utility and transportation contractor april 2015
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Utility and Transportation Contractor, APRIL 2015 1
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President’s Message
Best regards,
Scott Lattimer
As we try to remain positive these are the days when it
becomes very difficult. It seems all too often, just as soon as
we think we have something good going, Lucy pulls the football
away and we end up flat on our back. In our case, instead of
a football it is the renewal of the Transportation Trust Fund
(TTF) and Lucy’s part is played by our Governor. Other than
one fringe group there has been no opposition to renewing the
soon to be insolvent Trust Fund. Everyone from the business
community, the media, our industry and our partners in the
building trades all recognized the need
for a long term and sustainable funding
source for the TTF. This concept has
support from the Senate President and
Speaker of the Assembly in addition to
rank and file members of both houses
and both parties. It seemed we had finally
reached the goal line and New Jersey
would have the first real commitment to
infrastructure since the Kean
administration, and then it became
apparent that the Governor had backed
away from the negotiations. Without the
Governor’s support, promoting
whatever plan the Legislature and
advocates support would be an exercise
in futility. Time will only tell what the
Governor’s solution will be. While the
Governor has shown leadership on many
other issues we need him to be the leader
he promised New Jersey when it comes
to the TTF. Without a reliable and first
class infrastructure network, our State
will fall further behind in economic
activity than it already has and there is no way to tell if we will
be able to recover. The ball is in the Governor’s court.
UTCA staff and committee members have held numerous
meetings to revise specifications for the betterment of the
industry. The labor committee is negotiating terms for a more
successful and fairer approach to pension reform in order to
reduce or eliminate the financial responsibility of contractors
for failed pension systems. It is neither fair nor reasonable
that contractors should have to pay into the pension system for
a second time when they held up their end of the bargain the
first go around. The burden should be left with the people
responsible for the pensions to make sure that they are funded
and distributed properly.
On a lighter and more optimistic note, the New Jersey
Environmental Infrastructure Trust Fund reported at our most
recent South Jersey Membership Meeting, that it has close to a
billion dollars in projects either on the street or soon to be let.
That is good news for our industry, as it is represents a
significant increase over what we have seen in the past and the
future looks bright.
Continuing on with the good news, many UTCA members
just returned from our Executive Seminar in Sonoma and San
Francisco, California. This seminar
proved to be very educational with some
great presentations, which you will hear
about from Dennis Hart inside this
edition. It was great to see some new
faces on the trip and we hope that it was
a beneficial experience to all those that
attended. The weather and tours were
absolutely amazing.
Keeping with good news we are very
happy to acknowledge the two
milestones that Sanitary Construction
and DW Smith Associates are
celebrating. Sanitary Construction is 100
years old and DW Smith Associates has
reached 50 years in business.
Congratulations to both companies! Keep
up the great work.
In closing, I ask for your help with
our Constructors for Good Government
PAC program. Whether your firm is large
or small, UTCA’s PAC Clubs have a
membership level designed to fit your
financial capabilities. Every little bit helps
our mutual cause. The UTCA staff have been working tirelessly
to have laws passed that benefit the industry and to stop others
that would harm our businesses. In government and politics,
political contributions are simply part of the business and we
need to make sure our industry’s collective voice is heard in
Trenton. Please contribute what you can and thank you to those
that have already supported the UTCA PAC.
Features 4 Sanitary Construction Completes
100 Years In Construction
15 A Message From
U.S. Senator Cory Booker
28 Sonoma/San Francisco
Executive Seminar
45 Highway Trust Fund:
Groundhog Day Or Not?
48 DW Smith Associates Celebrates
50 Years In Business
55 Affordable Care Act:
Understanding The Employer
Reporting Requirements
APRIL 2015
Volume XL, Number 2
Departments 2 President’s Message
21 Financial Overview
24 Legislative News
40 Safety Perspective
53 Legal Dig
63 Labor Relations
66 Accounting Corner
Contents
Published Bimonthly
During 2015
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:
Michael DeVito
Editorial Contributors:
Anthony Attanasio
Mike DeVito
Dennis Hart
Dan Neville
Advertising Manager:
Helene Nasdeo
Photographer:
Michael DeVito
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 Associa-
tion 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.
Utility and Transportation Contractor, APRIL 2015 3
CoverPictured on the cover from left to right are
William Cervino, Michael Cervino Sr.,
Anthony Cervino, Michael Cervino Jr., Todd
Cortese.
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28
48
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Sanitary Construction Completes100 Years In Construction
Fourth Generation Family Members Now Involved
Cover Story
When any business is able to reach the century mark as an
entity, that firm most certainly should be lauded, especially when
that firm has been able to weather the many ups and downs the
construction industry has seen during that time period. Sanitary
Construction was incorporated in 1915 by brothers William Cervino,
Michael Cervino, Jr. and Anthony Cervino. In the 100 years since
incorporation, Sanitary Construction has survived the 1929 market
crash, the Great Depression of the 1930’s, World War I, World War
II, the Korean & Vietnam Wars and numerous recessions. Today
the firm continues to thrive and grow.
The idea of a family-owned construction firm actually dated back
30 years prior to its incorporation in 1915. Family patriarch Michael
Cervino, Sr. had completed work in 1885 for the Erie Railroad which
spring-boarded his foray into the construction industry. His
aforementioned three sons would later utilize their father’s
experience to
establish Sanitary
C o n s t r u c t i o n .
Early work for the
new firm included
water, drainage,
sewer and road
c o n s t r u c t i o n
projects in North-
ern New Jersey.
An early project
for Sanitary which
was completed in
the 1920’s was for
the installation of
a sanitary sewer
system on Union Avenue in Paterson. This $380,000 project was
completed with a steam generated trenching machine. The firm
successfully completed many more projects throughout the 1920’s.
Pictured are Sanitary forces on a project from
the 1930’s.
By 1948, one of the three brothers, Anthony Cervino, took over
the family business along with his wife Margaret Palladino Cervino.
Construction projects were completed in Bergen and Passaic
counties during that time. Margaret Cervino was involved with
numerous aspects of the business including estimating, payroll
and accounts payable/receivable, and at the same time was busy
raising her four sons who would form the next generation of the
firm. Ironically, Margaret Cervino was also born in 1915 – the same
year that the firm was incorporated.
For the next two decades, Sanitary Construction completed
numerous projects in both the public and private sectors of
construction. The firm had gained a reputation as a top-notch
utility contractor that could complete difficult work on time and
within budget.
Pictured is an aerial view of a project in Morristown.
Utility and Transportation Contractor, APRIL 2015 5
However, in 1969 a major event rocked the Cervino family when
Anthony Cervino passed away. The newly-widowed Margaret
Cervino, with four sons under the age of 18, took the reins of the
company and opened many eyes with her successful operation of
the firm. After she was able to convince Sanitary’s bonding
company and bank that she could handle the challenge of the
business, Margaret Cervino competitively bid jobs and supervised
quality work, all while raising four sons.
