Development and handled those responsibilities and David, Bryan and Mike, handled the field operations and equipment, which had been Max’s responsibilities. David Mott also continued under the tutelage of his father and was being groomed to manage the business as Sam had since 1981. The transition continues to this very day, and Sam couldn’t be happier with the results.   In March of 2015, the Mott brothers and their wives took one of their golf trips together to Florida. At 12:15 AM on the night before they were scheduled to leave, Sam got a call from Max’s wife Bev saying that something was wrong with Max and that he’d better come to their room. When Sam arrived, Max was sitting on the floor, having trouble breathing. They called 911, but just as the ambulance arrived, Max collapsed into Sam’s arms and lost consciousness. The EMTs arrived and attempted to revive him on the way to the hospital, but Max never did wake up. His Doctor had given him a clean bill of health just a few weeks earlier; no one could have known that Max had an aneurism that would burst that fateful night in Kissimmee Florida. Sam chokes up as he talks about his kid brother and how he left this life too soon. “We did everything together, work, play, vacations… I’m still not over los-

ing Max.” Dave too was hit hard by the loss of his uncle. “Max brought me up in this business by teaching me every aspect of the field work. He was my Uncle, boss, trainer, and mentor.”   The Mott family and the rest of the Stone Hill team are looking to build on the company’s first 35 years of success and honor Max’s memory by creating 35 more years of achievements. The company is well on their way to doing so, having recently signed their largest contract ever. Stone Hill is building a $28.5 million standby generator system for the Passaic Valley Water Commission. The company has also begun sponsoring The Max S. Mott Memorial Charity Golf Outing held in Max’s memory each September.   When the men and women of Stone Hill look at the current state of the industry, they see some immediate challenges and opportunities. The greatest challenge to the water/sewer industry is consistent funding. Without it, utility contractors don’t have enough reliability in the market to properly plan past the next few years. With the passage of the Transportation Trust Fund renewal, David sees a great opportunity to expand Stone Hill’s business model and is looking at getting back into transportation work for the first time since completing the last bridge job in 1999 that gave the company a new lease on life. Sam, David and the rest of the team are grateful for their membership in UTCA and know that the Association is here to protect the industry on regulatory and other matters, which will help their company look to the future.   The goal of Stone Hill over the next few years is to maintain their current level of work before beginning to once again grow as a company. For Sam Mott, it’s the perfect time to continue to transition to full retirement. He has cut has his work time in half since April of 2016 and desires to slowly reduce it further over the next couple years. He and his current wife, Linda, enjoy travelling and are regulars on the UTCA Executive Seminars. Sam has earned the right to sit back, relax a bit more and look back on the company he started in 1981 and know that he and his brother built a legacy that will last for generations to come.

Congratulations To Stone Hill Contracting On 35 Successful Years In Construction!

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Featured Article

SITA CONSTRUCTION CELEBRATES 25 YEARS IN BUSINESS  

2016

By: Anthony Attanasio, Executive Director

was a true milestone for Bienvenido “Pepe” and Elsa Carretero. Sita Construction, the company they founded together in 1991, celebrated 25 years in business. As if that wasn’t reason enough to celebrate, the couple also reached their 50 year golden anniversary. Needless to say, 2016 is a year the Carretero family will look back on with great pride and joy for generations to come.   Pepe Carretero is a man who came from very humble beginnings. Looking back at his 50-year career in construction, 25 of those years owning his own company, he takes great pride in his life’s work. Born in Spain, Pepe came to the United States at the age of 18 and moved to New Jersey in pursuit of the American Dream. Not long after arriving in the United States, he did two things that forever changed his life for the better. First, he began his career in heavy and highway construction. Shortly after, he met Elsa, his true love who eventually turned out to be not only his perfect partner in marriage, but also in business.

Jesse Allen Park, Newark, NJ

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  In the first half of his career, Pepe worked mostly as a general foreman for several companies on road and bridge projects. In 1991, he and Elsa decided to start their own construction company. Incorporated in Kearny, NJ, Sita Construction Co., Inc. was born. In the beginning, the husband and wife team handled every aspect of the business; Elsa ran the books and handled all the contracts, and Pepe was in the field personally managing every project. They opened a small home office, choosing to run their fledgling company under the same roof where they were raising their family.   Like so many in the industry, the early years were a struggle. Nevertheless, the Carreteros persevered, slowly adding to their resume of municipal projects completed on time and on budget. As their reputation grew, so did the company portfolio. Over time, Sita steadily began handling larger and more complex contracts in the public sector. Building upon this solid foundation of successful roadwork projects, the company has significantly expanded its portfolio of construction disciplines. Sita continues to perform road and paving projects, but also specializes in recreational construction such as athletic fields, basketball courts, tennis courts, parks, playgrounds, water parks and other outdoor facilities.   As the years marched on and their volume of work grew, it became time to expand the company’s main office operation. Fortunately for Pepe and Elsa, they didn’t need to look far for the right person to lead their company into the future. In 2001, their daughter Sandra joined the company on a part-time basis. She started by helping her mom with the bookkeeping, but by 2002 Sandra became a full time employee and her role quickly began to expand. Sandra’s parents began to teach her different parts of the business from contracts and insurance to actual visits to ongoing projects. Pepe would take Sandra in the field to show her their construction projects in real time. For several years, Elsa and Pepe continued teaching Sandra all aspects of the business and in 2005, the Carretero’s other daughter Lidia began working part time for the company handling all

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inner-office clerical duties.   The company has found success as both a prime contractor and subcontractor in New York and New Jersey. Their business has also grown since their certification as a D/S/W/MBE firm with the NJ Department of Transportation, NJ TRANSIT and the Port Authority of NY/NJ. In addition to the Carretero family, another key member that joined the Sita team is project manager Ayman Botros. The company Pepe Carretero at the Parkway Avenue Bridge, Warwick, NY

proudly uses union labor and cites their excellent working relationship with Laborers’ Local 472.   In 2009, the company took a big step forward when it landed its largest and most prestigious job. Sita won a $6 million dollar contract with Hudson County to build several major county parks projects. They went on to successfully build 5 separate parks for Hudson County including several playgrounds, pavilions, athletic fields, basketball courts, tennis courts, water parks and much more. In 2012, Sita’s capabilities were put to the test when they were chosen to handle the Parkway Avenue Bridge washout in Warwick, NY after Superstorm Sandy. Sita performed the precast installation of the bridge in the difficult post-Sandy environment, and restored this critical piece of infrastructure for the Orange County region in a timely and efficient manner.   In 2016, as the company was celebrating its 25th anniversary, they landed a significant M/WBE set aside contract for the Port Authority of NY/NJ. Sita was selected to handle the $1 million Port Newark Davit Street Extension. Once again, the Carretero’s and their small but impressive company finished the project ahead of schedule and to the prime contractor and owner’s satisfaction.   The future is bright for Sita Construction. The vision of the company is to continue to grow in both size and capability while not forgetting who they are and where they came from. Sandra has risen to the level of Vice President and hopes to continue to take more off her parents’ plate so they can enjoy the fruits of their labor. Yet even with all their success, some things never change. Even though their company has now completed tens of millions worth of construction contracts, the Carreteros still run the business out of their family’s home. While the space has been completely renovated and modernized, remaining in their original location is symbolic of the family’s humility. Bienvenido Carretero came to America as a young man with nothing but a desire to succeed. He, Elsa and the entire Carretero family deserve recognition for their part in turning a young man’s dream into reality.

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Featured Article

UTCA COMMENDS THE SERVICE OF JUAN GUTIERREZ, FRANK RENDA, ROGER WUESTEFELD & GEORGE HELMER By: Anthony Attanasio, Executive Director

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  TCA would like to recognize Juan Gutierrez, Frank Renda, Roger Wuestefeld and George Helmer for their many years of service as members of the UTCA Board of Directors. Serving on the UTCA Board of Directors is a very prestigious honor in the construction industry, for around that table the best and brightest of our industry gather to set the policy agenda and goals for New Jersey’s premier contractor association.   Now, after several decades of service and success, these long serving members of the Board have retired and become Members Emeritus. During their decades of service, Juan, Frank, Roger, and George gave thousands of hours to the association, which resulted in remarkable accomplishments and victories for the industry. We can’t thank them enough for everything they have done for the industry both as individuals and as Board members. Their legacies will live on for many years to come.   Juan Gutierrez is larger than life in many ways. His is a story of America, and what its promise of freedom means to those who come from countries with little or no hope. Juan escaped Cuba and the Castro regime at the age of 13. He came to the United States with nothing and built the American Dream for his family. Juan began working for Cruz Construction, eventually founding

“My experience with the UTCA was like a train ride. I got on at a particular station in my life and there were many people already on the train. Many wonderful friendships and memories were created along the way.” - Juan Gutierrez 24

his own company that has grown today into the JAG family of companies. Once a stranger to our shores, his business holdings now include but is not limited to, Northeast Remsco and Caldwell Marine International.   Juan looks back on his time as a member of the UTCA Board as one of the key factors to his company’s success. Juan joined the Board in 1981, and as a small contractor, felt privileged to sit at the same table with so many titans of the industry. Juan was our first Hispanic Board member, and at the time, his firm was still a small

Juan Gutierrez is pictured with Bob Briant, Sr.

