July 2015 co web

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

JULY, 2015

Route 1A Sewer Extension Plainville, MA

• OSHA Issues New Construction Confined Space Standards That Take Effect 8/3/15 • Governor Baker Certifies Plan to Address Cape Cod Water Quality Issues • Massachusetts Extends OSHA Protections to State Workers

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IN THIS ISSUE

OFFICERS President TONY BORRELLI Celco Construction Corp.

President Elect JOHN OUR Robert B. Our Co., Inc. Treasurer PAUL SCENNA Albanese D&S, Inc. Secretary RICHARD PACELLA, JR. R. M. Pacella Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. VINCENT BARLETTA Barletta Heavy Division NICK BIELLO J. D’Amico, Inc. KEVIN COLE J. F. White Contracting Co. STEPHEN J. CONNOLLY ATS Equipment, Inc. MAUREEN DAGLE Dagle Electrical Const., Corp.

THOMAS DESCOTEAUX R. H. White Const. Co., Inc. ALEX DUNN Travelers GREG FEENEY Feeney Bros. Excavation, LLC JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. PHIL JASSET Honorary Board Member AL MORTEO FED. CORP. JOSEPH PACELLA RJV Construction Corp.

BRIAN RAWSTON Jay Cashman, Inc. KENNETH STEVENS A. H. Harris Construction Supplies PAUL A. UMBRO Umbro & Sons Construction Corp.

CHRIS VALENTI GVC Construction, Inc. DAVID ZOPPO R. Zoppo Corp.

ANNE KLAYMAN Executive Director

3 President’s Message:

It’s Summertime and Clean Water is Vital

5 Legislative Update:

• Baker-Polito Administration Releases Five Year Capital Investment Plan; Direct Funding For Water Infrastructure Not Prominent • Baker-Polito Administration Awards More than $210,000 in Grants to Assist Local Water Quality Management Efforts • Fifteen Communities Receive Almost $400,000 for Water Infrastructure Assessment and Planning Needs • Items of Additional Note

15 Legal Corner:

OSHA Issues New Construction Confined Space Standards That Take Effect August 3, 2015

19 In Memoriam:

Richard McCourt, McCourt Construction Co.

21 Spotlight on Cape Cod:

Governor Baker Certifies Plan to Address Cape Cod Water Quality Issues

24 Contractor Member of the Month: R. M. Pacella, Inc.

31 MWRA Annual Water Quality Report Test Results Confirm Water Quality is Excellent 43 Save the Date...UCANE’s 61st Gala Banquet 45 Massachusetts Extends OSHA Protections to State Workers 51 OSHA Confined Spaces in Construction: Pits 55 Safety Corner:

Mounting and Dismounting Equipment

57 Financial Management:

• The Math of Buy and Hold • Passive Activity Losses From Rental Property • Succession Planning for a Family Business

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

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

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It’s Summertime and Clean Water Is Vital It’s a known fact that a reliable infrastructure system is key to our region’s economic stability, and that summer is the time of year when that system is probably relied on the most. Not only do our residents expect to turn on their kitchen faucets and fill a glass with clean drinkable water, or to be able to enjoy a refreshing shower, they also expect to fill their pools, water their lawns, and enjoy our beaches, lakes, and streams.

I

n addition, tourists flock to our State…traveling to historical sites in Boston and surrounding towns, to the Cape Cod seashore, and to the Berkshires…filling hotels, motels, rental properties, and buying local goods and services.

The economic impact on our State is huge. Our tourists also have the same expectations as our residents—clean drinking water, access to our State’s natural water resources free of pollution, and no “NO SWIMMING” warning signs. This is absolutely essential because Massachusetts’ reputation as a tourist attraction is at stake.

It’s safe to say that in the summer municipal water and sewer systems are operating at capacity, and it is not an overstatement to say that a reliable underground infrastructure system is an important factor to ensuring our state’s economic vitality during the summer months. We need to be certain that our clean water and drinking water systems remain first rate and do not deteriorate over time. However, there are problems in areas of Massachusetts that are just beginning to be addressed.

Cape Cod communities, in particular, have been slow to invest in their water and sewer infrastructure. Even with incentives through the State Revolving Loan Fund Program (SRF), progress has been slow. However, things are changing. In June of this year, Governor Baker approved the “208 Plan” which will require all 15 communities on Cape Cod to develop individual or regional comprehensive water quality management plans within the next year. These plans will be sent to the EPA for approval no later than September 2015.

(See article on page 21.)

While it is encouraging that the Cape will begin to aggressively address their water issues, there is still a question as to what type of projects will be developed. Faulty septic systems have led to widespread nitrogen pollution. While the Cape represents only 4% of our State’s population, it has 20% of the state’s septic systems. Since it may not be feasible to traditionally sewer the entire Cape, towns have looked into alternative technologies as a limited solution to achieve nitrogen abatement. The jury is still out on some of these alterna-

JULY, 2015

tive methods. As part of the 208 Plan, Governor Baker and Barnstable County have each appropriated $250,000 a year for four years to monitor water quality on the Cape to ensure that trial solutions are working. For several years, UCANE has been advocating with State and local Cape Cod officials to approve projects with reliable and proven technologies and will continue to do so. UCANE maintains that sewering and treatment facilities are still the most reliable and cost effective methods for most areas of the Cape.

We again thank the Governor and the legislature for recognizing the importance of our water infrastructure and maintaining level funding while dealing with a large budget deficit.

However, there are still serious issues that will need their attention. Action is imperative on Chapter 259 committees and funding, and closure of the $21 billion water and sewer project needs gap. UCANE’s challenge will be to continue to build on the increased awareness of the importance of water infrastructure and to translate that into an increase in underground water and sewer infrastructure investment in the coming year.

On July 1, our members were also challenged with implementing the new Earned Sick Leave Law that was passed by the voters in last November’s election. Attorney General Maura Healey released the final regulations for the new law in late June. We have worked closely with other construction industry Associations to try and get the AG to clarify these regulations, but there will still inevitably be a lot of confusion around this broad law. I hope you have taken the time to review the information forwarded from the UCANE office and had the opportunity to attend the recent seminars presented

by Attorneys Richard Wayne and Brendan Lowd from Hinckley Allen, LLP. No matter the size of your company, this law is going to have an impact on you. UCANE will continue to forward any updated information to our membership as it becomes available.

And last, but not least, I want to wish you and your families a safe, happy, and prosperous summer…after this winter, we deserve it! n

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Baker-Polito Administration Releases Five Year Capital Investment Plan; Direct Funding For Water Infrastructure Not Prominent

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owards the end of June, the Baker-Polito Administration released its FY16 capital budget, including a $2.125 billion bond cap on General Obligation Bonds, the same level as FY15. The accompanying spending plan invests in communities by budgeting for Chapter 90 transportation funding, extends the Accelerated Bridge Program, makes investments in economic development, and devotes significant funds toward fixing and maintaining state assets. According to the Administration’s fiscal message within the plan, “the collaborative plan addresses the needs of communities and public sector agencies across state government and invests the taxpayers’ money prudently across several essential areas while responsibly managing the Commonwealth’s debt.”

Of particular interest to UCANE members, the plan does not directly address the $21 billion funding gap as identified in 2012 by the Massachusetts Water Infrastructure Finance Commission. While water infrastructure needs will be addressed as ancillary components of certain identified projects, the plan identified no significant direct funding for water infrastructure projects per se. (Note: $1 million is spe-

cifically referenced for water infrastructure technical assistance for municipalities.) While appreciative of the fiscal management of the proposal and existing project commitments made by the previous Administration, UCANE will continue to advocate for a greater commitment to water infrastructure projects directly.

Among the highlights of the five year capital investment are: • $500M+ for roads and bridges, highways, and local roadwork statewide • $405.9M for Accelerated Bridge Program – structurally deficient and/or obsolete bridges • $251M for the MBTA Green Line extension • $117.6M for DCAMM maintenance of state assets • $75M for MassWorks Infrastructure Grant Awards As noted within the capital plan, the statutory debt limit constrains growth of direct debt to 5% per year. In FY15, the direct debt limit was $19.8 billion, resulting in an increase to $20.7 billion in FY16. To review the Administration’s five year plan, please visit: www.mass.gov/bb/cap/fy2016/rec/hdefault.htm continued on page 7

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Legislative Update continued from page 5

Baker-Polito Administration Awards More than $210,000 in Grants to Assist Local Water Quality Management Efforts

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he Baker-Polito Administration recently announced the awarding of $210,860 in grants to five projects across the Commonwealth to conduct watershed pollution assessment and planning work to address water quality impairments in local water bodies. According to a press release from the Governor’s Office, this year's projects, selected annually by the Massachusetts Department of Environmental Protection (MassDEP), are located in Berkshire County, Nantucket, Southampton/Easthampton, Sturbridge, and Watertown. The grants are funded by the U.S. Environmental Protection Agency (EPA) through Section 604b of the federal Clean Water Act. Since January of 2007, MassDEP has funded 53 projects under the 604b Water Quality Management Program for more than $2.5 million. Overall, since 2007, MassDEP has issued 132 grants under both the 604b and Section 319 programs, totaling more

than $16 million, to address non-point source pollution problems. The term "non-point source pollution" refers to contaminants that are carried to a waterway as a result of precipitation and stormwater runoff from the land or infiltration into the soil. Common types of non-point source pollution include phosphorus and nitrogen from lawn and garden fertilizers, bacteria from pet waste and waterfowl, oil and grease from parking lots and roadways, and sediment from construction activities and soil erosion.

The selected projects include: Berkshire Regional NPDES Phase II - $50,000 Hoosic and Housatonic Rivers/Berkshire Regional Planning Commission The Berkshire Regional Planning Commission (BRPC) will work with the Towns of Adams, Cheshire, continued on page 9

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Legislative Update continued from page 7 Dalton, and Lanesborough and the City of Pittsfield to form a National Pollution Discharge Elimination System (NPDES) Regional Working Group to develop a plan to address the cost of stormwater management and Municipal Separate Storm Sewer System (MS4) compliance.

Phosphorus Sources for Hummock and Miacomet Ponds, Nantucket - $26,850 Cape Cod Islands/Town of Nantucket This project will sample groundwater entering the lake and test certain sediments to determine the potential for those sources to supply enough phosphorus to support observed blooms.

Manhan River Water Quality Monitoring & Bacteria Source Tracking - $50,000 Connecticut River/Pioneer Valley Planning Commission Due to increased public access to the Manhan River, this project aims to identify the major sources of E. coli impairment in the Manhan River, including nonpoint sources and potential remaining illicit connections through water quality monitoring and bacterial source tracking.

