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President’s Message   In his final President’s Message to the association, outgoing President Tino Garcia lamented that it is unbelievable that an agreement to establish a fully funded and robust transportation infrastructure construction program has not been reached. No one worked harder on our behalf than Tino in the fight to outline the needs to improve our state’s infrastructure, as well as propose the solutions necessary to, as I borrow a phrase, make New Jersey Great Again. New Jersey’s political leadership has over time allowed our infrastructure to deteriorate to a third-world level. Fortunately, while we were at our convention the Governor and the legislative leadership announced an agreement to fund an 8-year TTF program. As I write this message I am happy to report that the TTF implementing legislation was voted upon and passed both houses of the Legislature on October 7th and we are awaiting the signature of the Governor. We are leading the effort to have this legislation enacted immediately to put our people back to work and stem the losses that have hit our industry, our workers and the state’s economy. The Association continues to advocate with political leadership and the Department of Transportation to honor the claims for delays and damages due to the shutdown. While the impact of the shutdown has been very hurtful to us we must, however, celebrate the final enactment of a fully funded 8-year transportation construction program. This is a major accomplishment that we have been pushing for many years.   I would like to especially thank all of the members, exhibitors, and sponsors that attended this year’s convention

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and made it a huge success. Without the participation of these individuals we would not have the opportunity to enjoy the comradery, networking, and all around good time during our days in Atlantic City. It was an honor to be there for the award presentations to Joe Walsh, Rob Culnen and the induction of Frank Renda into the Construction Industry Hall of Fame. Please see the Association website, UTCANJ.org for all of our upcoming industry news and events. I hope to see you at the Clay Shoot at the end of October which continues to raise money for the UTCA scholarship program. Also, please do not forget to attend the southern membership meeting on October 27th.   I want to extend a personal congratulations to Maria and Don Fuentes on the celebration of Aspen Landscaping’s 20th year in business. When you read Aspen’s story in this issue you will know that they are poised to do even bigger things in the years to come.   I look forward to meeting with our membership over the next year and working closely with all of you on the critical issues which face our industry today.

Best regards,

Jim Coddington Utility and Transportation Contractor, OCTOBER 2016


OCTOBER 2016

Contents

Volume XLI, Number 5

Published Bimonthly During 2016 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 Editorial Contributors: Anthony Attanasio Dennis Hart Dan Neville

Features 5 UTCA’s 51st Anniversary Convention 18 Aspen Landscaping Celebrates 20 Years 33 A Message From Assembly Majority Leader Lou Greenwald 73 UTCA Executive Disability Program 85 Hard Hats To Software: Construction Risk Management In The Modern Age 91 Succession Planning In The Construction Industry

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

Departments 2 39 49 63 81 89

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

Cover

Pictured on the Cover are Joe Walsh, left, and Jim Coddington.

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Cover Story

51st ANNIVERSARY CONVENTION FEATURED CAL THOMAS & BOB BECKEL & AWARDS TO FRANK RENDA, JOE WALSH & ROB CULNEN

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By: Anthony Attanasio, Executive Director

TCA’s 51st Annual Convention was held earlier this month at the Borgata Hotel and Casino in Atlantic City. The convention was a major success attracting approximately 1200 people over the three day event. The convention once again proved to be an important networking event for exhibitors and attendees. On the convention floor more than 90 companies were represented covering the full gamut of businesses in the construction industry. The convention is now in its second year at the Borgata which once again provided a world class experience with great entertainment and fantastic restaurant choices for UTCA attendees.   The annual convention opened on Thursday morning, September 29th, with the UTCA fall golf outing at the Atlantic City Country Club in Northfield, NJ. The golf outing and luncheon was attended by more than 40 golfers despite the difficult weather conditions. South State generously sponsored an open bar during the lunch and JRCRUZ Corp. provided cigars for the event. That evening, convention attendees and exhibitors participated in the Opening Reception, sponsored by Foley, Incorporated, which attracted a large crowd, excited that the convention had begun as they enjoyed a variety of food and drinks.   The Friday Luncheon began with the presentation of the 2016 Larry Gardner Memorial Award to Rob Culnen of the C&H Agency. Rob was selected for his years of support to the association as an active member, advertiser, exhibitor and sponsor as well as a friend. Rob is proudly following in his father Danny’s footsteps at C&H and the UTCA once again congratulates Rob for this achievement. Immediately following the award presentation those in attendance heard renowned political analysts Cal Thomas and Bob Beckel discuss the current state of American politics with a very forensic analysis of the current Presidential Election. Their message about Republicans and Democrats finding common

ground in Washington, D.C. was well received by the audience. Their appearance was sponsored by our friends at the Operating Engineers Labor Employer Cooperative (ELEC) and UCIAF.   During the convention Juan Gutierrez, Frank Renda and Roger Wuestefeld were recognized for their years of service to the Association as members of the Board of Directors and now serve as Board Members Emeritus.   Friday night’s President’s Reception, sponsored by C & H Agency was standing room only and proved to be the place to be in Atlantic City. The mood of the event was given a tremendous boost when news broke that the Governor, Senate President and Assembly Speaker had reached an agreement on how to end the TTF crisis. Several friends from the political world mixed with the crowd including industry allies Assembly Majority Leader Lou Greenwald (D-6), Republican Conference Chairman Dave Rible (R-30), and Atlantic City’s own Assemblyman Rob Culnen is pictured as he addressed the crowd after recieving the Larry Gardner Memorial Award.

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Chris Brown (R2). Recognizing the strong partnership with our friends in labor we were very pleased to be joined by leaders and representatives from the Operating Engineers Union Local 825 and the Laborers International Union Locals 472 and 172.   Following the President’s Reception, UTCA conducted its annual Cal Thomas (top) and Bob Beckel address the Friday PAC Auction Party Luncheon crowd. which benefits the Constructors for Good Government PAC. This year’s PAC Auction was set up nightclub style and featured professional auctioneering by Ritchie Brothers. The event was a major success raising more than $42,000 for the PAC. Having a strong PAC presence is critical to advancing the industry’s legislative and regulatory initiatives. More than 100 items were available in both “silent” and “live” phases of the auction.   The association wishes to thank those firms that contributed items to the auction, those individuals that purchased items and the companies that sponsored the PAC Auction Party. These sponsors included Atlantic Concrete Products, Cohen Seglias Pallas Greenhall & Furman PC, Earle Asphalt, EIC Associates, Engineers Labor Employer Cooperative, High Steel Structures, JESCO, M.L. Ruberton Construction, Northeast Remsco Construction, Tilcon,

Fred Vilsmier of Ritchie Brothers is pictured with George Helmer during the Live portion of the PAC Auction.

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Tino Garcia, right, congratulates Frank Renda on his induction into the NJ Construction Industry Hall of Fame.

South State and Vianini Pipe. Special congratulations to committee chairman George Helmer for his continued efforts in making this event a huge success!   On Saturday morning the breakfast program featured the traditional presentation of the personalized manhole cover by Campbell Foundry to outgoing President Tino Garcia in recognition of his year of service. The breakfast closed with the drawing of “his” and “her” watches and a Microsoft Surface Pro 4 by Jay Sciortino of Construction Risk Partners which sponsored the drawing. Congratulations to Gary Repke of Binder Machinery who won the Surface Pro and Erich Kremer of Kremer Marine who took home the designer watches. The exhibit floor closed with the grand prize drawing for a trip to the Caribbean which was sponsored by Hoffman Equipment. The winner of the grand prize was Holly Patetta.   Saturday afternoon saw the return of two popular programs that were first unveiled in 2014. The Third Annual Spouse’s Program featured Medium Craig McManus at the restaurant 28 West. His appearance, which was sponsored by Ferreira Construction and Tilcon, led to many “connections” and was thoroughly enjoyed by the attendees. Also Saturday afternoon the Third Annual UTCA Poker Tournament took place in the Borgata Poker Room. The event, which was sponsored by Montana Construction, generated a great deal of enthusiasm with more than 20 participants. This year’s winner was Luke Smith of Wells Fargo Equipment Finance

Bob Briant, Jr. is pictured with Joe Walsh, The 2016 Robert A. Briant, Sr. Memorial Awardee.

