Construction Outlook May 2018

MAY | 2018 A PUBLICATION OF THE UTILITY CONTRACTORS’ ASSOCIATION OF NEW ENGLAND, INC.

UCANE Interview:

Representative Jerry Parisella

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MAY, 2018

OFFICERS President RICHARD PACELLA, JR. R. M. Pacella, Inc.

President-Elect MARCELLA ALBANESE

Albanese Brothers, Inc.

IN THIS ISSUE 3 President’s Message: Water’s Worth It

5 Legislative Update:

• House Passes FY19 Budget Proposal; Increases Contract Assistance and Funding for MassDEP

Treasurer RYAN McCOURT

• Baker-Polito Administration Provides Drinking Water Supply Protection Funds

Secretary BRIAN COONEY

• MassWorks Grant Applications Now Available

McCourt Construction Company

• Senate and House Pass Short-Term Rental Legislation; Cape Delegation Delivers Innovative Funding Mechanism

C. C.Construction Inc.

• News in Brief

BOARD OF DIRECTORS

17 UCANE Interview:

GREG ANTONELLI GTA Co., Inc.

VINCENT BARLETTA

Barletta Heavy Division

TONY BORRELLI

Celco Construction Corp.

BEN CAVALLO

C&S Insurance Agency

ANDREW DANIELS J. Derenzo Co.

GREG FEENEY

Feeney Bros. Utility Services

JERRY GAGLIARDUCCI

Gagliarducci Construction, Inc.

NICK GAMACHE

Rain for Rent - New England

MARCO GIOIOSO

P. Gioioso & Sons, Inc.

MIKE GORMAN

E. J. Prescott, Inc.

BILL LEONARD

Aqua Line Utility, Inc.

AL MORTEO

FED. CORP.

JOHN OUR

Robert B. Our Co., Inc.

JOSEPH PACELLA

RJV Construction Corp.

PAUL SCENNA

Albanese D&S, Inc.

CHRIS VALENTI

GVC Construction, Inc.

KEN VOGEL

WES Construction Corp.

DAVID WALSH

Pawtucket Hot Mix Asphalt

ANNE KLAYMAN

Executive Director

Representative Jerry Parisella (House Chairman, Joint Committee on Public Service)

23 Legal Corner:

The Bid Unit of the Massachusetts Attorney General’s Office Releases Decision on Bidder Responsibility

27 UCANE Welcomes the Following New Members 29 Governor Baker Signs OSHA Bill for Public Workers 35 UCANE’s 39th Annual Golf Classic 37 Results from the 3rd Annual Value of Water Index 39 Under the Hard Hat with UCANE’s Officers & Board Members: Q&A with UCANE Board Member Tony Borrelli (Celco Construction Corp.)

43 Insurance Perspective:

7/1/2018 Massachusetts Workers’ Compensation Rate Change

48 Contractor Member of the Month:

R. H. White Construction Co., Inc. Celebrates 95 Years

55 The Opioid Crisis: The Construction Industry’s Simmering Threat 61 UCANE Members Support Boston Marathon Effort to Raise Funds for the McCourt Foundation 63 Pittsfield Approves $74 Million Wastewater Upgrades 67 Spotlight on Cape Cod: Towns Will Pursue Regional Wastewater Treatment

69 A Recipe for Successful Customer Care 73 Financial Management: • The New Tax Law Will Change Divorce Tactics • Stretching for Yield...Carefully • No Tax Deductions for Business Entertaining

Editor: Anne Klayman, Associate Editor: Suzanne Savage, Magazine Designer/Assistant Editor: Sherri Klayman Construction Outlook Chairman: Richard Pacella, Jr. Editorial Board: Richard Pacella, Jr., Marcella Albanese, Ryan McCourt, and Brian Cooney 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; Email: 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 Brockton, 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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Water’s Worth It Being outside and on the job recently, I think I can finally say that spring is here, or maybe we just jumped right into summer, which has been known to happen in New England. Either way, this is the time of year people will begin to go outside to work on their lawns, gardens, and to fill their pools. Tourists will flock to Massachusetts from the Cape to the Berkshires as a desirable vacation destination. Of course, none of this would be able to happen without water infrastructure, so this is also the time of year when many people take for granted access to safe and clean water.

A

s has been written in this space many times before, water is vital to our jobs, our health, and our economic well-being. It is indispensable in our daily lives. That is why UCANE has joined several other groups in a public awareness campaign to make May “Water’s Worth It Month.” Through social media and coordinated events, this campaign serves as an opportunity to join with other like-minded organizations to promote the importance of clean water.

Nationally, there are over 800,000 miles of water pipe and 600,000 miles of sewer lines, much of which are outdated and crumbling underground, and it has been documented that there are an estimated 240,000 water main breaks annually.

In Massachusetts, many pipes are near or over a century old. This past year’s storms again highlighted the need to upgrade our infrastructure, as catastrophic breaks and outdated treatment plants caused millions of gallons of raw sewage to flow into our rivers. We face a $20 billion funding gap over the next 20 years, and at our current rate of funding, that deficit will only continue to grow.

The good news, at least according to a recent MAY, 2018

survey, is that most Americans realize the importance of clean drinking water and the need to upgrade our infrastructure. The Value of Water campaign released the results from its annual poll and it found that 88 percent of the respondents understand and support the need for an increased investment in our water infrastructure. Another 75 percent say they would be willing to pay a modest increase in water rates to help close the gap in funding. (See article on page 37.)

While these numbers are based on a national survey, hopefully the results reflect the feeling of Massachusetts residents, as over the course of the next few weeks and months, municipal town meetings and city governments will be meeting to approve necessary local projects.

In conclusion, while UCANE took part in the “Water’s Worth It” campaign in May, we will continue to promote that water is worth it EVERY day. The longer we wait to replace our aging pipes, the more it will ultimately cost the taxpayers, no matter what time of year it is. That is why it is “worth it” to invest additional funding for water infrastructure. n

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House Passes FY19 Budget Proposal; Increases Contract Assistance and Funding for MassDEP

owards the end of April, the House Committee on Ways and Means offered, and the Massachusetts House of Representatives passed, a fiscal year 2019 budget proposal. The budget “remains cognizant of the Commonwealth's revenue growth, invests responsibly in basic services and programs, and improves the wellbeing of the people of Massachusetts. This balanced budget builds on commitments in the areas of healthcare, education, and social services, and makes new investments that complement legislative policies in the areas of criminal justice reform and substance use disorder,” according to House Ways and Means Chairman Jeff Sanchez, who shepherded through his first budget.

According to the summary provided by the House Ways and Means Committee, the Massachusetts' economy continues to grow and the unemployment rate has fallen to record lows. The life sciences, finance, and renewable energy industries, among others, drive this growth, creating new job opportunities across the Commonwealth in this ever-changing global economy. Investments in state priorities like healthcare and education enable more people to participate in this success.

The House Committee on Ways and Means FY19 budget allocates over $41 billion, an increase of 3.1% from the FY18 budget. The majority of the spending is supported by tax revenue estimates established during the Commonwealth's Consensus Tax Revenue process, which projected a $933 million (3.5%) increase in new tax growth. As part of that process, the House budget commits to a record $2.608 billion for pension liabilities and a projected $88 million deposit into the Massachusetts Stabilization Fund to continue its growth.

Of particular interest to UCANE, there were a number of appropriations and amendments adopted to the budget proposal that improve the Commonwealth’s ability to address underground infrastructure, including but not limited to:

MAY, 2018

•

Increased funding for the administration of the Massachusetts Department of Environmental Protection (MassDEP) to slightly over $29 million. Additional funding for the MassDEP ensures that the administration of water infrastructure programs are not hindered by reduced staffing.

• Funding for the Underground Storage Tank (UST) program under Mass. Gen. Laws ch. 21J was set at $8 million. The UST program pays for the replacement of single-lined fuel tanks to double-lined fuel tanks for eligible entities. There is currently a large backlog of unpaid claims.

• Additional language for the Clean Water Trust’s contract assistance line-item, making an important technical change to bring the budget language into conformity with Chapter 259 of the Acts of 2014 and more recent regulations to allow use of funds beyond only debt service to include principal forgiveness, interest rate reduction and other means of financial assistance was also included.

• The Commonwealth Rate Relief Fund was funded at $1.1 million, as per recent historical precedent, but will require support to find its way into the final Conference Committee report as the Senate often does not fund the initiative.

UCANE, which submitted letters in support of amendments to increase the MassDEP funding as well as contract assistance funding for the Massachusetts Clean Water Trust, noted that the over $29 million in funding for the MassDEP creates a positive trend for bringing the agency towards its one-time high of $34 million.

The Massachusetts Senate is expected to take its budget up in mid-May. The House and Senate will then reconcile their differences in a Conference Committee report before submitting it to the Governor towards the mid-to-latter part of June. continued on page 7

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MAY, 2018

Legislative Update continued from page 5

Baker-Polito Administration Provides Drinking Water Supply Protection Funds

T

he Massachusetts Executive Office of Environmental Affairs (EEA) recently announced $756,513 in grant awards to five Massachusetts public water suppliers through the Drinking Water Supply Protection Grant Program (DWSP). According to a release from the agency, the grant awards will enable water suppliers to protect existing or new wells and surface drinking water supply systems, such as reservoirs and other water bodies.

Since 2004, the DWSP Grant Program has offered grants to municipal and public water systems to be used for water supply protection and land conservation purposes, such as the acquisition of land, the placing of a conservation restriction, or the assignment of a watershed preservation restriction. Land acquired through the program must be located within existing MassDEP-approved drinking water supply areas, in estimated protection areas for new sources, or in an area identified through an appropriate planning process as suitable for groundwater recharge to an aquifer. Projects funded under this grant program should also provide appropriate public recreational opportunities to the residents of the Commonwealth.

FY18 DWSP grant awardees include: • Northampton DPW: Ryan Reservoir Complex $34,063 grant award to conserve a 50-acre forested parcel located within the watershed of the Ryan and

West Whately Reservoirs.

• South Deerfield Water Supply District: Conway and Whately Glen Reservoir II - $129,950 grant award to preserve 66 acres in the watersheds of the Conway and Whately Glen reservoirs.

• Town of Ipswich: Mile Lane Wellhead – $250,000 grant award to preserve a 14.5-acre forested parcel near Bull Brook Reservoir for drinking water source protection and passive outdoor recreation purposes.

• Town of Plymouth: Darby Pond Well Protection – $162,500 grant award to acquire a 40-acre parcel in order to remove a potential water supply threat posed by an active cranberry bog and improve groundwater quality in the Darby Pond Well area.

• Worcester DPW: Cobb Brook Protection - $180,000 grant award to acquire 48.5 acres of land straddling Cobb Brook, which drains to the Quinapoxet Reservoirs – one of the largest reservoirs in the City’s system.

For more information regarding the program, please visit EEA’s Division of Conservation Services’ Drinking Water Supply Protection Grant Program webpage at: https://www.mass.gov/service-details/drinking-watersupply-protection-grant-program-1

continued on page 9

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Legislative Update continued from page 7

Senate and House Pass Short-Term Rental Legislation; Cape Delegation Delivers Innovative Funding Mechanism

T

he Massachusetts Senate and the Massachusetts House of Representatives passed legislation, respectively, regulating the short-term rental industry. Although the House and Senate took different paths in regulating the industry, they did agree on one particular item: providing a funding and management mechanism to address the water infrastructure needs on Cape Cod and the Islands. Generally, the legislation expands the scope of the state’s room occupancy excise tax and local option excise tax to include short-term transient accommodations. According to proponents, the legislation will level the playing field, preserve local control and support the emerging short-term rental industry.