By the 1980’s Sanitary Construction completed major sewer
projects in Wyckoff and Mt. Olive, as well as pump stations at
Picatinny Arsenal and various bridge rehabilitation projects. The
work at Picatinny included installations of water mains and spill
containment areas. Another project completed during this time
included land clearing and construction of a flood corridor on
Mashipacong Island in Sussex County. Construction was performed
between two sections of the Delaware River which serves as a
sanctuary for Indiana Bats and American Bald Eagles. The project
was completed in areas of very sensitive wetlands.
Margaret Cervino died in 2000, but her successful stewardship
of the firm was an inspiration and excellent example for women who
aspire to work in the construction industry. Her accomplishments
were recognized in 2003 by the Utility & Transportation Contractors
Association of New Jersey which established a new scholarship
that bears her name. The Margaret Cervino Memorial Scholarship
is awarded on an annual basis at the New Jersey Institute of
Technology to a female student who majors in engineering or
construction technology. Certainly a worthy tribute to Margaret’s
legacy as a female business owner in a traditionally male-dominated
profession. Since 1974, her four sons: Michael, William, Anthony
and Augustus, have been involved with the company on a full-time
basis. William currently serves as President of Sanitary
Construction, Michael, Sr. is Vice President, Anthony is the
Secretary/Treasurer and Augustus is a field operator/foreman. A
fourth generation is also involved with the firm. Michael Cervino,
Jr. is the Assistant Treasurer and also involved with estimating and
project management, while Todd Cortese, Michael’s Sr.’s Son in
law, serves as Operations Manager and handles the company’s
financial aspects with Michael, Sr.
In recent years the company has transitioned its focus to large
scale site development projects for residential and commercial
clients. This turn-key construction includes demolition, earthwork,
utility installations, paving, striping and landscaping. From 2006-
2009, the contractor completed a site package for the expansion of
Morristown Memorial Hospital. This work required the installation
of foundations, construction of a new parking deck, paving, as well
as the widening and signalization of Route 124. At the same time,
Sanitary performed a similar type contract at Preakness Health Care
Center.
Another recent project was the installation of an eight inch ductile
iron fire suppression line which was placed under an active runway
A school project is completed in Morris County.
Walls and pond are constructed in Highland Park.
The firm is at work on a site work contract in Parsippany.An underground detention system is under construction in
Paramus.
6 Utility and Transportation Contractor, APRIL 2015
and taxiway at Teterboro Airport. This construction also involved
the completion of a mechanical building and the installation of
hydrants. On a project at Newark Airport, Sanitary completed a
glycol recovery system as a subcontractor for Tilcon. This type of
system is utilized to de-ice airplanes that are situated over a catch
basin which collects and processes the glycol for recycling.
The firm has also completed site preparation for a wastewater
treatment plant and a pump station at the Prices Pit Landfill in
Pleasantville which required a 40 foot deep cofferdam and deep
well dewatering. Additionally, SCC forces recently completed a total
sewer collection system replacement in West Orange at a location
that once housed Thomas Edison’s laboratory, and constructed a
new culvert on Route 206 for Tilcon. The Route 206 project also
involved the installation of approximately 3000 linear feet of eight
inch force main as well as demolition of an existing bridge.
Some of the company’s current projects include two site work
subcontracts with Joseph A. Natoli Construction Corp. These
projects are for the construction of Paul Miller Auto Group’s new
Porsche dealership and the Bergen County Special Services Facility
located in Paramus. Sanitary is also completing the first phase of
work for Mill Creek Residential Trust’s 268 unit luxury apartment
building in Morristown and recently broke ground on the first phase
of a major commercial redevelopment project located on Passaic
Avenue in Kearny.
Throughout the years, Sanitary Construction Company has
persevered and continues to thrive in a challenging and ever
evolving construction industry. By adhering to the corporate values
which the company was founded on over 100 years ago and
cultivated throughout the twentieth Century by the Cervino family,
the next generation of the firm is sure to remain a respected player
in NJ’s construction industry for many years to come.
The Pleasantville pump station is completed for the US Army
Corp of Engineers.
Utility and Transportation Contractor, APRIL 2015 7
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Recently, I was fortunate to be named the top-ranking
Democrat on the US Senate’s Subcommittee on Surface
Transportation – a position that will enable me to work across
party lines to improve infrastructure in New Jersey and across
the country. And there isn’t a single New Jerseyan who
doesn’t count on some kind of federally funded infrastructure.
Currently, America is faced with a long list of transportation
projects that can’t get done because local officials don’t have
access to adequate funding. New Jersey’s businesses,
residents, and commuters are counting on us to find solutions
that sustain and improve our
nation’s highways, railways,
and waterways — networks
that are critical to economic
growth, job creation, and
national security.
New Jersey alone has more
than 38,000 miles of public
roads, and nearly 1,000 miles
of rail freight lines, connecting
every corner of the state to
consumers and networks
throughout the region. Sixty-
six percent of New Jersey’s
major roads are in poor or
mediocre condition. This costs
New Jerseyans over $3 billion
a year in extra vehicle repairs
and operating costs.
Across the United States,
65,000 bridges are classified as
structurally deficient and 65
percent of America’s major roads are rated in less than good
condition. Americans spend 5.5 billion extra hours of travel
time from traffic congestion annually, costing families $120
billion in fuel and lost time, and our businesses $27 billion in
extra freight. According to a report by Facing our Future, a
group of former New Jersey government executives, New
Jersey needs at minimum $21.3 billion to invest in short-term
transportation infrastructure needs through 2018.
It is this urgent and collective need that keeps me committed
to finding sustainable, long-term solutions to our nation’s
infrastructure funding crisis. Most recently, I introduced
bipartisan legislation that would give local officials more control
Senator Booker was elected to a full term in the United States
Senate in 2013. Prior to that Cory won a special election to fill
the term of the late Senator Frank Lautenberg- and became New
Jersey’s first African-American senator. Under his leadership as
mayor, New Jersey’s largest city, Newark, entered its biggest period
of economic growth since the 1960s – the first new downtown
hotels were constructed in 40 years, the first new office towers in
20. During Cory’s tenure, overall crime declined and the quality
of life for residents improved with more affordable housing, new
green spaces and parks, increased educational opportunities and
more efficient city services.
A Message FromUnited States Senator Cory Booker
over the transportation planning process in their states and
communities. The “Innovation in Surface Transportation Act,”
introduced by Senators Wicker, Casey and me, will create
new opportunities for economic growth by empowering cities
to compete for a larger share of federal funds. Local
jurisdictions, metropolitan planning organizations, transit
providers, and others would be in charge of developing projects
for consideration. Instead of people in Washington making
the decisions, a panel of local stakeholders would decide which
projects to approve based on how the project could improve
the transportation system,
promote innovation, and spur
economic development.
In order to advance New
Jersey’s economic dev-
elopment, it is vital that we
adopt policies that invest in our
transportation infrastructure.
This legislation will increase our
economic competitiveness and
fund necessary transportation
projects to promote the safety,
stability and economic strength
of our state and nation. These
issues are of tremendous
importance to growing our
state’s economy and creating
job opportunities for New
Jerseyans and I’m excited to
get to work.
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Utility and Transportation Contractor, APRIL 2015 2 1
Financial Overview
START-UP SEASON:
HOW BANKS CAN REV CONTRACTORS’ ENGINESBy: William J. Ruckert, Provident Bank
Finally!! Spring has sprung and start-up season has arrived.