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who took home $650. Steve Ballerini of Montana Construction came in second and won $400. Congratulations gentlemen.   Saturday night’s dinner dance was a truly memorable affair. Founding UTCA Board Member and newest Board Member Emeritus Frank Renda was inducted into the New Jersey Construction Industry Hall of Fame. Frank served the industry in many capacities throughout his long career and is a staple in the annals of UTCA history. Congratulations for your Hall of Fame induction Frank.   Tino Garcia was recognized for his year of service and success as association president, and Paul Fader, UTCA’s General Counsel, gave the Oath of Office to Jim Coddington as UTCA’s new president. Following his induction, Jim thanked everyone for their support and presented his agenda for the upcoming year.   The evening program continued with the presentation of the Second Annual Robert A. Briant, Sr. Memorial Award to Joe Walsh, President of J. Fletcher Creamer & Son Construction. The award celebrated his achievements during his tenure as a UTCA Board Member, Past President and his leadership on association committees. Joe thanked his family, his co-workers at Creamer as well as the UTCA Board of Directors. He also expressed his gratitude in being selected as only the second recipient of the Robert A. Briant, Sr. Memorial Award. This award recognizes the tireless efforts of Bob Briant, Sr. during his many years of service to the UTCA, and is considered the association’s most prestigious honor.   The Kenny I Orchestra provided music and entertainment which got the crowd onto the dance floor. Additionally, the return of

Paul Fader, UTCA’s Legal Counsel, inducts Jim Coddington as UTCA’s 2016-2017 President.

two photo booths allowed attendees to create lasting memories with friends and family. The Saturday Night Reception and photo booths at the convention were sponsored by Binder Machinery, Komatsu America Corporation and Wirtgen America.   The UTCA staff and Convention Committee are applauded for the planning of this year’s event, and the change of venue to the Borgata Casino was once again a big success. CEO Bob Briant, Lauren Hagan, Helene Nasdeo, Dan Neville, Dennis Hart, Anthony Attanasio and Zoe Baldwin did a great job with this special event and are thanked for their hard work. UTCA will return to the Borgata Casino for the 2017 convention.

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Featured Article

ASPEN LANDSCAPING CONTRACTING CELEBRATES 20 YEARS IN BUSINESS

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By: Anthony Attanasio, Executive Director

  wenty years ago, Maria Fuentes was an executive at Motorola and her husband Don was a decorated Police Officer at the Westfield Police Department. Twenty years ago, Maria and Don didn’t know much about bid strategies and local plant purchase mandates. Then again, twenty years ago, Maria and Don Fuentes had no idea that they were about to put everything on the line and embark upon what has become their own journey toward the American Dream.   Maria Fuentes grew up around landscaping. Her father had a business in the residential sector, and she came to see there was emerging opportunity in the public sector; so in 1996, Maria upended life as she knew it and founded Aspen Landscaping Contracting. Through hard work, perseverance, and sheer strength of will, Maria masterfully shepherded the fledgling company through those lean early years. Her efforts paid off, and this year marks two decades as a successful commercial landscaping firm in the construction industry.   In 1996, when Maria embarked on what has become a 20-year journey, she never imagined that Aspen Landscaping Contracting would become the success story you are reading about today. Aspen now has 40 full time employees and grows to 100 during the landscaping seasons. They are a 100 percent union contractor employing laborers, operating engineers, teamsters and plumbers, and consider their working relationships with Laborers Local 472 and Operating Engineers 825 to be more like partnerships. Aspen works solely in the public sector with a lion’s share of their work in recent years taking place in the five boroughs of New York. They work on projects for a variety of Government Agencies in both states, including upstate NY, the five boroughs, the NY and NJ Department of Transportation, Turnpike Authorities, educational institutions, municipalities, and counties. 18

  This is quite a departure from the late nights in 1996 when Maria would stay up calculating and retooling bid numbers in search of her first public contract. Maria was the chief, cook, and bottle washer in the early days of Aspen Landscaping. She tried many different techniques to hone her bidding skills while waiting for her first big break. It took quite a leap of faith and a significant investment to start the business. In order to meet prequalification standards for many of the public agencies, Aspen was required to own, not rent, a hydro-seeder and a straw mulch blower. At the time, this equipment cost $125,000, which was a daunting number since the house Maria and Don owned at the time was only worth $250,000. They continued to submit bids without success, and the equipment sat in a rented lot as a daily reminder of the enormous risk the couple had taken to make a go at the business.

Maria and Don Fuentes are pictured in the Aspen Offices. Utility and Transportation Contractor, OCTOBER 2016


In Camden where Aspen built a channel and then planted thousands of wetland plants to stabilize and conserve the wetlands.

  Ultimately, the company began subbing for several contractors and began to build a reputation as a reliable and dedicated subcontractor. Aspen’s first big job at the time, a $350,000 contract for Mt. Hope Rock Products, Inc., seemed too good to be true, but sure enough, Union Paving came calling shortly after that and gave Aspen a $1.2 million subcontract on the Route 21 project in Passaic City. The sudden jump in contract size meant the company needed to grow, and needed to grow fast. Fortunately, they were able to enroll in a business-mentoring program and were paired up with a building contractor (Torcon) and a highway contractor (Anselmi & DeCicco). To this day, Maria and Don credit Henry Meyers for playing a critical role in their company’s ability to adapt to its early rapid growth. In addition to Union Paving and Anselmi & DeCicco, over the years Aspen has been proud to perform work as a subcontractor for many of UTCA’s largest and most active members including Ferreira Construction, Crisdel, J. Fletcher Creamer & Sons, Railroad Construction and Northeast Remsco to name a few. Maria and Don are quick to point out that working with all of these contractors helped them learn and grow.   As the company continued to expand as a subcontractor and take on larger projects, Maria and Don learned about a new program being rolled out by the NJDOT called Roadside Rehabilitation. The program presented Aspen with the opportunity to perform landscaping for the NJDOT as a prime contractor. They knew immediately that this could be a key to the company’s success, and they set out to secure their first prime contract. The first job they won was a nail biter. Maria stayed up until 3 AM reviewing, tweaking, and crunching numbers. She was so tired in the morning that she gave the bid package to Don and had him go for the bid opening. When bids were opened, Aspen Landscaping had won a $1.3 million contract on Route 78, coming in just $20,000 under

the next lowest bidder. The company had an excellent Resident Engineer who helped them every step of the way as they worked through the growing pains of becoming a prime contractor. Aspen successfully completed the contract, and went on to win several more Landscaping Prime contracts, which earned the company a reputation as one of the premier landscaping contractors in New Jersey. All of this success enabled Aspen to graduate the New Jersey Department of Transportation’s Disadvantaged Business Enterprise (DBE) program. It was at this time that Don retired from the Police Force and joined the company.   When looking back at their 20 years in business, Maria and Don are proud of the work they have done and the struggles they have overcome. As Don puts it, “Everything seemed so big and massive in the beginning. As you complete each job and grow, one project becomes hundreds of projects completed. The view becomes less in size and you get more confident. It can get emotional as we drive through the State by all of our completed projects.”   Several projects stand out as particular points of pride. Their work at major universities like the SUNY campuses where they built more than 17 rooftop green roof systems, as well as a major project completed at the Hoboken Waterfront for the Port Authority of NY & NJ. Aspen successfully planted more than 15,000 trees for Crisdel as part of the New Jersey Turnpike widening program. The next time you are across the river in New York City, stop by Union Square Park for a delightful respite. As you look around, know that Aspen Landscaping rehabilitated the entire park, creating one of the more beautiful places in the entire city. Finally, when taking in the majesty of the 9/11 Memorial, know that Maria and Don’s company played a role in the landscaping that helps make the Memorial so breathtaking.