MBE. He was one of the little guys looking to make it big in the industry. As Juan recalls, serving on the Board gave him access and insight to the bigger picture. It gave him the opportunity to participate in all the areas in which the UTCA was advancing the industry such as labor, funding, regulations, and contract specifications. What Juan valued most from his early years on the Board was the Utility and Transportation Contractor, FEBRUARY 2017


access to knowledge it provided and that it was a true sounding board for extraordinary problems. He would go on to serve as Board President from 1987-1988.   Juan believes that in this business you need Juan Gutierrez several key partners to achieve true success; a company can’t reach its full potential alone. He feels the partners needed are a top-notch accountant, lawyer, insurance broker, banker, and your trade association. Juan is extremely proud of his time spent on the Board and feels that the UTCA has always stood out across the country as the best at what it does due to the leadership of its members and its staff. “I have served on many volunteer Boards in my life. UTCA is one of the few groups that has a line of people waiting and eager to get on its Board.”   Juan also truly appreciated the opportunity to work with and become friends with Bob Briant Sr. “Bob was an excellent teacher. He handled the Board marvelously and always had a way of making you see things his way.” When speaking of Bob Sr. and the many other friends he made while serving on the Board, Juan likened the experience to a journey taken on a train. “My experience with the UTCA was like a train ride. I got on at a particular station in my life and there were many people already on the train. As the train went on its way, it made lots of stops, and the members of the Board and the Association would get on and off the train at different stops. Many wonderful friendships and memories were created along the way.”

Frank Renda

  Juan retired from the Board in 2014 after more than three decades of service. It gives him great pride to see his son Roly now serving on the Board. Even though their company has grown into one of the more successful members of the industry, he recognizes that there are always regulatory and other challenges for which his company needs the Association. He is grateful for the opportunity to have the next generation of his family serving on the Board.   Frank Renda was born in Italy and immigrated to United States in 1960 after spending one year in England and five years in Montreal. Upon receiving his draft notice in 1965, he served our country proudly in Vietnam from 1965 to 1967. Frank attended college when he returned, graduating from Rutgers University in 1971 with a degree in Civil Engineering and acquired his Professional Engineer and Professional Planner Licenses. That same year, Frank began working for his Uncle Ernie at Ernest Renda Contracting Company, Inc.

Pictured at a UTCA Executive Seminar are Frank Renda, Michael D’Annunzio and Roger Wuestefeld.

  Shortly after he began, one of the responsibilities his Uncle gave him was to get involved with UTCA. Ernie recognized the importance of the Association to the industry and wanted to make sure his company was well represented. Frank began attending meetings and had such an immediate impact as a new member that he was asked to join the Board only two years later in 1973. Frank thoroughly enjoyed being a member of the Board and took to it quite naturally. By 1976, Frank had been elected as UTCA’s President. Retiring from the Board in 2016, Frank holds the distinction of having been the longest serving Board member in UTCA’s history.   Frank looks back and recognizes that much has changed from his early days on the Board. Back then, contractor issues such as unfair treatment by owners and the need to reform contract specifications dominated the Board’s time. Frank joined the UTCA Specifications Committee, at the time chaired by Tony Cammarata, as he felt it would be the best opportunity for him to make a lasting difference for the industry. The committee began holding regular meetings with the Department of Environmental Protection and started to tackle issues that were negatively effecting contractors, engineers, and owners. The committee successfully developed new sewer construction regulations that brought standardization and fairness in a way that had not previously existed. The process led to the resolution of countless problems that continue to benefit the industry to this day. Frank went on to Chair the Specifications Committee for more than two decades, and oversaw hundreds of

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specification changes for both utility and transportation contractors.   Frank worked for his Uncle from 1971 to 1989 before leaving to found F D Renda Engineering & Construction Inc., in Whitehouse, NJ. F D Renda Engineering & Construction is a full service, professional management firm that continues to provide services to Owners, Engineers, Contractors, Attorneys, and Surety firms in all phases of project and construction management, including construction consulting, scheduling, claims evaluation, claims preparation, expert reports and testimony. While Frank retired from the UTCA Board, he remains very active in the industry.

and fought for policies, regulations and legislation that would benefit the entire industry, not just their individual company.”   As he reminisces about his service on the Board, Roger is truly appreciative of the staff’s work over the years and how much they support the Board. The legislative and regulatory accomplishments of the Association and the influence UTCA has in the process is what he most enjoyed and what has left a very lasting impression. “When I look back over the years, it’s pretty amazing what the Association accomplished.”   George Helmer is the most recent retiree from the Board of Directors, having stepped down this past December. George became a member of the Board in 1994, and was always a strong and constant voice on the Board for smaller sewer contractors in the State. George has worked for 48 years in the construction industry and is one of the most humble men you will ever meet. His is a life of service to others and we are extremely grateful for the time he gave the Association.   After George graduated high school in 1963, he enlisted in the U.S. Marine Corps and served for 3 years. Shortly after finishing his time in the military, he married his wife Carol and moved to Williamstown. He spent many of his teenage years working on his father’s cars and trucks, and so his first job after the Marines was turning a wrench as a mechanic at a local Chevrolet dealer.

Roger Wuestefeld is pictured with Juan Gutierrez.

  Frank is extremely proud of his 43 years of service on the UTCA Board. “The UTCA is the best at what they do!” What Frank stresses as his continued wish for the future of UTCA is that it never forgets to focus on the small contractors. While all companies need a vibrant trade association, it will always be the small contractors who need UTCA’s leadership the most.   Roger Wuestefeld served on the UTCA Board for 35 years from 1981 to 2015. Roger’s career in construction began after he graduated with a degree in Civil Engineering from Drexel University in Philadelphia, PA. Upon graduation, he took his first job in the industry with the Peter Kiewit & Sons Company and then Edward Ellis Inc. After his first two jobs, he went on to spend 17 years with H. John Homan Company. After joining the UTCA Board in 1981, Roger became active with several committees and eventually joined the line of succession to become President. Never one to shy away from a challenge, Roger founded his own firm, Roger W. Wuestefeld, Inc. in 1988, the same year he began his service as UTCA’s President. Despite the challenges, Roger successfully balanced the demands of getting his new company up and running while also meeting the needs of the Association. In addition to his time as an officer with UTCA, he served on several committees including the Specifications Committee and stints as Chairman of the Executive Seminar and Industry Directory committees.   When looking back at his time on the Board, Roger truly appreciates the time he had to work with the leaders of the industry. What he valued most were the relationships that he developed and the ability to help formulate policies that directly benefitted the industry. Roger feels that one of UTCA’s best attributes is that its work helps all contractors, big and small. “When Board members entered the Board room, they left their company names at the door 26

George Helmer is pictured at a recent UTCA PAC Auction Party.

George’s father in law, Dave, sliced meat at the A&P for a living, but always had some type of side venture going. One day, Dave bought a well drilling machine and gave George a call to see if he’d be interested in drilling wells for some side work. Thus Utility and Transportation Contractor, FEBRUARY 2017


had been vocal about the convention from the day he joined UTCA, and by 1994, he and Bob were in the middle of a very “lively discussion” about how the convention committee was being run. The Association up to this point had a revolving Chairmanship for the Convention Committee. George felt that this led to a lack of consistency of both ideas and follow through. Bob Sr., never one to let an opportunity go to waste, asked George to join the UTCA Board of Directors, which he did. Once on the Board George was named the permanent Co-Chair of the Convention Committee. Several years later in the late 1990s, recognizing his passion for the convention, and after a nomination by Juan Gutierrez, George was named as sole Chairman of the Committee, a post he held until his resignation from the Board.   George looks back on his experience as Chairman of the Convention Committee with an enormous sense of achievement. “It was a great experience for me. I got to investigate the various hotels and casinos to find the best venues, work with casino executives, and most importantly we continually improved the event for our vendors and George Helmer is pictured with Tim Watters of Hoffman Equipment at a recent Convention. contractors. We always aimed to make it an excellent networking began George’s career in construction when he and Dave started experience for the attendees. I personally visited every exhibitor D&G Well Drilling as a part time venture. By 1971, with the oil every single year I was involved.” George was also largely responembargo of Saudi Arabia in full effect, work for mechanics was sible for the financial success of the PAC Auction. The event used drying up, so George decided to take the leap and move full time to generate a few thousand dollars. George brought new ideas to into construction. the table, and as a result of his work, the PAC Auction now gener  After his father in law passed away, in the late 1970’s, George ates on average $40,000 a year for UTCA’s political advocacy. renamed the company George Helmer Construction. By 1979,   George looks back on his time as a Board member with great George had expanded into pipe work and began working as a subpride and satisfaction. He points out his nearly perfect attendance contractor for the late Bill Feather. As George worked with Bill record at Board meetings and hopes that future Board members Feather, Bob Briant Sr. began working George over to join UTCA. will take a page from his book. “I always gave as much time as I At the time, George didn’t think he needed the Association. He was could. I wasn’t a big guy, but what I couldn’t give in dollars I gave fighting all of his battles on his own until 1982 when, as George in time and sweat equity.” puts it, “Bob Sr. finally wore me down and I joined. I quickly realized I had been making bad decisions in some of my battles and began to understand the value of the Association. I immediately saw the benefit of the Association with the legislation, regulation and specification changes they accomplished. The whole industry benefitted from the work of the Association and I wanted to be part of that.”   In 1985, Bob Sr. put George and his good friend Bob Kennedy on the Association’s Convention Committee. George didn’t know it at the time, but he was beginning a 30-year journey that would completely revolutionize the Annual Convention. George

“I always gave as much time as I could. I wasn’t a big guy, but what I couldn’t give in dollars I gave in time and sweat equity.” -George Helmer

  Juan, Frank, Roger and George are now all Board Members Emeritus. The industry is better off having had these four men help lead the Association for so many years. While they no longer directly serve on the Board, their contributions and accomplishments will serve our industry for many generations to come. We here at the UTCA want to thank them for their time, energy, passion and service, and wish them nothing but continued success in life and business.