Of particular note, members of the Cape and Islands delegation, led by Senator Julian Cyr and Representative Sarah Peake, successfully added language to the respective short-term rental legislation that established a Cape Cod and Islands Water Protection Fund (CCIWPF) for Barnstable, Dukes, and Nantucket Counties to provide funding for critical regional water pollution abatement projects. The CCIWPF will be funded by an additional 2.75% occupancy excise tax in municipalities located within

those counties. While the House version of the language allows for the additional excise assessment on short-term rentals (i.e., AirBnB, etc.), the Senate version allows for the assessment on short-term rentals as well as traditional lodging establishments (i.e., hotels, motels, etc.).

According to a fiscal estimate from the Senate Committee on Ways and Means, the legislation would generate an estimated $34.5 million and $25.5 million in state and local revenues. The expanded tax base will automatically apply to all 175-plus cities and towns that have already adopted the local room occupancy excise to date. For the House version of the short -erm rental legislation, revenue estimates are in the range of $50 million.

The effort to establish the CCIWPF was notable for its involvement of key stakeholders from the region.

With advocates ranging from Wendy Northcross, CEO of the Cape Cod Chamber of Commerce, to Andy Gottlieb, Executive Director of the Association to Preserve Cape Cod, and officials from municipalities throughout the region, the Cape and Islands business, environmental and municipal communities united to produce

continued on page 11

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Legislative Update continued from page 9 potentially big results. The CCIWPF, which will advise and coordinate Cape and Islands’ access to funds, will work closely with the Massachusetts Clean Water Trust to manage the additional excise funds.

In supporting each of the Cape and Islands initiatives, UCANE wrote: [This initiative] recognizes the simple fact that property value is intrinsically tied to the availability and condition of a water infrastructure system. To this end, property rentals are also inextricably tied to the availability of clean water and linkages to wastewater infrastructure systems.

The proffered mechanism of an optional 2.75% surcharge by municipalities on short-term rentals is a workable means providing necessary new funding for this initiative – one that does not simply rely on the federal or state government to pay for water infrastructure improvements.

In order to address Cape Cod’s $4 billion - $6 billion in water infrastructure needs, property owners and renters must partner with the local, state, and federal government in financing needed maintenance and improvements.

The House of Representatives and Senate will iron out their differences with a conference committee comprised of three House members (Reps. Michlewitz, Peake, and Barrows) and three Senate members (Rodrigues, Spilka, and Fattman). The legislation will then be forwarded to Governor Baker for his approval before the end of formal sessions on July 31.

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Legislative Update continued from page 11

T

MassWorks Grant Applications Now Available

he Baker-Polito Administration recently announced that the MassWorks Infrastructure Grant Program is now accepting applications for 2018. At an economic development summit in Worcester on May 1, officials from the Massachusetts Executive Office of Housing and Economic Development (HED) made the announcement starting off the annual process. Last year, the Baker-Polito Administration awarded $85 million in grants to 46 projects, bringing the total awarded since 2015 to $274 million. According to HED, the grants have helped spur the development of more than 2 million square feet of commercial and retail space and more than 7,000 housing units.

The MassWorks Infrastructure Program provides a one-stop shop for municipalities and other eligible entities seeking public infrastructure funding to support economic development and job creation. The program represents an administrative consolidation of six former grant programs: Public Works Economic Development Grant (PWED); Community Development Action Grant (CDAG); Growth District Initiative

MAY, 2018

Grant (GDI); Massachusetts Opportunity Relocation and Expansion Program (MORE); Small Town Rural Assistance Program (STRAP), and the Transit Oriented Development Program (TOD).

Priority for funding is given to projects, which support the production of multi-family housing in mixeduse districts that are well connected to significant employment opportunities, projects that demonstrate consistency with sustainable development priorities and a reasonable level of readiness. The MassWorks Infrastructure Program Guidelines can be found at: http://www.mass.gov/hed/economic/eohed/pro/infrastructure/massworks/guidance-documents/.

An economic development bill pending before the Legislature would provide $300 million in new funds for the MassWorks program over an extended period of time. The 10-page applications for 2018 MassWorks grants will be accepted between July 30 and Aug. 10, 2018. More information about this important program can be found at: www.mass.gov/ service-details/massworks. continued on page 15

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MAY, 2018

Legislative Update continued from page 13

News in Brief

•

•

Senator Donoghue now City Manager Donoghue. The Lowell City Council voted to make Senator Eileen Donoghue its next City Manager in April. According to the Lowell Sun, City Manager Donoghue will be paid $196,000 in salary her first year. While voters in Lowell, Dunstable, Groton, Pepperell, Tyngsborough, and Westford will go without representation in the Senate for the rest of the session, the seat is expected to be hotly contested in November. A former Lowell city councilor and mayor, Donoghue served in the Senate since 2011.

Hawkins Replaces Heroux in House. Representative Jim Hawkins of Attleboro was recently sworn in to take the seat left open when former Representative Paul Heroux become Mayor of the City of Attleboro. Representative Hawkins, who became a high school math teacher at age 50, is an avid racer at Seekonk Speedway. A former owner of a gas station, manager of a family-owned group of auto parts stores, and a teacher of small business management at Roger Williams University, Representative Hawkins is a member of the Democratic party.

•

•

Representative Calter Becomes Town Administrator in Kingston. Prior to the FY19 House budget debate, Representative Thomas Calter was named the new town administrator in his hometown of Kingston, setting the House up for another vacancy. Representative Calter became the fourth lawmaker to leave Beacon Hill this year for a municipal job. (McGee – City of Lynn Mayor; Donoghue – City Manager for Lowell; Heroux – Mayor of Attleboro).

First elected to the House in 2006, Representative Calter represented Halifax, Plympton, and parts of Duxbury, Middleborough, and Plymouth.

Representative Jim Miceli Passes Away. Wilmington Representative James Miceli died at age 83 towards the end of April. Miceli, the longest continuously serving member of the Massachusetts House, had represented Tewksbury and Wilmington since 1977. Miceli served as Vice Chairman of the House Committee on Global Warming and Climate Change, and a member of the Joint Committee on Tourism, the House Committee on Personnel and Administration, and the House Ways and Means Committee. Miceli’s death is the third death of a member of the Massachusetts House of Representatives this session. n

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Representative Jerry Parisella (House Chairman, Joint Committee on Public Service)

After high school, Representative Parisella took some college classes and got hired as a laborer working at the electric power plant in Salem, Massachusetts. After a few years of working on the insulation crew, he graduated from Emerson College thinking he was going to be the next big sports broadcaster. That didn’t happen, but he got a job at a local newspaper and started covering local and regional government and politics.

Rep. Parisella was offered a job as a press secretary for a congressman and moved to Washington for two years, a job he really enjoyed. Unfortunately, the congressman lost his re-election so Rep. Parisella moved back to Massachusetts and attended law school. After law school he worked in both private and public practice and was involved helping local candidates with some of their elections. In 2010, the incumbent State Representative decided not to run for re-election, so he jumped into the race. Rep. Parisella was elected and has been serving since then. He is also a 24-year veteran of the Army Reserve and has been deployed to Bosnia and Iraq. In fact, after his election in 2010 he received orders to deploy to the Middle East, so his first year as a representative was spent mostly in Iraq.

Q:

The Legislature will soon be considering budget recommendations for FY19. With increasing costs in different areas, what are your thoughts on how the state will continue to fund local aid to cities and towns to help support basic municipal services, specifically water infrastructure?

A:

In regard to the Commonwealth’s budget, it’s no surprise that roughly 40% of state revenues goes toward health care, so the folks who write the budget always have to keep that in mind when it comes to new spending. As far as this year’s budget goes, revenue projections are looking better than last year’s. I believe that the Office of Administration & Finance is anticipating 3.5% revenue growth, which is conservative when compared to other estimates that I’ve seen. This bodes well for the budget overall, and I would anticipate that the legislature will reaffirm its commitment to local aid in FY19 as a result. Providing for my community has always been my top priority as a State Representative, and I will continue to support increases in local aid and funding for important projects in Beverly.

As federal funds for water infrastructure continue to decline, it’s up to the Commonwealth to increase funding and grant

MAY, 2018

programs in an effort to continue these vital investments.

Q:

The Massachusetts Water Infrastructure Finance Commission found that there is a $20 billion gap in water and sewer infrastructure funding over the next 20 years in the Commonwealth.

Representing the City of Beverly, can you discuss some of the water and sewer infrastructure concerns your community has been addressing?

A:

Like many cities and towns across the Commonwealth, Beverly has a rapidly aging infrastructure. The city has taken on several water infrastructure projects in recent years, and others are in the planning stage at the moment. The most significant project has been the reconstruction of Route 1A, which is still ongoing. That project has involved extensive underground utility work, including nearly two miles of water and sewer drainage improvements. That project will eventually change the face of downtown Beverly. In addition, we’re addressing several other drainage and water main rehabilitation projects throughout the city. At this point, the city is primarily continued on page 19

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Interview continued from page 17 concerned with cleaning or replacing outdated underground infrastructure with the goal of improving both water quality and more efficient distribution, which will reduce our vulnerability during tough storms or extreme temperatures.

In the end, the hope is that these improvements will also lead to reduced rates for consumers. However, these types of projects tend to impose a degree of inconvenience on residents, and city officials are always working, in tandem with contractors, to keep the public informed and prepared.

Q:

The construction industry is crucial to the continued economic development and growth of the Commonwealth. There is concern about a shortage of the workforce to fill construction jobs over the next few years. What do you believe can be done to make sure that the industry is not affected by a lack of qualified workers?

A:

Throughout my time as a legislator, I’ve worked intimately with employee unions from across the Commonwealth, most notably as Chairman of the Committee on Public Service. I know from speaking with industry stakeholders that maintaining a qualified workforce is essential, given the rapid rate of development across the state. I think that a few actions

At this point, the city is primarily concerned with cleaning or replacing outdated underground infrastructure with the goal of improving both water quality and more efficient distribution, which will reduce our vulnerability during tough storms or extreme temperatures. can be taken to avoid any potential dearth of skilled workers. Potentially, the state could streamline the building and trades licensing process to get more workers in the field.

Additionally, we can either bolster or create new programs to incentivize young people to seek out careers in construction.

This could include a greater emphasis on apprenticeships, investing in and promoting vocational schools, and creating partnerships between the industry and the Commonwealth’s community colleges. Speaking of vocational schools, I was proud to support funding for the new Essex Tech High School in Middleton that has state of the art facilities and is producing outstanding graduates who come out of the school with experience and knowledge in a variety of trades, such as plumbing, carpentry, masonry, and culinary arts. These types of programs are training a 21st century workforce vital to our economy. Creativity will be key when it comes continued on page 21

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Interview continued from page 19

Specialists In Bonding And Insurance For Contractors

to avoiding a lack of qualified workers in the future. Having a skilled construction workforce is essential to maintaining the state’s ability to grow economically year after year.