Aspen crews, saw cutting the roadway, installing 8” main water pipe and then installing irrigation followed by landscaping in Central Park NYC. Utility and Transportation Contractor, OCTOBER 2016 19


Aspen crew digging and burlapping a 14” zelkova tree, transported to Bryant Park then transplanted in the park.

  Aspen’s success did not come easy, and a few of those early struggles persist to this day. Some of the biggest challenges they face are prompt payment as a subcontractor, identifying quality plant material that meets contract specifications, guaranteeing their work, and an often-unreliable market in New Jersey. When prime contractors are slow to pay for work completed, cash flow becomes an issue. Maria points out that New York and New Jersey handle this issue quite differently and prompt payment is much more standard operating procedure in the five boroughs.   Another constant challenge is finding quality plant material that is reasonably priced and available within a practical distance from their projects. Beyond the very specific types and sizes of plant materials, some agencies also require that plants and trees be purchased within a 200-mile radius of a project. However, due to the variable availability of necessary plants, this is not always feasible. Some nurseries have taken up the practice of buying their plant material from other parts of the country and selling the plant material at their nurseries to qualify within the 200-mile radius, which costs more to purchase when the material is grown outside the 200 miles and delivered locally.

  Finally, the market itself and lack of consistency in New Jersey has proven to be a great challenge for the company. About three quarters of Aspen’s workload is outside of New Jersey, a majority of which takes place in the five boroughs. They have also begun working in Philadelphia and Delaware. As New Jersey, and NJDOT specifically, have become unreliable for steady work while also having the strictest contract specifications which Maria does not see changing any time soon. When discussing the challenges they face on a daily basis Don says, “This business can be tougher at times than my days on the force when I was in the narcotics unit!”   Even with these challenges, the future is bright for the Fuentes family. As Maria put it, “We have achieved success beyond our wildest dreams. We are proud to be a part of this industry that impacts our home state so much. We are humbly thankful for all the opportunities that General Contractors that build this State’s infrastructure have and continue to give Aspen a chance to work as a subcontractor for their firms. Service is our top priority and will always be along with our integrity that we consider the most important of all.”   Maria and Don credit much of their success to their involvement in the industry associations. Maria serves as a Board Member on the Heavy, Highway & Utility Division of the AGC and Don is very active in the UTCA. In fact, Don has brought home more UTCA Scholarship Sporting Clay Shoot trophies (both team and individual shooter) than almost any other participant has since UTCA began hosting its bi-annual clay shoot several years ago. Both Maria and Don appreciate UTCA’s news updates and find the Association is constantly in the thick of it on major issues that affect the industry. Aspen’s goal is to be a leader in the green industry for many years to come and looks forward to continuing their wonderful journey. We wish them nothing but continued success for the next 20 years and beyond.

“Everything seemed so big and massive in the beginning. As you complete each job and grow, one project becomes hundreds of projects completed. The view becomes less in size and you get more confident. It can get emotional as we drive through the State by all of our completed projects” - Don Fuentes   Aspen stands by its work and will replace any plant material that fail to survive. Aspen guarantees a plant for 1-5 years, depending on the contract, regardless of whether drought, extreme heat, or some other factor out of their control causes the plants to fail. A particular business practice that Maria and Don take great pride in is that every contractor they work for knows that they can count on Aspen for 100% of the necessary replacements, regardless of cost and the retainage value withheld. 20

Liberty Park at the World Trade Center roof top where Aspen installed a specialized irrigation system and placed hundreds of cubic yards of light weight soil on the 13th floor before being planted. Overlooking previously planted trees. Utility and Transportation Contractor, OCTOBER 2016


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A Message from Assembly Majority Leader Lou Geenwald   In the months since Governor Christie shut down non-essential transportation projects, we’ve seen the disastrous effects of this decision resound throughout our state. During what should have been the height of construction season, when the weather is ideal, hundreds of transportation projects were stalled and thousands of workers laid off. While we’re now seeing the light at the end of the tunnel, this shutdown has hurt families throughout our state.   Even prior to this crisis, it was clear that we need to be doing more to fix our crumbling roads and bridges. We spend the fifth lowest amount of any state on our infrastructure, and it shows. As our roads age, the arteries that form the lifeline of our economy become a threat to the overall prosperity of our state. Underfunding our infrastructure puts New Jersey at risk. Our crumbling roads and bridges cripple the state, hurting commuters and our economy.   Commuters lose two weeks a year to traffic congestion. Meanwhile, rough road surfaces and debris cause flat tires, broken windshields, and major damage to vehicles, amounting to an average of $601 a year spent on automobile repairs.   With nearly $425 billion in goods shipped from our state each year, businesses depend on reliable infrastructure to move products and services. Our rapidly deteriorating roads are a deterrent when companies look at the quality of our infrastructure while deciding whether to re-locate. In the end, New Jersey loses out.   It’s incumbent upon us to look for new and innovative ways to fund infrastructure improvements and keep men and women on the job and gainfully employed so they can support their families. Since 2014, I championed legislation to encourage state and local governments, and universities to enter into public-private partnerships for infrastructure projects in order to better serve residents. The success of this approach can be seen at Montclair University where new housing was built at no cost to taxpayers through a public-private partnership designed to combat the fact that the school’s growth had outpaced its infrastructure.   We need to apply this type of innovative, outside-the-box approach on a statewide level because, unfortunately, our roads and bridges are not the only infrastructure in desperate need of repair.   Here in New Jersey, 20 percent of our water infrastructure is over a hundred years old and well past its expiration date. Some of the pipes in our water system predate the Civil War, causing many to leak over 20 percent of the water before it ever reaches the faucet. Our deteriorating water infrastructure is not only costly, but it can pose a potential health risk if not properly addressed.   Recognizing this critical issue, I authored the bipartisan Water Infrastructure Protection Act, signed into law last year, which allows private water companies to make needed investments in water infrastructure across the state while putting people to work.   Without serious investment in our infrastructure, we cannot continue to grow our economy. That was evident this summer when the Transportation Trust Fund stalemate between the Governor

and the Legislature dragged on, grinding road projects to a screeching halt during peak months and putting men and women reading this magazine out of work. As projects were sidelined, families were unable to make ends meet. The G o v e r n o r ’s rash decision to shut down projects upended the lives of thousands of Garden State residents, as UTCA members know all too well.   It was clear we needed a plan to put people back to work, fund our roads, and create a better tax climate in our state. Thankfully, we have finally arrived at an agreement to do just that.   Working closely with other members of the Legislature, we were able to create an eight-year plan for our Transportation Trust Fund that authorizes $2 billion per year in spending, increases local aid to counties and municipalities, and provides broad-based tax relief. Ultimately, it will restructure New Jersey’s unfair and unfriendly tax structure, make life easier for our families and increase our state’s economic competitiveness, driving more businesses to build and invest in New Jersey.   This November, you have the power to help make this new infrastructure investment permanent. There is a ballot question to constitutionally dedicate all money collected by the gas tax directly to the Transportation Trust Fund. This constitutional amendment would make it impossible for this governor, or anyone else, to raid transportation funding to fill budget holes. As long as we win with a YES vote on this amendment, never again will the government be able to raid the funds that UTCA members rely upon for steady work.   Far too much is at stake. Commuters trying to get to work, buses bringing kids to school, trucks hauling goods to support our economy, ambulances and police responding to emergencies – all rely on a sound infrastructure system. When that infrastructure flounders or fails, our state grinds to a halt.