Sturbridge Stormwater Pollution Reduction Project - $42,900 Quinebaug River/Central Massachusetts Regional Planning Commission Green Infrastructure (GI) and Low-Impact Development (LID) techniques reduce stormwater runoff from residential and commercial development and mimic natural site hydrology by storing, infiltrating and recharging stormwater on site. This project will assist the town in the development of a LID Bylaw for passage at the Sturbridge Town Meeting.

Watertown Green Infrastructure Planning and Education - $41,110 Charles River/Town of Watertown This project will inform stakeholders about effective green infrastructure approaches in general and to develop green infrastructure priorities for Watertown.

To find out more information about grants and financial assistance related to water quality and watersheds, please visit: http://www.mass.gov/eea/agencies/massdep/water/grants/ continued on page 11

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Legislative Update continued from page 9

Fifteen Communities Receive Almost $400,000 for Water Infrastructure Assessment and Planning Needs

I

n a further effort to assist municipalities address their water infrastructure needs, the Baker-Polito Administration also announced that nearly $400,000 in grants have been awarded to 15 communities to help plan for infrastructure improvements to local drinking water, wastewater, and storm water systems. This new grant program, implemented by the MassDEP, will fund planning and technical assistance grants to assist public entities in developing water system asset management plans, comprehensive wastewater management plans, and green infrastructure plans, along with other technical assistance projects.

MassDEP will award up to $30,000 for drinking water, wastewater, or storm water planning projects that allow a public utility system to outline long-term capital investments for existing infrastructure and plan for the installation of green infrastructure, such as energy-efficient equipment, solar panels, and wind turbines. The preparation of these asset management plans will help the grant recipients to meet state and federal Clean Water Act requirements, as well as to enhance aging public utility systems. Once completed, the asset management plans will help communities target future funding needs under the Clean Water and Drinking Water programs within the State Revolving Loan Fund.

The following communities have been selected for funding: • Avon: Storm water system planning - $10,000 • Ayer: Wastewater asset management plan $30,000

• Belmont: Sewer system asset management plan - $26,100 • Canton: Drinking water system asset management plan - $22,500 • Eastham: Comprehensive wastewater planning for water quality - $30,000 • Fall River: Drinking water, storm water, and wastewater asset management plan - $30,000 • Grafton: Wastewater asset management plan $30,000 • Lunenburg: Sewer system asset management plan - $30,000 • Medway: Storm water system plan - $30,000 • Monson: Drinking water system asset management plan - $25,200 • Newburyport: Wastewater technical assistance $29,850 • Shelburne Falls Fire District: Drinking water asset management plan - $30,000 • Upper Blackstone Water Pollution Abatement District (Worcester, Auburn, Holden, Rutland, Millbury, West Boylston, and Cherry Valley Sewer District): Asset management planning for wastewater facility - $30,000 • Uxbridge: Wastewater asset management plan $16,204 • Westford: Storm water asset management plan $30,000 continued on page 13

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Legislative Update continued from page 11

Items of Additional Note

• State Senator Thomas Kennedy, a Brockton Democrat and legislator for more than three decades, passed away in late June. Kennedy joined the House in 1983 and won election to the Senate in 2008 where he most recently served as co-chair of committees on Election Laws and Consumer Protection and Professional Licensure. A dedicated public servant, he was a strong voice for seniors and the disability community as well as an ardent champion for the City of Brockton.

• MassTaxConnect is the new tax system being developed for the Massachusetts Department of Revenue, in partnership with Fast Enterprises. MassTaxConnect is the portal that taxpayers will use to access the new system. Currently MassTaxConnect is available for the following tax types: Alcoholic Beverages Excise, Ferry Embarkation Fee, IFTA, and Non-Resident Motor Vehicle Excise. By the end of 2015, most corporate and business tax types will be added, giving access to thousands more taxpayers. To learn more about this transition, please visit: www.mass.gov/dor/e-services/welcome-to-masstaxconnect.html • On June 30, the U.S. Department of Labor (DOL) proposed regulations designed to make overtime pay available to an additional 5 million workers who are currently classified as exempt “white collar” employees. The proposal calls for an increase in the current

minimum salary threshold for white collar status from $455 per week ($23,660 annually) to $970 per week ($50,440 annually), with automatic threshold increases thereafter. In calling for public comment on the proposal, the DOL also asked for comment on whether the duties test for white collar status were working as intended. This suggests a modification of the duties test could be inserted before the regulation is finalized and implemented. Publication of the proposal in the Federal Register triggers a 60-day comment period. For more information about this matter, please visit: www. dol.gov/whd/overtime/NPRM2015/OT-NPRM.pdf • According to the Massachusetts Department of Industrial Accidents (DIA), employers will pay about $600,000 less this year in workers' compensation assessments to the state after the Baker-Polito Administration announced its plan to slightly lower the rate for FY16. Businesses will pay a 5.75% assessment, down from 5.8%, on their total insurance premiums for workers' compensation policies that are required under state law. The assessments are used to fund the Department of Industrial Accidents, which also sets the annual assessment rate. Assessments generated $68 million for the state in fiscal 2015, and DIA expects to collect roughly $600,000 less in fiscal 2016 under the reduced rate budgeting for $67.4 million in collections. n

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Jason P. Rogers Construction & Public Contracts Group, Hinckley Allen, LLP

OSHA Issues New Construction Confined Space Standards That Take Effect August 3, 2015 On May 1, 2015, the Occupational Safety and Health Administration (OSHA) announced the issuance of its new Confined Spaces in Construction standards (“New Confined Spaces Standards”). See 80 Fed. Reg. 25366 (May 4, 2015). OSHA will include the new subpart to 29 CFR Part 1926, providing added protections to employees performing work in confined spaces (i.e., sewers, manholes, HVAC ducts, boilers, crawl spaces, tanks, and pits), which will become effective on August 3, 2015.

T

he New Confined Spaces Standards creates new responsibilities primarily for three identified parties: the “host employer”, the owner of the site containing the confined space; the “controlling contractor”, who has primary control over the construction project; and the entry employer, whose employees will enter the confined space. Under the New Confined Spaces Standards, the “host employer”, such as the property owner or manager, the “controlling contractors” (i.e., the general contractors) and the entry employers (i.e., subcontractors) will be subject to a “comprehensive standard that includes a permit program designed to protect employees from exposure to many hazards associated with work in confined spaces, including atmospheric and physical hazards.”

While similar to the General Industry confined spaces standards, the New Confined Spaces Standards differ by additionally requiring, among other things, that: (i) a competent person evaluate the work site and identify confined spaces, including permit spaces; (ii) employers continuously monitor confined space atmospheres, whenever possible, by employing lookouts or equipment to monitor, for example, engulfment hazards like flash flooding when workers are performing work in storm sewers; (iii) workers are trained on the location and hazards of permit-required confined spaces; (iv) a written confined space pro-

JULY, 2015

gram is maintained if workers will enter permit-required confined spaces; (v) ensure that unauthorized workers do not enter permit-required confined spaces; and, if there are multiple trades working in the same confined spaces, (vi) employers must coordinate their activities with the other employers in “more detailed provisions” to avoid the introduction of hazards into a confined space by workers performing tasks outside the space.

The New Confined Spaces Standards requires the “host employer” and the “controlling contractor” to exchange specific information and, in turn, the “host employer” must share the information with the “entry employer.” Therein, the “controlling contractor”, rather than the “host employer”, will be the primary point continued on page 17

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Legal Corner continued from page 15 of contact for information about the permitted confined spaces at the worksite, while the host employer must provide the information it has to the “controlling contractor” who in turn passes the information to the “entry employer”.

In addition, the “controlling contractor” is charged with ensuring that employers outside of the confined space do not create hazards in the confined space.

For example, the “controlling employer” must now inform the “entry employer” if its employees will be running a generator near the entrance of a confined space, the exhaust from which could result in increased levels of carbon monoxide.

Contractors and subcontractors should immediately review the expansive New Confined Spaces Standards issued by OSHA to meet compliance by the effective date, August 3, 2015, and avoid potential OSHA citations.

Additional information may be found on OSHA’s “Confined Spaces in Construction website (https: //www.osha. gov/SLTC/confinedspaces/). n

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I n M emoriam R ichard McCourt McCourt Construction Co.

W

e are deeply saddened to announce that in the early morning of July 6, our beloved member and friend Richard McCourt passed away at the

age of 68.

Rich is survived by his loving wife of over 44 years, Virginia (Ginger), and his three sons, Ryan, his wife Charity, Matthew, his wife Ali, and Trevor all of Boston, and four grandchildren, Shafer, Cameron, Whit, and Kylie, his mother Katherine McCourt and six siblings.

Richie worked at his family’s business, McCourt Construction Company for over 47 years, the final 35 of which he was President and CEO. During his tenure, the company grew to be one of the states largest general contractors.

Under his leadership, McCourt built such landmarks as the Rose Kennedy Greenway’s North End Park, Granite Links Golf Club, The 1-93 Central Artery Tunnel, Lechmere Canal Park, Dorchester Heights Monument, Logan Airport’s newest runway, and the cable TV infrastructure for several cities including Boston, Brookline, Sacramento, and Palo Alto.

He worked tirelessly to not only grow the company, but to advocate for infrastructure improvements in Massachusetts.

He was CIM Chairman of the Board in 1986 and was named UCANE’s Contractor of the Year in 2011. Richie was also a catalyst for peaceful labor-management relations as Treasurer of the CIM – Labor Relations Division and trustee of the Laborer’s Health and Welfare Fund. He received a Bachelor’s Degree in Finance from Boston College ’68 and a Master’s Degree in Business Administration from Babson College ’74.

In addition to his dedication to Construction, he spent a great deal of time working to improve his community – he was a strong supporter of the McCourt Foundation and

JULY, 2015

Boston College in addition to supporting the South Boston Neighborhood House, Grampy’s Charities, and the American Diabetes Association. In 1984, he was honored on the cover of the Boston Globe for teaming with Mayor Ray Flynn and Pat Walsh of Laborer’s Local 223 to clean up Roxbury. He endowed a college scholarship in his father’s name through UCANE and has endowed a scholarship in his family’s name at Boston College.

Richie’s true passions were his family and friends.

He loved his wife and children more than anything in the world. Despite his busy professional life, he managed to coach basketball and football teams for each of his three sons. His home was always welcome and open to family and friends and with his wife and sons, he traveled the world to Europe, Egypt, Asia, South Africa, South America, and the Caribbean. He was never short of a joke or an interesting piece of sports trivia. And while his children vehemently deny it, Richard was self-proclaimed to be undefeated in Backgammon during his entire life. Richard’s advice was sincere…his mentoring was true…and his love of sports was only surpassed by his love of life and love for his family and friends.