That’s the good news. The bad news is that contractors like you
may have to find a way to finance their operations for the next 120
days as work is done, expenses are incurred, bills are generated,
and payments are pending. For yet another year, the primary issue
for all contractors is seasonal cash flow, that persistent thorn in the
side.
Your winter repairs/ maintenance expenses have been paid,
accounts receivable are low, operating expenses are growing,
inventory is sorely needed—and your cash balances are being
depleted. The cash flow problem is only heightened this year by
terrible weather conditions—polar vortex, anyone?—that have
delayed and will continue to delay start-up.
Luckily for you, bankers are dedicated to ensuring that
contractors are adequately financed for the upcoming season. And
this time of year is critical. While your accountants are working
feverishly to complete year-end financials, your bank anxiously
awaits the statement. Bankers and surety agents depend on that
information to make decisions about your financing eligibility;
similarly, the public and private sector job owners rely on the
decisions of banks and surety agents when considering your bids.
Here’s the challenge: How do you make banks comfortable
lending to you given the weakening balance sheet and seasonal
losses? More importantly, what solutions can your bank offer
you?
Naturally, a working capital line of credit is the obvious choice.
But there are ideal alternatives designed specifically for the seasonal
start-up phase, including a seasonal override to an existing line of
credit, short-term time note, and/or moratorium on term debt
payments.
Seasonal overrides to lines of credit are commonplace in banking
and by no means unique to the construction industry. For example,
retailers typically employ them as they incur the costs prior to the
holiday season and await billings/payments. Sound familiar? The
override amount and time frame should mimic your cash flow cycle.
Typically, the cycle picks up after 6 months or less but varies based
on the unique need.
Specific short-term borrowings, also known as a time note, are
generally job-specific to ensure repayment. Interest is paid monthly
with full principal payment due at maturity, which benefits cash
flow as the job ramps up and payments are collected. These loans
can extend for up to one year, but be careful; you do not want the
timing of that lump sum principal payment to exacerbate your cash
flow crunch at this time next year.
A brief moratorium on term loan payments can also provide cash
flow relief. Repayment of the debt is not extended beyond typical
terms, but deferring spring payments helps you manage your cash
position. This loan structure should be negotiated ahead of time
because requesting a moratorium after the loan closes can unsettle
the bank.
Whichever solution is right for you is based on the unique
borrowing needs of your company and can be affected by several
factors, including the prior year’s results, an unexpected rush of
winter business (e.g. snow plowing), back-log, and the mobilization
costs associated with starting a new job.
No two borrowing needs are alike. Regardless of your company’s
unique financial condition, your banker should be intimately aware
of your situation prior to receiving year-end financial statements
so all parties are prepared to meet your company’s needs. All of
your cash flow issues can be overcome by open and active dialogue.
The lines of communication should flow between company
management, your accountant, surety agent and banker.
If you can’t have this kind of frank conversation with your bank,
then perhaps you should seek a new financial institution. Provident
Bank can be there for you: for start-up season and all seasons.
To learn more about start-up season financing options, please
contact the author.
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Legislative News
FEDERAL & STATE UPDATEBy: Anthony Attanasio, Executive Director
UTCA enjoyed several legislative successes this winter but our
biggest initiative still remains unresolved. There continues to be a
tremendous amount of work ahead of us but here is a recap of some
of the issues the Association has been working on legislatively.
As we all know the single most critical issue our industry faces is
the renewal of the broken Transportation Trust Fund. The need to
renew the fund is undeniable, however there has been no major
action from the Christie administration to address this issue. The
Governor chose not to mention the TTF in either his state of the
state speech or annual budget address. Further, the Governor
proceeded to go on to his monthly radio show and say “there is no
crisis” and that he believes the TTF is “pretty well funded”. As
those of us in the industry know both of these statements are not
completely accurate. At a legislative hearing in March, UTCA
Executive Director Anthony Attanasio testified that “this is not
only a crisis but is in fact actually a catastrophe”. The trust fund
will have an annual debt service starting in FY16 of close to $1.2
billion while it only takes in a little over $900 million in cash leaving
a $300 million shortfall. That revenue is only enough to pay down
debt on old projects, therefore the State currently has no money for
future projects beyond the next fiscal year. Worse than that is the
fact that New Jersey’s bridges were recently ranked 6th worst in the
nation and our roads are also in unacceptable condition. The
administration has cobbled together funding for one more year
using more borrowed money and one shot funding sources that
will force the NJDOT to make decisions that could harm our industry
for several years. Senate President Sweeney, Assembly Speaker
Prieto along with Assembly Transportation Chairman John
Wisniewski have tried to keep the TTF as the main focus in Trenton
but the Governor’s silence on this issue is deafening. In February,
UTCA CEO Bob Briant, Jr. was invited to meet with the Senate
President and Speaker as part of an exclusive group of industry
leaders to work on a permanent solution to the TTF crisis. In addition,
Anthony Attanasio appeared on NJTV’s “On the Record with
Michael Aron” in March alongside Assemblyman Wisniewski to
continue to pound the drum. Anthony will also be moderating and
participating on several panels focused on the TTF at the
TransAction conference in Atlantic City this month. UTCA will
continue to work with the ForwardNJ coalition to lobby for a long
term, robust and sustainable funding source for the TTF.
In Washington D.C., there appears to be bipartisan support to
renew the federal highway trust fund. Leading members from the
Senate and House, both Republican and Democrat, continue to
highlight the need for a long term and adequately funded trust
fund. Congressman Frank LoBiondo (R-2), Congressman Bill
Pascrell (D-9) and Congressman Tom MacArthur (R-3) are
representing New Jersey well on the issue. Congressman
MacArthur has even co-sponsored a bill called the Partnership to
Build America Act of 2015 (H.R. 413). This measure establishes
the American Infrastructure Fund (AIF) to provide bond guarantees
and make loans to state and local governments, non-profit
infrastructure providers, private parties, and public-private
partnerships for state or local government sponsored
transportation, energy, water, communications, or educational
facility infrastructure. This requires proceeds from the sale of the
bonds to be deposited into the AIF. The bill would also amend the
Internal Revenue Code to allow U.S. corporations to exclude from
gross income qualified cash dividend amounts received during a
taxable year from a foreign-controlled corporation equal to the face
value of qualified infrastructure bonds the corporation has
Utility and Transportation Contractor, APRIL 2015 2 5
purchased. We are encouraged that Congressman MacArthur is
working across the aisle on innovative new ways to fund
infrastructure projects in America.
On the legislative front, UTCA was successful in seeing several
of the bills the association supported and/or amended become law
and legislation we aggressively opposed vetoed by the Governor.
We are happy to report that the Permit Extension Act-A3815, has
been signed into law. This bill pushes back the expiration date of
current permit approvals to December 31, 2015. In addition, the
Governor signed The Water Infrastructure Protection Act-A3628
into law. This bill authorizes municipalities and municipal, county,
and regional utilities authorities to lease or sell their water or
wastewater assets to a private entity, without a referendum, if an
emergent condition exists. UTCA was able to secure several crucial
amendments to the bill that will benefit the industry. UTCA also
worked closely with a coalition of business, utility companies and
labor organizations to aid the passage of this bill including a last
minute push to secure the 21st “yes” vote for the legislation in the
Senate. We were also pleased that the Governor vetoed S1811,
also known as the Buy America bill. This proposal would have
required government contractors to use goods made in the United
States; and it required businesses that receive government contracts
or government assistance to disclose job exportation information.