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Labor Relations

EXPECT CONSTRUCTION LABOR COSTS TO RISE WITH ENACTMENT OF THE NEW DOL RULE By: Shawn Farrell & George Pallas, Cohen Seglias Pallas Greenhall & Furman, PC

  On May 18, 2016, the U.S. Department of Labor published a final rule regarding overtime exemption regulations. This rule change was in the works for more than a year and its announcement was highly anticipated – if not widely feared and despised. And, as anticipated, it places a much higher restriction on an employer’s ability to classify employees as “exempt” from overtime. The new rule, which takes effect December 1, 2016, increases the minimum salary requirement for the overtime exemption from $455 per week ($23,660 annual) to $913 per week ($47,476 annual). This means that anyone making less than $913 per week will be entitled to receive, and more importantly, must be paid, overtime pay for every worked hour in excess of 40 hours per week.   This change will apply to virtually every single employer and – depending upon the composition of your workforce – it may have a very significant impact on your bottom line. Here is what you need to know to begin planning for the effective date of the rule change.   Under the federal wage and hour law, the Fair Labor Standards Act, employers are allowed to treat certain types of employees as “exempt” from the overtime rules. Stated otherwise, when a worker is appropriately classified as “exempt,” you do not have to pay them the time-and-half overtime premium for the hours worked in excess of 40 in a workweek. The new rule change, however, will cause employers to incur additional costs to account for the bureaucratic burden of determining which employees are now exempt.   The different categories of workers that can qualify as overtime exempt are: administrative, executive, professional, computer professional, and outside sales employees. There is also another “catch-all” category for “Highly Compensated Employees,” or HCEs.   There are three sets of rules that determine whether an employee fits into one of these categories. One set of the rules are the “duties” tests – an employee’s actual work duties must meet various benchmarks to meet the different requirements for each of the above categories. Although there were proposed changes to

these rules, they were not changed at this time. The second set of rules are called the salary basis rules and prohibit docking or making deductions from an exempt employee’s pay except in limited circumstances.   The last rule sets the minimum salary level for the overtime exemption to apply. This is the rule that was changed – and it has been met with widespread criticism because it has more than doubled the amount that employers must pay their employees in order to qualify as “exempt.” Under the prior rule, employees who met the duties test and fell within one of the above categories had to be paid a salary of no less than $455 per week, or $23,660 annually, to be exempt for overtime. Under the new rule, an employee must be paid a salary of no less than $913 per week, or $47,476 annually, to qualify as exempt and meet the salary basis test.   For HCEs, the increase in the salary amount was not quite as dramatic, but it was still very significant. An employee qualified as an HCE under the old rules if they performed office or non-manual work and received total annual compensation of $100,000. Under the new rules, HCEs must be paid at least $134,004 per year – a more than 1/3 increase over the old rules – to qualify as overtime exempt.   The one “silver-lining” in the rule change is that employers are now permitted to apply up to 10% of nondiscretionary bonuses and incentive payments to the new thresholds. However, such amounts must generally be paid no less than quarterly, or more often.   The new rule goes into effect on December 1, 2016 – so there is no time to waste. Every employer should assess the impact the rule change will have on your company, determine what options you have, and decide what actions you will need to take. For example, employers will have to consider such strategies as whether to simply pay the overtime worked by their employees or limit workweeks to no more than 40 hours or give raises to certain employees to render them exempt from overtime. In addition, employers will also need to decide how best to adjust estimating, bidding and billing approaches to account for the increased labor costs while maintaining a competitive advantage.

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Employers can and should, at the same time, use this rule change as an opportunity take a close look at its existing classification of employees as “exempt” and ensure you do not have any classification violations. This means reviewing with counsel what your “exempt” employees actual job duties are, and whether this meets the “duties test” for their exemption category.   Since a large component of wage and hour lawsuits involve this type of misclassification - and those claims grow every single day that an employee remains misclassified - this can be a costly mistake. It is one that no employer can afford to be making.   But that is not all – and employers will need to become used

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to reviewing their employees’ classifications more regularly. This is because both of the above dollar thresholds will automatically change and be adjusted every three years beginning January 1, 2020. But most importantly, if an employer fails to properly classify its employees and pay required overtime, under the Fair Labor Standards Act, the employer may be liable not only for the shortfall in pay but also liquidated damages.   Every employer should consult with their attorney, accountant or human resources professional over the coming months not only to ensure proper classification of employees but also any proposed changes in employee compensation models.

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Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Executive Director   On Friday, September 30th, Governor Chris Christie, Senate President Steve Sweeney (D-3) and Speaker of the General Assembly Vincent Prieto (D-32), announced they had reached a compromise on the TTF renewal and a tax reform package. With the TTF shutdown and lack of funding having a devastating effect on our industry, UTCA’s continued efforts to push on our elected leaders to stop talking and start acting finally succeeded. On October 7th, after a tumultuous journey, the New Jersey Legislature passed a long-term and robust Transportation Trust Fund renewal. At the time this article is being written we are still awaiting the Governor’s signature on the measures, and that is anticipated to occur imminently.   The bipartisan, bi-cameral effort authorized a $.23 fuel tax increase along with a slate of tax cuts that will enable the State to provide a $2 billion annual capital program for the next 8 years. This will be the first capital program greater than 5 years in length since the creation of the Trust Fund in 1984. The following is a synopsis of each bill: Transportation Fund A10 Passed (45-27)/S2412 Passed (24-9) -23-Cent Gas Tax Increase -8-Year Capital Program -$2 Billion Annual State Capital Spending ($4 Billion with Federal Match) -UTCA’s Transportation Infrastructure Bank (Which could produce up to an additional $200m annually in local aid projects) Tax Adjustments A12 Passed 44-27/S2411 Passed (22-8) -Sales Tax Cut Of .375%: On January 1, 2017, the sales tax will decrease from 7% to 6.875%. On January 1, 2018, it will reduce to 6.625%.

-Tax Savings for the Working Poor: Increase the Earned Income Tax Credit for the working poor to 35 percent of the federal benefit amount beginning in Tax Year 2016. -Tax Savings for Retirees: Increase the New Jersey gross income tax exclusion on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately. -Eliminate the Estate Tax: Phase out the estate tax over the next 15 months, replacing the current $675,000 threshold with a $2 million exclusion after January 1, 2017 and eliminating the estate tax altogether as of January 1, 2018. -Tax Savings for Veterans: Provide a personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard.   We wish to extend our deepest gratitude to the bill’s sponsors, Senator Paul Paul Sarlo (D-36) and Senator Steve Oroho (R-24), who introduced the original TTF proposal that produced 90% of the language that ultimately passed into law. Senators Sarlo and Oroho’s leadership on our industry’s single greatest issue will not be forgotten.   A2863/S2173, a UTCA initiative to clarify how public contracts address apprenticeship programs within public contracts recently reached several milestones. On September 8th, the Senate Labor Committee passed S2173 out of committee by a unanimous 4-0 vote. On September 29th, the full General Assembly passed A2863 by an overwhelming 69-2-2. UTCA staff has been assured by the Senate co-sponsors that S2173 will be posted at the next full session of the State Senate.