The Officers, Board of Directors, Members, and Staff of UCANE extend their deepest sympathies and condolences to the McCourt family. Richie’s years of experience and knowledge of our industry, coupled with his quiet demeanor brought him the unequalled respect of his peers. His long-term support and unwavering commitment to our Association’s goals set an example that will be difficult to equal. All who knew and loved Richie feel a deep personal sadness at his passing. n

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Governor Baker Certifies Plan to Address Cape Cod Water Quality Issues ‘208 Plan’ Brings Cape Cod Commission, Communities Together to Find Water Quality Solutions BOSTON – In support of a significant Cape Cod water quality initiative, Governor Charlie Baker has certified a plan, developed by the Cape Cod Commission (CCC), aimed at both addressing Cape Cod water quality issues, and restoring those waters to levels where they are able to meet state water quality standards.

I

n a letter to the U.S. Environmental Protection Agency (EPA), Governor Baker certified the Water Quality Management Plan for Cape Cod, also known as the “208 Plan” (named for a section of the federal Clean Water Act), and has submitted it to EPA for review and approval by September.

Once approved, the Plan will be implemented by the CCC and individual Cape Cod communities to address the problem of excessive amounts of nitrogen pollution, primarily from septic systems, discharged into the water bodies and estuaries on Cape Cod. The Plan will facilitate development of the most effective and affordable solutions to the problem, tailored to local needs.

“Nitrogen pollution in Cape waters affects not only the natural resources, but the economy and qualityof-life there too,” said Governor Charlie Baker. “The Plan is designed to empower Cape Cod citizens and officials to design and develop solutions that work for their communities – rather than having solutions imposed on them by outside parties or the federal government.”

With Commonwealth support, the CCC spent more than two years drafting the 208 Plan. The Plan was written after an extensive public participation process that included numerous public meetings across

JULY, 2015

the Cape and input from hundreds of residents, community officials and stakeholders.

The Plan examines the causes of water quality issues on Cape Cod and provides more options for communities to consider and new planning tools to use in making local decisions about potential solutions. It offers greater flexibility and discusses financing and funding options to help implement those solutions. Additionally, the Plan: • Encourages communities to share systems to reduce costs; • Provides analysis and planning tools, such as GIS mapping, to see if alternatives to large sewer systems and sewage treatment plants can work in a community; • Supports the potential use of enhanced septic technologies; and • Backs the use of natural solutions in areas near the water’s edge, such as wetlands, to help absorb nitrogen.

The Plan recommends continued support through loans and other forms of assistance from the State Revolving Fund’s Clean Water Trust. Every year, the Trust provides millions of dollars in low- or no-interest loans continued on page 23

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Cape Cod continued from page 21 to communities that seek to construct or upgrade wastewater treatment systems.

A key element of the 208 Plan will be the implementation of the Cape Cod Water Quality Monitoring Initiative, which will involve four years of extensive water testing at stations situated along Cape Cod Bay, Buzzards Bay and Nantucket Sound. This initiative will be funded by $250,000 per year allocated over four years by the Executive Office of Energy and Environmental Affairs and will be equally matched by funds appropriated by Barnstable County.

“This 208 Plan reflects a significant effort to address a serious environmental problem on the Cape,” said Energy and Environmental Affairs Secretary Matthew Beaton. “To help the Commission and communities begin this important work, we are committed to funding the water quality monitoring initiative to ensure that the community efforts can be measured and are effective.”

The Massachusetts Department of Environmental Protection (MassDEP) administers the statewide water quality management planning process, and MassDEP recently completed an extensive review of the 208 Plan, and found that it will help waterways meet state water quality standards. To support the

Plan, the Governor has directed MassDEP to develop a watershed-based permitting program to provide communities flexibility in their efforts to address water quality issues in their watersheds.

“MassDEP is committed to a Cape Cod watershed permit that will foster local flexibility, support adaptive management when deciding on a solution and choosing appropriate timelines for an undertaking of this size and complexity,” said MassDEP Commissioner Martin Suuberg, “and we will continue to work closely with the Commission, the communities, and all interested citizens to implement these solutions.”

“The 208 Plan is a true community effort that reinforces local control and decision-making in dealing with our greatest environmental challenge,” said Cape Cod Commission Executive Director Paul Niedzwiecki “and the regulatory reforms promoted by the Plan will significantly lower the cost of compliance.”

The 208 Plan must receive final approval by EPA Region 1 before its recommendations can be implemented by the Cape Cod Commission and Cape communities. n

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Richard, Sr. and Richard, Jr.

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Boston Common Stormwater Recharge System

In the construction industry, the Pacella name is synonymous with the water and sewer underground utility business in Massachusetts. From humble beginnings in the 1940s, the Pacella family became well known

by DPW directors across New England, many of whom were just starting to understand the critical need to modernize and expand their water and sewer infrastructure systems to meet a growing population. Long before the Clean Water Act of 1972 ushered in the water and sewer industry as we know it today, the Pacella family complemented their utility installation projects throughout New England by manufacturing their own reinforced concrete pipes.

Working closely with various government agencies, they realized that there were two major problems arising in their industry.

First, most water and sewer projects were locally funded and there was no single standard for performing the work or any one set of safety regulations. Second, when contractors had a contract dispute or payment issues, their concerns and voices were not being heard. Basically each municipality had its own contract specifications and payments could be retained for any reason without any recourse for the contractor. In 1954, members of the Pacella family and a handful of other like-minded area underground contractors founded the Utility Contractors’ Association of New England, which allowed them to speak with a unified voice and forge resolutions to issues arising during their day-to-day operations. continued on page 26

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R. M. Pacella, Inc. continued from page 25 The Pacella family continued to grow, and as new generations came along, many of them ventured off to begin their own businesses. Such was the case for Richard Michael Pacella, Sr. who started R. M. Pacella, Inc. in 1977. Like the Pacella family members before him, Richard was a hands-on owner, willing to do whatever it took to make his business successful. He started with a few employees and with his wife, Mary who ran the office for the next 30 plus years. Richard procured, managed, and ran each job, acted as the human resources director and public relations manager for his small firm…all-the-while operating equipment every day. Richard stated, “Getting the business started was not easy. There were many long days and short nights, but with Mary beside me all the way, we soon began to make some progress.”

From small jobs in the beginning to larger contracts today, R. M. Pacella, Inc. is known in both the public and private sector as a versatile and dependable contractor who gets the job done, and done right. Richard tackled any project that involved moving some dirt, snow, or installing and/or improving piping systems. Their initial small and varied projects gave R. M. Pacella a wide range of experience and capabilities that continues to set the company apart from others today.

As the business grew, Richard was able to secure experienced personnel at every level. His management team expanded to cover the variety of services that the company offered. This also allowed Richard to continue operating equipment while working closely with project owners in the field. As time went on, R. M. Pacella became the go-to contractor for many developers and construction managers who needed to get their site work packages done efficiently and professionally. The company also competed in the public sector with emphasis on water and sewer work.

In the mid 1990s Richard Pacella, Jr. (Rich) began working in the family business after school and during summer vacations. After completing his first two years of undergraduate studies, Rich joined his father and mother full time in the business, while pursuing his bachelor’s degree in Construction Management at Wentworth Institute of Technology nights and weekends. Rich brought in a new management perspective and another set of eyes eager to push the company even further. The company expanded its equipment fleet focusing on equipment with multi-uses as well as some specialized equipment that would allow multi-facet performance of some specialty tasks. The ability to perform more and more of this work increased the company’s efficiency and, as a result, private sector business increased. “We try to keep up with current technology when it comes to our equipment.” According to Rich, “Adaptability is our most important attribute; we look for versatility in all assets. Employing

26

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multi-disciplined personnel and equipment allows us the resourcefulness to efficiently tackle a variety of projects.”

On top of the core business, Rich also saw opportunities in specialty areas including wastewater, septic, sludge, and leachate pumping, heavy equipment transportation, and 24-hour emergency services. He further stated, “We pride ourselves on the ability to respond 24/7 to municipalities and private owners. Our resume of emergency service contracts has given us the experience to effectively organize emergency water, sewer, and drainage projects within days (sometimes hours) that generally warrant weeks of planning. It’s our team’s capability and creativity in emergency circumstances that has solidified R. M. Pacella, Inc.’s reputation.”

Stephen Locke, Distribution Superintendent for the Dedham-Westwood Water District, has high praise for R.M. Pacella’s performance on the District’s Annual On-

Call Emergency Repair Contract. “I have been the direct contact with R. M. Pacella and I could not be more pleased with both the service and the professionalism shown by the company. Both Richard, Sr. and Jr. have gone out of their way to accommodate us whether day or night. I highly endorse them for whatever your construction needs might be.”

Scott Souice, Manager for PCM/H. Carr and Sons said “I found the staff at R. M. Pacella to be unmatched in their knowledge of their work and attention to detail.

On a difficult building project with a constantly changing schedule, they were able to adapt to any situation, keep the site work moving, and made my job a lot easier. It’s a great company to work with.”

R. M. Pacella has been an active member of UCANE since their early years in business. Richard, Sr. served continued on page 29

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R. M. Pacella, Inc. continued from page 27 on the Board of Directors for several years and now his son Rich is giving his time to the industry, as well, recently moving from a Board position up to Secretary of the Association. “Being a member of UCANE helps us to keep up with all facets of our business. Whether it be information about the latest laws or regulations, or attending safety seminars, or being able to find out where SRF, state, and local funding is headed, UCANE keeps us current on the issues that affect our livelihood,” said Rich.

Transition of the business from first generation to the second generation is progressing smoothly, according to Richard, Sr. “I am very proud of my son’s grasp of the business and the accomplishments that he has made. He is a reflection of my long term commitment to honesty and reliability as the cornerstones of our company. I am able to step back a little after nearly 40 years of hard work in a tough business. Rich is making things happen these days and the company is in a good position. We have some great employees both in the field and in the office that have helped build this business, too. I’m still there to give some advice and to peek over my son’s shoulder, but I have to say I enjoy designating more time on Cape Cod and partaking in the antique truck and equipment shows.”

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UCANE is proud to count R. M. Pacella, Inc. as a longtime member of our Association and wish them continued growth and success in the future. n

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MWRA Annual Water Quality Report Test Results Confirm Water Quality is Excellent Throughout the month of June, the Massachusetts Water Resources Authority will be mailing its Annual Water Quality Report to every household in its service area.

For 2014, MWRA again met every federal and state drinking water standard. The hundreds of thousands of tests taken during the year confirm that the quality of MWRA’s water is excellent.

MWRA hopes the report will encourage residents to drink local tap water and highlights that MWRA water was chosen as the best tasting in the country in 2014 at an annual conference of water specialists.

“And it’s not just the taste of the water that’s good,” said MWRA’s executive director Fred Laskey. “We take hundreds of thousands of tests each year, and your water met every state and federal drinking water standard.”