This legislation, while well intentioned, would have slowed public
projects and added dramatically to the contractor’s compliance
costs. Additionally, these requirements would create more red tape,
would stall project decisions and could jeopardize relations with
New Jersey’s international trade partners. Finally, the bill could
potentially conflict with federal “Buy America” provisions which
could jeopardize federal funding on transportation projects. UTCA
coordinated with the State Chamber of Commerce, the NJ Business
& Industry Association and the New Jersey Department of
Transportation in opposing this legislation.
The UTCA continues to be the industry leader in both Trenton
and Washington D.C. and will continue to tirelessly advocate on
your behalf.
Continued from Page 45
While these attacks on the irrefutable public and economic
benefits that come from improved transportation infrastructure are
disappointing, these individuals and entities would not be stepping
up their efforts to kill a HTF fix if they too did not see progress
occurring.
The first step toward ending the eight-year cycle of dysfunction
that has plagued federal surface transportation investment and
disrupted the activities of the state that rely on these funds for, on
average, 52 percent of their highway and bridge capital
improvements was always going to be the launch of a national
debate. It has been clear over the last two months that this overdue
discussion has begun.
It is now up to Congress and President Obama to find a way to fill
the HTF’s $15 billion per year shortfall between available resources
and current levels of highway and transit investment. The positive
developments over the last two months have certainly laid the
foundation for such a solution, but we still have a long way to go.
It is the responsibility of the transportation construction industry
and all transportation stakeholders to build on these steps and
continue pushing Congress to act in a meaningful way to
permanently fix the HTF. As already noted, there are vocal and
committed groups working aggressively to defeat us in this effort
and you can bet Congress is hearing from them.
With the authorization of the highway and transit programs
expiring May 31 and the trust fund needing additional resources by
July, one way or another Congress will act in the next few months.
This means we have the attention of lawmakers and they are facing
a deadline, two things that always create an opportunity on Capitol
Hill.
For those of you who have not seen or do not remember the
movie, Bill Murray’s character in “Groundhog Day” broke out of
his time trap by beating the odds to achieve something meaningful.
In a similar spirit, it’s time to break out of the time trap and for
Congress and the President to achieve something meaningful and
permanent with the HTF.
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Sonoma/San Francisco
Executive Seminar
Attendees Enjoy Great Weather & Beautiful Locations
The 2015 Executive Seminar proved to be one that the
participants will talk about for years to come. Throughout a week of
perfect weather, 100 UTCA members and their families enjoyed
touring the tranquil vineyards of Sonoma, California and the beauty
and excitement of San Francisco. Thanks to the research and
planning conducted by UTCA Board Member and George Harms
Construction President and COO Tom Hardell, the group enjoyed
wine tastings and tours of the Ledson and Artesa Wineries; the
Rodney Strong Winery with a stopover for lunch in the town of
Healdsburg; and a tasting and tour of the Benziger Winery featuring
a fantastic group dinner in their wine storage caves.
The Lodge at Sonoma Renaissance Resort & Spa became the
perfect spot for the members of the group to gather in the evening.
UTCA President Scott Lattimer noted that the ability to meet
informally with other industry members is invaluable. “Of course
the wineries and the tours are fantastic but the most enjoyable part
of the trip is to meet such a varied group of industry members and
build new relationships and discuss issues that impact all of us.
Meeting in the evening in the hotel lounge and spending time on
the buses and going out to dinner help to build relationships and
the overall strength of the Association. On this trip we had members
from the highway and utility contracting community; equipment
and material suppliers; metal fabricators and highway electrical
contractors; law firms, insurance, bonding and information system
companies; and engineering firms. I would encourage everyone in
the Association to attend these events and they won’t be
disappointed.” Newly appointed UTCA General Counsel Paul FaderGroup photo at the Artesa Winery.
George Pallas and Shawn Farrell discuss contract issues during
an interactive presentation.
Utility and Transportation Contractor, APRIL 2015 2 9
of Florio Perrucci Steinhardt & Fader, LLC echoed this sentiment,
“Initially I and other members of our firm thought it was a good idea
to attend just to introduce ourselves to the membership but I can
say that in a short week we learned a great deal about the issues
affecting the association and have built new friendships.”
The Executive Seminars feature work sessions addressing various
topics of interest to the industry. George Pallas and Shawn Farrell
of Cohen Seglias Pallas Greenhall & Furman continued their tradition
of providing the group with valuable legal presentations. George
and Shawn’s interactive presentations and knowledge are always
well-received. This year’s presentation was entitled “How to Get
Paid For Extra Work” and copies are available at the Association
office.
Upon leaving Sonoma the group stopped at the picturesque
town of Sausalito to enjoy fantastic restaurants and strolling the
waterfront streets. San Francisco afforded the group the options of
touring Alcatraz, the waterfront and riding the famous cable cars.
Some of the group took advantage of the opportunity to play a
round of golf at the Spanish Bay course within Pebble Beach while
others enjoyed the day in Carmel-By-The-Sea, California.
The seminar presentations in San Francisco were given by UTCA
member Kevin Ellman of Wealth Preservation Solutions and
Riccardo Castracani of DEAL/RDE USA. The Association is always
grateful when Kevin can advise the group on emerging financial
management issues. His program this year concerned investing
and executive retention planning. Riccardo Castracani gave a
detailed presentation on the challenges his firm faced in producing
the pre-cast work for the construction of the newly completed San
Francisco-Oakland Bay Bridge. The construction techniques used
in building this massive segmented bridge were as impressive as
the bridge itself.
During the farewell reception UTCA CEO Bob Briant Jr. thanked
all of the sponsors of the seminar as well as the UTCA Executive
Seminar Committee and Committee Chairman Gerard Burdi and the
UTCA staff for arranging a fantastic program. He also announced
that the committee has selected the Casa de Campo Resort in the
Dominican Republic for the 2016 seminar and Paris/Barcelona for
2017. For additional information on the seminars or copies of the
presentations please contact the association office.
A Benziger Winery employee discusses their biodynamic farm-
ing techniques to produce ultra-organic wines.
30 Utility and Transportation Contractor, APRIL 2015
Utility and Transportation Contractor, APRIL 2015 3 1
Photo Caption: Gennaro Liguori receives his Hall Of Fame Award
from Joe Walsh in 2012.
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40 Utility and Transportation Contractor, APRIL 2015
THE CAVE-IN PROBLEMBy: David Kliwinski, CSP
Safety Perspective
Trench Collapse Kills 2
A father and son trenching a water line were killed when a dirt
wall collapsed and buried them. Both men were pronounced dead
at the scene of a housing subdivision under construction. According
to police, the accident was reported at 1p.m., and it was nearly 3p.m.
before the body of the second victim was finally recovered. The
accident occurred in a housing subdivision where road work and
one house where under construction. Interviews and evidence
disclosed that the ground was thick with mud the day of the incident
from recent rains resulting in unstable soil conditions.