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Financial Overview

PREPARING FOR THE RENEWAL SEASON By: William J. Ruckert, Provident Bank

  The 1st quarter is here, snow is on the ground, most jobs are shut down and your accountant is calling. This means that the renewal season is here and it’s time to think about your financing needs for the upcoming year.   While it seems this should be a slow period, especially for those in the construction industry, it’s actually quite busy. Failing to plan is planning to fail, and this down-time should be used to set your strategic objectives, including reviewing your banking relationship. Seasonal businesses experience fluctuating cash flow, accounts receivable are now being collected and cash reserves are ample, but they will soon be depleted, leading the need for additional capital.   Closing the books on 2016 is paramount in preparing for the renewal season, and hopefully your records are ready to be examined by your accountant. Estimating completed jobs can be difficult for year-end financial reporting and the results will most certainly impact your income statement. However, you should have open communication between your accountant, surety and banker during this process to ensure your financial objectives are understood and can be reasonably achieved.   Your accounting staff will prepare the requisite information for your auditor but their estimated results should be communicated to those professionals that rely on your completed financial statements. If there’s bad news, share that promptly and include adequate information that explains the reasons for the unanticipated results. Once the historical information is conveyed, be prepared to detail action steps that will be put in place to eliminate the pitfalls of the prior year. This should include any additional financing that may be required to overcome the aforementioned pitfalls.   Good news is always welcome, and can be used to improve your financing arrangement. For example, a one-time event that may have caused a banner year will generate surplus cash that can be used to pay down debt or internally finance capital needs. If how-

ever good performance was the result of successful strategic planning that projects into long-term sustainable profitability, use those results to improve your position relative to guarantees, collateral, pricing, fees, etc.   Reviewing the credit facilities that are currently being provided is another area of focus for the renewal season. Inquire about multi-year lines of credit with your banker, as the accounting treatment can help bolster a company’s balance sheet and improve liquidity ratios. The potential need to purchase equipment should also be considered in order to obtain financing for support of fixed asset acquisitions on a timely, convenient basis. Lastly, as interest rates are moving up, review your floating rate debt and consider fixed rate options to hedge your interest rate risk and manage costs. As you prepare for renewal discussions with your banker, don’t forget your projections. Everyone knows they are a best guess, but it’s important that your business goes through the exercise to demonstrate that financial performance is adequate to pay back the debt. It will also prove beneficial whether you’re discussing bad or good news as it will support your request for financing. Projections help set expectations for all parties and will provide active communication throughout the year.   The renewal season doesn’t start until business owners produce adequate financial information to share with their banker and it should be done on a timely basis. Once that dialogue is completed, your bank is equally obligated to be responsive to your upcoming financing needs so when jobs get started again in March/April, the capital is in place when needed in May/June.   I’d like to congratulate Stone Hill Contracting for their 35 years in business, as well as Sita Construction for their 25 years in business. I would also like to thank Juan Gutierrez, Frank Renda, George Helmer and Roger Wuestefeld for their long-term support of the UTCA and wish them well as they retire from the Board of Directors.

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Legal Dig

BIDDER’S EXPERIENCE & PREQUALIFICATION REQUIREMENTS: PAY CAREFUL ATTENTION! By Paul T. Fader, Esq., Association Legal Counsel & Adrienne L. Isacoff, Esq.

  State agencies and local contracting units have the au-

thority to establish qualification requirements for undertaking the performance of public works projects. Bidders must carefully review the requirements and provide as complete information as possible, or risk bid rejection. State requirements   On the State level, bidders are required to furnish “a statement under oath in response to a questionnaire, standardized for like classes of work...to develop fully the financial ability, adequacy of plant and equipment, organization and prior experience of the prospective bidder…” N.J.S.A. 52:35-2. The State then classifies prospective bidders as to the character and amount of public work on which they are qualified to submit bids, and bids may only be accepted by State agencies from persons qualified under this process. The procedures for the classification process are undertaken by the Department of the Treasury, Division of Property Management and Construction (“DPMC”), which classifies prospective bidders based on their past performance record for a variety of trades, from generic (such as C008 General Construction) to specific (such as C117 Underground Storage Tanks). Bidders seeking classification must identify at least two projects for each requested trade that were performed within the past five years. N.J.A.C. 17:19-2.4.   Other State agencies, such as the Schools Development Authority, rely in part upon the DPMC classification system when soliciting bids, but a further review process is taken. Even contractors already classified by DPMC are required to fill out the SDA prequalification application, which is re-

viewed for completeness and then forwarded to the New Jersey State Police for a “moral integrity screening.” N.J.S.A. 18A:7G-1 et seq. and N.J.A.C. 19:38A.   New Jersey Department of Transportation has its own prequalification system. N.J.S.A. 27:7-35.1 et seq. and N.J.A.C. 16:44-3.1 et seq. Potential bidders must be classified and have a project rating in order for their bids to be opened. Contractors must apply for prequalification using the Questionnaire on Form DC-74A, which requires, among other things, a classified CPA certified audited financial statement or a classified CPA reviewed financial statement in accordance with general accepted accounting principles; statements as to construction equipment owned, key personnel, prior experience, and work record, and a statement that the contractor has adopted an affirmative action program for Equal Employment Opportunity in accordance with federal and state laws. Local Requirements   On the local level, the Public Schools Contracts Law, N.J.S.A. 18A:18A-26, (“PSCL”) provides that all prospective bidders “shall first be classified . . . as to the character and amount of public work on which they shall be qualified to submit bids.” Boards of Education rely upon DPMC classification for this qualification protocol. N.J.S.A. 18A:18A-27. That provision was revised in 1999 to shift reliance for the classification system to the DPMC, whereas previously the State Board of Education was permitted to adopt regulations for that purpose.

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The Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq. (“LPCL”) has a different mechanism than the PSCL. There is no mandatory requirement in the LPCL for prospective bidders to be qualified. N.J.S.A. 40A:11-20 provides that there may be required from any bidder submitting a bid a certificate showing that the bidder owns, leases or controls the necessary equipment required by the plans and specifications. Other than that provision, the only section of the LPCL relating to qualification of bidders is N.J.S.A. 40A:1125, which provides that the contracting unit “may establish reasonable regulations appropriate for controlling the qualifications of prospective bidders . . . by the class or category of goods or services to be provided or performed, which may fix the qualifications required according to the financial ability and experience of the bidders and the capital and equipment available to them pertinent to and reasonably related to the class or category of goods and services to be provided or performed . . . .”   Importantly, a contracting unit must hold a public hearing prior to the adoption of any such regulations, and after the hearing, must submit the proposed regulations and transcript of the hearing to the Director of the Division of Local Government Services (“DLGS”) for the director’s approval. DLGS may disapprove the proposed regulations if it finds that they will unnecessarily discourage full, free and open competition; restrict the participation of small businesses in the public bidding process; create undue preferences; or otherwise violate the LPCL.  Finally, N.J.S.A. 40A:11-25 provides that local governing bodies may adopt a standard form of statement or questionnaire for bidders on public works contracts “and, in such case, their action shall be governed as provided herein.”   The DLGS brought this statutory provision to the attention of local contracting units by issuance of Local Finance Notice 2016-12, which stated that “[a]bsent Director approval, bid prequalification regulations are of no force and effect and may not be required as a condition of bid acceptance on any public contract.” The Director may approve prequalification requirements for a set number of years, not to exceed five years, or only for the duration of a specific project.   The question remains whether local contracting units may require evidence of “responsibility” of bidders, since the LPCL provides that contracts shall be awarded to “the lowest responsible bidder.” N.J.S.A. 40A:11-4 (emphasis added). “Responsible” is defined as “able to complete the contract in accordance with its requirements, including but not limited to requirements pertaining to experience, moral integrity, operating capacity, financial capacity, credit, and workforce, equipment, and facilities availability.” N.J.S.A. 40A:11-2(32). Since the LPCL does not mandate that local units adopt regulations regarding qualification, many, if not most, governing bodies have not engaged in what they may consider to be the somewhat onerous proceedings set forth in N.J.S.A. 40A:11-25. The burdensome nature of that statu46