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Legal Dig

INSTITUTING A CLAIM TO COLLECT PURSUANT TO THE CONSTRUCTION LIEN LAW By Paul T. Fader, Esq., Association Legal Counsel

  The New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1 et seq. (the “CLL”), provides security to contractors, subcontractors and suppliers who furnish labor or materials used to enhance the value of property. Craft v. Stevenson Lumber Yard, Inc., 179 N.J. 56, 68 (2004). At the same time, the CLL endeavors to protect property owners from improper liens and “to ensure the rights of property owners who have met their financial obligations and to preclude imposing upon them the burden of double payment for work and materials.” Id. The dual purposes of the CLL are accomplished, in part, by the strict procedural requirements for filing and enforcing lien claims to collect a judgment in court. The CLL contains detailed procedures for lien filings, including the verification of basic information, preparation of the construction lien, filing of the lien and service of the lien. Although many contractors have a broad understanding of these procedural requirements, a recent unpublished Appellate Division decision underscores the importance of complying with the rigid time requirements for commencing an action in the Superior Court. According to the CLL, a construction lien must be filed “within 90 days following the date the last work, services, material or equipment was provided for which payment is claimed” and an action to enforce the lien must be filed in the county in which the real property is situated “within one year of the last provision of work, services, material or equipment, payment for which the lien claim was filed.” N.J.S.A. 2A:44A-6, N.J.S.A. 2A:44A-14(a)(1).  In WJV Materials, LLC v. Erin Contracting, LLC (Docket No. A-2453-14T1, decided August 12, 2016), a supplier, WJV Materials, LLC (“WJV”), initiated a lawsuit against the owner, general contractor, and subcontractor seeking judgment on a construction

lien. Id. at 2. Erin Contracting, LLC (“Erin”) served as the general contractor for the construction of a facility owned by Bottom Dollar Foods Northeast (“Bottom Dollar”). Id. Erin subcontracted with Partanna Concrete, Inc. (“Partanna”), to complete concrete and paving projects. Id. Partanna retained WJV to supply concrete to the site. Id.   WJV provided the last delivery of concrete on April 3, 2013 and conducted a final site inspection on May 16, 2013. Id. Partanna failed to pay the balance of the invoices. Id. On May 24, 2013, WJV filed a construction lien and on May 2, 2014, WJV filed a lawsuit seeking to obtain a judgment on the construction lien. Id. at 3. The complaint alleged that WJV “last performed work at the site on May 3, 2013.” Id. However, the construction lien provided that the final work was performed on April 16, 2013. Id. at 2. WJV contended that the discrepancy between the dates was attributed to a typographical error. Id. Notwithstanding, the trial court dismissed WJV’s complaint against Erin and Bottom Dollar as untimely due to WJV’s failure to institute the action within one year from the last day of work as required pursuant to the CLL. Id. at 3. The proceeding against Partanna was dismissed without prejudice for failure to prosecute because it was not a valid entity and the proper business entity “Partanna Construction, Inc.” declared bankruptcy. Id.   On appeal, WJV argued that the May 16, 2013 inspection approving the work product constituted the final day of work performed on the site. Id. at 5. In support of its position, WJV submitted an affidavit by the owner of WJV, stating that he did not

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THE UTCA EXECUTIVE DISABILITY PROGRAM: Protecting Your Most Valuable Asset

By: Bob Damato, Partner, RDA Benefit Services   RDA Benefit Services LLC has been offering the Executive Disability Plan to UTCA members for the past 10 years. This program for owners and key executives is now being offered exclusively through Mass Mutual Life Insurance Co., a top-rated insurance company. It is non-cancelable, individual disability protection at discounts of 10% off registered rates for UTCA members, available exclusively through RDA Benefit Services.

Why is individual Disability Insurance coverage so important?   It protects you from losing your MOST IMPORTANT ASSET. This asset is not your business, your investment portfolio or your home—it is your ability to EARN AN INCOME. This benefit pays you monthly, tax-free, cash benefits if you get sick or hurt. Whether you own your own company or simply work for one, your talents dictate your current pay. If you’re unable to return to work after an accident or sickness, your paycheck stops—but the monthly bills keep coming. Why is this Benefit so valuable?   If you become sick or hurt and your doctor says you’re unable to return to work doing what you used to do, this disability plan will pay you up to $15,000 per month of tax-free benefits, based on your current taxable income, until you reach the age of 67. It will pay you all or a portion of your contracted monthly benefits depending if you’re totally or partially disabled. What makes the UTCA Executive Disability Plan so special? Two reasons:

1.  PLAN DESIGN. There are various benefit plans and options to choose from. In this comprehensive plan, the definition of Total Disability provides for payment of the full monthly benefit in the event you are disabled in your OWN occupation. In addition, other unique features of this plan make it a great value. This policy allows you to return to work, full or parttime, and due to your disability, to perform job duties unrelated to your former occupation. AND STILL RECEIVE MONTHLY TAX-FREE BENEFITS. 2.  DISCOUNTS. The UTCA Executive Disability Plan provides for discounts of 10% off registered rates. Such savings can equate to thousands of dollars during your working years. Further, once your benefits start, you premium payments stop.   For business owners, this protection provides an even greater value. Often, owners realize if they’re disabled, they must continue paying themselves and then hire or elevate another executive to take over the majority of their own job duties. However, paychecks provided to a disabled owner or executive are NOT tax-deductible. To eliminate such tax consequences, RDA Benefit Services, LLC is providing, at no cost, a Salary Continuation Agreement for each interested UTCA member.   When you figure you have insurance to protect your car, your home and your prized possessions, common sense dictates that it seems most reasonable to purchase protection on your most valuable asset—YOUR ABILITY TO EARN A PAYCHECK.   For more detailed information and quotes, please contact Bob Damato, RDA Benefit Services, LLC at 609-693-0772.

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Safety Perspective

OSHA - A FRIEND NOT A FOE By: Dina Pomarico, Phoenix Safety & Associates

  My company, Phoenix Safety & Associates, LLC, is a full service Safety company to help your employees and your company become more compliant with current OSHA standards. We have been in business for over 10 years, providing our clients with up to date trainings Job Site/Shop OSHA compliance audits, Site Specific and Corporate Health & Safety Manuals, as well as Confined Space job-specific programs and rescue services.   In the past, I have written articles that have been very personal. I have talked about my father who worked his whole life, unprotected from asbestos exposure, who died on a feeding tube at the age of 52. I have spoken about road safety, job safety, keeping safe on jobsites, and working safely at home. I would like to take a slightly different course with this month’s article. I would like to speak directly to employers who may be reading, who may not really know about the OSHA standards that pertain to their company’s business operations.   In the past year, I have had so many clients come to me and say, “I didn’t know I had to do that” or “Do I need to train my guys in this task” or “Can you help me to understand how I can become more compliant to OSHA?”. I have been a consultant to many companies to help them answer their questions about OSHA compliance and I would like to address some of that information here.   OSHA‘s mission statement is as follows:. “With the Occupational Safety and Health Act of 1970, Congress created the Occupational Safety and Health Administration (OSHA) to assure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance.” OSHA is a federal agency of the American government and its purpose is to protect American workers. I have come across people who are from other countries, where workers are still unprotected, like my dad was all those years he worked. We are a country who cares about our employees

and we should do everything in our power as employers to instill a Safety culture in all working environments of our companies.   OSHA’s website is www.OSHA.gov and can be navigated very easily. It is a website with so much information that can be used for in-house trainings, on jobsites and to help all our employees understand that there really is a way to do their job, safely, without losing time and production. Often I come across employees in an OSHA 10 or OSHA 30 training who tell me that if they followed all the safety rules on a job, they would never get their work done. In today’s construction world, labor and materials are expensive, payroll taxes and union benefits are climbing and margins for profit are getting smaller and smaller, it is very difficult for small construction companies to make money, this I tell my clients I do understand, because I am a small business owner. I have worked in the offices of construction firms for over 21 years and I do understand job costs, labor and union costs, but unfortunately I also understand what happens to workers and their families when they are hurt or die on the job. My understanding comes from processing hundreds of workman compensation and disability claims and talking to spouses who are losing everything because their husbands/wives are unable to work due to illness or injury on the job. The OSHA website provides training materials for your employees including videos, toolbox talks, and information on statistics of injuries and accidents. I encourage every employer out there to check out the website and use the information provided to help become more familiar with what is expected of them as far as safety on the job. Employees will find the website very useful too. They can learn about their RIGHT to KNOW and how they can make their work environment safe for themselves as well as others.   In the past year, OSHA has come out with the new standard,