Q: A:

What are some of your priorities as the 20172018 legislative session come to a close?

I am hoping that we can invest more in our infrastructure, because, as noted, there is a tremendous backlog of projects that need attention, whether it is our roads and bridges, or water and sewer systems. This investment not only improves our critical systems, but it also creates well-paying jobs that boost our economy. As a veteran, I am always looking to help improve the lives of those that have served our country. I believe veterans have the work ethic and discipline to make effective employees, so I continue to support programs that help veterans enter the job market, including Helmets to Hard Hats, an initiative that provides training to veterans to enter the construction trades. The state also has adopted bidding and hiring preferences for veteran-owned businesses. Additionally, there are several projects in Beverly that are critical to development in our community, including the new middle school that is scheduled to open in the fall, and planning for a new police station to replace the current 80-plus year old structure. n

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MAY, 2018

Construction & Public Contracts Group, Hinckley Allen, LLP

Christopher Morog Partner

Robert T. Ferguson Partner

The Bid Unit of the Massachusetts Attorney General’s Office Releases Decision on Bidder Responsibility The competitive bidding statute for public works projects (M.G.L. c. 30, § 39M) generally requires an awarding authority to award to the lowest eligible and “responsible” bidder on large projects. Because awarding authorities have discretion when it comes to determining “responsibility,” the awarding authority’s bidder responsibility determination can, in some cases, be used as a trump card to reject a low bidder. The responsibility determination will usually be upheld so long as there is a rational basis to support it. Under this legal standard, bid protests challenging bidder responsibility determinations often fail. But that was not the result in a recent bid protest decision of the Bid Unit of the Massachusetts Office of the Attorney General (“AGO”). ​The AGO’s decision in In re: I. W. Harding Construction Co., Inc. arose out of a $2.5 Million municipal roadway improvements project. Although I. W. Harding Construction Co., Inc. (“I. W. Harding”) had submitted the lowest bid, the awarding authority rejected I. W. Harding in favor of the second-low bidder. As purported grounds for rejection, the awarding authority pointed to references and alleged prior experience with I. W. Harding. The awarding author-

MAY, 2018

ity also took the position that, “since there was only a small differential between [I. W.] Harding and the second lowest bidder ($16,000), it weighed the two contractors and chose the contractor who would[,] it thought[,] probably get along best with the abutters” to the project.

I. W. Harding lodged a bid protest, arguing that the awarding authority’s rejection was not justified on the record and that it impermissibly compared the bidders. The AGO agreed, allowing the protest in a well-reasoned and detailed decision. Hinckley Allen handled the protest for I. W. Harding.

After briefing and a hearing, the AGO found that I. W. Harding had successfully completed hundreds of public works projects similar to this project in the Commonwealth for more than 35 years. The AGO made the following additional factual findings concerning several of I. W. Harding’s references: • Reference 1. The awarding authority’s former city engineer “praised” I. W. Harding’s project mancontinued on page 25

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Legal Corner continued from page 23 ager, and confirmed that I. W. Harding was cooperative with the owner and engineer on prior projects for the awarding authority and had produced “high quality results.”

• Reference 2. A second reference indicated that I. W. Harding aggressively pointed out issues and problems with the specifications at the pre-construction meeting. However, the reference confirmed that I. W. Harding “was actually correct” and that I. W. Harding “did a good job and demonstrated good judgement.” The AGO acknowledged I. W. Harding’s testimony that it promptly raises specification issues to avoid project delays.

• Reference 3. A third reference confirmed that I. W. Harding was cooperative with the owner and engineer and rated I. W. Harding highly.

• Reference 4. A fourth reference also gave I. W. Harding a positive reference, confirming that I. W. Harding was cooperative and “definitely” has the “skills for roadway improvement projects.”

While recognizing the awarding authority’s discretion, the AGO made clear that such discretion is not “unconstrained.” The bidder responsibility investigation must be reasonable, accurate, and thorough.

The awarding authority cannot disregard facts and

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circumstances and its decision must be justified on the record.

Rejecting any notion that I. W. Harding was “difficult to work with” as unsupported by the record, the AGO noted that it is “incumbent upon a contractor to bring deficiencies in the plans and specifications to the attention of the awarding authority, in order to avoid future problems during the construction of the project.”

The AGO also rejected conclusory comments by one reference in light of evidence that the reference – which the AGO had previously found to have acted arbitrarily with respect to I. W. Harding – was biased against I. W. Harding. On the facts of this case, the AGO concluded that the awarding authority’s consulting engineer should have known of such bias when investigating references, and indicated that a different reference should have been contacted.

The AGO further found that there was “absolutely no evidence that [I. W.] Harding could not handle the complexity of this project and any ‘challenging conditions’ that it may encounter” and rejected several other grounds that the awarding authority had raised in support of its rejection.

Lastly, the AGO concluded that the awarding authority impermissibly “weigh[ed]” I. W. Harding continued on page 26

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Legal Corner continued from page 25 against the second-low bidder to determine which bidder would be a “better fit� for the awarding authority. The AGO made clear that the awarding authority must first determine that the low bidder is not responsible “before the second bidder can be considered.�

This article does not address all the issues involved in In re: I. W. Harding Construction Co., Inc. Generally speaking, the AGO’s decision makes clear that an awarding authority cannot pick-andchoose among bidders; the awarding authority must investigate the low bidder first. If the awarding authority decides to reject the low bidder on responsibility grounds, the awarding authority must be able to justify its decision on the record.

Bidders aggrieved by an awarding authority’s bidder responsibility determination must evaluate whether the determination is justifiable. If not, there may be a narrow avenue to protest. n

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Governor Baker Signs OSHA Bill for Public Workers Bill extends OSHA Safety Standards to 428,000 public sector employees in Massachusetts. Law to be enforced by MA Dept. of Labor. Guidelines issued for employers and employees.

DEPARTMENT OF LABOR STANDARDS MASSACHUSETTS — On March 9, 2018 Governor Baker signed a bill that amends M.G.L. chapter 149 § 6½. The law was updated to clarify employee safety requirements in public sector workplaces, and is enforced by the Department of Labor Standards (DLS).

•

Clarifies that the definition of public sector workplace includes counties, municipalities, all state agencies, quasi-public independent entities, courts, bureaus, commissions, divisions or authorities of the commonwealth, political subdivisions, and public colleges and universities.

Clarifies that public sector employers are required to provide methods to reduce work-related injury and illness, which meet the minimum requirements provided under OSHA.

Why the Law Was Updated •

The original law, M.G.L. chapter 149 § 6½ did not contain the phrasing for OSHA compliance because it was written before 1970, when OSHA was enacted.

How Safety Requirements are Enforced •

DLS conducts safety and health inspections of public sector workplaces. Federal OSHA inspectors will not inspect public sector employers. The updated law clarifies the public sector employer’s obligations and does not change current DLS procedures.

How Workplaces are Selected for Inspection DLS prioritizes inspections in the following order.

DLS makes an appointment for all inspections, with the exception of “Imminent” inspections.

• Imminent Hazard: DLS inspectors stop at active trenches, aerial lift operations, and roofing to ensure safety equipment and procedures are used.

MAY, 2018

• •

Highlights: •

•

•

Accident Investigation: DLS inspects workplaces in response to a worker injury. Examples of recent inspections include amputation, electric shock, fall from ladder, broken leg, crushed hand, trench collapse, and flash fire.

Voluntary: An employer can request a voluntary safety and health audit.

Complaint: DLS responds to complaints about workplace safety conditions. Examples of complaints include ladder handling, lack of respirators, and facility maintenance.

Planned Programmed Inspection: DLS inspects a representative number of inspections in workplaces expected to contain machinery or other hazards. Examples of recent inspections include wastewater treatment plants, drinking water plants, highway departments, municipal electric power, school kitchens, and crossing guard locations.

Frequent Discussions: 1. The amended law does not replace OSHA. OSHA continues to have jurisdiction for private sector employers.

2. Massachusetts requirements are as strict as OSHA. No stricter or more lenient.

3. The effective date is February 1, 2019. However, the original Mass General Laws are still in effect.

DLS will continue to conduct safety and health inspections in the interim, and will conduct outreach to familiarize employers with their responsibilities.

4. Massachusetts may pursue becoming an OSHA State Plan State. An OSHA State Plan is a program that is approved, partially funded, and audited by OSHA. In order to become an official State Plan, DLS must submit an application to federal OSHA. There are currently five states that have a State Plan which covers public sector workplaces only, and use federal OSHA for private sector: Connecticut; Illinois; Maine; New continued on page 31

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OSHA Bill continued from page 29

5.

6.

7.

8.

Jersey; and New York. Whether or not Massachusetts is an OSHA State Plan does not affect the authority of DLS to enforce workplace standards at least as stringent as OSHA. Public sector employers may get fined. DLS has the authority to issue fines. The enforcement approach used by DLS is to issue an order for corrective action to employers for a first offense.

When corrective actions are completed within the timeframe specified, a fine is not issued.

When to notify DLS about an injury - Contact DLS within 24 hours if an accident causes a death, amputation, loss of an eye, loss of consciousness, or inpatient hospitalization at (508) 616-0461 or safepublicworkplace@state.ma.us. For these and all other injuries, continue to follow your current workers’ compensation procedures and file First Reports with the Department of Industrial Accidents.

When to keep an OSHA 300 Log - Complete an OSHA 300 Log if you receive a letter from the Bureau of Labor Statistics requesting a copy of your log. Complete an OSHA 300 Log if requested by a DLS inspector. Do not enter your logs on the osha.gov website. More details to follow in 2019.

Training requirements are job specific. Safety train-

ing depends on the tasks and equipment handled by employees, such as aerial lifts, trenches, ladders, or chainsaws. For a summary, see the DLS website at www.mass.gov/dols/wshp and https:// www.osha.gov/Publications/osha2254.pdf.

9. OSHA 10 training is not required. OSHA 10 training is not required of all employees under updated MGL c149 § 6½. However, there is a public bidding law that requires OSHA 10 training on publicly bid construction projects over $10,000. Provide this training if that law applies to your workers.

10. Requirements for a private contractor performing work on public property are the same as before.

Private sector employers are required to comply with OSHA standards. An enforcement inspection can be conducted by federal OSHA inspectors.

11. DLS provides tools to help prepare for compliance. Self-audit checklists are available for public workplaces. See www.mass.gov/dols/wshp 12. To request free technical assistance: A municipal, county, or state agency can request a free DLS safety inspection. For example: a safety and health audit of a wastewater treatment plant; a school electrical safety audit; or safety committee coaching. If safety and health hazards are observed, a “Technical Assistance Report” which continued on page 33

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OSHA Bill continued from page 31 itemizes each hazardous condition and recommends corrective action will be provided. Civil penalties are not issued for voluntary requests for technical assistance. However, the employer will be required to provide documentation that hazardous conditions are corrected. Call the Department of Labor Standards at 508-616-0461, or send an email to: safepublicworkplace@state.ma.us

How to Report an Accident or File a Complaint To report an accident involving a public employee: • Call (508) 616-0461 x9488 or email: safepublicworkplace@state.ma.us • Police, fire, and EMS departments are requested to report injuries that occur to public employees, particularly EMS response, amputation, loss of eye, hospitalization, or fatality.

• A public employee is an employee of a state, county, or municipal entity.