This report contains very important information about your drinking water. Please translate it, or speak with someone who understands it.

JULY, 2015

Si usted desea obtener una

Im Bericht steht wichtige Information über die Qualität des Wassers Ihrer Gemeinschaft. Der Bericht soll übersetzt werden, oder sprechen Sie mit einem Freund, der ihn gut aversteht.

There are several reasons the water tastes so good, beginning with high-quality source water.

Next is the state-of-the-art treatment we provide - starting with ozone in 2005 and then adding UV light in 2014. After treatment, the water does not see the light of day until it reaches consumers’ faucets.

The report is distributed to over 850,000 homes in the MWRA service area as required under the federal Safe Drinking Water Act. Community-specific inserts also provide information about municipal water systems. The reports are being mailed through the end of June. Look for it in your mailbox.

This report and the reports from the Partially Supplied Communities and the Chicopee Valley Aqueduct Communities are available at www. continued on page 33 mwra.com.

Massachusetts Water Resources Authority and Your Local Water Department

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MWRA continued from page 31 Dear Customer, Clean, fresh water that tastes great – that’s what you expect when you fill your glass, and that’s what MWRA delivers right to your faucet. In fact, MWRA water was chosen as the best tasting in the country in 2014 at an annual conference of water specialists.

Dear Customer,

MWRA BOARD OF DIRECTORS

great – that’s what you expect whentakes you fill And it’s notClean, just fresh the water tastethat of tastes the water that’s good.

MWRA your glass, and that’s what MWRA delivers right to your faucet.

In fact, hundreds of thousands of tests each year, and your water met every state MWRA water was chosen as the best tasting in the country in 2014 at an and federal drinking water standard. System-wide, we remain below the MWRA BOARD OF annual conference of water specialists.

DIRECTORSLead Action Level. Please read the letter on page 39 4 for more information And it’s not just the taste of the water that’s good. MWRA takes your community’s local water system.

Matthew A.on Beaton,

Matthew A. Beaton, Chairman John J. Carroll, Vice-Chair Joseph C. Foti, Secretary

hundreds of thousands of tests each year, and your water met every state

Chairman

and federal drinking water standard.

System-wide, remain below the There are several reasons our water tastes so good, we beginning with John J. Carroll, Lead Action Level.

Please read the letter on page 4 for more information source water. Next is the state-of-the-art treatment we Austin F. BlackmonVice-Chair high-quality on your community’s local water system. provide starting with ozone in 2005 and then adding UV light in 2014.

Joseph C. Foti, Kevin L. Cotter Secretary There arewater severaldoes reasons tastesofsoday good, beginning with After treatment, the notour seewater the light until it reaches high-quality source water.

Next is the state-of-the-art treatment we your tap. MWRA is now finishing up construction of the last of its covered Paul E. Flanagan Austin F. Blackmon provide - starting with ozone in 2005 and then adding UV light in 2014.

Kevin L. Cotter water storage projects withthe thewater Spotdoes Pond inlight Stoneham slated for After treatment, notTank see the of day until it reaches Andrew M. completion later thisMWRA year. is now finishing up construction of the last of its covered your tap.

Pappastergion Paul E. Flanagan water storage projects with the Spot Pond Tank in Stoneham slated for

hope youcompletion take a few moments to read this report. We want you to later this year. have the same confidence we have in the water we deliver to over 2 John J. Walsh We hope you take a few moments to read this report. We want you to Henry F. Vitale million customers. Please contact us if you have any questions or have the same confidence we have in the water we deliver to over 2 John J. Walsh Jennifer L. Wolowicz comments about water quality any ofusMWRA’s programs. millionyour customers.

Please or contact if you have any questions or Henry F. Vitale

Andrew M. We Pappastergion

Jennifer L. Wolowicz

Sincerely,

comments about your water quality or any of MWRA’s programs.

Sincerely,

Frederick A. Laskey Frederick A. Laskey Executive Director Executive Director

continued on page 35 Quabbin Reservoir

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MWRA continued from page 33 small amounts of material into the reservoir. Minerals from soil and rock do not typically cause problems in the water. But, water can also transport contaminants from human and animal activity. These can include bacteria and viruses - some of which can cause illness. The test data in this report show that these contaminants are not a problem in your reservoirs' watersheds.

The Department of Environmental Protection (DEP) has prepared a Source Water Assessment Program report for the Quabbin and Wachusett Reservoirs. The DEP report commends DCR and MWRA on the existing source protection plans, and states that our “watershed protection programs are very successful and greatly reduce the actual risk of contamination.” MWRA follows the report recommendations to maintain the pristine watershed areas.

WHY YOUR WATER TASTES GREAT - HIGH QUALITY SOURCE WATER Your water comes from the Quabbin Reservoir, about 65 miles west of Boston, and the Wachusett Reservoir, about 35 miles west of Boston. These pristine reservoirs supply wholesale water to local water departments in 51 communities. The two reservoirs combined supplied about 200 million gallons a day of high quality water to consumers in 2014.

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

Rain and snow falling on the watersheds protected land around the reservoirs - turn into streams that flow to the reservoirs. This water comes in contact with soil, rock, plants, and other material as it follows its natural path to the reservoirs. While this process helps to clean the water, it can also dissolve and carry very

TESTING YOUR WATER - EVERY STEP OF THE WAY Test results show few contaminants are found in the reservoir water. The few that are found are in very small amounts, well below EPA's standards.

Turbidity (or cloudiness of the water) is one measure of overall water quality. All water must be below 5 NTU (Nephelometric Turbidity Units), and water can only be above 1 NTU if it does not interfere with effective disinfection. In 2014, turbidity was always below both the 5.0 and 1.0 NTU standards, with the highest level at 0.62 NTU. Typical levels at the Wachusett Reservoir are 0.3 NTU. MWRA also tests reservoir water for pathogens such as fecal coliform, bacteria, viruses, and the parasites Cryptosporidum and Giardia. They can enter the water from animal or human waste. All test results were well within state and federal testing and treatment standards.

TESTING RESULTS - AFTER TREATMENT EPA and state regulations require many water quality tests after treatment to check the water you are drinking. MWRA conducts hundreds of thousands of tests per year on over 120 contaminants (a complete list is available on www.mwra.com). Details about 2014 test results are in the table below. The bottom line is the water quality is excellent.

Sodium facts Sodium in water contributes only a small fraction of a person’s overall sodium intake (less than 10%). MWRA tests for sodium monthly and the highest level found was 34.8 mg/L (about 9 mg per 8 0z. glass).

This would be considered Very Low Sodium by the Food and Drug Administration.

Compound

(MCL) Highest Level Units Allowed

(We found) Detected Range of (MCLG) LevelAverage Detections Ideal Goal Violation How it gets in the water

Barium Monochloramine Fluoride Nitrate^ Nitrite^ Total Trihalomethanes Haloacetic Acids-5 Total Coliform Combined Radium

2 ppm ppm 4-MRDL 4 ppm 10 ppm 1 ppm 80 ppb 60 ppb 5% % 5 pCi/L

0.008 2 0.007-0.009 1.9 4-MRDLG 0-3.9 1.02 4 0.87-1.1 0.06 10 0.01-0.06 0.006 1 ND-0.006 13.3 ns 3.7-17.3 10.2 ns 0-15.9 1.0% (Aug) ND-1.0% 0 1.76 0 1.76

No No No No No No No No No

Common mineral in nature Water disinfectant Additive for dental health Atmospheric deposition Byproduct of water disinfection Byproduct of water disinfection Byproduct of water disinfection Naturally present in environment Erosion of natural mineral deposits

KEY: MCL=Maximum Contaminant Level. The highest level of a contaminant allowed in water. MCLs are set as close to the MCLGs as feasible using the best available technology. MCLG=Maximum Contaminant Level Goal. The level of contaminant in drinking water below which there is no known or expected risk to health. MCLGs allow for a margin of safety. MRDL=Maximum Residual Disinfectant Level. The highest level of a disinfectant allowed in drinking water. There is convincing evidence that addition of a disinfectant is necessary for control of microbial contaminants. MRDLG=Maximum Residual Disinfectant Level Goal. The level of a drinking water disinfectant below which there is no known or expected health risk. MRDLGs do not reflect the benefits of the use of disinfectants to control microbial contamination. ppm=parts per million ppb=parts per billion ns=no standard pCi/L=picoCurie per liter ^As required by DEP, the maximum result is reported for nitrate and nitrite, not the average. continued on page 37

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MWRA continued from page 35

Award winning tap water!

WHY YOUR WATER TASTES GREAT WATER TREATMENT One of the reasons that the Boston area water tastes so good is that MWRA has state-of-the-art treatment at the John J. Carroll Water Treatment Plant in Marlborough. Since 2005, your water has been treated with ozone - produced by applying an electrical current to pure oxygen.

Ozone has ensured strong protection against microbes and viruses, improved water clarity, and makes the water taste better. Starting in 2014, we also added ultraviolet (UV) disinfection, further improving the quality of the water.

UV light is essentially a more potent form of the natural disinfection from sunlight, and ensures that any pathogens potentially in our reservoirs are rendered harmless.

In addition, the water chemistry is adjusted to reduce corrosion of lead and copper from home plumbing. Fluoride is added to promote dental health, and in April 2015 the dose was lowered to 0.7 ppm based on CDC and EPA recommendations. Last, we add monchloramine, a mild and long lasting disinfectant to protect the water as it travels to your home.

In 2014, MWRA won Best Tasting Water in the US at the American Water Works Association Annual Conference. We competed against water suppliers from across the country. MWRA also received the Public Water System Award for excellent performance from the Massachusetts Department of Environmental Protection.

RESEARCH FOR NEW REGULATIONS MWRA has been working with EPA and other researchers to define new national drinking water standards by testing for unregulated contaminants.

To read more about these regulations, and to see a listing of what was found in MWRA water, please visit www.mwra.com/UCMR/2014.html.

DRINKING WATER AND PEOPLE WITH WEAKENED IMMUNE SYSTEMS Some people may be more vulnerable to contaminants in drinking water than the general population. Immuno-compromised persons such as persons with cancer undergoing chemotherapy, persons who have undergone organ transplants, people with HIV/AIDS or other immune system disorders, some elderly, and infants can be particularly at risk from infections. These people should seek advice about drinking water from their health care providers.

EPA/CDC guidelines on appropriate means to lessen the risk of infection by Cryptosporidium and other microbial contaminants are available from the EPA's Safe Drinking Water Hotline (1-800-426-4791).

CONTAMINANTS IN BOTTLED WATER Drinking water, including bottled water, may reasonably be expected to contain at least small amounts of some contaminants. The presence of contaminants does not necessarily indicate that water poses a health risk.