Police said the workers dug a trench six to eight feet deep for the
pipe. The walls were not braced! Firefighters were first on the scene,
and the Deputy Fire Chief said one man was completely buried. The
partially buried man was pulled out but could not be revived. The
local public works department employees assisted firefighters in
directing the shovel operator in removing dirt and widening the pit
for the rescue attempt of the second victim. Police investigated the
accident for criminal negligence while the U.S. Occupational Safety
and Health Administration (OSHA) investigated the fatalities for
violations of compliance with regulatory standards.
The frequency and regularity of these types of fatal occurrences
during excavation work has been a concerning and on-going industry
challenge for many years. Management commitment, risk planning,
effectively executing proper means of employee protection, training,
regulatory compliance and budgeting money to perform this activity
safely are the primary contributing factors and root causes.
Cave-In Dangers
The greatest danger associated with trenching and excavation
work is the potential of cave-in or earth slides. Cave-ins are a primary
source of fatalities in the construction industry killing hundreds of
employees annually. Eliminating cave-ins should be the ultimate
goal of every contractor, and this goal can only be supported if
supervision and workers are aware of the risk associated with their
work, and have knowledge of the tremendous force created during
a cave-in. For example, a cubic yard of soil weighs approximately
2700 pounds (in dry conditions). And, the average cave-in typically
results in the collapse of 3 to 4 cubic yards of soil weighing 8000 to
10000 pounds. Since the average person is unable to breathe when
their chest is covered with 150 pounds of soil, survival under these
conditions is unlikely.
Factors Contributing to Cave-Ins
Trenching cave-ins occur because the strength of the soil in the
trench wall is not sufficient to withstand the pressure exerted by
the surrounding earth. Several factors affect the soil’s strength to
ultimately cause a cave-in. The 4 most significant factors
contributing to cave-ins include: 1) weight 2) water accumulation,
3) vibration and 4) soil composition. Excessive weight caused by
surcharge loads such as spoil (excavated soil), construction
equipment and materials, and the removal of soil beneath structures
in the vicinity are responsible for excessive loads on trench walls
creating cave-ins. Water accumulation is one of the greatest
dangers because the presence of too much can substantially weaken
the soil. Too little water can cause a stable appearing soil to become
brittle and crumble causing a cave-in. Vibrations caused by nearby
road traffic and construction equipment, along with blasting and
pile-driving activities weaken the soil creating cave-in potential.
Finally, soil composition is a crucial factor because it involves
various types of soil possessing different strengths. Hard compact
soils (cemented sand and gravel) exhibit characteristics similar to
rock and are much stronger than sandy or loose soils. A “Competent
Utility and Transportation Contractor, APRIL 2015 4 1
Person” (knowledgeable and experienced in trenching activities)
should be responsible for evaluating existing soil conditions and
recommending the appropriate measures to ensure trench stability
during construction work. This individual is responsible for
inspecting the trench daily for unsafe conditions (changing
conditions), and ensuring that support systems are provided and
maintain their engineering quality and performance.
The most common cause of cave-in accidents are : 1) inadequate
or lack of protective shoring systems, (usually in an attempt to cut
costs or save time) 2) inability to accurately assess soil conditions
3) failure to consider changing weather conditions 4) failure to
properly locate heavy loads away from trenches/excavations 5)
poor planning and 6) improper or inadequate training.
Danger Signs Related to Cave-Ins
To ensure safe trenching operations contractors should take
action to mitigate the following existing dangers:
· Spoil, material or equipment closer than 2 feet from the trench
edge
· Experience level of the Competent Person, supervision and
employees
· Bulges on side walls of the trench
· Accumulation of loose rocks or material fallen from the
trench walls
· Cracks in the soil near the surface of an excavation
· Water in the bottom of a trench and rainfall activity
· Subsidence (a shrinking or vertical movement of the soil)
· Layered soils
· Previously excavated soils
· Intersecting trenches
· Narrow right of way limiting workers freedom of movement
Any one or a combination of these danger signs should prompt
immediate corrective actions. Many accidents can be attributed to
improper installation and removal of shoring, and the anxious nature
of employees to enter a collapsing trench to prematurely attempt
rescue. Proactive measures that address the risk and associated
hazards is necessary to drive the safe execution of excavation and
trenching activities.
Conclusion
Cave-ins continue to be a prevalent problem in the construction
industry requiring the immediate attention of both management
and employees, and industry constituents. The limited resources
of government agents (e.g. OSHA compliance officers) often
preclude the inspections required. These agencies are usually
understaffed, distrusted and usually only contacted after a tragedy
has occurred. Ultimately, compliance should not be the driving
factor for providing employees the safe work environment they are
legally required to be provided. The contractor has the primary
responsibility for Safety including for the humanitarian, financial
and legal reasons associated with the work being performed. Each
contractor should be of the mindset to create a culture of caring for
the safekeeping of all employees performing work so it becomes a
value that permeates the entire organization, and that drives the
safe performance of work. A company’s ultimate goal should be to
ensure the protection of their greatest asset, and to return each
employee home safely to their loved ones.
· Increased seepage of subsurface water
· Drying of exposed trenches
42 Utility and Transportation Contractor, APRIL 2015
Firm Provides Support Services To Contractors
Featured Article
Utility and Transportation Contractor, APRIL 2015 4 3
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HIGHWAY TRUST FUND:GROUNDHOG DAY OR NOT?
By: Dave Bauer
ARTBA Senior Vice President Of Government Relations
In the early 1990s movie “Groundhog Day”, Bill Murray plays a
character that keeps reliving the same day. No matter what Murray’s
character does during that day, the next morning he wakes to the
same song from his alarm clock and the day proceeds just as the
others.
This bit of pop culture has become a too frequent metaphor for
the past eight years of Highway Trust Fund (HTF) dysfunction
where each cycle begins with a projection of when the fund will be
unable fulfill its obligations and ends with Congress approving last
minute legislation to temporarily preserve highway and public
transportation investment. Then the clock starts ticking on the
next crisis.
As we count down to the sixth HTF revenue shortfall in eight
years, a number of developments have already ensured that we are
not reliving the same trust fund cycle.
Certainly, the U.S. Department of Transportation’s projection
that—without additional revenues—it will need to start slowing
down reimbursements to the states in July due to trust fund liquidity
constraints and insolvency looming in September very much bring
to mind the premise of Groundhog Day. The difference between
this situation and the previous five trust fund shortfalls, however,
is the vast recognition by members of Congress of the need for
action and the priority the congressional leadership has placed on
passing a surface transportation bill. The day after the 2014
elections, both House Speaker John Boehner (R-Ohio) and incoming
Senate Majority Leader Mitch McConnell (R-Ky.) cited
infrastructure as one of the few areas where the new Republican
Congress could find common ground with President Obama. Since
the 114th session of Congress convened in January, passing a
surface transportation reauthorization bill has been consistently
listed as one of the “must do” items by members of both chambers
and parties.
Perhaps one of the brightest spots in terms of distinguishing the
2015 HTF crisis from those in 2008, 2009, 2010, 2012, and 2014, is
that this time around all parties are actively seeking a solution.