tory requirement is acknowledged in the leading treatise on New Jersey public bidding requirements, which characterizes them as “usable in those situations where major construction is involved and in which prequalification . . . is thought desirable.” 35 N.J. Prac., Local Government Law § 15:25 (4th ed.).   Rather than use this optional procedure, local units either provide in their specifications that bidders must be prequalified for certain trades by DPMC, or require that bidders provide evidence of financial capacity, equipment and facilities, and experience evidencing their capacity to undertake the scope of work set forth in the plans and specifications. Through those requirements set forth in the specifications, contracting units determine whether the bidders are “responsible.”   These types of financial and experience requirements have uniformly been upheld by our courts, without having to go through the N.J.S.A. 40A:11-25 procedures for adopting regulations. For example, in P & A Const., Inc. v. Tp. of Woodbridge, 365 N.J. Super 164 (App. Div. 2004), the court found that the requirement that a bidder submit a certified financial statement is a material and nonwaivable bid element. In Vanas Const. Co. v. City of Jersey City, 2010 WL 5185088 (N.J. Super. Ct. App. Div. 2010), the court noted that financial security in only one factor that evidences the bidder’s ability to perform the contract. In fact, the court overruled the municipality’s decision to waive requirements for bidders to submit certificates of experience and questionnaires from subcontractors, notwithstanding that there is no statutory requirement for such experience certificates to be submitted on behalf of contractors. Best Practices   Whether the directive by the DLGS has ripple effects on these types of “responsibility” requirements by local governing units remains to be seen. For the time being, bidders should be careful to review whether the bid specifications require DPMC prequalification or simply evidence of experience and other capacity to perform the project. And, of course, if you are seeking to knock out the numerically low bidder, make sure to review their conformance with those requirements, as well. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation.

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CYBER ATTACKS & IDENTITY THEFT PROTECTION: A SERIOUS CONCERN FOR ALL EMPLOYERS By: Nancy Damato, Partner, RDA Benefit Services   The Federal Trade Commission has advised that “information security should be a priority for every business in America.” And according to a special report, Identity theft protection is among the top 10 Best Practices in HR Management for any business. The reality of a cyber attack is a serious concern for all business owners, since it is now a matter of “when”, not “if”, it will happen to you, your business, and your employees.   According to Michael Hall, a certified identity risk management specialist, the workplace is the site of more than half of all identity thefts. There are five types of identity theft: financial identity theft, driver’s license identity theft, social security identity theft, medical identity theft and character/criminal identity theft. And he noted that the 5 main causes of data breaches at work are: disgruntled or dishonest employees, untrained or careless employees, lost or stolen laptops, service providers, contractors and visitors, as well as hackers.   So, what can you, as an employer, do to prevent these breaches? Hall has suggested some basic steps:   •  Develop a written data protection plan. The plan should be designed to protect all data throughout the company.   •  Appoint a security manager. This should be an upper level managerial employee.   •  Provide training for employees. Employers should implement a training schedule and ask every employee to sign an agreement that he or she will follow company standards.   •  Before you outsource any company function, be sure to investigate that firm’s data security practices.   •  Consider offering Identity Theft Protection as an Employee Benefit. Typically, this would include restoration services, to assist the employee in reclaiming his or her identity.

  We are proud to announce that The Utility and Transportation Contractors Association has partnered with RDA Benefit Services and Legal Shield, a leader in identity theft protection and restoration, to offer members access to this valuable service. The purpose of this program is to help lower your company’s potential liability associated with a data breach. We are willing to conduct an awareness and safety meeting for your staff, as well as offer ID theft protection and restoration services, as either a company-paid or voluntary benefit, to employees.   The Legal Shield IDShield program includes the following benefits:   • Identity threat alerts    • Emergency assistance 24/7   • Live support    • Lost wallet assistance     • Data breach notification    • Social security number fraud detection    • Complete range of monitoring services    • Unlimited consultations with a licensed private investigator    • Complete identity restoration with a dedicated licensed private investigator    • Backed by $5 Million service guarantee   Employers should most certainly consider including Identity Theft protection in their employee benefit packages. This is just one more way to help protect your business as well as your employees, by being proactive and offering such a valuable service, knowing that Identity Theft was the #1 consumer complaint in 2014. To learn more and get started, please feel free to contact Nancy Damato at RDA Benefit Services at 855-693-0772 or ndamato@rdabenefits.com.

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Accounting Corner

GET READY FOR YEAR-END TAX FILINGS By: Salvatore Schibell, CPA, CFP, Master in Tax Law, MBA, PFS

I. Introduction

  This article starts out reviewing some of the more important tax changes that President Elect Donald Trump has proposed. The remaining article deals with current business tax law that I chose because of its importance in minimizing tax liability.   I next discuss Business and Investment Tax Planning which includes many tax favorable provisions including but not limited to the Research and Development Credit, Bonus Depreciation, Section 179 expensing, and 15 year recovery period for depreciating certain leasehold improvements (The Expensing Provisions). Generally, this area of the tax law is significant because it allows the taxpayer to immediately expense acquisitions as opposed to capitalizing and depreciating the items over a period of time resulting in a tax benefit of taking the deduction today as opposed to future years, save on taxes today to help fund acquisitions. Capitalization, write-offs and expensing in respect of real estate and business equipment   Another important piece of legislation occurred with the Internal Revenue Service issuing regulations in the area of repair, maintenance and capitalization of property, (the tangible property regulations). Due to the length of this article I will only briefly summarize the basics to make the reader aware that these rules exist and they are determinative as to the understanding of a capital addition to property and equipment as opposed to a repair treated as expense.   The tax law in respect of the tax accounting treatment of expenditures for property has grown both complex and confusing over the past five years. The combination of the expansion of old paradigms of §179 expensing and bonus depreciation with new regulations on capitalization and repair in an atmosphere of expirations and retroactive extensions of provisions has made it difficult not 60

only for taxpayers but also for tax professionals to understand what can and cannot be done in reporting such expenditures.   The general rule is that the cost for property is a capital item reflected in the property’s basis that is taken into account either through annual depreciation (cost recovery), as an offset on the proceeds of the sale of the property, or both. Depreciation is annually determined as a percentage of the original cost over the useful life of the property for its classification.   Bonus depreciation with respect to “first use" property provides an additional acceleration of cost recovery in the year the property is placed in service. Section 179 permits taxpayers engaged in an active trade or business to expense all or a portion of the cost of personal property and some real property.   Against the traditional framework, the Service issued regulations popularly called the “capitalization/repair" regulations, because they provide fundamental rules of categorizing an expenditure as a repair (or materials and supplies) - and thus outside the rules applicable to capital expenditures generally; they also provide safe harbors which, in addition to §179, recategorize certain expenditures not as capital but as current expense through safe harbors.   Prior to the issuance of the final regulations, the line between a capital improvement and a repair was a shadowy one that had to be clarified on an ad hoc basis by judicial decision. In FedEx Corporation v. United States, the court recognized that a continuing problem is the identification of what is the “unit of property.” The FedEx court determined that when a repair is made to a discrete component part (in this case, engines and auxiliary power units) of a larger item of property (in this case the airframe), the court must determine whether to apply the repair regulations to the component part or to the larger item of property. The court must Utility and Transportation Contractor, FEBRUARY 2017


identify which “unit of property" is being “repaired” and whether the repair materially adds to the value or appreciably prolongs the life of that unit of property. In this case, the court determined that the entire airframe was the unit or property so the work performed on and the replacement of the components was a repair. Had the court determined that the auxiliary power unit or engine was the unit of property, it would have been a capital expenditure for a new engine being replaced.   The rules for capitalizing improvements to tangible property are applied to each unit of property. A unit of property generally includes all components that are functionally interdependent, as when placing one component into service depends on placing the other into service. Although a building and its structural components are technically defined as a single unit of property, the improvement standards are applied separately to building systems, (heating, ventilation, air conditioning, plumbing, electrical, escalators, elevators, fire systems and other systems that the Internal Revenue Service identifies as separate units of property).   The structural components of a building include walls, partitions, floors, ceilings as well as many coverings. The term building generally means any structure or edifice enclosing space within its walls and usually covered by a roof the purpose of which is for example to provide shelter or housing, or to provide working, office, parking display or sales space. The definition does not include, machinery and equipment within the structure or an activity such as manufacturing, extraction, communications, or other activity which is considered independent of the structure.   This concept is important because it is defining the property unit. Expenditures are capitalized if they fall into one of three categories; betterments, to improve upon, make functionally better than new; restorations, return a unit of property to its original state; and adapt property to a new or different use, alter the use of the property by changing its structural components.   The property regulations contain a de minimums rule whereby if certain criteria are met materials and supplies can be deducted as acquired opposed to being capitalized. These regulations are important because they provide guidance as to capitalizing or expensing purchases of equipment, property and whether a repair is a capital item or expense.   The above comments relating to the property regulations are mentioned only for purposes to make the reader of this article aware that there are rules that define property and the methodology for classification of expenditures relating to that property.