To file a complaint on a public sector worksite: 1. Download and email the Notification of Alleged Hazard form, complete it and then email it to safepublicworkplace@state.ma.us. Please include your name, address and telephone number

so they can contact you to follow up. This information is confidential.

2. Call DLS at (508) 616-0461 x9488. DLS recommends that employees try to resolve safety and health issues first by reporting them to their supervisors, managers, or the safety and health committee. At any time, however, employees can complain to DLS. Employees or their representatives may complain if they believe there is a violation of a safety or health standard, or if there is any danger that threatens physical harm, or if an "imminent danger" exists. Enough information must be provided for DLS to determine if a hazard exists. Workers do not have to know whether a specific standard has been violated in order to file a complaint.

The Department of Labor Standards (DLS) will follow-up by sending a written complaint letter or by conducting a site inspection.

Notice of Alleged Hazard Listed below are questions to consider when submitting your Notice of Alleged Hazard. Answering these will assist in providing complete and accurate information: • How many employees work at the site and how many are exposed to the hazard?

• How and when are workers exposed? continued on page 34

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OSHA Bill continued from page 33 •

What work is performed in the unsafe or unhealthful area?

What type of equipment is used? Is it in good condition?

What materials and/or chemicals are used?

Have employees been informed or trained regarding hazardous conditions?

What process and/or operation is involved?

What kinds of work are done nearby?

How often and for how long do employees work at the task that leads to their exposure?

How long (to your knowledge) has the condition existed?

Have any attempts been made to correct the problem?

On what shifts does the hazard exist?

Has anyone been injured or made ill as a result of this problem?

Have there been any "near-miss" incidents?

Do any employees have any symptoms that they think are caused by the hazardous condition or substance?

Have any employees been treated by a doctor for a work-related disease or condition? What was it?n

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The poll measured responses from 1,000 regisWater infrastructure is a TOP PRIORITY tered voters and was conducted by the bipartisan refor voters. search team of Fairbank, Maslin, Maullin, Metz, and Associates and Public Opinion Strategies.

Key findings include: e years, the Value of Water Campaign Maslin, Maullin, Metz, and Associates (D) and Public • Water infrastructure is a top priority for voters.

5 voters say rebuilding America’s infrastructure is an voters to better their Strategies (R).4 ofThe findings demonstrate that Four understand of five American voters (80 Opinion percent) say that extremely or very important. rebuilding America's infrastructure is extremely state of our nation’s water infrastructure water is an issue that resonates with the public over time or action very important, with nearly everyone saying w as priorities for and potential and that Americans across the political spectrum support it is at least somewhat important (96 percent). d annual poll ofInfrastructure 1,000 American voters investment outstrips every other issue in and this stewardship of our water infrastructure he bipartisan research of Fairbank, resources. regard team including building a walland on the Mexican When asked about water infrastructure specifically (the infra­ border, replacing Obamacare, and providing perstructure that brings clean drinking water to our homes and manent resident status for Deferred Action for removes and treats wastewater) 78% say it is extremely or very Childhood Arrival recipients. important for the President and Congress to develop a plan to rebuild our water infrastructure. want congress to invest in our nation's ructure is• aAmericans TOP PRIORITY water infrastructure before our systems fail. In "Our water infrastructure systems are aging and fact, 88 percent of Americans support increasing federal investment to rebuild our water infrafailing. We may come from different walks of life, but structure to ensure safe, reliable water service we all agree that rebuilding our water infrastructure is for all communities. Voters support a proactive a priority. Water is one of the most powerful conveprogram of water infrastructure upgrades, rather ners of diverse interests, and our elected officials and than fixing problems as they arise (75 percent). those campaigning this year would do well to listen They maintain this support when told it would and act on infrastructure" says Radhika Fox, Director uilding America’s infrastructure is of voters say it is at least somewhat important. cost over $1 trillion.

Americans want Congress INVEST of the Value of Water Campaign to and CEO ofinthe US portant.

Water • Agreement spans party lines: water infrastructure ourAlliance. nation’s water infrastructure BEFORE is essential to all. Support for investing in water our systems fail. infrastructure cut across age, gender, party, geogAbout the Value of Water Campaign raphy, and ideology. Sixty-six percent of RepubliThe Value of Water Campaign educates and incans, 80 percent of Independents, and 88 Voters saypercent infrastructure is more important other top spires the nation aboutthan howevery water is essential, inof Democrats agree that investing in our issue waterright in- now. federal valuable, and in need of investment.

Spearheaded by frastructure is either extremely or very important. of Americans support increasing federal investment to rebuild ater infrastructure specifically (the infra­ top leaders in the water industry, and coordinated by Rebuildingshould America’s infrastructure our water infrastructure.

• Ratepayers will do their share. Congress clean drinking water to our homes and the US Water Alliance, the Value80% of Water Campaign do the same. When informed that some costs wastewater) 78%would say it isbeextremely or very is building public and political will for investment in borne by ratepayers, 78 percent of Legal statustofor esident and Congress to develop a plan to America’s water and wastewater infrastructure through Americans continue to support the program re-Dreamers 55% rastructure. best-in-class communications tools, high-impact invest in our water infrastructure, and 75 percent

95%

88%

would be willing to pay a modest increase in local Defense funding water rates to fund improved service.

events, media activities, and robust research and publications. More 54% at thevalueofwater.org n

Repealing Obamacare

MAY, 2018

38% “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” Building a wall

37

Maslin, Maulli Opinion Strate water is an iss and that Ameri investment an and resources

95%

of voters say it i

Voters say infra federal issue rig

Rebuilding Ame

Legal status for

Defense funding

Repealing Obam Building a wall

75%

of Americans su upgrades, rathe

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

MAY, 2018

with UCANE’s Officers and Board Members How did you get started in the underground construction industry and what was your first job?

I completed my education in the Philadelphia area at the end of 1988, at which time my wife Karen, a Weymouth girl, and I decided to relocate to Massachusetts. So we packed up our 11/2 year old daughter (and a second one on the way) and headed north. I flooded the New England area with my resumes hoping to land a new job in Massachusetts within the field. Unbeknownst to me, Karen had already approached her father asking him to interview me for a possible position in his well-established construction company.

So we got to New England and I met with Karen’s father, Joe DiPietro, who I really didn’t know that well, since we lived in Philly the last few years. Having degrees in chemical engineering, I basically had nothing to offer him and told him so. His response, which I can still hear to this day was “Don’t worry, I’ll teach you,” and in May of 1989, at 27 years old, I started work at Celco Construction Corp.

How long have you been with the company you currently work for?

2018 will be my 30 th construction season with Celco – and Joe is still teaching me!

How long have you been involved with UCANE? I have personally been involved with UCANE since 2010. Celco has been involved with UCANE since the early 1970s.

MAY, 2018

UCANE Board Member Tony Borrelli, Clerk/Director Celco Construction Corp.

I have been on the Board most of the time since I became active, and I was honored to be elected President of UCANE in 2015.

How and why did you decide to get involved with UCANE? Because Anne asked me; and you can’t say no to Anne.

What is the nature of the industry as you currently see it?

In general, I see the underground utility industry as underappreciated. Obviously since most of our completed work is never seen by the public, there is very little notoriety until something goes wrong, such as the catastrophic Plymouth or Nantucket force main failures. The word continued on page 41

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

39

40

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

MAY, 2018

Under the Hard Hat continued from page 39

tunity to see what is going on within the industry and to effect positive change. In many cases, the UCANE Board can take action to prevent negative changes that might otherwise be instituted to the detriment of the industry. Sometimes stopping bad legislation and regulation is more important for our businesses than promoting good ones. n

“infrastructure” has taken on too many meanings lately.

Water, sewer, gas, and underground piping is the true infrastructure. Nothing really can be built above ground without first putting in these important systems. Roads and bridges get top billing and top funding because they are visible to the eye, but the piping below is the true foundation and is equally important. Underground work should be sharing the stage with roads and bridges and getting Call Your Nearest GENALCO Warehouse funded accordingly.

For These Supplies What would you like our membership to know about being a Board Member?

I enjoy meeting and working with other respected contractors at the monthly Board meetings. There is a lot of experience in the room and no shortage of ideas. Every contractor, large or small, gets a voice when you’re on the Board. Being a Board member also affords one the oppor-

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

MAY, 2018

Lou Tonry

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7/1/2018 Massachusetts Workers’ Compensation Rate Change The Massachusetts Commissioner of Insurance has approved a Stipulation for the general revision of workers’ compensation rates, effective 12:01 A.M., July 1, 2018, applicable to new and renewal policies.

Average Rates The overall average decrease of 12.9% will vary by industry group as follows: Industry Credit Manufacturing 11.2% Construction 14.2% Office & Clerical 13.4% Goods & Services 12.0% Miscellaneous 13.0% Average rates include adjustments for experience factors, the construction class credit and other factors.

Change in Manual Rates The overall decrease in manual rates by industry group is: Industry Credit Manufacturing 10.8% Construction 16.1% Office & Clerical 9.7% Goods & Services 11.6% Miscellaneous 12.5% The changes by class, even within the same industry group, vary substantially.

The classification phraseology for class codes 5040 (Iron or Steel: Erection – Frame Structures), 5059 (Iron or Steel: Erection – Frame Structures Not

MAY, 2018

Over Two Stories) and 5538 (Sheet Metal Work – Shop & Outside) have been updated to clearly describe all operations that are common to all insureds involved in these types of steel erection projects. Consequently, the rates for these codes have been adjusted downward to reflect the clarification of the scope of these classifications with regard to steel erection operations.

For further details, refer to Circular Letter No. 2331.

Following is a list of the more common classifications we work with and the new manual rates per $100 of payroll. The rates for all Massachusetts classes can be found at www.wcribma.org, the web site of the Workers’ Compensation Rating and Inspection Bureau of Massachusetts, on their Class Code Lookup page.

Experience Rating Plan Changes The Experience Rating Plan Expected Loss Rates and D-Ratios have also changed. These rates and ratios are used in calculating experience rating factors (experience mod. and ARAP) and are a significant component in determining the final premium for an experience rated risk. Expected loss rates used in calculating experience factors decreased by an average of (5.3%) over all industry groups.

There were also changes in the Weight and Ballast Tables used in calculating experience factors and the per claim accident limitation increased from $210,000 to $250,000. continued on page 44

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43

Estimated Annual Standard Premium $0 to $75,000 $75,001 to $100,000 $100,001 to $125,000 $125,001 to $150,000 $150,001 to $200,000 over $200,000

Insurance Perspectives continued from page 43 A risk is eligible for experience rating when the payrolls or other exposures developed in the last year or last two years of the experience period produced a premium of at least $11,000. If more than two years, an average annual premium of at least $5,500 is required.

Experience mods and ARAPs already issued effective 7/1/18 or after on a preliminary basis will be recalculated to reflect the new Expected Loss Rates.

Small Deductible Credits The premium credits applicable to the election of small deductibles under either the Massachusetts Benefits Deductible Program or the Massachusetts Benefits Claim and Aggregate Deductible Program have been revised. The deductible credits will be:

Benefits Deductible Coverage Program Deductible Amount Credit $500 2.0% $1,000 3.1% $2,000 4.9% $2,500 5.6% $5,000 8.3%

Credit 5.5% 5.4% 5.3% 5.2% 5.0% 4.7%

Other Factors There were changes to the Retrospective Rate Plan as well as an overall average decrease in FClasses rates of 13.3% and a decrease in the United States Longshore and Harbor Workers’ (USL&H) factor for non-F classes to 22.6%. For details, see the Bureau’s web site at www.wcribma.org.