Most members of Congress now clearly understand they cannot
deliver a long-term surface transportation bill until the find a long-
term solution. Senate Finance Committee Chairman Orrin Hatch (R-
Utah), Environment & Public Works Committee Chairman Jim Inhofe
(R-Okla.), Commerce Committee Chairman John Thune (R-S.D.), and
Foreign Relations Committee Chairman Bob Corker (R-Tenn.) have
all publicly said they are evaluating all options—including a federal
motor fuels tax increase—to generate additional HTF revenues.
In the House, Representatives Reid Ribble (R-Wis.), Dan Lipinski
(D-Ill.), Tom Reed (R-N.Y.), and Bill Pascrell (D-N.J.) generated a
letter from 285 House members—including a majority of both party—
urging the House GOP and Democratic leadership to make
developing a long-term HTF plan a priority.
While the Obama Administration has long advocated for increased
federal surface transportation investment, the President’s FY 2016
budget for the first time includes a specific plan to generate the
resources necessary to pay
for his highway, transit, and
passenger rail spending
proposal. The Adminis-
tration’s plan to allocate $238
billion generated over six
years by requiring U.S.-
based multinational
companies to “repatriate”—
or declare as U.S. revenue—
profits earned overseas has
generated mixed responses on Capitol Hill, but no one disputes
that this mechanism would generate real revenue.
The complications with this proposal is primarily based on the
need for a broad re-write of the U.S. tax code—a major lift in any
environment—to make the repatriation construct work.
Furthermore, many on the congressional tax committees and in the
business community want revenue generated from corporate tax
reform to be used to lower corporate tax rates. Regardless of the
prospects of using repatriation revenues to support transportation
investment, the fact that the President and his team has forwarded
a HTF solution is further evidence of the different environment in
2015 than in years past.
It should also be noted that forces outside of Capitol Hill have
highlighted the nation’s infrastructure challenges and the need for
congressional action. The CBS news program “60 Minutes” ran a
lengthy segment in late November about the deterioration in the
nation’s highways, bridges and other infrastructure facilities. Since
January, editorials in the “Washington Post,” “USA Today,” “New
York Times” and other major publications have endorsed a gas tax
increase to generate the resources needed to begin improving the
country’s roads, bridges and public transportation facilities.
According to Sir Isaac Newton’s Third Law of Motion, for every
action there is an equal and opposite reaction, While Newton
focused on physics, his insight also applies to politics. The long-
time opponents of federal highway and transit investment have
definitely noticed the momentum towards a solution for the HTF
over the last two months and have accelerated their activities to
derail this progress.
Professional conservative groups, such as Heritage Action and
The Club for Growth, were part of a letter signed by 50 self-titled
taxpayer advocates and free market organizations that wrote to
Congress in February opposing a gas tax increase and brandishing
unsupported claims of wasteful federal highway spending. The
“Wall Street Journal” also recently wrote a lengthy editorial calling
for abolishing the federal gas tax and forcing states to handle
highway and bridge needs on their own. The Journal is also allowing
other conservative pundits to run op-eds decrying a gas tax increase
and further criticizing the value of federal highway investment.
Continued on Page 25
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Continuing A Proud Tradition
Featured Article
DW SMITH ASSOCIATESCELEBRATES 50 YEARS IN BUSINESS
There are few privately owned professional consulting firms
that were established in New Jersey in the 1960’s which are still in
business. Many firms that got their start in those years are now
publicly owned or no longer active today. DW Smith Associates is
a firm that is celebrating 50 years in business and has remained
privately owned over the years.
DW Smith Associates, LLC has experienced unique success and
development since it was first established in July 1965 by Donald
W. Smith. The commitment to innovative, environmentally-sensitive
and cost effective designs established in 1965 has remained the
core philosophy of the firm today.
In the early years, the firm provided various professional services
throughout Ocean County, including work on various sites for
Leisure Technology Corporation and K. Hovnanian Enterprises.
The firm continued to play a major role in providing consulting
services for the development of a multitude of adult communities
throughout Central New Jersey. The decades of the 80’s and 90’s
found the firm continuing to prosper in the private sector, while
expanding its services in the public sector throughout New Jersey.
Some of the firm’s new efforts included municipal work, parks and
the development of some unique recreational communities that
required the firm to meet several environmental challenges.
Approximately 15 years ago, Jennifer Nevins became an owner at
DW Smith Associates, LLC. She joined the firm in 1988 and currently
serves as President of the company. Ms. Nevins has contributed to
the success of the firm over the past 27 years and currently oversees
the firm’s business operations with a focus on quality assurance
and control, strategic planning and project management, specializing
in Community Association and Utility services. She has received a
number of recognitions for her hard work and dedication as a woman
Pictured together are company founder Donald W. Smith and cur-
rent President Jennifer Nevins.
Pictured left to right are the firm’s owners; Thomas Murphy, Timo-
thy Lurie and Jennifer Nevins.
Utility and Transportation Contractor, APRIL 2015 4 9
business owner, including being named Enterprising Woman of the
Year by Enterprising Women Magazine and as one of the Top 25
Women in Business by NJ Monthly.
Joining Ms. Nevins in leadership roles are firm Principals Timothy
Lurie, PE, PP, CME and Thomas Murphy, PLS. Mr. Lurie has served
with the company since 1996, specializing in Civil Engineering,
Municipal Engineering and Planning with extensive experience in
Land Development, Landfill Design, ADA Analysis, Environmental
Permitting and CAFRA Design. He has been highly involved in the
restoration of Monmouth and Ocean counties following Superstorm
Sandy and continues to support efforts to repair and rebuild the
Jersey Shore.
Mr. Murphy joined the company in 1997, specializing in
Construction Surveys, GPS Surveys, NJDOT Highway Surveys,
Right-of Way, Bathymetric and Route Surveys with extensive
experience in Land Title Records Research, Survey Mapping and
CADD Calculations. He has also been instrumental in expanding
the firm’s survey department focus on infrastructure and utility
projects. Together the partners have assembled a talented workforce
to ensure project success for the firm’s clients.
Today, DW Smith Associates is a certified WBE/SBE/DBE
Professional Consulting firm that provides Construction
Management, Engineering, Planning, Surveying, Landscape
Architecture, Environmental Permitting, and Community
Association services. The firm offers comprehensive expertise and
quality services for projects of varying sizes and complexity.
As DW Smith Associates has progressed, the firm has seen
tremendous growth in recent years and has been able to significantly
expand its talent base. In addition, longtime Associates Kevin
Murphy, Syed Husain and John Harper continue to offer their
extensive professional experience, along with recent addition Lynn
Voorhees, Director of the Community Association division. The
company had also benefited from the experience of its founder,
Donald W. Smith, for 49 years until his passing in late 2014.
The most recent 15 years have been especially active for DW
Smith Associates under the new management team. Activities have
continued in both the private and public sectors throughout New
Jersey as well as in New York and Pennsylvania. Some of these
projects include planned community development, waterfront
development, affordable housing, recreational facilities, professional
sports complexes, roadway and right-of-way work, utility and
natural gas transmission lines, airport development and dam and
bridge work.