II. The Trump Proposed Tax Plan

  A. Basic Premise   •  Reduces taxes across-the-board, especially for working and middle-income Americans who will receive a massive tax reduction.   •  Ensures the rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability to compete.   •  Eliminates special interest loopholes, makes our business tax rate more competitive to keep jobs in America, creates new opportunities, and revitalizes our economy.   •  Reduces the cost of childcare by allowing families to fully deduct the average cost of childcare. Includes stay-at-home parents.   B.  Individual tax rates Trump's Proposed Tax Rates The president-elect's tax proposal has a top rate of 33% and three brackets as follows;

Taxable Income

- Trump Proposal

Single Filers   Married Filing Jointly Marginal Rate $0 – 37,500    $0 – 75,000   12% $27,500 – 112,500  $75,000 – 225,000   25% $112,501 & above  $225,001 & above   33%

Taxable Income - Current Law Single Filers   Married Filing Jointly   Marginal Rate $0 - $9,275    $0 - $18,550    10% $9,276 – 37,650    $18,551 – 75,300    15% $37,651 – 91,150   $75,301 – 151,900    25% $91,151 – 190,150   $151,901 – 231,450    28% $190,151 – 413,350   $231,451 – 413,350    33% $413,351 – 415,050  $413,351 – 466,950    35% $415,051 & above   $466,951 & above    39.6%

Note: Taxable income under the Trump plan differs from current law due to variations in deductions and exemptions, see below for an explanation.

    Trump’s Plan also provides little to no tax savings for some upper middle class taxpayers. For single filers, those between $190,151 and $413,350 will remain at 33%. For MFJ, the 33% rate stays constant with the Trump Plan between $231,451 and $413,350.   Trump has stated that these tax increases will be corrected when final legislation is approved so that no American will face a rate increase.   C.  Capital gains   For 2016, the present law tax rate on capital gain and/or qualifying dividend income is available to individuals with ordinary taxable income of the following: Ordinary Taxable Income

0% Capital Gains Rate

15% Capital Gains Rate

20% Capital Gains Rate

Single or MFS

$37,650 and below

$37,651 to $415,050

Over $415,050

Joint filers & surviving spouses

$75,300 and below

$75,301 to $466,950

Over $466,950

HOH

$50,400 and below

$50,401 to $441,000

Over $441,000

Trump’s Plan retains the existing capital gains rate structure (max rate of 20%) with his proposed 12%, 25% and 33% income tax structure.   Does this mean that those in the 12% income rate will pay 0% or 12% in capital gains while his 25% and 33% filers will pay the maximum rate of 20% for capital gains?   The 15% capital gains rate currently kicks in at the 25% ordinary rate. With the uncertainty of Trump’s application of the rate structures, it is possible that capital gains could actually increase in 2017 for some taxpayers, particularly those currently at 0%.   While those in Trump’s 25% and 33% income tax rates would probably pay the 15% or 20% capital gains rate, the capital gains

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rate for those in Trump’s 12% is not known at this point and could potentially be 0% or 12%. The final legislation will settle this issue.   Again, Trump has stated that the final legislation will not allow a capital gains tax increase to any American.   D.  Net investment income tax   The 3.8% tax on net investment income will be repealed under the Trump Plan. Trump’s Plan will begin to result in tax savings for MFJ at $250,000 or more in adjusted gross income.   E.  Itemized deductions   Trump Plan will increase the standard deductions for joint filers to $30,000, up from $12,600 and increase the standard deduction to $15,000 up from $6,300 for single filers.    •  Trump Plan will cap itemized deductions at $200,000 for Married Joint filers and $100,000 for Single filers.   F.  Other individual changes    • The Alternative Minimum Tax (AMT) will be repealed under the Trump Plan.    • Personal exemptions will be eliminated.    • Head of Household filing status will be eliminated.    • The Affordable Care Act will be repealed and ostensibly replaced. Though Trump on November 11, 2016 stated he will retain the provisions for age 26 and under dependents on parents’ insurance and, also the prohibition on denying insurance for preexisting conditions.   G.  Estate tax (death tax)   The Trump Plan will eliminate the federal estate, gift and generation-skipping transfer taxes.   When understood as a whole, these transfer taxes serve to protect the income tax - arguably a purpose much more important than revenue generation. Without a gift tax, there is the concern that parents will gift property and cash down to children, presumably at lower rates, who in turn could sell the property or even eventually gift the property back to parents. With Trump’s Plan where oftentimes both parents and adult children will be in the 33% highest rate at income above $225,000, this is no longer as much of a concern. Under the Trump Plan, capital gains held until death and valued over $10 million will be subject to tax. Exemptions will be provided to small businesses and family farms.    • To fight abuse, contributions of appreciated assets into a private charity by decedent or decedent’s family will be disallowed.    • Stepped-up basis will be disallowed by the Trump Plan for estates exceeding $10 million. Example: What if you have a $50 million estate which includes $20 million of capital gains (not small business or family farm)?   H.  Business taxes    • Trump Plan will lower the tax rate on C corps from 35% to 15% and eliminate the corporate AMT. In addition, the Trump Plan would eliminate most corporate tax credits except the Research and Development Credit.    • The Trump Plan would provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10%. Think Apple - with roughly $215 billion, over 90% of its cash and equivalents, overseas.    • Reduction in corporate rate would effectively end recharacterization of business income to foreign- source to avoid U.S. taxation.    • Corporate inversions involving companies moving tax residence abroad will also be curtailed. 62

   • Note that Trump Plan does not change basic presumption that U.S. resident corporation pays income tax on worldwide income.    • 15% rate would be available to all businesses, small and large, that want to retain profits within the business.   I.  Flow Through Entities    • 15% rate of tax would be available to all business that would want to retain profits in the business including pass through entities such as Partnerships and S corporations.    • Distributions from large (undefined) pass-through businesses received by their owners who elected the 15% flat rate would be taxed as dividends.   J.  Cost of tax reduction    • The Trump Plan only commits to retaining the Research and Development Credit.    • Most other corporate tax credits, though none are specifically mentioned in the Trump Plan, would be eliminated.    • Possible examples of cuts could be wage credits for active duty military and long-term unemployed individuals and empowerment zone tax incentives, etc.   K. Expensing    • The Trump Plan would allow firms engaged in manufacturing in the U.S. to elect to expense capital investment (equipment, structures, inventories, etc.) rather than depreciating these purchases over time.    • Businesses that elect this expensing would not be able to deduct interest expenses.    • The election could only be revoked within three years. If revoked, amended returns would need to be filed for prior years. Election is irrevocable after three years.   L.  Carried interest    • Carried interest is basically a right that entitles the general partner of a private investment fund (Hedge Fund manager) to a share of the fund’s profits. In a typical situation, the general partner contributes 1 to 5 percent of the fund’s initial capitalization and is tasked with managing the fund. The general partner usually receives an annual fee of 2% of the fund’s assets plus a "carried interest” of 20% of the profits that exceed a predetermined rate of return. Think of carried interest in essence as a performance fee.    • Carried interest is currently taxed at capital gain rates but will be taxed as ordinary income under the Trump Tax Plan.   M.  What will it cost and who gets the benefit    • The Tax Foundation determined that, on average, taxpayers will receive a tax cut of $1,818 under the Trump Plan. It also calculated that in combination with the total economic reform agenda, the Trump economic plan would create at least 25 million jobs over the next 10 years. Counterpoints: The Tax Policy Center has estimated that nearly half of the benefits from the Trump Plan would go to the top 1% of households - earning more than $700,000 yearly. Estimates vary wildly but generally have federal revenue reduced anywhere between $3.5 trillion over 10 years for the changes to individual taxation and $7 trillion overall.    • From the viewpoint of an economist, there is the potential for increased government borrowing and its attendant negative effect on interest rates and investment.

III. Business and Investment Tax Planning

  The following is a summary of some business tax provisions that can significantly reduce Federal taxes.   A.  Research Tax Credit   The research and development (R&D) tax credit is available to

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taxpayers with specified increases in business-related qualified research expenditures and for increases in payments to universities and other qualified organizations for basic research. Many businesses had complained that research investment requires years to realize potential and short extensions of the research credit were counterproductive.   The Protecting Americans from Tax Hikes (PATH) Act of 2015 modifies and makes permanent the credit for increasing research activities (research credit). The PATH Act also adds the research credit to the list of general business credit components designated as "specified credits" that may offset alternative minimum tax as well as regular tax, effective for tax years beginning after December 31, 2015. In addition, a qualifying small business may make an election to apply a specified amount of its research credit for the tax year against the 6.2% payroll tax imposed on the wages that it pays to its employees.   The research credit was provided to encourage taxpayers to increase their research.   B.  Payroll Tax Credit For Research Expenditures   For tax years beginning after December 31, 2015, a taxpayer that is a "qualified small business" during a tax year may elect to apply a portion of its research credit against the 6.2 percent payroll tax imposed on the employer's wage payments to employees, not to exceed $250,000 with certain other exceptions.   The payroll tax credit portion may only be applied against the taxpayer's 6.2 percent share of payroll tax liabilities and may be carried forward indefinitely against future liabilities if necessary, as explained below. Any payroll tax credit that is unused in a tax year may not be treated as a general business credit that may be carried carryforward and applied against regular and minimum tax liabilities in future tax years. Example: A taxpayer has a $35,000 general business credit in 2016, which includes a $25,000 research credit computed without regard to the payroll tax credit. The taxpayer's regular tax liability in 2016 is $15,000 and it has no alternative minimum tax liability. The taxpayer's 2015 tax liability was $5,000 and it had no alternative minimum tax liability in that year. After offsetting 2016 and 2015 tax liability, the taxpayer has a $15,000 general business credit carryforward to 2017 without regard to the election to claim a payroll tax credit. The maximum payroll tax credit that may be claimed in 2016 is $15,000 since this amount is less than $250,000 and the $25,000 research credit determined for the year of election without regard to the payroll tax credit.   Qualified small business defined. A partnership or corporation (including an S corporation) is a qualified small business during a tax year if its gross receipts are less than $5 million and the partnership or corporation did not have gross receipts in any tax year preceding the five-tax-year period that ends with the tax year of the election.   C.  100-Percent Gain Exclusion on Qualified Small Business Stock (C corporation Stock)   The 100-percent exclusion allowed for gain on the sale or exchange of qualified small business stock held for more than five years by non-corporate taxpayers is made permanent. This benefit has proven a valuable method of funding certain startups. With a five-year holding period, it obviously still requires a long-term