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HARD HATS TO SOFTWARE: CONSTRUCTION RISK MANAGEMENT IN THE MODERN AGE By: James M. Hanrahan, Conner Strong & Buckelew   Construction companies are no strangers to dealing with risk. Physical risks constantly threaten project completion and worker safety. But in the last decade, as new technologies and innovations have pushed the industry into the digital age, cyber risk has become a growing concern.   Unfortunately, many construction companies are still playing catch-up when it comes to managing and insuring cyber risk. Many firms don’t think they are threatened, which is precisely why cybersecurity experts consider the construction industry a “hot target” for hackers – companies are relatively vulnerable because they aren’t proactively protecting themselves.   While it’s easy to think that construction companies, particularly smaller ones, don’t have a lot that hackers would be after, that’s far from the case. Construction companies may in fact be more vulnerable than other types of businesses. The specific areas of vulnerability break down in a number of key areas. Your Own Intellectual Property   Most companies have their own proprietary strategies and processes that make them successful. Construction companies are no different. Whether it has to do with the way you manage resources or the design and development process, there’s a good chance that you have something that makes you different from everyone else.   While this information would be valuable to your competitors, they’re unlikely to be the ones launching a cyber attack. Sometimes attacks are perpetrated by hackers solely to boost their own egos.   Furthermore, attacks don’t have to take place from outside your organization – a disgruntled employee often has the easiest access. Regardless of the source, any intellectual property that lives in a digital file is vulnerable to attack. The more successful you are, the more likely it is that you’ve got a “secret sauce” that could be stolen away. Handling Sensitive Customer Information   Contractors are often given access to sensitive customer information out of necessity. Maybe they need access to security codes to access work sites or perhaps they have network access so that they can more easily share information with customers. This sensitive client information, which might be living on internal servers

or in the cloud, is an attractive target for hackers and cyber criminals.   The 2013 data breach of Target that exposed credit card information for thousands of customers was eventually traced back to an HVAC contractor that did work for a number of Target store locations. Hackers may not have been able to break into Target’s own network to get the information, so they went after one of their partners. The total cost of the breach reached up to $300 million.   This should be a cautionary tale for any construction company. You’re not only risking your own business information, you’re risking that of your customers and potentially opening yourself up to a ton of liability. Building Information Modeling   The use of BIM technology has exploded in the last few years as more private businesses and governments around the world have mandated its use on construction projects. While the technology has created a number of new efficiencies, the information that a typical BIM file contains about the physical structure of buildings and the location of critical design elements is something that could be dangerous in the hands of criminals.   By design, the information stored in BIM files is meant to be shared between contractors and customers. Unfortunately, whether these files are stored on the cloud or on servers with multiple points of access, they are often vulnerable to cyber attacks. As construction companies continue to use these tools, the security of these systems must be thoroughly verified. How to Protect Against Cyber Attacks   Just as there is no building that has ever been constructed that’s indestructible, there’s not likely to be a firewall or protection system that will fully protect against cyber attacks. To further complicate matters, all these issues are changing on a daily basis.   According to a recent report from the Insurance Information Institute, major cyber attacks and breaches are growing in frequency and cost, breaking records every year. Loss of corporate reputation, business interruption and damages paid due to loss of customer data are the main causes of economic losses due to these attacks, and it’s increasingly clear that no organization is safe.

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So what is a construction company to do? For starters, it can get serious about considering cyber insurance. Chances are that your general liability insurance policy does not cover losses resulting from cyber attacks. It’s no longer a matter of whether a company will experience cybersecurity-related losses, but a question of when and how much.   That being said, insurance is merely the last line of defense. Construction companies should be proactively working to understand the risks posed by using technology, and consider online security a real risk. Develop strong passwords, limit access to networks, use secure software and systems, thoroughly vet vendors and emphasize to employees the necessity of discretion.   Most breaches are due to human error. Employees send emails to the wrong people, leave their phones unlocked in public places, click on links that give others’ access to their files, or simply don’t set up barriers to entry in the first place. This type of behavior should be deemed just as reckless as not using personal protective equipment on a job site.   Ultimately, if contractors can handle complex building projects, and conform to nebulous government regulations, they can get their arms around cyber risk. It’s simply a matter of not only thinking in terms of risk that can be handled by hard hats, but also risks related to software. About the Author: James M. Hanrahan is Vice President of Major Accounts, Construction & Development Practice, for Conner Strong & Buckelew, where he is responsible for business development and risk management consulting. He has 23 years of experience in underwriting and risk management services, and has earned numerous awards for his contributions to business growth.

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Accounting Corner

YEAR-END TAX PLANNING STRATEGIES FOR CONTRACTORS By: Richard Higgins, CPA, Partner of Mazur, Krieghbaum & Higgins

  As we approach year-end, it is time to look into planning strategies that could reduce your tax obligation. Construction contractors can take advantage of several tax breaks thanks to the Tangible Property Regulations (TPRs), Protecting Americans from Tax Hikes (PATH) Act, and numerous provisions in the tax law. Income and Expense Recognition   Generally, it is best to defer income to the next year and accelerate deductions in the current year. Even so, if you anticipate that your company will be more profitable in 2017, it may be better to do the opposite - accelerate income in 2016 and defer deductions to 2017. Therefore, it is important to consider realistic opportunities for near-term growth, as well as industry and economic trends before implementing this type of tax planning strategy.   Your accounting method determines when revenue is recognized for tax purposes and expenses are deductible. Companies on a cash-basis report revenue as it is received and expenses when they are paid in cash. Under an accrual-basis method of accounting, revenue is recognized when it is earned and expenses when incurred. Typically, companies on a cash-basis have more opportunities to defer income or prepay certain expenses. For example, a company on a cash method could delay billing for services rendered so that the payment is actually received in 2017. Companies on an accrual method would have to delay the performance of certain services until after year-end to defer income. Payments received in 2016 for services or goods that will be delivered in 2017 may also qualify to be deferred.   Most construction contractors use the percentage-of-completion accounting method and report income and expenses during the period incurred instead of deferring it to the end of the project.