There were no changes in the following: • Expense Constant • Loss Constant • Admiralty Law and Federal Employers’ Liability Act classifications • Merit Rating Program • Massachusetts Construction Classification Premium Adjustment Program • Premium Discount Tables A and B

It is important to remember this rate change will affect each insured Under this program, a per claim deductible of differently and premium changes $2,500 applies subject to an aggregate of $10,000. will vary. Please consult with your For policies with an estimated annual standard premium over $200,000, the aggregate is 5% of the esaccount manager to review how timated annual standard premium. this change will affect you. n MASSACHUSETTS WORKERS’ COMPENSATION RATES Benefits Claim and Aggregate Deductible Program

Selected Rates per $100 of Payroll MASSACHUSETTS WORKERS’ COMPENSATION RATES Select Rates per $100 of Payroll Class 7600 5472 5473 1463 8232 8058 8204 5703 9014 9015

Description

9/1/08 Rate

9/1/10 Rate

4/1/14 Rate

% Change 16 to 18 $3.97 $2.96 -25.4% $9.27 $8.75 -5.6% $10.25 $10.55 2.9% $8.98 $8.79 -2.1% $5.53 $5.81 5.1% $2.44 $2.18 -10.7% $4.23 $4.49 6.1% $21.41 $14.57 -31.9% $3.01 $2.28 -24.3% $3.17 $2.89 -8.8% continued on page 45 $5.52 $4.49 -18.7%

7/1/16 Rate

Alarm Systems $3.03 $3.23 $3.54 Asbestos Removal $7.22 $8.75 $8.98 Asbestos Removal NOC $12.48 $12.60 $11.70 Asphalt Works & Drivers $6.06 $7.53 $8.27 Building Material Dealer – New Materials $4.87 $4.43 $4.75 Building Material Dealer – Store Employees $3.45 $2.71 $2.58 Building Material Yard $6.89 $5.42 $4.89 Building Raising or Moving $26.58 $26.72 $24.80 Buildings Operations By Contractors $2.50 $2.48 $2.66 Buildings Operations By Owners $2.94 $2.72 $2.99 Carpentry - Cabinet Work, Interior Trim, Wood 5437 $5.93 $5.23 $4.86 Flooring 5645 Carpentry - Detached Dwellings $7.50 $8.68 $8.06 $8.11 “BUY FROM THE ADVERTISERS IN CONSTRUCTION 280244 Carpentry - Shop $4.35 $4.63OUTLOOK” $3.93 $4.42 5403 Carpentry NOC $11.92 $9.61 $9.86 $11.00

7/1/18 Rate

$7.10 -12.5% MAY, 2018 $3.67 -17.0% $7.64 -30.5%

1463 8232 8058 8204 5703 9014 9015

Asphalt Works & Drivers $6.06 $7.53 $8.27 $8.98 $8.79 -2.1% Building Material Dealer – New Materials $4.87 $4.43 $4.75 $5.53 $5.81 5.1% Building Material Dealer – Store Employees $3.45 $2.71 $2.58 $2.44 $2.18 -10.7% MASSACHUSETTS WORKERS’ COMPENSATION RATES Building Material Yard $6.89 $5.42 $4.89 $4.23 $4.49 6.1% Building Raising or Moving $26.58 $26.72 $24.80 $21.41 $14.57 -31.9% Select Rates per $100 of Payroll Buildings Operations By Contractors $2.50 $2.48 $2.66 $3.01 $2.28 -24.3% Buildings Operations By Owners $2.94 $2.72 $2.99 $3.17 $2.89 -8.8% Carpentry - Cabinet Work, Interior Trim, Wood 5437 $5.93 $5.23 $4.86 $5.52 $4.49 -18.7% Flooring 5645 Carpentry - Detached Dwellings $7.50 $8.68 $8.06 $8.11 $7.10 -12.5% 2802 Carpentry - Shop $4.35 $4.63 $3.93 $4.42 $3.67 -17.0% 5403 Carpentry NOC $11.92 $9.61 $9.86 $11.00 $7.64 -30.5% 5610 Cleaner Debris Removal $5.83 $5.43 $5.57 $6.49 $5.66 -12.8% 8810 Clerical NOC $0.12 $0.09 $0.08 $0.07 $0.07 0.0% 5222 Concrete - Bridge Construction $8.43 $8.70 $8.93 $10.40 $8.58 -17.5% 5213 Concrete Construction NOC $21.45 $18.85 $17.50 $15.46 $11.97 -22.6% 5221 Concrete Floors, Driveways $6.62 $6.24 $6.40 $6.77 $6.97 3.0% 5215 Concrete Work - Private Residence $5.07 $5.33 $4.95 $5.65 $4.33 -23.4% 6325 Conduit Construction-Cable or Wires $3.61 $4.38 $4.49 $4.79 $3.41 -28.8% 8227 Contractors Permanent Yard $3.24 $3.93 $4.03 $4.70 $4.79 1.9% 5102 Door, Door Frame, Sash Erection $6.76 $6.89 $6.40 $6.12 $6.12 0.0% 6229 Drainage or Irrigation Systems $4.17 $4.35 $4.46 $4.56 $3.77 -17.3% 6204 Drilling NOC $9.81 $9.67 $9.01 $7.78 $5.85 -24.8% 7380 Drivers NOC $5.56 $5.71 $6.17 $6.08 $5.96 -2.0% 5190 Electrical Wiring $3.17 $2.84 $2.74 $2.61 $2.17 -16.9% 5160 Elevator Erection or Repair $3.47 $4.21 $3.91 $3.37 $2.75 -18.4% 8601 Engineer or Architect - Consulting $0.33 $0.26 $0.29 $0.27 $0.21 -22.2% 6217 Excavation / Grading of Land $4.17 $4.35 $4.46 $4.53 $4.03 -11.0% 5606 Executive Supervisor $1.75 $1.62 $1.66 $1.87 $1.47 -21.4% 6400 Fence Erection $6.33 $7.05 $6.55 $6.00 $4.71 -21.5% 5478 Floor Covering Installation $4.68 $4.68 $4.80 $5.59 $4.18 -25.2% 5462 Glazier $8.93 $9.58 $8.89 $7.70 $6.18 -19.7% % 9/1/08 9/1/10 4/1/14 7/1/16 7/1/18 Class Gravel & Sand Digging Description 4000 $5.31 $4.82 $4.41 $4.29 $4.48 Change 4.4% Rate Rate Rate Rate Rate to 18 9521 House Furnishings Installation $4.56 $4.53 $3.85 $3.40 $2.73 16-19.7% 5479 Insulation Work $8.94 $7.78 $7.98 $8.90 $6.92 -22.2% 5040 Iron or Steel Erection $44.61 $54.08 $55.49 $59.07 $24.00 -59.4% 5057 Iron or Steel Erection NOC $39.97 $33.00 $30.63 $26.45 $21.61 -18.3% 5059 Iron or Steel Erection: Not over 2 Stories $39.97 $33.00 $30.63 $26.45 $16.69 -36.9% 3030 Iron or Steel Shop - Structural $7.34 $8.53 $7.24 $6.16 $5.47 -11.2% 3041 Iron Works - Shop - Decorative $5.16 $4.71 $4.25 $4.74 $3.40 -28.3% 3040 Iron Works - Shop - Ornamental $9.01 $7.77 $7.03 $5.98 $4.52 -24.4% 6005 Jetty or Breakwater Construction $5.09 $6.01 $6.16 $6.52 $4.51 -30.8% 0042 Landscape Gardening $4.23 $4.03 $4.11 $4.09 $3.55 -13.2% 8820 Law Office $0.10 $0.09 $0.09 $0.09 $0.08 -11.1% 9102 Lawn Maintenance $1.97 $2.24 $2.47 $2.66 $2.49 -6.4% 5022 Masonry NOC $11.62 $10.55 $9.80 $9.70 $9.60 -1.0% 3724 Millwright Work NOC $6.79 $5.48 $5.09 $4.99 $5.08 1.8% 9534 Mobile Crane Hoisting Service $6.95 $5.60 $5.75 $6.70 $5.29 -21.0% 8742 Outside Sales $0.20 $0.15 $0.16 $0.16 $0.12 -25.0% 5474 Painting or Paper Hanging NOC $5.01 $5.09 $5.22 $5.66 $4.25 -24.9% 6003 Pile Driving $14.99 $12.92 $11.99 $10.46 $9.15 -12.5% 5480 Plastering $4.89 $4.68 $4.80 $4.64 $4.04 -12.9% 5183 Plumbing NOC $3.88 $3.50 $3.25 $3.45 $2.93 -15.1% 1624 Quarry NOC $4.77 $5.33 $5.34 $4.64 $3.60 -22.4% 9079 Restaurant $1.10 $1.07 $1.15 $1.09 $1.03 -5.5% continued on page 47 5547 Roofing - Built-Up $14.08 $17.07 $15.85 $13.68 $11.44 -16.4% 5545MAY,Roofing $30.35 IN CONSTRUCTION $30.99 $31.79 OUTLOOK” $37.05 $35.68 45-3.7% 2018 NOC “BUY FROM THE ADVERTISERS 7720 Security Enforcement or Protection $1.50 $1.73 $1.90 $1.71 $1.34 -21.6% 6306 Sewer Construction $6.28 $7.61 $7.81 $9.10 $8.09 -11.1%