commitment. Trading such stock for other, similar stock, however, can be a useful option under which gain is allowed to be deferred.   D.  Reduced Recognition Period for S Corporation Built-In Gains Tax   The reduced recognition period for built-in gains tax of an S corporation is made permanent for tax years beginning after 2014 by the Protecting Americans from Tax Hikes (PATH) Act of 2015. Therefore, for purposes of computing the built-in gains tax, the recognition period is the five-year period beginning with the first day of the first tax year for which the corporation was an S corporation.   An S corporation is a pass-through entity that is treated very much like a partnership for federal income tax purposes. As a result, income is generally passed through to the shareholders and taxed at their individual tax rates.   However, a corporate-level tax is imposed on an S corporation's net recognized built-in gains attributable to assets held at the time it converted from a C corporation to an S corporation. The built-in gains tax also applies if an S corporation sells, during the recognition period, assets that were acquired in a carryover basis transaction; for example, a tax-free reorganization. To avoid the builtin gains tax, the S corporation must not sell the assets during the 5-year recognition period applicable to the assets.   The built-in gains tax can be triggered by downsizing or other business survival decisions, including the disposal of unused assets to raise needed cash. Consequently, the relief provided by the reduced recognition period may be valuable for small family or privately-owned businesses.   The PATH Act makes permanent the five-year recognition period for built-in gain following conversion from a C to an S corporation. A corporate-level tax, at the highest marginal rate applicable to corporations (currently, 35 percent), is imposed on an S corporation's net recognized built-in gain (for example, gain that arose prior to the conversion of the C corporation to an S corporation and is recognized by the S corporation during the recognition period).   E.  Business Depreciation and Direct Write offs (Expensing)   1. Bonus Depreciation The PATH Act extends bonus depreciation (additional first-year depreciation) under a phase-down schedule through 2019:    • at 50 percent for 2015-2017;    • at 40 percent in 2018; and    • at 30 percent in 2019.   The PATH Act also continues the election to accelerate the use of AMT credits in lieu of bonus depreciation and increases the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. Additionally, the PATH Act modifies bonus depreciation to include qualified improvement property, and permits certain trees, vines and plants bearing fruits or nuts to be eligible for bonus depreciation when planted or grafted. Certain longerlived and transportation property may qualify for an additional one-year placed in service date. Unlike Code Sec. 179 expensing (above), only new property is eligible for bonus depreciation.    • For property placed in service after 2015, bonus depreciation on "qualified leasehold improvement property" is replaced with an expanded version of bonus depreciation on "qualified improvement property" that does not need to be placed in service pursuant to the terms of a lease.   2. Code Sec. 179 Expensing    • The dollar limits for expensing business property acquisitions permanently set at $500,000 with a $2million overall invest-

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ment limit before phase out (both amounts are index for inflation beginning in 2016) • Air conditioning and heating units. For tax years beginning after December 31, 2015, air conditioning and heating units qualify as section 179 properties and can be expensed under Code Sec. 179. • Off-the-shelf computer software. The Code Sec. 179 expense deduction for off-the- shelf computer software has been made permanent. • Revocation of election. The rule that allows a taxpayer to revoke a Code Sec. 179 expense election without IRS consent has been made permanent. For tax years beginning after December 31, 2015, the treatment of qualified real property as eligible section 179 property for the Code Sec. 179 expensing allowance has been made permanent. In addition, the $250,000 limitation on the amount of section 179 property that can be attributable to qualified real property is has been increased to $500,000, and the corresponding provision on carryforwards of disallowed amounts attributable to qualified real property is removed. The incentives for investing in business property are significant and must be coordinated. For example, Code Sec. 179 expensing is claimed prior to the additional depreciation allowance. In general, taxpayers should expense under Code Sec. 179, assets with the longest recovery (depreciation) period in order to accelerate the recovery of their costs. Planning for your capital and equipment acquisitions and retirements is essential. 3. Fifteen-Year Recovery Period Made Permanent The Protecting Americans from Tax Hikes (PATH) Act of 2015 makes permanent the 15-year reduced recovery period for qualified restaurant property, leasehold improvement property, and retail improvement property. The provision originally enacted by the American Jobs Creation Act of 2004 for restaurant and leasehold improvement property, and expanded to include retail improvement property by the Emergency Economic Stabilization Act of 2008 was extended by legislation in past years to apply to assets placed in service before January 1,2015. a) Qualified leasehold improvement property. A qualified leasehold improvement is any improvement to an interior portion of nonresidential real property if the following requirements are satisfied: i. the improvement is made under, or pursuant to, a lease by the lessee, lessor or any sublessee of the interior portion; ii. the improvement is section 1250 property; iii. the lease is not between related persons; iv. the interior portion of the building is to be occupied exclusively by the lessee or any sublessee of that interior portion; and v. the improvement is placed in service more than three years after the date the building was first placed in service by any person. If an improvement was made by the lessor of the improvement when it was placed in service, the improvement can be qualified leasehold improvement property only so long as it is held by the lessor. b) Qualified retail improvement property. The following requirements must be met in order to meet the definition of a qualified retail improvement: i. the property must be an improvement to an interior portion of a building that is nonresidential real property; ii. the interior portion of the building must be open to the 64

general public and used in the retail trade or business of selling tangible personal property to the general public; and iii. the improvement must be placed in service more than three years after the building was first placed in service. Excluded from the definition of both qualified leasehold improvement property and qualified retail improvement property are expenditures attributable to: i. the enlargement of the building; ii. any elevator or escalator; iii. any structural component benefiting a common area; and iv. the internal structural framework of the building. c) Qualified restaurant property. Qualified restaurant property includes a building or improvements to a building if more than 50 percent of the buildings square footage is devoted to a preparation of, and seating for on-premises consumption of prepared meals. That is, qualified restaurant property includes a new building and improvements made to an existing building. Unlike leasehold improvement property and retail improvement property, it is not necessary for the building to have been in service for more than three years.

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Legislative News

FEDERAL & STATE UPDATE

By: Zoe Baldwin, Director Of Government & Labor Relations IN THE STATE HOUSE

  “Clear eyes, full hearts, can't lose” Coach Taylor – On the heels of the decades-in-the-making Transportation Trust Fund (TTF) victory, UTCA staff has been consistently asked one question: “Now what?” Legislators and allies alike were impressed with the Association’s efforts and the resounding voices of our members as the historic 23-cent increase came to fruition. Now it’s time to ride that momentum into 2017 as we continue to pave the way for a better contracting landscape, from capital planning and funding to bid letting, straight on through to change orders and completion.   But first things first – CEO Bob Briant, Jr. and Executive Director Anthony Attanasio have been in talks with Governor Christie, Senate President Steve Sweeney, and Assembly Speaker Vincent Prieto in an effort to clean up the recent TTF reauthorization language. Conversations have been focused on Local Aid and Transportation Infrastructure Bank funding and allocation, and on minimizing the burden of unnecessary and duplicative reporting. We need to keep the project pipeline flowing to make sure our members can focus on what they do best – building infrastructure. We will keep you updated on this process as it advances   “Letting the days go by, water flowing underground” Talking Heads – In 2016, the nation became suddenly and heartbreakingly aware of an underground crisis our industry has been fighting for years: America’s water systems are crumbling and in many places, toxic. Public outcry following the revelation that high levels of lead lurk in water systems across the country has woke a sleeping giant in New Jersey, and UTCA has been working to make sure we’re headed in the right direction. In December, Executive Director Attanasio participated in a conference with industry and thought leaders from across the state working to educate policy makers and the public on the need to repair and upgrade our water and sewer systems. Behind the scenes, staff continues to work with 70