More information about contaminants and potential health effects can be obtained by calling the EPA’s Safe Drinking Water Hotline (1-800-426-4791) or MWRA. In order to ensure that tap water is safe to drink, the Massachusetts DEP and EPA prescribe regulations which limit the amount of certain contaminants in water provided by public water systems. The Food and Drug Administration (FDA) and the Massachusetts Department of Public Health regulations establish limits for contaminants in bottled water which must provide the same protection for public health.

TESTS IN COMMUNITY PIPES MWRA and local water departments test 300 to 500 water samples each week for total coliform bacteria. Total coliform bacteria can come from the intestines of warm-blooded animals, or can be found in soil, plants, or other places. Most of the time, they are not harmful. However, their presence could signal that harmful bacteria from fecal waste may be there as well. The EPA requires that no more than 5% of the samples in a month may be positive. If a water sample does test positive, we run more specific tests for E.coli, which is a bacteria found in human and animal fecal waste and may cause illness. No E.coli was found in any MWRA community in 2014. If your community found any total coliform, it will be listed within the community letter on page 4.

35.

INFORMATION ABOUT CROSS CONNECTIONS The Massachusetts DEP recommends the installation of backflow prevention devices for inside and outside hose connections to help protect the water in your home, as well as the drinking water system in your town.

For more information on cross connections, please call 617-242-5323 or visit www.mwra.com/crosscon.html.

Tap water– the smart choice Although tap water and bottled water have to meet the same standards, tap water is delivered straight to your home without trucking or plastic waste. Bottled water produces over 10,000 times the amount of greenhouse gasses compared to tap water.

Tap water costs less than a penny per gallon, while bottled water can cost between $1 and $8 per gallon. Tap water is the smart choice!

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continued on page 39

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MWRA continued from page 37 Public Water Supply #3035000

City of Boston City ofAND Boston BOSTON WATER SEWER COMMISSION

Public Water Supply # 3035000

BOSTON WATER AND SEWER COMMISSION

Dear Customer: This report contains an annual update on the quality of drinking water supplied to you by the Boston Water and Sewer Commission (BWSC), in partnership with the Massachusetts Water Resources Authority (MWRA). BWSC purchases water from MWRA for distribution to homes and businesses in the City of Boston. Inside this report, there is detailed information on the MWRA’s system, and how the water delivered to Boston exceeds both federal and state quality standards.

In 2014, at the tenth annual National Tap Water Taste Test, the American Water Works Association (AWWA) named Boston’s tap water as the “Best of the Best.” The contest included entrants from water utilities across the United States, Canada and Puerto Rico.

A recent article in the Journal of the American Water Works Association provides a summary of BWSC’s nationally recognized asset management program responsible for the superior quality of Boston’s water. The comprehensive program includes replacement and rehabilitation of old pipes, which reduce the occurrences of water main breaks and leaks. Routine maintenance, an aggressive leak detection program, and the replacement of hydrants and valves also improve overall system efficiency.

To assure quality and regulatory compliance, BWSC maintains a comprehensive program to sample its tap water. EPA requires that no more than 5% of samples in a month may be positive for total coliform. BWSC and MWRA test over 240 samples each month for total coliform. In all of 2014, only one sample tested positive (June), and all other samples were clear.

BWSC continuously makes efforts to reduce the presence of lead in tap water and vigilantly monitors lead levels in our drinking water.

BWSC tests homes regularly each year, and is pleased to report that since 2007, the Boston lead sampling results have remained below the EPA Lead Action Level of 15 parts per billion (ppb). In 2014, the test results were 11.4 ppb at the 90th percentile. BWSC continues its efforts to replace lead service lines, thereby improving overall water quality. Please aboutlead leadinin Pleasesee seePage page541forformore moreinformation information about tap water. tap water.

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

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

Henry F. Vitale Executive Director/CFO and Treasurer

JULY, 2015

continued on page 41

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 4

39

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MWRA continued from page 39

What you need to know about lead in tap water MWRA water is lead-free when it leaves the reservoirs, and MWRA and local pipes do not add lead to the water. However, lead can get into water through household plumbing including some service lines (the pipe from the street to your house).

Check with your local water department if you have a lead service line. If you do, you should replace it.

INVESTMENTS IN YOUR WATER SYSTEM Preparing Dams for Climate Change Since 2006, MWRA has spent over $21 million on dam safety projects. All MWRA dams, dikes, spillways and appurtenances are inspected routinely by licensed dam safety engineers and are in good condition.

Protecting Reservoirs While Providing Open Space The best way to deliver clean, safe water is to start with high quality source water. Since 1985, $134.5 million has been invested in land preservation around the Quabbin, Ware and Wachusett watersheds.

Monitoring Water Quality in Real Time Your water is monitored by a state-of-the-art system in real time – 24 hours a day, seven days a week – to make sure it is free of contaminants. This allows MWRA to respond to changes in water quality almost immediately.

Taking Advantage of Gravity MWRA operates three hydroelectric generators that capture the energy of the water as it flows east providing $1.5 million in renewable energy annually.

Covered Storage Keeps Water Safe and Clean MWRA has constructed a network of covered storage tanks across the service area that keep your water protected from the treatment plant to your tap. The Spot Pond Tank in Stoneham will open later this year.

Water conservation works MILLION GALLONS PER DAY

On average, MWRA delivers 200 million gallons of water each day - over 120 million gallons less than it did in the 1980s.

350 325

SAFE YIELD

300 275 250 225 200 175 150 1980

1998

2014

Under EPA rules, each year your local water department must test water in homes that are likely to have high lead levels. The requirement is that 90% of the sampled homes must have lead levels below the Lead Action Level of 15 ppb. Since corrosion control treatment began in 1996, lead levels in tested homes have dropped over 90%, and 19 straight sampling rounds have been below the EPA Action Level.

For tips on how to reduce your possible exposure to lead at www.mwra.com/lead.

SEPTEMBER 2014 LEAD & COPPER RESULTS (Target) (Ideal # Home 90% Action Goal) Above AL/# Range Value Level MCLG Homes Tested Lead (ppb)

0-66

5.4

15

0

7/450

Copper 0-0.5 (ppm)

0.1

1.3

1.3

0/450

KEY: AL=Action Level-The concentration of a contaminant which, if exceeded, triggers treatment or other requirements which a water system must follow. Definition of MCLG available on page 2.

35.

Important information from EPA about lead

If present, elevated levels of lead can cause serious health problems, especially for pregnant women and young children. Lead in drinking water is primarily from materials and components associated with service lines and home plumbing. MWRA is responsible for providing high quality drinking water, but cannot control the variety of materials used in plumbing components. If your water has been sitting for several hours, you can minimize the potential for lead exposure by flushing your tap for 30 seconds to 2 minutes before using water for drinking or cooking.

If you are concerned about lead in your water, you may wish to have your water tested.

Information on lead in drinking water, testing methods, and steps you can take to minimize exposure is available from the Safe Drinking Water Hotline at 1-800-426-4791 or www.epa.gov/safewater/lead, or MWRA at 617-242-5353 or www.mwra.com/lead.

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M assachusetts Extends OSHA Protections to State Workers : It’s About ‘Creating an Infrastructure that Supports Health and Safety’ Back in 1970 when the U.S. Occupational Safety and Health Administration was established, local policymakers could choose whether or not to extend OSHA protections to state employees. Unfortunately, Massachusetts took a pass. But decades later — and after years of advocacy, organizing and research on the part of worker advocates — employees of the Commonwealth of Massachusetts can now look forward to safer and healthier workplaces.

I

n June 2014, then-Massachusetts Governor Deval Patrick signed legislation that expanded OSHA protections to executive branch employees — that’s more than 150,000 workers. The law, which went into effect in March, requires that the new executive branch safety and health measures be at least as protective as OSHA standards. Advocates estimate that the new protections will not only save lives and avert preventable injury, illness and disability, it could save the state significant costs in medical care and workers’ compensation. While current Governor Charlie Baker proposed $500,000 in funding to support the state Department of Labor Standards in implementing the new law and establishing safety standards, community advocates will continue to play a central role in making the law an on-the-ground reality.

“I think (the law) will save numerous lives and it will certainly save the Commonwealth money, some of which can be reinvested in preventing illness and injury,” Margaret O’Connor, associate director of health and safety at the Massachusetts Nurses Association, told me. “This whole process is about creating an infrastructure that supports health and safety.”

Nurses employed by state hospitals are among the thousands of executive branch workers who will benefit from the OSHA extension, as will highway engineers, electrical workers, community college em-

JULY, 2015

ployees, law enforcement officers, custodial personnel and many more occupational sectors. Before the new law, state employees weren’t covered by the same worker protection standards as their peers in the private sector, with each state agency addressing workplace health and safety on its own.

But with 150 state agencies, the process was not terribly effective and many agencies simply lacked the technical expertise to implement and keep abreast of ever-evolving worker safety science and standards. In essence, the fragmented system was primarily reactive, not proactive. In contrast, the new law centralizes the work of protecting executive employee health and safety, takes full advantage of OSHA’s evidence-based practices and protocols, and prioritizes prevention.

Marcy Goldstein-Gelb, executive director of the Massachusetts Coalition for Occupational Safety and Health (MassCOSH), described the new law as “groundbreaking.” MassCOSH was part of a broad coalition of employee organizations, labor unions and safety advocates that spent years working with state labor officials on the issue of extending OSHA protections. A pivotal point in the process was the 2009 signing of Executive Order 511, which established the Massachusetts Employee Safety and Health Advisory Committee and charged it with examining continued on page 47

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riced.

d.

ts e dly and. and

such as the OSHA standards, as well as a health and safety management system. Both are needed in concert to protect the Commonwealth’s workforce from preventable injuries and illnesses.”

safety among state workers and making recommendations to prevent further injury and illness. The order also established individual worker health and safety committees within state agencies. Overall, the order called for the “creation of an infrastructure that will allow for on-going assessment and improvement of health and safety conditions for Commonwealth employees on the job.”

Goldstein-Gelb provided me with a memo from the state’s Department of Labor Standards comparing the cost of workplace injury to the cost of prevention. Here’s just one insightful example: During fiscal years 2010 through 2012, there was an average of more than 1,000 injuries per year across the executive branch in the lifting/moving/ walking category. To date, the cost of such injuries neared $77,000. The cost of investing in prevencontinued on page 49

“At the time, there was a complete inconsistency in safety protections (for executive branch workers),” Goldstein-Gelb, a member of the advisory committee, told me. “But to have so many stakeholders united on this front was so exciting.”

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Massachusetts continued from page 47

implementing the law, including training, technical assistance and enforcement.