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3724 Millwright Work NOC $6.79 $5.48 $5.09 $4.99 $5.08 1.8% 9534 Mobile Crane Hoisting Service $6.95 $5.60 $5.75 $6.70 $5.29 -21.0% 9534 Mobile Crane Hoisting Service $6.95 $5.60 $5.75 $6.70 $5.29 -21.0% 8742 Outside Sales $0.20 $0.15 $0.16 $0.16 $0.12 -25.0% 8742 Outside Sales $0.20 $0.15 $0.16 $0.16 $0.12 -25.0% 5474 Painting or Papercontinued Hangingfrom NOC $5.01 $5.09 $5.22 $5.66 $4.25 -24.9% Insurance Perspectives page 45 5474 Painting or Paper Hanging NOC $5.01 $5.09 $5.22 $5.66 $4.25 -24.9% 6003 Pile Driving $14.99 $12.92 $11.99 $10.46 $9.15 -12.5% 6003 Pile Driving $14.99 $12.92 $11.99 $10.46 $9.15 -12.5% 5480 Plastering $4.89 $4.68 $4.80 $4.64 $4.04 -12.9% MASSACHUSETTS WORKERS’ COMPENSATION RATES 5480 Plastering $4.89 $4.68 $4.80 $4.64 $4.04 -12.9% 5183 Plumbing NOC $3.88 $3.50 $3.25 $3.45 $2.93 -15.1% 5183 Plumbing NOC $3.50 $3.25 $3.45 $2.93 -15.1% Select Rates per $3.88 $100 Payroll 1624 Quarry NOC $4.77 of $5.33 $5.34 $4.64 $3.60 -22.4% 1624 Quarry NOC $4.77 $5.33 $5.34 $4.64 $3.60 -22.4% 9079 Restaurant $1.10 $1.07 $1.15 $1.09 $1.03 -5.5% 9079 Restaurant $1.10 $1.07 $1.15 $1.09 $1.03 -5.5% 5547 Roofing - Built-Up $14.08 $17.07 $15.85 $13.68 $11.44 -16.4% 5547 Roofing - Built-Up $14.08 $17.07 $15.85 $13.68 $11.44 -16.4% 5545 Roofing NOC $30.35 $30.99 $31.79 $37.05 $35.68 -3.7% 5545 Roofing NOC $30.35 $30.99 $31.79 $37.05 $35.68 -3.7% 7720 Security Enforcement or Protection $1.50 $1.73 $1.90 $1.71 $1.34 -21.6% 7720 Security Enforcement or Protection $1.50 $1.73 $1.90 $1.71 $1.34 -21.6% 6306 Sewer Construction $6.28 $7.61 $7.81 $9.10 $8.09 -11.1% 6306 Sewer Construction $6.28 $7.61 $7.81 $9.10 $8.09 -11.1% 5538 Sheet Metal Work - Shop & Outside $5.74 $5.72 $5.31 $4.58 $3.82 -16.6% 5538 Sheet Metal Work - Shop & Outside $5.74 $5.72 $5.31 $4.58 $3.82 -16.6% 9552 Sign Mfg - Erection, Repair, Maintenance $8.29 $8.35 $7.92 $6.94 $7.12 2.6% 9552 Sign Mfg - Erection, Repair, Maintenance $8.29 $8.35 $7.92 $6.94 $7.12 2.6% 5188 Sprinkler Installation $4.68 $4.13 $4.24 $4.94 $4.32 -12.6% 5188 Sprinkler Installation $4.68 $4.13 $4.24 $4.94 $4.32 -12.6% 9402 Street Cleaning $5.49 $4.92 $5.40 $4.80 $3.92 -18.3% 9402 Street Cleaning $5.49 $4.92 $5.40 $4.80 $3.92 -18.3% 5507 Street or Road Construction $6.26 $7.05 $7.24 $7.64 $5.60 -26.7% 5507 Street or Road Construction $6.26 $7.05 $7.24 $7.64 $5.60 -26.7% 5506 Street or Road Paving $6.96 $7.05 $7.09 $6.85 $5.20 -24.1% 5506 Street or Road Paving $6.96 $7.05 $7.09 $6.85 $5.20 -24.1% 5348 Tile, Stone or Mosaic Work $6.45 $5.81 $5.93 $5.12 $4.15 -18.9% 5348 Tile, Stone or Mosaic Work $6.45 $5.81 $5.93 $5.12 $4.15 -18.9% 0106 Tree Pruning $13.52 $14.64 $15.80 $13.63 $10.05 -26.3% 0106 Tree Pruning $13.52 $14.64 $15.80 $13.63 $10.05 -26.3% 7219 Trucking NOC $7.68 $8.28 $9.10 $9.77 $8.41 -13.9% 7219 Trucking NOC $7.68 $8.28 $9.10 $9.77 $8.41 -13.9% 5445 Wallboard Installation $7.13 $7.24 $7.43 $6.90 $6.08 -11.9% 5445 Wallboard Installation $7.13 $7.24 $7.43 $6.90 $6.08 -11.9% 6319 Water / Gas Main or Connection Construction $5.14 $4.86 $4.66 $4.48 $3.55 -20.8% 6319 Water / Gas Main or Connection Construction $5.14 $4.86 $4.66 $4.48 $3.55 -20.8% 7520 Waterworks Operation $3.29 $3.15 $3.46 $3.16 $2.77 -12.3% 7520 Waterworks Operation $3.29 $3.15 $3.46 $3.16 $2.77 -12.3% 3365 Welding NOC $9.72 $9.67 $8.98 $7.75 $5.73 -26.1% 3365 Welding NOC $9.72 $9.67 $8.98 $7.75 $5.73 -26.1%

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CONTRACTOR MEMBER OF THE MONTH

R.H. White Construction Co., Inc. has been a long time active member and staunch supporter of UCANE and the water and sewer industry. A quick look back on the history of the company explains why. In 1923 a young man named Ralph H. White, saw opportunities developing in Central Massachusetts for a company that could install water and sewer piping. He took the gamble, purchased some tools and horses, and entered the business. Now, 95 years and four generations later, it is quite apparent that Ralph White's vision back then was 20/20. His small business has grown into one of the largest and most well respected construction companies in New England employing over 600 people and with annual revenues in excess of $120 million.

Although the company has diversified into other areas of construction such as construction management, commercial development, industrial and manufacturing construction, and underground gas distribution, R.H. White continues to rely on the water and sewer industry, both public and private, for a large amount of its volume.

In talking with current R.H. White family members and leadership, UCANE was able to chronicle some of the history and highlights of the last 95 years.

Connecticut Water R.H. White constructed a new 25,000 SF 9 MGD DAF/ GAC water treatment plant on the site of the existing.

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Connecticut Water Process pipe gallery at the new Rockville Water Treatment plant.

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University of New Hampshire An R.H. White crew pours the floor of a steam vault structure during the Conant Vault Replacement at the university.

From Horse Drawn Trenchers to a Modern Fleet of Vehicles Ralph White and two close friends started the company working out of a barn on the same land in Auburn, MA that today houses the R.H. White headquarters. Photographs of the horse-drawn trenchers used during those early days are still displayed and are a testament to how primitively utility construction work was performed in the 1920s, and just how far the industry and the company have progressed since then. A fleet of modern construction vehicles and heavy equipment numbering well over 500 pieces has replaced company horses. This inventory of equipment is needed to support the company’s five offices, three in Massachusetts; one in Bow, New Hampshire; and one in Hartford, Connecticut. Operationally and logistically, R.H. White performs the majority of their projects within the New England region.

Moving Beyond Pipe Installation During the remainder of the 1920s, Ralph and his partners concentrated on the installation of water and sewer pipe. But, Ralph was not satisfied just performing pipe installation and he quickly realized that the pipe he

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was installing invariably ended or started at a pumping station or treatment plant. In Ralph’s mind, the building at the end of the pipe was where the action was, where the real engineering challenges that he craved lived. So, Ralph asked his pipe customers if he could start bidding on the buildings. Soon he began to direct and expand the company’s capabilities and operations to include pump station mechanical equipment installation and building construction. While this was the true beginning of R.H. White Construction Co., Inc. and the work being performed today, there were still many challenges ahead.

WPA Experience Proves Valuable According to the R.H. White 80-year history written in 2003 by Ralph’s son Leonard, who was then R.H. White’s President, the company experienced a few roller coaster economic rides as the nation’s economy “waxed and waned through recessions, depressions, and four wars.”

Leonard wrote, “The Company’s first real test was surviving the Great Depression of the 1930s. At that time almost 100% of the new utility related construction was headed up by the federal government’s Work Progress Administration (WPA).” To take advantage of this opportunity, continued on page 50

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R. H. White continued from page 49 Ralph became the Chief Engineer for the WPA’s Worcester County operations where he drafted and helped engineer projects in every town. R.H. White performed some WPA projects but survived mainly by renting its equipment to the government for use on other projects.

Some Early Memorable Projects The experience Ralph and others in the company gained by working on WPA projects was reflected in their first big project, which was installing dewatering pumps in Boston’s Sumner Tunnel during its construction in 1933.

Each day the R.H. White crew would travel between Auburn and Boston, via the old Route 9, in the back of a dump truck. It was difficult work, but work that showed R.H. White had a wide range of construction and engineering capabilities. According to Leonard’s history of the company, its second significant project, and almost its last project, was installing the first 12-inch transite water main in New England under Scituate Harbor. The engineering company overseeing the project insisted on a 150-psi test before backfilling, which Ralph and R.H. White engineers argued would cause the line to pull apart. The test was performed, and the line did pull apart resulting in a new replacement main being installed, tested to 150-psi, and backfilled. Ralph was so invested in this project that he rented a deep-sea diving suit and performed the necessary underwater work himself. According to company records, the main is still in service today.

A Company with Deep New England Roots Willing to Diversify Over its 95-year history, the company has performed thousands of projects and with that volume of work, management had to meet a whole variety of challenges. According to third generation president David White there have been some truly memorable projects such as the company’s engineering and construction of a church, the Bethel Lutheran Church in Auburn, MA; and a 1981 fast track project at Wachusett Mountain in Princeton, MA. That project included building a base lodge and three chair lifts; developing more than 20 trails; creating a water supply pond; and installing snow making equipment together with construction of a pump station. As an example of the longterm relationships that R.H. White builds with its customers the company has done work at the mountain several times since. In its most recent assignment, in 2017, three of its construction divisions – utility, mechanical, and building – were deployed to build a new pump house; doubling the mountain’s pumping capacity from 4,000 to 8,000 gallons per minute. Additionally, the system added more than 40 computer-controlled tower guns increasing snowmaking output and improving quality.

During many cyclical economies and recessions, each generation of R.H. White executives was adept at finding where the work was and then refocusing and re-

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University of New Hampshire An R.H. White employee fuses 12-inch HDPE gas pipe during a project to relocate 650 feet of gas line to accomodate the new Wildcat Stadium. adjusting company energy and assets as necessary to meet the demands of that work. This allowed their employees to keep working and the company to remain stable even through the worst of times. During the 1950s there were many textile mills in the Central MA area, including Whitin Machine Works, the world’s largest textile machinery manufacturer. At that time R.H. White became their go-to contractor and was able to build foundations for machinery, help expand buildings, and even provided labor for Whitin and other textile mills that were often working multiple shifts. With each job, R.H. White’s reputation grew and textile mills throughout Massachusetts and southern New Hampshire, kept crews busy for years.

In the 1970s and 1980s the “high-tech” industry was expanding rapidly with large tracts of land being purchased and groundbreakings being held monthly. Again, R.H. White was able to align its services to meet the needs of this new industry. It developed a close working relationship with DEC (Digital Equipment Corporation) a huge leader in the computer industry at the time. R.H. White crews were tasked for many years with building DEC’s engineering and manufacturing facilities in both Massachusetts and New Hampshire. This trend continues today, servicing the construction needs of companies like Waters Corporation, Saint Gobain, Metso, and EMD Millipore.

Key Construction Business Areas: Impressive Client List Today R.H. White’s breadth and depth of construction knowledge and expertise allows it to successfully compete in many areas, both in the public and private markets. James McCarthy, the company’s COO, identified these areas as being: 1. Utility Division - Construction of underground utilities including water, sewer, gas, electric, and fiber as

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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well as LNG/CNG and propane storage facilities, regulator and meter stations and co-generation plants.

2. Mechanical Division - Design/build of water and wastewater treatment facilities and pump stations as well as installation of complex process piping, valves, and meters; chemical feeds and even maintenance and repair of institutional pools.

3. Water Utilities Management Division - Operation, management, and maintenance of municipal and industrial water and wastewater treatment facilities through its subsidiary, Whitewater, which has more than 100 operator licenses and serves more than 400 private and public clients.

4. Building Division - Specializing in all aspects of vertical construction for the commercial, industrial, and institutional markets, the division offers full construction management services including design/build all the way through to turnkey opportunities for both design/build and own/operate scenarios via White Development.