Some current and recently completed projects include the
Lakewood Blue Claws Stadium, Hoffman’s Marina in Brielle, Four
Seasons at South Knolls Adult Community in Jackson Township,
Hickory Farms Community in Berkeley Township and Manahasset
Creek Park in Long Branch, a project for which the company received
a Distinguished Engineering Award from NJ Alliance for Action in
2013.
DW Smith Associates is currently providing land surveying
services to Ocean County as part of the Route 526 roadway
improvement project. The firm is also providing route, construction
and as-built survey services for natural gas pipeline infrastructure
in New Jersey, New York and Pennsylvania. Current efforts also
include providing construction stakeout survey services to The
EPH Group for a planned 251 single family home development in
Howell.
In addition, construction layout services were recently completed
for Caruso Excavating as part of the Asbury Park Waterfront
Redevelopment project and for Earle Asphalt Company as part of
the New Jersey Turnpike Authority’s Garden State Parkway
Interchange 88 Improvement project.
What we have witnessed at DW Smith Associates in recent
years is a resurgence of top flight, professional consulting services
through the management and leadership team of the company. This
explains the numerous accolades bestowed upon the firm, including
its recent recognition as one of the Top 100 Diversity Owned
Businesses in NJ and one of the Fastest Growing Privately Held
Companies in America. The DW Smith team is excited to be
celebrating the company’s 50 year anniversary and continuing the
proud traditions of the firm.
Working for Caruso Excavating, DW Smith provided construction
layout services for the Asbury Park Waterfront Redevelopment
project.
The firm provides construction stakeout survey services in prepa-
ration for a development in Howell.
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Legal Dig
CALCULATING YOUR AGGREGATE
WITH A NEW TWISTBy: Paul T. Fader, Association Legal Counsel
Recently, in Dobco Inc. v. Brockwell & Carrington Contractors,
Inc., (hereinafter “Dobco II”) a New Jersey trial court considered a
case of first impression regarding whether a low bid on another
contract, which has not yet been the subject of a contract award,
must be disclosed at the time of bidding a contract subject to a
DPMC “aggregate rating” limitation. The DPMC aggregate rating
establishes a dollar cap on the volume of work that a contractor
may become obligated to perform. The contractor’s available
bidding capacity is calculated by deducting the value of its
uncompleted work, as certified in its Form DPMC 701, from its gross
aggregate rating. Evidence of completed work consists of an owner-
approved invoice or “other similar documentation”. N.J.A.C. 17:19-
2.13(c).
In a prior Dobco case, i.e., Brockwell & Carrington Inc. v. Kearny
Board of Education 420 N.J. Super. 273 (App. Div. 2011) (hereinafter
“Dobco I”), the court held that an aggregate rating bidding
requirement extended to both the bidder and the bidder’s bid-listed
subcontractors. In Seacoast Builders Corp. v. Jackson Twp., Board
of Educ. 363 N.J. Super. 373 (App. Div. 2003), the court ruled the
contractor must have the needed bidding capacity both at bid time
and at the time of contract award.
In the instant case, Dobco II, Dobco challenged the
responsiveness of two low bidders, who had bid-listed the same
electrical subcontractor (Sal Electric), arguing that Sal Electric’s
subcontract exceeded its bidding capacity because it was also the
electrical subcontractor of a low bidder (Torcon) on another
unrelated contract, which, if ultimately awarded, would diminish
Sal Electric’s bidding capacity to the degree that the instant
subcontract exceeded its capacity. The low bidder and Sal Electric
argued that Sal Electric’s anticipated Torcon subcontract did not
have to be disclosed at bid time because the Torcon contract had
not then been awarded. Theoretically, such contract might never
be awarded due to a successful bid protest or a possible rejection
of all bids, or the award may be delayed to the point that, when
actually awarded, it would not, due to an intervening diminution of
its work backlog, be a non-issue.
The trial court upheld Dobco’s bid challenge and Dobco, the
third low bidder, was awarded the contract. The court reasoned
that Sal Electric’s expected Torcon subcontract ought to have been
disclosed in its Form DPMC 701 certification and that its non-
disclosure precluded any post-bid evidence that its aggregate rating
would not be exceeded. In support of its decision the court observed
that non-disclosure would create havoc because public owners
would not be able to expeditiously determine bid capacity. Further,
in light of the Seacoast Builders case, Sal Electric had to have the
needed bidding capacity at time of bid and at the time of contract
award. The court concluded that if the Torcon contract was awarded
then the subcontractor’s bidding capacity under the instant
subcontract, would be exceeded.
The court also touched on, but did not decide, the issue of how
to determine completed work for purpose of a DPMC-aggregate-
rating analysis. The trial court, noted that, because a contractor
might submit an inflated or unsent invoice in order to increase its
bidding capacity, some indicia of owner approval of its invoice
should be required.
The takeaway from Dobco II is that bidders on contracts
governed by the DPMC rating ought to: (1) disclose in their DPMC
701 any low bid it has previously submitted, but as to which there
has been no contract award; and (2) ensure that no bid-listed
subcontractor has any such pending low bids that it has failed to
disclose in its DPMC 701 submitted with the bidder’s bid package.
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.
54 Utility and Transportation Contractor, APRIL 2015
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By: Nancy Damato, Partner, RDA Benefit Services
AFFORDABLE CARE ACT:Understanding The Employer
Reporting Requirements
The Employer Reporting provisions under the ACA (Patient
Protection and Affordable Care Act/Obamacare) requires
employers, insurers and carriers, and other reporting entities
to complete specific forms and report this information to the
IRS, in order to enforce the individual responsibility and
employer shared responsibility (“Pay or Play” provision), as
well as reconcile subsidies.
WHO HAS TO COMPLY WITH THIS REPORTING
REQUIREMENT?
These reporting requirements under Sections 6055 and 6056
apply to all Applicable Large Employers (ALEs), which is
any employer with 50 or more full-time equivalents. It is also
important to note that ALEs must report even if they are
insured in the small group market, are an uninsured group, or
even self-insured. Self-insured small employers (with fewer
than 50 employees) must also comply with the reporting
requirements of Section 6055.
WHAT INFORMATION MUST BE REPORTED ON
THESE FORMS?
Information to be tracked on a monthly basis for every month
in 2015 and reported to the IRS includes:
· Which months an employee and their dependents were
covered under your group’s health plan
· The cost of the employee’s share of the lowest monthly
self-only insurance coverage
Keep in mind that the information needed for this reporting
may come from several different sources, such as payroll,
HRIS, and time and attendance records.
So, it is very important to start collecting this data on a
regular basis now.
WHEN DOES THIS REPORTING NEED TO BE
DONE?
Employers must provide statements to each full-time
employee on or before January 31, 2016. Forms need to be
filed with the IRS on or before February 28, 2016. (If filing
electronically, then by March 31, 2016.) You should also be
aware that there will be penalties for failure to file the forms
with the IRS or provide statements to employees.
Don’t delay! Make preparations now to collect all the
data needed for this important ACA requirement. To answer
detailed questions, please visit: http://www.irs.gov/Affordable-
Care-Act/Employers/Questions-and-Answers-on-Employer-
Shared-Responsibility-Provisions-Under-the-Affordable-
Care-Act.