Goldstein-Gelb said the state Department of Labor Standards promulgated regulations related to the new law late last year, effectively adopting most OSHA standards. However, she said one OSHA standard is notably missing from the new Massachusetts protections — Section 11(c) of the OSH Act, which protects workers against retaliation for speaking up about unsafe or unhealthful workplace conditions.

tion? About $50 per employee to receive training in proper lifting techniques. Also, the same year former Governor Patrick signed Executive Order 511, MassCOSH and Massachusetts AFL-CIO released a report on work-related fatalities in conjunction with Workers’ Memorial Day that highlighted the death of a state electrical worker. In investigating the death, state officials found the incident might have been prevented if certain OSHA standards had been in place.

The state advisory committee report issued a number of recommendations in response to Executive Order 511, including implementing a statewide policy that all agencies use nationally recognized worker safety standards and formalizing the role of health and safety committees. Goldstein-Gelb told me that while some policymakers were initially uneasy about the cost of extending OSHA protections, the report made it clear that closing safety gaps would not be prohibitively expensive and would likely save money in the long term.

“It certainly took a lot of effort, but in the end, many (decisionmakers) were very receptive,” she said.

In addition to extending OSHA protections to executive workers, the new law also codified the advisory committee, which is now known as the Occupational Health and Safety Advisory Board. The board includes a representative from MassCOSH, four labor representatives, a representative from the University of MassachusettsLowell and representatives from the administration. The advisory board will have a central role in

JULY, 2015

Today, MassCOSH is working with public employee unions and state officials to educate state agencies on the new OSHA protections and continues to advocate for the funding necessary to effectively implement the law. Goldstein-Gelb said MassCOSH also recently launched an effort to bring workplace health and safety to municipal employees as well.

According to O’Connor at the Massachusetts Nurses Association, the new OSHA protections bring the science of prevention to the lives of executive workers.

“I think this is, without a doubt, one of the most important pieces of legislation that the Commonwealth has seen in years,” she said.

To learn more about the new OSHA protections, visit MassCOSH. Reprinted with permission. Written by Kim Krisberg at ScienceBlogs’ The Pump Handle. Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade. n

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FactSheet

Confined Spaces in Pits

Confined Spaces inin Construction: Confined Spaces Construction: Pits Sewer Systems

Confined spaces can present conditions that are immediately dangerous Confined spaces can present conditions that are immediately dangerous to workers to workers if not properly identified, evaluated, tested, and controlled. This if such conditions are not properly identified, evaluated, tested, and controlled. This fact highlights sheet highlightsmany many ofof thethe confined space hazards associated with associated sewer fact sheet confined space hazards with systems and how employers can protect workers in these environments. pits and how employers can protect their workers in these environments.

OSHA has developed a new construction standard

OSHA has developed a new construction standard for Confined Spaces (29 CFR 1926 Subpart AA)— anySpaces space that meets the 1926 following three criteria: for Confined (29 CFR Subpart AA)— any space that the following three criteria: • Is meets large enough for a worker to enter it; • Has limited means of entry or andit; • Is large enough for a worker to exit; enter • Is not designed for continuous occupancy.

• Has limited means of entry or exit; and A space may also be a permit-required confined • Is not designed for continuous occupancy. space if it has a hazardous atmosphere, the potential for engulfment a layout that might A space may also beorasuffocation, permit-required confined trap a worker through converging walls or a sloped space if it has a hazardous atmosphere, the potential floor, or any other serious safety or health hazard. for engulfment or suffocation, a layout that might trap a worker through converging walls or a sloped floor, or Fatal Incidents any other serious safety health hazard.

Confined space or hazards in sewer systems have led to worker deaths. Several tragic incidents in Fatal Incidents sewers have included:

Confined in pits have and led died to work• Aspace workerhazards who lost consciousness er deaths. Several tragic incidents included: when he climbed into a sewer vault to retrieve a tool. His co-worker also died when he attempted • Two workers suffocated while attempting to a rescue. close gate valves in a valve pit.

• While repairing a natural gas leak, a worker entered drainage pipe to retrieve • A worker lostaconsciousness, fell, survey and was equipment.

The natural killed while climbing downgas a ignited, ladderkilling into an the worker. unventilated underground valve vault to turn on water valves.

Training The new Confined Spaces standard requires • While replacing a steam-operated vertical employers to ensure their workers know about pump, an equipment that repair technician died the existence, location, and dangers posed by each frompermit-required burns and suffocation after falling into confined space, and that they may an industrial waste pit.without authorization. not enter such spaces Employers Training must train workers involved in permitrequired confined space operations so that they The new Confined standard requires can perform theirSpaces duties safely and understand the in permit the methods employers hazards to ensure thatspaces their and workers knowused about to isolate, control or protect workers.

Workers the existence, location, and dangers posed by each not authorized to perform entry rescues must be permit-required confined space, and that they may trained on the dangers of attempting such rescues.

not enter such spaces without authorization.

Employers must train workers involved in permitrequired confined space operations so that they can perform their duties safely and understand the hazards in permit spaces and the methods used to isolate, control, or protect workers from these hazards.

JULY, 2015

Safe Entry Requirements The new Confined Spaces standard includes several requirements for safe entry.

Preparation: Before workers can enter a confined space, employers must provide pre-entry planning.

This includes: • Having a competent person evaluate the work site for the presence of confined spaces, including permit-required confined spaces.

• Once the space is classified as a permit-required confined space, identifying the means of entry and exit, proper ventilation methods, and elimination or control of all potential hazards in the space.

• Ensuring that the air in a confined space is tested, before workers enter, for oxygen levels, flammable and toxic substances, and stratified atmospheres.

•Workers If a permit is required for theto space, removing or rescues must not authorized perform entry hazards the spaceof and determiningsuch rescues. becontrolling trained on the in dangers attempting rescue procedures and necessary equipment.

• If the airSafe in a space is not safe for workers, Entry Requirements ventilating or using whatever controls or protections are necessary that employees can The new ConfinedsoSpaces standard includes safely work in the space.for safe entry. several requirements Ongoing practices: After Before pre-entryworkers planning, can enter a conPreparation: employers must employers ensure that the space is monitored fined space, must provide pre-entry planfor hazards, especially atmospheric hazards. ning. This includes: Effective communication is important because a competent person evaluate the work there • canHaving be multiple contractors operating on a site, eachsite withfor its own workers needing to enter spaces, the presence of confined the confined space. Attendants outside confined including permit-required confined spaces. spaces must make sure that unauthorized workers • Once the space is classified as a permit-redo not enter them. Rescue attempts by untrained quired confined space, identifying the means personnel can lead to multiple deaths.

of entry and exit, proper ventilation methods,

Confined Spaces in Sewer Systems and elimination or control of all potential hazTypes of sewer include sanitary (domestic ards systems in the space. sewage), storm (runoff), and combined (domestic • and Ensuring that the air in confined sewage runoff). Sewer systems areaextensive

space is tested, before workers enter, for oxygen levels, flammable and toxic substances, and stratified atmospheres.

• If a permit is required for the space, removing or controlling hazards in the space and continued on page 53

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” JULY, 2015 56 “BUY FROM THE ADVERTISERS IN CONSTRUCTIO

outside confined spaces must make sure that unauthorized workers do not enter them. Rescue attempts by untrained personnel can lead to multiple deaths.

OSHA continued from page 51

even if there are none at the start of a project.

Changes to the entry/exit, the ease of exit, and air flow could produce a confined space or cause one to become permit-required.

Construction work can create confined spaces,

rescue Confineddetermining Spaces in Pitsprocedures and neces-

Personal protective Employers es to the entry/exit, theequipment: ease of exit, and air flow could should the worksite determine what produceassess a confined space or to cause one to become personal protective equipment (PPE) is needed permit-required. to protect workers.

Employers should provide Personal protective equipment: Employers should assess the worksite to determine workers with the required PPE and proper what personalon protective equipment (PPE) is needed to training its use and about any related hazards protect workers.

Employers should provide workers before the work starts.

sary equipment.

Even though a pit is typically open on top and If the air in a space is not safe for workers, ventilatovering4 or feet deep, it cancontrols still beoraprotections confined are space using whatever necesor permit-required confined space.

Additionally, sary so that employees can safely work in the space. pits canOngoing be completely underground or below practices: After pre-entry planning, grade, such as a utility vault a sewer employers must ensure thatwithin the space is monitored system or a pit within for hazards, especially atmospheric hazards.

Effective communication is importantabecause there can be mulpit in a wastewater tiple contractors operating on a site, each with treatment plant. its own workers needing to enter the confined space. Attendants outside confined spaces Pitsmust are make foundsure in that unauthorized workers do not enter them.

Rescue attempts many environments. by untrained personnel can Examples lead to multiple deaths. include

Confined Spaces in Pits sump pits, valve

pits or vaults Even though a pit is typically open (e.g., on top and wastewater treatment over 4 feet deep, it can still be a confined space or permit-required confined space.

Additionally, plants, municipalpits can be systems), completelyelectrical underground or below steam grade, pits/ such as water pits/vaults, a utility vault within a sewer system or a pit within vaults, vehicle service/garage pits, elevator pits,a pit in a wastewater treatment plant. dock leveler pits, industrial chemical waste pits, Pitsmore. are found in many environments.

Examples and many Many of these spaces qualify as include sump pits, valve pits or vaults (e.g., wastewapermit-required confined spaces. ter treatment plants, municipal water systems), electrical pits/vaults, steam pits/ vaults,steps vehicle Employers must take all necessary to service/ garage pits, elevator pits, dock leveler pits, industrial keep workers safe in confined spaces, including chemical waste pits, and many more. Many of these following OSHA Construction confined Confinedspaces. spaces the qualify as permit-required Spaces standard. This standard applies to both Employers must take all necessary steps to keep newworkers construction in a pit and alterations and/or safe in confined spaces, including following upgrades.

Among the pit-related tasks covered the OSHA Construction Confined Spaces standard. by the Thisstandard standard are: applies to both new construction in a pit and alterations and/or upgrades. Among the pit• Opening or closing related tasks coveredvalves by the during standardrenovation are: work.

• Opening or closing valves during renovation • Installing or upgrading pump equipment, work. cables, or junction boxes. pump equipment, • Installing or upgrading cables, or junction boxes.

even if there are none at the start of a project. Chang-

with the required PPE and proper training on its use and about any relatedOSHA hazards before the work starts.