5. Construction Services Division - The company prides itself on its full-service philosophy and this Facilities Management division provides 24/7 emergency service, solutions and support for both the public and private markets.

In addition to an extensive list of municipal and public clients, the construction group at R.H. White regularly provides services to many substantial private companies such as Aquarion, Columbia Gas, Eversource, Wyman

Gordon Company, Holy Cross, Verizon, NSTAR, Waters Corporation, and National Grid to name a few.

Real Estate and Commercial Ventures Create New Entities In 1975, R.H. White formed White Development to expand on the company’s building expertise and to offer planning, design, and permitting services for residential and commercial development projects, as well as to manage R.H. White Companies’ real estate holdings. In 2005, the company built a 112-apartment complex, Cordis Mills, which it owns and manages. White Development recently completed a total Design/Build Operations facility for Columbia Gas. From purchasing the land, to constructing and commissioning of the 29,000 SF building, to demolition of Columbia’s old building, White Development showed their wide range of capabilities.

In 1980, R.H. White ventured into the public water business and purchased Southbridge Water Company.

This company evolved in 1989 into the creation of another company, WhiteWater, which provides contract operation services for municipal and private water and wastewater systems. In 2003, East Coast Utilities was added to the company. In 2011, WhiteWater purchased contracts from United Water that boosted sales and profitability. WhiteWater now has over 100 employees and serves hundreds of commercial and public clients in the Northeast. continued on page 52

Liberty Utilities Installation of 29,500 LF of 12-inch steel natural gas line including 24,140 LF of direct bury .250” and .375” pipe and 5,360 of miscellaneous directional drill installed pipe as well as reseeding and bringing the area back to the original landscape conditions in Tilton, NH.

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R. H. White continued from page 51

Natural Gas - The Increasing Demand for Service and Innovation As the company looked to the future and other business areas, offices in Hartford, CT and Bow, NH were set up and a fleet of equipment was purchased to help meet the expanding needs of the natural gas industry in the New England region. Recently R.H. White completed a challenging 13-mile installation of a biogas pipeline for the University of New Hampshire at Durham. The customer came to R.H. White with a design-build proposal to transport recovered landfill gas from the Turnkey Landfill in Rochester, NH to the University’s cogeneration plant.

The challenge came as the desired route passed through four miles of wetlands, which was completed using directional drilling; leaving no permanent disruption to the wetland area, while also staying under federal permitting limits. Because of the fast track schedule, R.H. White utilized HDPE pipe instead of steel. This combination of engineering decisions reduced the project duration by six months. In addition many utility, industrial, and campus based institutional customers are looking for lower cost energy and R.H. White meets their needs with the construction of Liquid Natural Gas (LNG) and Compressed Natural Gas (CNG) facilities and conversions.

White is currently in the final phase of a $13 million gas transmission main project running 16 miles alongside busy Rte. 6 in Cape Cod, Massachusetts. In 2018, R.H. White expects to field over 75 separate pipe crews removing and replacing old cast iron piping throughout New England.

pleted some of the largest treatment facilities in the Northeast. One of the company’s early water treatment jobs was the expansion of a circa 1938 water treatment plant to a 5 MGD plant in Groton, Connecticut in the 1960s for $4 million. Nearly 60 years later, in 2017, it was R.H. White again that won the bid to completely rebuild the same plant, but this time it will be a 15 MGD facility at a cost of $44 million. Currently the company is doing several water and wastewater projects and just recently completed the new Rockville Water Treatment Plant in Vernon, CT which is a 9 MGD facility valued at $35 million.

New Technology and Safety Go Hand in Hand

Whenever there is a significant wastewater or drinking water treatment facility being bid in New England, you can expect to see R.H. White on the bidders list. Experienced, DCAMM qualified, and able to self-perform most elements of the work, R.H. White has won and successfully com-

The Company reinvests heavily in their equipment assets each year, always seeking out the newest technology on the market not only to provide optimum production, but also to provide maximum safety for its employees. Both David White and Jim McCarthy believe in the age of “smart” equipment. “Although there is no substitute for a talented and well-trained crew,” says McCarthy, “the safety features that some of this new equipment offers are amazing, and we want our people to have every advantage for a safe work day.” Increased use of directional drilling techniques and vacuum excavation can often make work more efficient and safer at the same time. R.H. White places great emphasis on safety and training and strives to maintain that “family business” atmosphere with all its employees. Management works hard to know each employee on a personal level and convey to them that they sincerely care that every one of them returns home safely to their families each day. The company has a full-time safety staff of five and incorporates numerous safety programs throughout the year to keep safety in the forefront at every site, every day.

R.H. White applies for training grants where possible and invests nearly $1 million each year in safety including comprehensive training programs for all its employees.

These programs ensure that the employee understands his trade, the operation of all tools and equipment that he

Columbia Gas of Massachusetts Design/build, own/operate project featuring 27,000 SF pre-engineered operations facility and a 5,500 SF material depot building.

Columbia Gas of Massachusetts Three divisions of R.H. White constructed a 3,000 SF soil storage canopy that highlights some of the company’s specialty concrete capabilities.

Sewer and Water Remains a Core Business

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WhiteWater R.H. White’s water utility management subsidiary, WhiteWater, has more than 100 operator licenses and services more than 400 private and public treatment facilities including this one in Southbridge, MA.

Leonard H. White Training Center R.H. White did all site preperation for design/build 14,000 SF training center consisting of office areas, conference rooms, training rooms, and a common break area.

operates on site and understands his/her role in helping to create a safe work environment for everyone. In January 2016, the newly constructed 14,000 SF Leonard H. White Training Center was officially opened. The $3.2 million facility provides conference and classroom space and a spacious hands-on lower-level training area for more technical training exercises for its nearly 600 employees.

“As individuals, we work to keep our families safe, as anything else is unthinkable. At R.H. White we also do the same for our work family by providing ongoing safety training, education, and opportunity for advancement.

And, our new training center is testament to those core values, stated President David White.

Award 2013 – The criteria for this award The Northeastern University Center for Family Business includes business success, generational family involvement, contributions to the community, and positive business practices.

4. Massachusetts Employer of Choice Award 2014 – For this honor from the Employer’s Association of New England, entrants are judged in areas that include: company culture, training and development, communication, recognition and reward, and work-life balance.

“These awards confirm that our company philosophy of investing in our greatest asset, our employees, is a successful way of growing a business. Our respect for our employees and concern for their success and for their families are reflected in these awards. We do more than talk about being a good corporate citizen and a good employer; we walk the walk,” says President David White.

Company Awards and Recognitions After reading this article one would expect that R.H. White Construction Co., Inc. would have accumulated a lengthy list of awards within the construction industry, and you would be correct. Awards adorn the walls of the Auburn headquarters and are significant as much for quantity as they are for quality. R.H. White management is quick to credit these awards to the hard work and dedication of their employees over the past 95 years. Among the notable recent awards that David White takes special pride in are: 1. STEP Safety Awards from Associated Builders and Contractors Association in six of the last eight years in the large contractor category - a testament to the return on R.H. White’s investment in safety and training.

2. Public Water Systems Awards in 2017 and 2018 from MassDEP for public water supply systems that have gone above and beyond compliance regulations..

3. Massachusetts Family Business of the Year

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All three generations of the White family and the company officers, should certainly be proud of the company’s achievements. The future looks bright as three of David White’s children (the fourth generation) and one of his sons-in-law are working for the company and ready to carry on the legacy. UCANE is very proud to call this successful family business a member of our Association. We congratulate them on their 95th Anniversary and wish them many more years of continued success. n

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MAY, 2018

The Opioid Crisis: The Construction Industry's Simmering Threat Editor's note: The following article is the first of two parts.

Drug overdoses claimed more than 64,000 American lives in 2016, which is nearly double the amount only a decade ago. Theories vary about the reasons behind the dramatic increase, although many attribute it to doctors prescribing of opioid medications more frequently. Despite stagnant levels of reported patient pain, prescription opioid sales to pharmacies, hospitals and doctors’ offices nearly quadrupled from 1999 to 2010.

The construction industry is no stranger to the devastating effects of opioid abuse. In fact, a 2017 study revealed that construction workers are among the most susceptible to opioid abuse, second only to food service industry employees. Business insurance agent CNA estimates 15.1% of construction workers have used legal or illegal drugs illicitly.

However, few construction company officials will talk openly about the issue, fearing a negative image for their firms and potentially higher insurance rates.

A recent Cleveland.com article took a detailed look at Ohio construction workers and their particularly high rate of death from opioid overdoses. Daniel Macklin, age 40, was one of 500 Ohio casualties of an opioid overdose last year, after battling a heroin addiction for nearly 20 years. Years of laying roof shingles subjected his body to wear and tear and his shoulders, especially, bore the brunt of the discomfort. After a doctor denied him a non-narcotic pain medication and suggested physical therapy, Macklin's fiancée found him dead in a bathroom of a fentanyl overdose.

When President Donald Trump declared the opioid crisis to be a public health emergency in October, more stories came to light about substance abuse

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across industries. Although the move opened the floodgates of dialogue around the topic, Trump came a play short of declaring the opioid crisis a national emergency, and didn't provide funding for addiction treatment — disappointing news for many health care professionals.

The epidemic poses a significant risk not only to construction workers, but the companies that employ them, others working on a jobsite and even passersby. In this article, Construction Dive explores the factors behind why construction workers may be more prone to opioid abuse, and what construction companies should know if a substance-related accident does occur. Part 2 of our opioid crisis report looks at substance abuse prevention and training.

Why Opioids?

One of the most pressing questions is why opioid abuse has become so prevalent in recent years. Beyond over-prescribing the medications, the construction industry has a unique take on the why.

"One of the bigger things we see driving this is the aging workforce in America," said Jake Morin, niche president of construction at ProSight Specialty continued on page 57

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Opioid Crisis continued from page 55 Insurance in Morristown, NJ. "Everyone calls [2008 to 2010] the economic crisis; I call it the construction crisis. We weren't building like we were so we lost a lot of skilled labor. Not only did you have people leaving construction during that two-and-a-half years, but it was also a time when younger people were not getting into [the industry]."

The aging construction workforce, coupled with fewer young people entering it, equals older laborers expected to do more than they were in the past. Typically, aging employees might have focused more on drawing and supervising as opposed to lifting I-beams and drywall and other physically strenuous work.

"Our bodies don’t rejuvenate when we’re in our late 40s onward like they did in our 20s and 30s," said Morin. "I think that's one of the major reasons we see substance abuse."

Rather than take the time off for a body to recuperate from strain or an injury, some turn to painkillers to mask the symptoms and try to work through them.

Mental health issues also may play into whether a worker is more prone to substance abuse. Many construction workers who come through the Canadian Construction Industry Rehabilitation Plan's (CIRP) doors are between 30 and 40 years old. After CIRP

started collecting data about substance abuse in the construction industry last year, it found that nearly 83% of those it treats screen positive for moderate to severe underlying mental health issues.

Although many companies require drug testing before finalizing an employment offer and some do random testing, drug tests on a jobsite can be complicated, explained David Pfeffer, chair of the construction practice group at New York-based law firm Tarter Krinsky & Drogin.

"As an owner or developer, you’re often dealing with people who aren't your employees, but are employees of many companies, subcontractors and sub-subcontractors," he said. "Every entity has their own testing protocol and unions have varying testing protocols. It's difficult for the industry to police itself."