For more information, please feel free to contact Nancy
Damato, RDA Benefit Services, LLC at 609-693-0772 or
The information in this article is intended as an overview and is
for informational purposes only.
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Labor Relations
NEW JERSEY’S “BAN THE BOX” LAW TAKES EFFECT:
WHAT EVERY CONTRACTOR SHOULD KNOW
By: Jill Tobia, Esq., Tobia & Sorger
On March 1, 2015, the “Opportunity to Compete Act”, which
was signed by New Jersey Governor Chris Christie this past
August, took effect. This Act, which is often referred to as the
“Ban the Box” law, prohibits a covered employer from asking a
job applicant about his or her criminal background during the
initial hiring process, including on a job application form as
well as in an interview. However, the Act still permits employers
to conduct background checks and to use the information
contained therein as part of an employer’s ultimate hiring
decision after the initial application process.
Since criminal background checks have become an almost
standard part of the hiring process, the Act impacts the majority
of employers in New Jersey. Furthermore, while certain
positions are exempt, the majority of job positions maintained
by UTCA Contractors fall under the Act. Therefore, as this
law is now in effect, and there are fines and penalties imposed
for violations, UTCA Contractors should familiarize themselves
with the requirements of the “Ban the Box” law and adjust their
hiring processes accordingly.
Overview of New Jersey’s “Ban the Box” Law:
The New Jersey “Ban the Box” Law prohibits a covered
employer from inquiring about a job applicant’s criminal history
during the initial hiring phase of the application process. This
means that a covered employer may not have a question relating
to criminal history on a job application form nor may the
employer ask the applicant about his or her criminal background
during an interview. However, an employer still may conduct a
criminal background check prior to extending an offer of
employment to an applicant and may also use the information
revealed in such a background check to deny employment to
an individual.
The Act applies to all employers doing business in New Jersey
who employ fifteen (15) or more employees during a twenty
(20) calendar week period. The Act does contain an exemption
for job positions, such as law enforcement and judiciary, which
by law may not be held by persons with criminal records.
Similarly, an employer may be exempt if its business activities
would be compromised by law or regulation if it employed
persons with criminal backgrounds. The Act will be enforced
administratively with civil penalties of $1,000 for a first violation,
$5,000 for a second violation, and $10,000 for any subsequent
violations.
Advice for UTCA Contractors:
Given that the law just went into effect on March 1, 2015,
there are many unknowns surrounding both practice and
enforcement. The fact that there is a line drawn between the
initial hiring phase, during which inquiries regarding criminal
history are prohibited, and the final employment decision, where
criminal background information can be considered, creates a
lot of uncertainty regarding the use of said information.
Accordingly, all UTCA Contractors should review their hiring
procedures and develop an application process that balances,
consistent with the Act, an applicant’s right to have access to a
position regardless of his or her criminal history and an
employer’s right to consider an applicant’s criminal history
before making a final employment decision.
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CAPTIVE INSURANCE:
A VIABLE STRATEGY TO REDUCE COSTSBy: Michael Mazur; Mazur, Krieghbaum & Higgins CPA’s
Accounting Corner
The high cost of insurance is an issue for most companies. New
Jersey business owners rank health insurance as their number one
cost concern according to the New Jersey Business and Industry
Association 2015 Business Outlook Survey. Other concerns include
the cost of workers compensation insurance, wages and labor, taxes
and frivolous lawsuits – all of which contribute to increased
insurance premiums.
Nationwide, executives in the construction industry echo the
concerns of New Jersey business owners. The Wells Fargo 2015
Construction Industry Forecast revealed that contractors are also
concerned about the cost of wages and labor, equipment, healthcare
benefits, insurance and taxes.
A strategy used by 90 percent of the Fortune 500 companies to
help control the cost of insurance is to form a captive insurance
company (captive). This is an insurer wholly owned by a parent
company which provides insurance to its parent and related
companies. Captives are generally used to augment existing
commercial policies and provide insurance for risks not covered by
traditional insurance.
Captives can cover everything from general and umbrella liability
to workers compensation, regulatory changes and legal defense.
Some companies are beginning to use captives to fund employee
benefit programs like life and disability insurance, retirement and
healthcare benefits. Other types of insurance captives offer include:
employment practice liability, contractor liability, director/officer/
employee liability, contractual liability, property damage and
business interruption, fiduciary liability, equipment, and protection
against pollution, mold and other environmental claims.
Generally, any type of definable and measureable risk can be
covered by a captive as long as the state or country in which it is
domiciled (i.e. incorporated, licensed, managed and operated) allow
the line of business to be underwritten. Contractors can custom
tailor insurance policies to cover their specific needs.
Captives can also be used to decrease the cost of commercial
policies. Contractors can elect to reduce premiums by increasing
deductibles and then have the deductible paid through the captive.
In the past, captives only made sense for companies with at least
$100,000 in insurance premiums and more than $10 million in revenue.
Today, it is possible for smaller contractors to form their own captive
due to declining capital requirements and operating costs. Ideal
candidates are businesses with: $500,000 or more in profits, multiple
entities, risk currently uninsured or underinsured, and interest in
protecting its assets while possibly minimizing its tax obligation. A
properly structured captive offers both added insurance coverage
and numerous tax planning opportunities, including but not limited
to:
* Tax deductions on insurance premiums paid to the captive
* Lower income taxes
* Possible tax saving on shareholder dividends
* Further opportunities for estate and gift planning
Smaller captives may qualify to be exempt from federal income
tax on operating income. Under U.S. Internal Revenue Code section
831(b), a captive with a gross premium income of $1.2 million or less
that makes an election under that section is not taxed on premium
Utility and Transportation Contractor, APRIL 2015 6 7
About The Author: Michael A. Mazur, CPA, CFF, PSA specializes in
working with contractors. Contact Mike at (732) 341-3893 or
[email protected] to answer your questions on captives.
income but is taxed on investment income. In other words, when
set up in line with IRS guidelines, a captive can receive up to $1.2
million in premiums tax free from its parent company. The parent or
affiliate company can then take a deduction for the amounts paid to
the captive as a legitimate business expense.
The captive can make a profit if claims are less than the premium
paid by the company. A portion of the profits can then be reinvested
to avoid ordinary income taxation. Or, the funds could be disbursed
to the company’s shareholders as a qualified dividend which would
be taxed at a lower rate. Even so, there is always the risk that claims
against the company could be higher resulting in a loss. Therefore,
it is important to consider what risks to insure under the captive
instead of a commercial policy.
Many contractors join a group captive where a number of
businesses come together to form their own insurance company or
an association captive which is established by a trade group for the
benefit of its members. Participating in a group or association captive
allows its members to share, in some degree, the collective risks, as
well as the benefits such as potential investment earnings and
profits from premiums paid in excess of claims. Since group members
make a commitment to minimize risks, participation also serves as a
risk management tool.
As with any business strategy a contractor should consult with
legal counsel, as well as accounting, insurance and other
professionals before establishing a captive. Contractors need to be
fully aware of compliance and funding requirements, as well as IRS
regulations. It is important to carefully consider all of the costs,
risks and benefits to ensure that a captive is right for your company.
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70 Utility and Transportation Contractor, APRIL 2015