How to Contact

For questions or to information or advice, to find How toget Contact OSHA out how to contactor OSHA’s on-site or consultation For questions to get free information advice, to program, order publications, report a fatality or find out how to contact OSHA’s free on-site consultasevere injury, or to file a confidential complaint, tion program, order publications, report a fatalityvisit or severe injury, orortocall file 1-800-321-OSHA a confidential complaint, www.osha.gov (6742). visit www.osha.gov or call 1-800-321-OSHA (6742). n

Additional Information OSHA’s Confined Spaces in Construction Standard (29 CFR 1926 Subpart AA) Confined Spaces: OSHA Construction Industry Topics by Standard OSHA Fact Sheet: Procedures for Atmospheric Testing in Confined Spaces Confined Spaces: NIOSH Workplace Safety and Health Topics Page State Plan Guidance: States with OSHAapproved state plans may have additional requirements for confined space safety.

Help for Small and Medium-Sized Employers: OSHA’s On-site Consultation Program offers free and confidential advice to businesses nationwide.

This is one in a series of informational fact sheets highlighting OSHA programs, policies or standards.

It does not impose any new compliance requirements. For a comprehensive list of compliance requirements of OSHA standards or regulations, refer to Title 29 of the Code of Federal Regulations.

This information will be made available to sensory-impaired individuals upon request. The voice phone is (202) 693-1999; teletypewriter (TTY) number: 1-877-889-5627.

JULY, 2015

“BUY FROM THE DOC ADVERTISERS FS-3788 05/2015 IN CONSTRUCTION OUTLOOK”

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Mounting and Dismounting Equipment

B

ecause jumping down off large equipment is a common practice for construction workers, it’s no surprise that lower back, knee, ankle, and neck injuries occur more frequently. Regardless of the type of equipment you work with, mounting and dismounting safely should always be top of mind.

•

What You Can Do To lessen your risk of injuries, follow these simple mounting and dismounting instructions for trucks and other tall equipment or machinery.

• When using a new piece of machinery, become familiar with proper mounting and dismounting procedures.

• When a person jumps from a height of more than one foot, the force that goes through the body is about 14 times the person’s body weight. In other words, a 165-pound man who jumps out of construction equipment or any other high surface is exerting 2,310 pounds of force on his body. This

• •

• •

•

To lessen your risk of injury, follow these simple mounting and dismounting instructions for trucks and other construction equipment and machinery.

JULY, 2015

•

•

can cause injury to bones, tendons, and cartilage.

And if you’re doing this multiple times every workday, the damage to the body can be extensive.

When dismounting and mounting, maintain threepoint contact. This means having contact with the construction equipment by either one foot and two hands or one hand and two feet. The smaller the triangle you form with your body, the more stable you are.

Always face the vehicle, both when mounting and dismounting.

Look at the surface below before stepping and make sure it is even to prevent ankle and knee injuries.

Never mount or dismount moving equipment.

Do not mount or dismount with anything, including tools, in your hands. Not only does it throw the body off-balance, it also reduces your chance of recovering your balance if you do slip. Use a drop rope to raise and lower supplies, tools, and equipment instead.

Handholds and footholds are on the equipment for a reason—use them.

Wear appropriate clothing. Loose or torn clothing can get caught on equipment when you are jumping down instead of climbing down. In slippery conditions, wear proper footwear to prevent slipping hazards.

Proper vehicle maintenance also contributes to the safe mounting and dismounting of equipment.

Make sure running boards, treads, steps, footholds and platforms are kept clear. Hazards like ice, snow, and grease could cause slips, trips, and falls. n

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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John E. Merchant, CPA IN THIS ISSUE:

Cullen, Murphy & Co., P.C.

Smart Tax, Business & Planning I

• The Math of Buy and Hold • Passive Activity Losses From Rental Property • Succession Planning for a Family Business

The Math of Buy and Hol

The Math of Buy and Hold

M

any financial advisers warn clients that they should not try to time the stock market. Indeed, research indicates that individuals tend to buy when stocks are going up and sell when stocks have gone down: a buy-high and sell- low approach that reduces long-term returns.

Consequently, some investment pros support a strategy known as“buy and hold.”

Example 1: Julia Martin consults with a financial planner and agrees to an asset allocation of 60% in stocks and 40% in bonds. Although Julia may periodically change the stocks and stock funds she owns, for specific reasons, she maintains this 60-40 asset allocation for many years. Not until she approaches retirement and desires a more conservative portfolio does Julia trim her stock position to 40% of her holdings.

Patience Can be Prudent Assuming that Julia holds well-chosen stocks and funds, this strategy probably will provide Julia with the market’s long-term returns, which historically have been excellent. According to Morningstar’s Ibbotson subsidiary, through 2014, large-company U.S. stocks have had annualized returns around 8% for the past 10 years, 10% for the past 20 years, 11% for the past 30 years, and 12% for the past 40 years.

(Those returns assume dividend reinvestment, no taxes, and no transaction costs.)

JULY, 2015

Going back nearly 90 years, to the beginning of the Ibbotson data base, U.S. stocks have annualized returns of about 10%. Generally, the numbers Many financial advisers warn clients for stocks are significantly higher than the returns for that they should not try to time the bonds or cash equivalents. That’s no guarantee of stocksuccess, market.butIndeed, research future it’s telling that U.S.indicates stocks have been long-term investments through recesthatgood individuals tend to buy when sions, depression, wars, busts. stocks are going up turmoil, and sellbooms, whenand stocks

Putting those numbers in perspective, assume have gone down: a buy-high and sellthat investors in the future net 7.2% a year from low approach reduces stocks, long term.that At that rate, long-term money doubles in about 10 years.

If that’s the case, $10,000 investreturns. Consequently, someainvestment ment today would grow to $20,000 by 2025, $40,000 pros support a strategy known as “buy by 2035, and $80,000 by 2045. Thus, buy-and-hold and hold.” investors can expect to enjoy portfolio growth if they can stomach the1: price volatility along the way.

Example Julia Martin consults

with a financialStress plannerTest and agrees to anHowever, asset allocation of stock 60% price in stocks dealing with volatility is not and in bonds.

Julia may just an40% emotional matter.Although There are dollars-and-cents implications as well.

In the bear and markets of this periodically change thetwo stocks stock century (2000–2002 and 2008–2009), the broad funds she owns, for specificcontinued reasons, she on page 59 maintains this 60-40 asset allocation for many years. Not until she approaches “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 57 retirement and desires a more conservative portfolio does Julia trim her

Patienc

Assuming stocks and will provi long-term have been Mornings through 2 have had for the pa 20 years, 12% for t assume d and no tra Going beginning stocks ha 10%. Gen are signifi for bonds guarantee that U.S. s investmen wars, turm Puttin assume th 7.2% a ye At that ra 10 years. investmen by 2025,

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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Financial Management continued from page 57 U.S. stock market dropped by about 50% of its value each time.

Example 2: Assume that Julia had $400,000 of U.S. stocks in mid-2008, with a portfolio basically aligned with major indexes. By early 2009, her stocks were worth only $200,000. After that 50% drop in value, Julia needed a $200,000 gain—100% of her early 2009 portfolio—just to get back to the $400,000 she had in mid- 2008. Indeed, it wasn’t until 2013 that stocks recovered all of their losses.

Such a steep loss and prolonged recovery period can be disheartening. The damage might be especially severe if it occurs just before you need the cash to fund a home purchase or a college education, for example. Retirees who are drawing down their portfolios, without earned income to invest at lower stock prices, may run short of money after an ill-timed bear market.

Tax Treatment Wary investors may want to move out of stocks after years of positive returns. Such a tactic will lock in profits and reduce exposure to a market correction. However, selling stocks at a profit can trigger capital gains tax.

The basic tax rate on long- term capital gains (for assets held more than one year) is 15%, but the rate for

high-income investors is 20%. The total payment may be increased by state tax, the 3.8% tax on net investment income, and various other tax code provisions.

Example 3: Assume that Julia now holds $500,000 worth of stocks, which she purchased for $280,000, for a $220,000 gain. Also assume a total tax obligation of 25%, federal and state. Julia would owe $55,000 in tax (25% of $220,000) on a sale of all her stocks, leaving her with a net of $445,000. From that point, Julia would need only a 12% gain to get back what she lost in taxes, when she decides that stocks are once again an attractive asset class.

Summing Up All investors should have a plan tailored to their specific needs, perhaps one that was created by a financial adviser. In general terms, though, buy-and-hold investing can be an effective strategy for truly long-term purposes.

Timing the stock market may not work, but reducing stock positions after a long upward surge might result in less exposure to a coming pullback. Even at today’s higher tax rates, taking stock market gains can be less expensive than suffering a sharp bear market setback. Indeed, trimming appreciated stock positions in tax-favored accounts such as IRAs will eliminate immediate tax obligations. continued on page 61

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Financial Management continued from page 59

Passive Activity Losses From Rental Property

I

n these times of high stock prices and low bond yields, investors might be thinking about rental property. Such investments can pay off, in the right situation. Before you make any decisions, though, you should be aware of the tax implications, especially the passive activity loss rules.

Despite the language, those rules don’t apply to familiar investments that might seem passive, such as buying corporate stocks or government bonds.

Rental property is deemed to be a passive activity, so the passive activity rules

Did You Know?

C

alifornia and Colorado taxpayers had the highest chance of an IRS audit in 2014. Other Western states in the top seven were Nevada, New Mexico, and Arizona. Yet, North Dakota taxpayers were the least likely to be audited.

Source: TaxAudit.com

typically apply to individual investors acting as landlords. Investing in real estate may deliver untaxed income, but deducting losses can be challenging. (The rules are different for individuals who are real estate professionals, but specific qualifications must be met.)

Depreciating While Appreciating Investment property owners can take depreciation deductions, even if the property is gaining value.

What’s more, this deduction requires no cash outlay.

Example 1: Brett Parker buys investment property for $400,000 and collects $1,800 in monthly rent.

Thus, his annual income is $21,600. His out-of-pocket expenses (interest, insurance, maintenance) total $12,000, so Brett collects $9,600 in positive cash flow this year, in this hypothetical example.

Suppose that Brett can claim $16,000 of depreciation deductions as well. Now Brett reports $21,600 of income and $28,000 ($12,000 plus $16,000) of expenses from the property, for a net loss of $6,400.

Brett has reported a loss, so no income tax will be due on his rental income. For Brett, this would be $9,600 of tax-free cash flow. If he also can deduct the $6,400 loss from his other income, the tax treatment would be even better.

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In one scenario, Brett has another rental property that generates $7,500 of net income. This passive activity income from Property B can be offset by the $6,400 loss from Property A, so Brett reports a taxable profit of only a net $1,100.

However, many people won’t have passive activity income to offset, or their passive activity loss will be greater than that income.

In those cases, deducting the loss from other income is possible, if certain conditions are met.

For one, investors must play an active role in managing the property. That doesn’t mean you’ll continued on page 63

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Financial Management continued from page 61 have to screen tenants or fix toilets. You can hire a property manager but still play an active role, for this purpose, by making decisions involving the property’s operation or management.