the Department of Environmental Protection to update the Water Pollution Control Act regulations, attends legislative hearings, and continues to work with allies to build a comprehensive platform to address the neglect.   The NJ Environmental Infrastructure Trust (EIT) is widely accepted to be NJ’s most successful environmental program, and over the past year, UTCA has successfully revived legislative efforts to make it more robust. Sponsored by Gary Schaer in the Assembly and Brian Stack in the Senate, A1649/S853 would require local governments and authorities to get a cost estimate from the EIT prior to advertising a project for bid. As of this writing, A1649/S853 is expected to appear on the Senate board list for final passage on January 23, 2017. The bill was passed by the full Assembly, 69-3.   Changed conditions are something we all face in the field, and UTCA is making steady progress toward standardizing the way project owners handle them. After final stakeholder outreach including conversations with the NJ Society of Municipal Engineers (NJSME), the draft legislation is finally ready for introduction. Staff has identified potential sponsors and expects introduction by February.   Wage theft is a serious issue, but recent legislation introduced by Assemblywoman Annette Quijano would’ve been bad news for even the best contractors. UTCA worked vigorously to amend, then ultimately to stop A862, which intended to punish employers who knowingly withhold wages or benefits from employees. The bill made no acknowledgement of existing protections within the prevailing wage system, enabled court proceedings for first time violations, and sought to impose and exorbitant disciplinary fees and fines to such an end that an honest mistake could criminalize a contractor. The sponsor initially told UTCA and our industry allies that she was open to amendments and was working with business groups to address concerns, but ultimately, neither proved to be Utility and Transportation Contractor, FEBRUARY 2017


true. Thankfully, UTCA and others were able to oppose the bill in committee and work with legislative leadership to stop the legislation from further advancement in either house.   Design-Build legislation is expected to see movement in 2017. As we’ve previously reported, A1730, sponsored by Assemblymembers Greenwald and Singleton, establishes procedures for awarding design-build contracts. The bill seemed to stall following an initial committee hearing in February of last year, but renewed movement is expected as the state looks for ways to maximize the impact of every transportation dollar.

ON THE HILL

 Cha-cha-cha-changes – Discussions during President-Elect Trump's first 100 days in office are expected to focus on health care, taxes, and a regulatory overhaul. Nonetheless, Rep. Lou Barletta, a member of the House Transportation Committee and the Trump transition team, said that lawmakers and the new administration would work behind the scenes to develop an infrastructure measure over the coming months.   This effort was reiterated during confirmation hearings for incoming Secretary of Transportation Elaine Chao, who served as a deputy transportation secretary under George H.W. Bush, before serving as Labor Secretary for the duration of George W. Bush administration.   As for the new Congress, there are several changes in store for the New Jersey delegation: Rep. Rodney Frelinghuysen (R-11) has been selected to Chair the House Appropriations Committee, a powerful gavel that could mean more money for NJ if the House makes good on its intention to reinstate the earmark process.

Rep. Donald Payne (D-10) to join the House Transportation and Infrastructure Committee. There are no changes to leadership of the Committee, Reps Shuster (R-PA-9) and DeFazio (D-OR-4) will continue in their leadership rolls. Rep. Josh Gottheimer (D-5) is NJ’s newest representative on the Hill after wrenching the seat from long-time scourge-to-the-industry Scott Garrett. During the campaign, Gottheimer was a strong advocate for infrastructure   The WIIN beneath my wings - On December 16, the President signed into law the “Water Infrastructure Improvements for the Nation Act” (WIIN). The legislation is the rebranding of the Senate and House versions of the Water Resources Development Act (WRDA) of 2016, passed separately earlier this year. Main components of the legislation authorize 30 new Corps of Engineers projects and 8 project modifications totaling $11.68B, allocate approximately $1B for lead and other contaminant construction projects; modifications to WIFIA terms and conditions; and language that urging “robust” funding for the State Revolving Funds.   The Senate bill included some provisions that were unfortunately cut from the final agreement, including: $1.8B for sewer overflow grants; a Water Infrastructure Trust Fund established through a voluntary water-labeling fee program; and a $50 M/year Innovative Water Technology grant program. Through our leadership in the Clean Water Construction Coalition, UTCA will continue to fight for these and other federal resources crucial to our industry.

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Safety Perspective

REDUCE WORKPLACE INJURIES WITH PREDICTIVE ANALYTICS By: David Gerhardt, Director Communications & Business Development - Arbill

  While the notion of predictive analytics may seem like a topic for a dissertation of an MIT grad student, the reality is that predictive analytics is already a part of your life – you just don’t notice it. Today, Netflix determines what movies/shows you are likely to enjoy, eHarmony selects your ideal life mate, Healthcare organizations identify patients at risk of developing various diseases and credit card companies determine your propensity to file for bankruptcy. Predictive analytics is here and it is about to get more pervasive.

according to OSHA is about $100,000 per injury when you combine the direct and indirect costs.   With the increase in fines, new regulations, and increasing costs of injuries, it is imperative for organizations to invest in creating and maintaining a safer workplace. Taking a proactive approach to injury prevention will not only reduce your safety spend and insurance premiums, but more importantly, it will increase employee safety. Now is the time to invest in protecting the most important assets you have, your people.

Can Predictive Analytics Help Reduce Workplace Injuries?   Just as healthcare companies and banks use predictive analytics to identify risk, so can companies looking to identify the risk of injuries within their organizations. Predictive analytics is on the rise and should be a vital part of your safety program.   While some organizations have begun taking a proactive or predictive approach to injury prevention, many organizations still limit themselves by using reactive tactics. They rely on lagging indicators, like month-end injury reports, that report after the fact rather than warn before an injury occurs.   Using predictive models allow organizations to develop leading indicators that aide in identifying the likelihood of where and when the chance for the next injury will happen. These systems take disparate data from many sources and integrate them into a unified model, which allows companies to identify trends and problem areas within the organization before incidents happen.   Making the switch from a reactive to a proactive prevention approach is a must for leaders who are serious about keeping their employees safe. This approach not only has a positive effect on employee morale, but also helps reduce the costs of injuries, which

What Should I Look for in a Predictive Analytics Workplace Safety System?   There are several services that claim to use predictive analytics to reduce workplace injuries. However, upon closer examination, most fall short of their claims. A true holistic solution combines sophisticated analytics with an intuitive user interface that provides simple-to-use, immediately actionable insights, before an injury occurs.   Below are some questions you should ask when selecting a workplace safety predictive analytics system. 1) Does the System Look at Objective or Subjective Data?   There are plenty of systems that provide electronic recordings of inspection data and other observations. The quality of this type of data is hard to ensure because it relies on an inspector’s observation making it inherently subjective. A system that looks at objective data, can provide deeper insights. This type of data includes historical injury statistics, HR and other system data and environmental data from sensors and other inputs. By removing the subjectivity of observations, all employees and departments are measured against the same standard. This in turn makes the

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results more accurate across the entire organization. 2) Can the System Track Multiple Indicators?   Indicators, also known as tracking factors, are those attributes that an analytics system monitors. Some systems can track only one indicator or may focus on just a handful of indicators. This does not provide the full picture as there can be multiple leading indicators that provide insight into potential injury risks. These indicators include historical and current employee data, behavioral factors, along with environmental information such as heat, gas, noise, etc. A system that can track multiple indicators has the advantage. 3) Is the System Easy to Use Throughout the Organization?   Being able to identify potential risks of injury is powerful, but it is useless if the system is difficult to use or navigate. The system should provide an intuitive interface that allows you to drill down to a specific location, office, or employee. It should use an easyto-understand set of pointers or signals that identify where there is increased risk for injury throughout your organization. 4) Can the System be Tailored to Your Business or Industry?   To truly assess risk in your organization you need a system that can be customized to your industry, and the specific risks that lead to injuries within your company. Different industries may weigh risks or indicators differently depending on the type of work, hazards that are present, or the environment in which work is performed. In short, you do not want something that is “one size fits all.” Instead, you need a system that can be customized to meet the intricacies of your company. 5) Can the System Detect Risk Down to the Employee Level?   Many systems provide an overall view or may be able to highlight elevated risk at the location level. While this information is helpful it does not contain sufficient detail. Being able to drill down to the employee level, and identify potential at-risk employees enables you to intervene before an incident happens. 6) Does the System Come with Extensive Support, Training and Guidance?   Implementing a predictive analytics system is a great first step in preventing injuries within your organization. But to create a holistic strategy you need to do more. The team you work with should not just have the technology expertise to effectively implement the system. They should also be able to provide industry expertise, human capital know-how and senior management experience.   They should help you develop and customize the solution to your needs while also providing intervention and training insights for when risk arises. It is not enough to just identify risk; you need to know how to intervene and have a plan to help those employees who may be at higher risk for injury. Combining the technology with proven intervention techniques creates a powerful and effective injury prevention program. Reactive vs. Proactive Approach to Injury Prevention   The shift from reactive to proactive injury prevention is not an easy change, but it is a necessary one. As fines and the costs of injuries continue to rise it is important for organizations to invest in technology that can help them identify injuries and perform the proper interventions.   This technology should be easy to use, yet compile and aggregate objective data points, track multiple leading indicators and provide a holistic view of risk throughout the entire organization. It should also be customizable to specific job and industry risk factors and identify risk down to the employee level. Lastly, the team behind the technology should provide industry expertise and

implement intervention and training strategies.   Arbill's Vantage Predictive Analytics, meets all the criteria outlined above. This powerful system can help you prevent workplace injuries and reduce the associated costs. About the Author….David oversees all company communications, including Arbill’s blog, Safer Every Day magazine, social media and website content. The goal of David’s communication efforts is to demonstrate to clients and prospects that Arbill not only strives to be the industry thought leader, but is in fact leading the safety space with the most comprehensive collection of safety services, safety products, safety training and safety technology.   In addition to his communication role, David also serves as a Business Development Manager where he is responsible for adding new clients to Arbill’s roster. Prior to joining Arbill, David served as Vice President of Marketing and Sales for a variety of traditional and online firms. With more than 30-years of experience, David brings a plethora of knowledge to both Arbill and the clients he serves. David is a graduate of Oglethorpe University and has earned the prestigious title of Competent Communicator from Toastmasters.