Contractors may however use the completed contract method. In this case, revenue and expenses related to a job are reported on the income statement when the contract is completed. Taxable income can therefore be deferred. If a project is started close to year-end, a contactor can elect to defer the recognition of gross profit on all jobs that are less than 10% complete at year-end. Employee Bonus Deduction   The timing of employee bonuses could impact your tax obligation. Cash-method businesses could claim a deduction for bonus expenses if paid in 2016. Accrual-method companies have more flexibility when it comes to a bonus deduction. Bonus payments made to unrelated parties by March 15, 2017 may qualify as a 2016 deduction. Net Operating Loss   A net operating loss (NOL) can generally be carried back two years to decrease reported taxable income. A special election not to use the carryback period is available. Unused NOLs may be carried forward to offset future taxable income for up to 20 years.   Contractors can also deduct losses due to casualty or theft, bad debt, capital expenditures, or the sale of business assets. Tax Provisions   The Tangible Property Regulations (TPRs) clarify how amounts paid to acquire or improve tangible property, including buildings and improvements must be treated for tax purposes. Construction companies may be able to accelerate repair and maintenance expense deductions.   The TPRs have several provisions that are taxpayer friendly. The partial disposition election gives you the ability to take a deduction for the replacement of components of building assets such

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as a roof, HVAC unit or flooring that were originally capitalized. The “de minimis” safe harbor election allows qualified companies to deduct amounts paid to acquire or produce tangible property that are expensed for financial accounting purposes or in keeping the company’s books and records. Businesses with annual gross receipts of $10 million or less in three preceding tax years may qualify to take the small taxpayer safe harbor election to deduct repair, maintenance and improvement expenses on eligible buildings (owned or leased with an unadjusted basis of $1 million or less). The total amount paid during the tax year cannot exceed the lesser of $10,000 or 2% of the unadjusted basis of an eligible building. This safe harbor can be elected annually on a building-by-building basis. The Protecting Americans from Tax Hikes (PATH) Act extended 52 tax provisions, including:  • Section 179 Deductions: Businesses can deduct up to $500,000 (with a phase-out beginning at $2 million) of the cost of qualifying asset acquisitions such as new and used machinery, equipment, vehicles, and other tangible non-real estate property, as well as certain computer software programs, and leasehold improvements.  • Bonus Depreciation: Bonus depreciation is 50% for property placed in service in 2015 thru 2017. It phases down to 40% in 2018 and 30% in 2019. Taxpayers can elect to use Alternative Minimum Tax (AMT) credits instead of bonus depreciation under special rules for property placed in service in 2015. This provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that can be claimed.  • R&D Tax Credit: Businesses with less than $50 million in gross receipts can use the R&D tax credit to offset the AMT starting in 2016. In addition, qualified start-up businesses who may not have an income tax liability can offset payroll taxes with the credit.  • Work Opportunity Tax Credit: Companies that hire workers from certain disadvantage groups such as veterans and ex-felons, may be eligible for the Work Opportunity Tax Credit. Beginning in 2016, employers who hire qualified long-term unemployed (27 weeks or more) individuals may also take this credit.   There are many other tax planning strategies you should consider before year-end. Contact your accountant to ensure that you are positioned to take all of the deductions and credits that you can. Disclaimer: This article is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

About the Author. . . Richard Higgins, CPA and partner with Mazur, Krieghbaum & Higgins, CPAs, LLC is highly regarded as one of the leading accountants in the construction industry. He can be contacted at 732-341-3893 or RHiggins@M-KCPA. com.

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SUCCESSION PLANING IN THE CONSTRUCTION INDUSTRY By: Paul Kuhl, CPA, CITP, CGMA

The Succession Planning Process   The succession planning process can be a long and involved process for the current owners of a construction company. The first step is to understand the difference between succession planning versus estate planning versus exit planning. Succession planning is the process of transferring leadership to successor management. The purpose of which is to ensure the ongoing viability of the company. Estate planning is the process of transferring ownership (wealth) from the current owners of a construction company to the successor owners or to family members/heirs in the most tax advantageous structure allowable by law. Exit planning is the process that the current owner(s) go through to determine their plan to leave the company. It involves the tranThe Issues and Problems   The industry has a disproportionate sition of both ownership and management share of closely held/family owned busi- of the company and this phase should be nesses. Issues relating to this include ques- done before the succession and estate plantions about who is the potential buyer. Is ning. management interested in/or able to ac-   Once the decision has been made to start quire the company, or does the next gen- exit planning the following items should be eration want to take over the company? considered: There have been estimates that less than 1/3 of family owned businesses survive to 1.  What are the current owners’ views the second generation. Many closely held including objectives, timing and personal businesses are unable to survive the loss of matters (i.e. what happens to long-time emthe founder. There are also the risks associ- ployees of the company? ated with the industry and the question is 2.  Who are the potential new owners whether banks or private equity firms want (family members, current management, the to finance a transaction and at what price? employees, or others) and are they capable Finally, what is the business worth, and of managing the business? If they are family members or current management, groom who prepares the business valuation? them early on for the potential transition. 3.  What will be the roles of current famRecent Activity   In the past few years’ strategic buyers of ily members who are in or out of the busiconstruction companies have been looking ness? to enter the Northeast, including the New 4.  What are the financial needs of the curYork City and New Jersey markets. The rent owners and what will they need to supreason for this is the continued strength of port those needs in the future? the New York City market and significant projects which are being planned for the   Frequently, family members may want region. Several recent transactions have to take over the business from their parents, involved the acquisition of construction but find themselves incapable of running companies by foreign companies, or the the business profitably, thus hindering their consolidation of manufacturing and con- ability to pay-out their parents. Can the next generation effectively and efficiently struction companies. continue the current business and enable it

  At some point in the life cycle of a construction company, the owner will start to think about how and when he/she would like to cash out. This decision may be the result of their desire to retire and spend more time with their family and grandchildren, to travel, or for finally getting serious about their golf game. Their decision could also be based on their perception that it is the right time to sell because it is a “good market”, or it could be due to a life changing event which has forced them to sell their company and retire. Whatever the reason is, there are various issues in the construction industry which will impact the succession plan, potential buyers and valuations of the company.

to thrive going forward is a very difficult question that the current owners and key management should address early on in this exit planning phase.   Once an exit strategy has been arrived at, the next step in the process is to start preparing for succession and estate planning. This would include the following: 1.  Meet with outside advisors such as your CPA and attorney, and with key internal personnel. 2.  Determine if the company has accurate and timely internal financial reporting that has been audited or reviewed by a reputable independent accounting firm. 3.  Verify who the key management is, and whether they are a strong and capable team. 4.  Review the “owners perks” and identify if they are reasonable business requirements and expenses, or do changes need to be made. 5.  Clean-up “issues” on the financial statements such as the completion and finalization of “problem contracts”. 6.  Develop a plan (both succession and estate), which is periodically reviewed and communicated to the appropriate people. The Role of the Company’s CFO   The Company’s CFO, should that position exist in your business, plays a key role in this entire process from start to finish. The CFO has access to the “inner sanctum” and will need to provide an objective viewpoint throughout this process. At times, this may be difficult because he/she will be juggling family/owner issues and trying to respond to questions from a prospective investor or buyer. The CFO is the person who should be responsible for coordinating all of the work that needs to be done by the various outside advisors, such as the lawyers, CPA’s (financial statement auditors and tax consultants) estate planners, valuation firms, etc. In addition, the CFO will be responsible for coordinating all of the documents which will be needed by the various outside advisors.

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Keys to Success   Succession planning is part of the overall strategic overview of the Company. As discussed, there are numerous factors which must be considered in the development and implementation of a successful succession plan. Succession planning is a process that, if done correctly, can take several years to complete. The owners should start planning early and not wait until a triggering event such as a serious illness, etc. occurs. If that happens the survival of the business may be in jeopardy. Throughout the process there must be clear communications and buy-in amongst all of the parties regarding their current and future roles in the company. Early in the process the issue of liquidity and the desire of the current owners to move on must be addressed because this may take time to agree on what is needed and how it will be funded. Finally, please remember that this is a process that will evolve over time and may change before it is finalized. About The Author: Paul Kuhl is a Senior Manager in the Princeton office of WithumSmith+Brown, PC. He is a team leader in the Firm’s Construction Services Team. Paul is on the Board of Directors and Past President of the New Jersey Chapter of the Construction Financial Management Association.