Another condition of deducting losses from a rental property relates to your adjusted gross income (AGI). A deduction as great as $25,000 per year is permitted, but the deduction phases out as your AGI climbs from $100,000 to $150,000. That phaseout range is the same for joint or single filers.

Example 2: Joan, Janice, and Jennifer Smith are sisters; they each own rental property that shows a loss this year, after deducting depreciation. Joan’s AGI is $95,000, so she can deduct her rental property loss this year, up to the $25,000 maximum. Jan-

Trusted Advice Passive Procedures • Passive activities include trade or business ventures in which you do not materially participate; that is, you are not involved in the operation of the activity on a regular, continuous and substantial basis.

• Rental activities such as rental real estate ventures generally are passive activities for the rules on passive activity losses.

• The passive activity rules apply to individuals, estates, trusts (other than grantor trusts), personal service corporations, and closely held corporations as well as to the owners of grantor trusts, partnerships, and S corporations.

ice’s AGI is $155,000, so she can’t deduct any loss from her rental property. (However, because Janice reports a loss, she also won’t owe tax on the cash flow she receives.)

Suppose that Jennifer’s AGI is $130,000. She is 60% ($30,000/$50,000) through the phaseout range, so she’ll lose 60% of her maximum loss deduction. Jennifer can deduct rental property losses up to $10,000 (40% of the $25,000 maximum) but won’t be able to deduct larger losses.

Keep in mind that rental property losses you can’t deduct currently are not gone forever. Unused losses add up, year after year, to offset future passive activity income. If you have unused losses from prior years, you can use them when your future AGI permits. Moreover, when you sell the property, you can use all of your banked losses then to reduce the tax you’ll owe on the sale.

Nevertheless, a tax deduction you can take immediately is more valuable than a deduction years in the future. If your AGI is between $100,000 and $150,000, actions such as taking capital gains or converting a traditional IRA to a Roth IRA can raise your AGI and reduce current deductions for rental property losses. continued on page 65

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eat as $25,000 per permits. Moreover, when you sell but the deduction the property, you can use all of your AGI climbs banked losses then to reduce the tax Financial Management continued from page 63 $150,000. That you’ll owe on the sale.

IRA to a Roth IRA can raise your AGI and reduce current deductions for rental property losses. g

Succession Planning for a ion Planning for aFamily FamilyBusiness Business

I

me a family f you intend pose problems. dynamics to name aIntra-family family member d you in running should bein considered, whichcommay to succeed you running your some The have some pany, you nothave be the case ifadvantages. your successor (probably rson you’ll person name you’ll is anname outsider.

Moreover,your thereson are or daughter, sonor daughter-in-law) or daughter, several methods of relinquishingis someone you can identify easily, without n-law) is someone ownership, all of which may be an extensive search. You know that persily, withoutson’s an capabilities closely scrutinized by the IRS. and shortcomings; he ou know that or she likely works for the company now, Seeing s and shortcomings; so you have a goodthings idea of clearly how well the Designating truly eager to each jumpother, off thebut she rks for the company sonsdaughter did not get along with future owner will do. a family member as thought that would change as they grew older. Inyourpassing successoron canyour raisecompany emotional partner track at her law firm to take good idea of how That said, stead, their mutual animosity continues, and they’re member problems.

Doescan yourpose son really want to competing chargewith of your Be honest ner will do. to a familyissues. each company? other to replace their mother Intra-family dynamics should be considAllen Enterprises. reality, Donna run your business, working the long as CEO withofyourself, even if itFacing leads to ng on your a 50-50 ownership solution would mayyou’ve not be the put case hours always in?ifIsyour your concluded painfulthat conclusions. ly member ered, can which successor is an outsider. Moreover, there are several methods of relinquishing ownership, all of which may be closely scrutinized by the IRS. Seeing Things Clearly Designating a family member as your successor can raise emotional issues. Does your son really want to run your business, working the long hours you’ve always put in? Is your daughter truly eager to jump off the partner track at her law firm to take charge of your company? Be honest with yourself, even if it leads to painful conclusions.

Example: Donna Allen realized that her two

ruin her successful company. Thus, she is dividing the company into two firms, continued along product lines, on page 4 so each son can be the sole owner of his own business in the future.

3

Playing Fair If you have more than one child, it’s often the case that one will be the obvious successor. Passing on ownership to all the children and leaving one to run the company can lead to strife: The operator may feel like he or she is working to enrich siblings, and the outside owners might second-guess business decisions. Naming the child who will manage the company as the sole owner may make sense, continued on page 67

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Financial Management continued from page 65 from a business perspective, but it also can deprive the others of a valuable asset. In such cases, it may be desirable to equalize the inheritances. (If you’re married, your estate plan also should provide for a surviving spouse.)

Situations differ, but life insurance might offer a way to compensate family members who won’t wind up with your valuable business.

Transfer Tactics Your estate plan also should focus on the method you’ll use to keep your company in the family. Broadly, here are your options: • Sell it. This mode has the obvious benefit of providing you with income in retirement, enabling you to enjoy the fruits of building the business. Coming up with enough cash for the buyout may be difficult for your younger successor, so it might be necessary to arrange financing or an installment sale so payments will come from future company earnings, in some manner.

• Give it. Another option is to transfer some shares to your successor during his or her lifetime. Gift tax may be avoided or minimized by

JULY, 2015

using discounts for fractional interests in the company while ownership might be motivational. On the downside, such gifts can reduce the income you’ll get from the business and you should have a strategy for dealing with other children.

• Leave it. You can simply hold onto the company until you die and bequeath it to your successor. This approach allows you to remain in control and perhaps receive income from dividends once you stop working. A lack of ownership, though, might discourage your chosen successor and lead to that person’s leaving for another opportunity.

No matter which of these methods you choose, the IRS may challenge the valuation involved. A below-market sale, for example, could be recast as part sale and part taxable gift. Thus, having a reliable valuation of the company should be part of your allin-the-family succession plan.

A sophisticated approach might involve a mix of selling, giving, and leaving your business to a younger relative. Tactics such as retaining income-producing shares while transferring operational control may be appropriate.

Reprinted from CPA Client Bulletin. n

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

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Advertisers’ Index ATS Equipment, Inc. .................................................... 48 American Shoring, Inc.................................Ins. Back Cvr. Boro Sand & Stone Corp.............................................. 54 Dennis K. Burke, Inc..................................................... 62 C&S Insurance Agency, Inc.......................................... 20 Concrete Systems, Inc.................................................. 38 Dagle Electrical Construction, Corp.............................. 34 Darmody, Merlino & Co., LLP.......................................... 5 Dedham Recycled Gravel............................................. 56 DeSanctis Insurance Agency, Inc. ............................... 50 Dig Safe System, Inc..................................................... 58 The Driscoll Agency ..................................................... 67 EJ.................................................................................. 32 Eastern Pipe Service, LLC............................................ 62 Eastern States Insurance Agency, Inc............................ 7 Eastpoint Lasers, LLC................................................... 63 T. L. Edwards, Inc...........................................................11 Excellence In Safety Inc................................................ 66 Ferguson Waterworks................................................... 56 Foley Carrier Services, LLC.......................................... 64 Genalco, Inc.................................................................. 61 GEOD Consulting, Inc................................................... 66 L. Guerini Group, Inc..................................................... 60 HD Supply Const. & Industrial White Cap...................... 4 HD Supply Waterworks................................................... 2 A. H. Harris Construction Supplies............................... 64 Hinckley Allen, LLP....................................................... 28 JESCO.......................................................................... 23 P. J. Keating Company.................................................. 12 P. A. Landers, Inc.......................................................... 65 Lawrence-Lynch Corp..................................................... 9 Lorusso Corp................................................................. 58 Lorusso Heavy Equipment, LLC..................................... 6 MBO Precast, Inc.......................................................... 49 Mabey, Inc..................................................................... 60 Mass Broken Stone Company...................................... 63 Milton CAT..................................................................... 22 Norfolk Power Equipment, Inc...................................... 64 North East Shoring Equipment, LLC............................. 59 Northland JCB............................................................... 53 NorthStar Insurance Services, Inc................................ 36 Ocean State Oil............................................................. 60 Our Outhouses, Inc....................................................... 47 Palmer Paving Corporation........................................... 66 E. H. Perkins Construction Co., Inc.............................. 68 Podgurski Corp............................................................. 54 E. J. Prescott, Inc....................................... Ins. Front Cvr. Rain For Rent-New England......................................... 10 Read Custom Soils ...................................................... 52 Rodman Ford Sales, Inc............................................... 40 Rogers & Gray Insurance Agency, Inc.......................... 44 Salem Dental Arts, PLLC................................................ 8 Schmidt Equipment, Inc.....................................Back Cvr. Scituate Concrete Products Corp................................. 30 Scrap-It, Inc................................................................... 46 Shea Concrete Products............................................... 16 Smith Print..................................................................... 50 Starkweather & Shepley Ins. Brokerage, Inc................ 17 Systems Support Corporation...................................... 58 Taylor Oil Company....................................................... 13 Ti-SALES, Inc. .............................................................. 50 Albert J. Tonry & Co., Inc.............................................. 52 TrenchTech Inc.............................................................. 54 United Concrete Products, Inc. .................................... 52 United Rentals Trench Safety....................................... 18 The Vellano Companies, Inc......................................... 17 C. N. Wood Co., Inc. .................................................... 14 Woodco Machinery, Inc................................................ 42

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from Design to Delivery American Shoring is the Leader in High Quality, ModularTrench Shoring A complete line of heavy duty and light weight aluminum or steel trench shoring is available for all your needs.

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City life isn’t for everyone. But the new 135G and 245G Excavators couldn’t be more at home. . But the new 135G and 245G Excavators couldn’t be more at home. Their reduced-tail-swing configuration opens up a TCihtyeliifreriesnd’ut fcoer dev-etrayiol-nsew ing configuration opens up a wide range of possibilities, making congested wide range of possibilities, making congested jobsites and working around obstacles a welcomed challenge. Coupled with their EPA-certified jInotbersim iteTsiear n4 denwgionerks,isnhgorat-rtohuronwdloowb-esftfaorctlecosnatrowlse, lacnodmspeadciocuhsa, qllueinetgcea.bsC, othuepy’llel kdeewpiytohutwhaenirtinEgPtAo-scteayrtoinfitehde jobsite, despite how easy Itnhetyerairm e toTiloeard4uepnag ndingeest ,toshthoertn-etxh t roonw e. Clo onwta-cetfufo s trotdcaoy.ntrols, and spacious, quiet cabs, they’ll keep you wanting to stay on the jobsite, despite how easy they are to load up and get to the next one. Contact us today.

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