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Labor Relations

OSHA COMPLIANCE: TIPS FOR ESTABLISHING A SAFE ROADWAY WORK ZONE (“RWZ”) By: Joseph M. Boyan, Esq., Hedinger & Lawless L.L.C.

  With time, most heavy utility and roadway contractors will suffer the unfortunate experience on one of their projects of a serious workplace accident, which in the dangerous arena of road work, typically results in serious personal injury or worse. The obvious primary impact of such accidents is to the victim and his/her family. Secondary impacts to the contractor’s organization are often overlooked, such as effect on morale or reputation, performance and efficiency losses and the disruption caused by, and financial impact of, the resulting investigation, penalties and fines. Such impacts collectively affect the bottom line in an era when modest profit margins leave little room for waste. The need to be proactive as to safety to avoid such accidents is highlighted by the old adage: “an ounce of prevention is worth a pound of cure.”   RWZ safety is regulated by Federal, State and local law. The primary regulations and standards which govern roadway safety are generated by the Occupational Safety and Health Administration (“OSHA”) under authority of the Occupational Health and Safety Act of 1970 (the “Act”). OSHA defines a RWZ as “an area of a highway where road user conditions have changed because of a work zone or incident by the use of temporary traffic control devices, flaggers, police, or other authorized personnel.” OSHA officials are authorized to investigate any project site and to enforce safety in and around RWZs. As such, OSHA officials may cite contractors for their failure to train employees and/or enforce safety (the General Duty Clause) or for other specific violations of the Act.   The first step in establishing a safe RWZ is the development of a workable, compliant Traffic Control Plan (“TCP”). A proper TCP addresses the following items: (1) conduct of drivers; (2) conduct of workers on foot; (3) particulars of traffic control signage and installation of traffic control devices (“TCDs”) (i.e., barricades, etc.); (4) procedures / requirements for flagging and lighting; and (5) type / use of protective apparel and other personal protective equipment (“PPE”). While the creation and implementation of a complete strategy for RWZ safety is detailed and beyond this ar-

ticle’s scope, below are some basic but all too often ignored tips which, if religiously followed, will reduce the risk of accidents in and around RWZs. 1.  All workers in a RWZ must be familiar with the TCP. The general contractor should conduct a pre-construction meeting with its subcontractors and their personnel to review the TCP, highlight the signage / TCDs being used and discuss each subcontractor’s safety obligations. Minutes should be maintained and each participant should sign an attendance sheet which will serve to emphasize the importance of the meeting and subject matter. Also, these documents collectively will provide evidence of OSHA training compliance by the contractor (and thus a defense) should an issue subsequently arise and citations follow. 2.  Make drivers of milling/paving equipment, dump trucks and other vehicles traversing a RWZ aware of the TCP particulars, the need for compliance and the potentially grave consequences of non-compliance. While there are specific OSHA regulations addressing the prevention of worker run overs and back overs, all drivers must adhere to the established TCP. Of particular note, motorized equipment must function properly, including that backup alarms and lights are audible and visible. 3.  Use compliant RWZ signs which must be properly placed and in working order. The Act contains specific standards for sign content/format in and around RWZs, including as to speed limit, lane shifts, road surface conditions, traffic pattern changes, exits and proper sign colors. Also helpful is the Manual on Uniform Traffic Control Devices (“MUTCD”) published by the Federal Highway Administration which provides further signage guidance. The use of proper RWZ signage will contribute to safety and assist workers, drivers and the traveling public. 4.  Use and maintain proper TCDs. There are several types of TCDs, including cones, barrels, barricades, concrete and sand collapsibles, crash cushions and delineator posts. The Act and MUTCD contain standards and recommendations for the proper use of these devices.

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5.  When flaggers are required, as in RWZs that require alternate traffic flow, ensure they: (1) are fully certified in hand signaling; (2) use OSHA approved high visibility clothing; and (3) use proper and working handheld flag posts and signs. There should be signs placed in advance of RWZs to notify motorists that flaggers are present ahead. Under the Act, flaggers’ clothing must be visible from at least 1,000 feet and, where applicable, flagger stations must be illuminated. All contractor personnel entering into or working within RWZs must be aware of and adhere to flagger hand signals – lives depend upon it! 6.  Workers must wear proper and OSHA approved PPEs and clothing. The Act establishes standards governing the use and performance requirements for PPEs and clothing. PPE and clothing requirements vary by work trade and it is the responsibility of every contractor / subcontractor to know their safety gear requirements. OSHA can and will cite contractors for failing to enforce these rules. 7.  Ensure proper safety training is performed and followed in all RWZs. While it may seem redundant, a properly trained workforce saves lives and money. And, under the Act, safety violations of a subcontractor may be imputed to the general contractor. Thus, in the event a given subcontractor fails to honor its safety obligations, the general contractor should issue a written warning notify-

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ing of the violation(s) and demanding immediate compliance. If the subcontractor fails to cure, the contractor should take aggressive steps, including termination if necessary.   The above tips provide an overview of the basic steps road contractors should take to ensure safe RWZs. The listing is neither exhaustive nor intended to substitute for a full understanding of the various germane OSHA, State and/or local regulations that govern RWZ safety. Given the inherent dangers of RWZs, exacerbated by the high traffic volume on New Jersey’s roads, safety compliance is paramount, primarily to ensure the safety of workers, but also to avoid adverse impact to the morale and financial health of your organization. About the Author…. Joseph M. Boyan, Esq. is an attorney with Hedinger & Lawless L.L.C., a full service construction and labor law firm serving clients primarily in New Jersey and New York. Mr. Boyan has over 20 years of experience in the areas of construction and labor law and has counseled clients in matters before state and federal departments of labor and concerning prevailing wage and union audits, OSHA investigations and litigation and other labor matters. Mr. Boyan can be reached at (973) 301-9100 or jboyan@hedlaw.com.

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ALLIED OIL HOSTS FREE LUNCH FOR POTENTIAL CUSTOMERS

PEER TO PEER PROBLEM SOLVERS

THINK TANK FORMED FOR NJ BUSINESS OWNERS UTCA member and CPA, Salvatore Schibell spends much of his time consulting with business owners. He finds that most owners have a common challenge. They have very few contacts who share similar problems. “There are many business issues you can’t share with employees or even consultants for that matter,” he states. “There are some matters best shared with fellow business owners who face similar issues.” Schibell’s answer is an organization called the Central Jersey Think Tank.

Melissa and Steve Reynolds of Allied Oil are joined by Kip Ronalds, center, who is the Eastern Materials Plant Manager.

  In August Allied Oil hosted two free lunch events at the Eastern Materials Quarry (a Division of US Concrete) in Glen Gardner and Hamburg. Every trucker that came out of the quarry received a hot dog, chips and water. A large business card that included contact information and testimonials from current customers was inside each lunch basket. The idea was for drivers to go back to their bosses and let them know about Allied Oil’s services and competitive prices. If the boss called and mentioned their driver, the driver’s name would be put into a raffle to win $250 as additional incentive.   Allied Oil has been a member of UTCA for more than 25 years. Stephen Reynolds brings 15 years of construction experience to Allied Oil and has implemented creative ways to market the company in the past by hosting similar events.

“I formed the Think Tank approximately one year ago, with the goal of helping Monmouth and Ocean County business owners solve their business problems by discussing their challenges with their peers. The Think Tank is operated in a mastermind style format. Every member gets dedicated time to share concerns and receive direct feedback and ideas from their peers,” says Schibell The group meets monthly on the last Tuesday morning of each month at the Ocean Township Italian American Club, 1100 Route 35. The Central Jersey Think Tank currently has 35 members. With a combination of guest speakers and small group discussions, this small group approach is accomplished by a pre-meeting survey of the attendees as to their business issues or concerns and matching them up with other attendees that share similar concerns in a small group environment (tables of five to eight attendee discussion groups). “This is not a typical networking group, says Schibell who is also a principal in the accounting firm Lawson, Rescinio Schibell. Members get four distinct benefits from participating.   1.  Meet and exchange ideas and get direct, objective advice from one another.   2.  Stay updated on today’s business trends and laws as discussed by industry experts.   3.  Receive advice from successful guest speakers.   4.  A unique resource and opportunity to help and be helped by a diverse business owner group.

Steve Reynolds distributes a free lunch to a trucker at the Glen Gardner Quarry.

Membership is by invitation only. Members must be a business owner or key decision maker. For more information contact Sal Schibell directly at salschibell@lrscpa.com or visit the web site at www.centralJerseyThinkTank.com

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