Continued from Page 49   UTCA was able to testify in support of two pieces of legislation regarding drinking water at the Senate Environment & Energy Committee. S2062, sponsored by Senator Kip Bateman (R-16) and Senator Linda Greenstein (D-14), is a bill that would appropriate up to $20 million from the societal benefits charge (commonly referred to as the “Clean Energy Fund”) to the Department of Environmental Protection (DEP) to pay the costs of remediation of elevated lead levels found in drinking water in public buildings. Funds would be disbursed to public entities upon receipt of appropriate documentation and receipts for the cost of the lead abatement. S2468 is a bill that would direct the Department of Environmental Protection (DEP) to adopt standards for 16 hazardous drinking water contaminants, as recommended by the Drinking Water Quality Institute (DWQI). The bill would also permit the DEP to establish more stringent standards for those contaminants upon recommendation of the DWQI. Both bills passed unanimously out of committee and now move on to the full Senate for a vote. Federal Legislation: Senate and House Passed WRDA 2016 Bills   On September 28th, the House of Representatives passed its version (H.R. 5303) of the Corps of Engineers' Water Resources Development Act (WRDA) by a vote of 399-25. On September 15th, by a vote of 95-3, the Senate passed its version of the bill (S. 2848). The two bills have significant differences, most particularly the House bill is a traditional Corps of Engineers only bill while the Senate bill also includes provisions on clean water, safe drinking water, innovative water financing and innovative water technologies. As an aside, both bills include funding for the Flint water crisis although the House bill authorizes less Flint funding than the Senate bill. The Senate version of WRDA would authorize $8 Billion in funding for more than 30 new Corps of Engineers projects and 7 project modifications. ). The bills won't be reconciled and finalized until after the election in the Lame Duck session, however, staff negotiations are already underway. PLEASE CONSIDER SUPPORTING UTCA’S CONSTRUCTORS FOR GOOD GOVERNMENT PAC   UTCA continues to be the leading voice in Trenton and Washington D.C. for the construction industry. Whether it is providing expert testimony before business and legislative groups or positively effecting the legislative process, UTCA stands alone in its record of achievement for our industry. This success is only made possible by your support of the Association, and more importantly, with your support of the industry’s PAC: Constructors for Good Government. Please consider making a contribution in 2016 as UTCA plans to be very active in the upcoming legislative session and a robust PAC only strengthens our voice. Thank you for your continued support.

A M E M BE R O F T H E P H O E N I X G R O U P O F C O M PA N I E S WBE/SBE CERTIFIED

As a Dianne proud member of the C.W.A Local 14156, Strohmenger President American Plus Printers employee owned, full service union print company offering diannes@amplusprint.com WBE/SBE Certified straightforward, customer-oriented service in the highly Office 215.698.6628 Cell 732.779.0276 competitive market of•commercial printing. 11601 Caroline Road • Philadelphia • PA 19154 American Plus is committed to the highest union standards of integrity, quality, and service to the community. NEW JERSEY

2604 Atlantic Ave., Wall, New Jersey 07719 • Tel: 732-528-2170

PENNSYLVANIA

11601 Caroline road, Philadelphia, PA 19154 • Tel: 215-698-6628 E-Mail: americanplus@mac.com • www.amplusprinters.com 92

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Continued from Page 63 consider the work completed until the final walkthrough on May 16, 2013. Id. The appellate panel rejected this argument and upheld the trial court’s decision dismissing WJV’s complaint as untimely. Id. at 6.   The Appellate Division noted that since WJV was hired to supply concrete, the timeline for filing a complaint began to run on April 3, 2013, the date of the final delivery of concrete to the worksite. Id. Furthermore, the May 16, 2013 walkthrough inspection did not extend the timeline for filing the complaint even if this was consistent with WJV’s common practice because there was no indication that WJV contracted with Partanna to provide this service. Id. Therefore, WJV was required to file the lien within 90 days and a complaint to enforce its construction lien within one year from PROCEDURE

April 3, 2013. By failing to file the complaint within one year of April 3, 2013, WJV forfeited its right to enforce the lien against the defendants. Id.   The holding in this case is important for general contractors, subcontractors and suppliers who perform services or provide material because it illustrates the importance of complying with procedural requirements of the CLL, including the rigid time limits. Significantly, the one year time period from the last date of work or supply of material or equipment may not be extended by a party’s unilateral act, such as inspecting the work site.   The following table sets forth the CLL’s salient time limit provisions for commercial projects:

TIME LIMIT

STATUTE

Filing a construction lien

Within 90 days after the potential claimant N.J.S.A. 2A:44A-6 completes its work or delivered materials or equipment N.J.S.A. 2A:44A-7 Service of the lien upon the owner and any Within 10 days following the filing of a contractor or subcontractor against whom construction lien the claim is asserted Right of contractor or subcontactor to Within 20 days after service of the conN.J.S.A. 2A:44A-12 object to payment by owner to the lien struction lien claimant N.J.S.A. 2A:44A-14(a)(1) and (a)(2) Institution of the lawsuit Within one year of completion of the party’s work or within 30 days after a demand by the owner Within 30 days from the date of resoluN.J.S.A. 2A:44A-30 Date for filing a certificate of discharge tion or within 7 days of a demand by any with the county clerk when a lien claim interested party is resolved by payment, satisfaction, or discharge Furnishing a verified list of subcontractors Within 10 days after receipt of the request N.J.S.A. 2A:44A-37 and suppliers

  Contractors, subcontractors and suppliers will be well served by familiarizing themselves with the applicable time limit provisions, placing a “tickler” on their own calendars, and consulting with their counsel well in advance of the deadline to file a complaint to ensure compliance with the statutory requirements.

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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Confined Space for Construction, it has always been a part of the General Industry standards, but now it is specific to construction, Employers are required to train their employees who work in confined spaces in this new standard. It is the employer’s obligation to keep their employees who are exposed to confined spaces, safe, healthy and alive. Our company has performed countless trainings on the new standard and has had a very positive response form employees who work in these dangerous environments. Many employees were happy to sit though the training and actually commented that they were glad their employers cared enough about their safety to pay for the training. I always tell my class, if you can just dedicate the time to learning and understanding about the topic we are covering, you will work safer and more efficiently. I tell them that their employer cares enough about them to provide the training to them and that they should be grateful by using the training they received on every job.   Very recently, OSHA has issued a final rule to curb lung cancer, silicosis, chronic obstructive pulmonary disease and kidney disease in America's workers by limiting their exposure to respirable crystalline silica. The rule is comprised of two standards, one for Construction and one for General Industry and Maritime. The new rule required engineering controls to keep workers from breathing silica dust. Tool and equipment manufacturers have developed

new engineering controls as part of their equipment to make it impossible not to control the dust. Key provisions in this rule include reducing the permissible exposure limit (PEL) for respirable crystalline silica to 50 micrograms per cubic meter of air, averaged over an 8-hour shift. It requires employers to: use engineering controls (such as water or ventilation) to limit worker exposure to the PEL; provide respirators when engineering controls cannot adequately limit exposure; limit worker access to high exposure areas; develop a written exposure control plan, offer medical exams to highly exposed workers, and train workers on silica risks and how to limit exposures. It provides medical exams to monitor highly exposed workers and gives them information about their lung health and it provides flexibility to help employers — especially small businesses — protect workers from silica exposure.   I encourage any worker or employer who wants to create safer environment to take Safety seriously. OSHA has provided tools that make training and compliance on the job sites, easy to understand and implement, Safety consultants like our company, Phoenix Safety, can provide you with guidance and direction on how to become a company that truly cares about its workers and keeping them free from injuries, illnesses and death from working.   Please work safely; know that everything you do, or don’t do to keep yourself safe also impacts the safety of those working around you. It is everyone’s responsibility to work safely.

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