Construction Dive contacted numerous construction companies about their experiences with opioid abuse among their workers and subcontractors, but all declined to be interviewed for this story.

Safety Concerns Pfeffer said while addiction is problematic in many industries, jobsites are physically dangerous.

"When you have construction workers under the influence, whether it be alcohol or illegal drugs, you're continued on page 59

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Opioid Crisis continued from page 57 putting not only that worker at tremendous risk, but you’re putting his coworkers and the general public or passersby at risk," he said. "There is a real issue, and I think it's something that should be revisited from a protection point of view."

Close camaraderie among colleagues means they’re reluctant to report any abuse they see. "Sometimes, it takes OSHA being on site or the Department of Buildings demanding a urinalysis or blood sample for proper protocol to be followed, Morin said. "These men and women take care of themselves. It's a team effect when you're on a jobsite with a lot of 'It could’ve been me' mindsets."

Morin also raised the question of how to define what drug abuse is and isn't. He questioned if certain drugs might be safer than others. For example, is medical marijuana better than Oxycontin, a prescription opioid pain medication? Are higher doses of prescribed Advil, an over-the-counter pain reliever, better than Vicodin, another opioid?

"Is there something we should be looking at as a country where we start ranking these drugs in a different order or fashion instead of lumping them all together?" he asked.

Morin suggested that if an individual is on a heavy-duty painkiller short-term, that the worker could be moved to a safer area of the jobsite or temporarily to a desk job. "I do think that's a way to combat it and why unions and associations have rehab protocols in place if you were to test positive," he said.

Next Steps As with so many legal issues, if there is a problem on a jobsite, next steps regarding liability depend on the jurisdiction. New York, for example, has Labor Laws 243 and 241, which make owners strictly liable for accidents that occur as a result of their project or projects, said Pfeffer. The industry has passed off liability through insurance and indemnification requirements, which the lawyer said, are "written indemnification clauses between the owner and contractor, whereby a contractor promises to indemnify, defend and hold harmless the owner of a construction project for site accidents that may occur as a result of contractor's or subcontractor's work on a project."

Pfeffer has seen cases proceed to litigation, which generally involve site accidents with allegations of employee drug or alcohol abuse. If a plaintiff can show the employer knew about the situation, then there can be punitive damages levied that otherwise may not exist. "There are varying levels of liability," he said.

Morin explained a contractor's general liability

MAY, 2018

insurance would cover damages if an under-the-influence worker injures someone in an accident. "If someone drops an I-beam, their employer is now responsible for property damage and bodily injury it caused," he said, adding the building owner could also be responsible for property damage and bodily damage.

But, he said, take the scenario one step further: "Depending on the type of job that individual had, such as a crane operator, they could be held criminally liable for their act. If they killed someone it could turn into a manslaughter case."

Most states have employee at-will status so employment can be terminated at any time. But in construction, many employment agreements are through unions, which involve a contract that the employer must honor. Pfeffer noted that those contracts do include protective language for the employer, such as if an employer has reason to believe an employee is doing illegal drugs or drinking alcohol onsite, that worker cannot come onsite and there may be an investigation. Some electrical companies Pfeffer knows of have a contract with a two-strikes and you're out policy.

Prevention, of course, may be the best medicine.

Written by Laurie Cowin. Reprinted with permission from Construction Dive. n

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UCANE Members Support Boston Marathon Effort to Raise Funds for the McCourt Foundation

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CANE Assistant Executive Director Jeff Mahoney recently completed the 2018 Boston Marathon on behalf of the McCourt Foundation, a 501c3 charity established by the family of UCANE Treasurer and McCourt Construction President Ryan McCourt.

The McCourt Foundation (TMF) is dedicated to building a community to cure neurological disorders such as Alzheimer’s, ALS, MS, and Parkinson’s disease. They partner with the Neurology Departments at Brigham and Women’s Hospital and Massachusetts General Hospital. While committed to finding cures, TMF also provides much needed financial assistance and medical support to neurological patients and families actively living with these conditions.

For more information you can visit their website at www.mccourtfoundation.org Thanks to the support of UCANE members and others, Jeff, who ran in memory of a close family friend who passed away from a neurological disorder, was able to raise over $14,500 for TMF. “The response was overwhelming, but not surprising, knowing how much UCANE members support each other,” Jeff said. “I would like to offer my heartfelt thanks to UCANE and the membership that donated. I am extremely proud and grateful to be a part of this Association.” n

MAY, 2018

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MAY, 2018

Pittsfield Approves $74 Million Wastewater Upgrades PITTSFIELD, Mass. — Begrudgingly, the City Council approved a $74 million upgrade to the wastewater system that is estimated to more than double sewer bills within the next three years.

T

he city has been under an administrative order from the U.S. Environmental Protection Agency to lower the levels of phosphorous and aluminum in the water coming out of the plant. The project proposed by the consultants, Kleinfelder, also called for a nitrogen optimization process as well.

The issue dates back to 2008 when the city went to renew the National Pollutant Discharge Elimination System permit. The EPA issued a permit with the higher levels to meet Clean Water Act standards. The city fought the issue in court but lost the appeals.

An administrative order was issued in 2015 demanding the city break ground on a project to meet those standards this August. In 2012, the city allocated $1 million toward the design and last March, added $4.9 million toward it to complete the engineering.

In January, Mayor Linda Tyer put forth an authorization request to borrow $74 million for the construction.

The council debated at length over the decision.

In February, the authorization fell one vote shy of the supermajority needed to authorize the borrowing.

Councilors Christopher Connell, Melissa Mazzeo, Kevin Morandi, and Donna Todd Rivers had all voted down the project.

On Tuesday (April 24), the council again spent hours discussing it after the mayor resubmitted the petition asking for authorization and ultimately, Rivers changed her vote. That now gives the administration the authority to move forward with the bonding.

"My no vote was about slowing down the process to allow more conversation, allow more research, and have the mayor meet again with the EPA," Rivers explained.

During the last three months or so, there had been many conversations and research throughout the community on the project.

Rivers said she doesn't like the history of the city's handling of the issue, does believe there could be a less costly option, and has some questions on the technology being proposed. But, she said all of those conversations were supposed to have been had before this moment.

MAY, 2018

"The time for that conversation was before me. Now I am here, right here right now, tonight," Rivers said.

And on Tuesday she said she wasn't going to "gamble" with taxpayer money with the threats of fines and continuing to fight the federal mandates.

"They pay their taxes honestly and they trust us to invest that money in things that will better their lives. For me, fines are a gamble," Rivers said.

And ultimately, the Ward 5 councilor said she wasn't going to do to future councilors and administrations what previous councils and administrations have done to her.

"The bottom line is, how could I sit here tonight and criticize them for kicking the can down the road and then kick it myself?"

That change swung the vote from being one short to making the supermajority for an affirmative action.

The city will now begin the procurement process for the contracts.

Financially, the city will seek to secure a $50 million loan through the state's Clean Water Trust Fund.

Director of Finance Matthew Kerwood said the state is expected to make another $24 million worth of lowinterest loans available next year.

"We've been given reasonable assurances that the $24 million will be available next year," Kerwood said.

Kerwood said he worked with Tighe & Bond engineers to estimate what that will mean for the ratepayers. He said the estimates show the annual sewer bills – which are separate from the water bills – incontinued on page 65

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MAY, 2018

Pittsfield continued from page 63 creasing from the current $61.93 quarterly to $137.36 per quarter for the average home with two toilets.

"The strategy would be to phase in the rates for the next three years," Kerwood said.

Kerwood said the wastewater enterprise fund is already facing a deficit that would call for a 40 percent hike – or about $100 a year – in rates anyway for next year. From there, the rates would increase evenly until 2021 when the debt payment begins.

Connell said those rate hikes is what he fears.

Connell has been leading the charge in opposition to the project saying he felt the design and scope of the work could have been less to curb the sharpness of the increase.

"I saw this coming five years ago," Connell said.

He said he put forth concepts of public-private partnerships which could have brought costs down.

But, ultimately, he was unsuccessful in getting momentum behind it.

"I just feel we could have saved the ratepayers money by going that route," he said, adding that it could have been less expensive, produced the same quality, and have "cut out some middlemen."

He said he believes the proposal put forth by Kleinfelder has "fat" in it that could have been cut through a different arrangement. But, ultimately, Connell's push to find a new type of project over the years did not gain traction.

"I've done whatever I could, personally, to try to make a difference for the ratepayers and the city," Connell said.

Councilor at Large Earl Persip, who is one of the newest members of the council, said the city had missed the opportunity to have conversations at that level.

"I think the time to question was way before this council and we are stuck with it," he said. "It is not a popular vote but by the information that I have, it is the right vote."

His sentiment was echoed by Ward 6 Councilor John Krol, who said rejecting the project wouldn't make it any less costly. He believes that the EPA would fine the city, and some strongly worded letters from the EPA suggests that, too, and ultimately the city would still be on the hook to make the upgrades. And by that time, Krol feels the price of the project will just increase.

"When it comes down to it, the idea that somehow you are doing a favor to the taxpayer by not doing something tonight is a false narrative. If we don't do anything tonight, it is going to cost the taxpayer more," Krol said.

Morandi, however, said he is "proud" to be one of the three councilors to vote against the project. He said a lot of residents are struggling financially and the increase will be a huge burden to them. He said most of his constituents are concerned about staying in their homes with increased taxes and now increased fees.

MAY, 2018

He said he's willing to fight it all the way on behalf of those who will be footing the bill.

"I don't think we've done everything we should have done," Morandi said. "I took an oath to stick up for the residents in my ward."

Mazzeo, meanwhile, still wants to have a sit down with the EPA to attempt to negotiate the details. While the EPA did meet with Tyer, the four councilors who opposed the project weren't included in that discussion. Mazzeo was hoping for essentially a fresh start at handling the issue, starting with such a meeting to explain the city's current state.

"We never really had a fair shot at getting this done differently," Mazzeo said. "I wanted a sit down to negotiate, word for word, some of the terms."

She said she still doesn't have a clear understanding of all of the issues surrounding this ongoing issues and she has learned in the past to not just blindly trust other city officials’ words.

But, after the vote total was clearer, Mazzeo saw that she was on the losing end this time and vowed to keep on top of the issue as it moves forward.

"I will watch this every step of the way and every piece of correspondence that comes through, I am going to ask to see it," she said.

Written by Andy McKeever. Reprinted from iBerkshires.com n

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MAY, 2018

Towns Will Pursue Regional Wastewater Treatment It’s a partnership that nobody really wanted and it may last 40 years or more, but it looks like Yarmouth, Dennis, and Harwich will begin to collaborate on a regional approach to dealing with wastewater disposal.

T

he three towns will each have articles on their spring town meeting warrants calling for the towns to “draft special legislation to create the DHY Clean Waters Community Partnership” and continue to work on a regional treatment plan.

The towns have received grant funds to help pay for the preliminary work. Without a plan to deal with coastal contamination caused by wastewater, mainly from septic systems, homeowners might be required to install individual treatment systems beyond typical Title 5 septic systems.

Yarmouth officials proposed a one-town solution in 2011, but voters, seeing the staggering cost, soundly rejected it. The regional approach is expected to save the three towns $100 million compared to the cost of dealing with the problem individually.

At a meeting held March 22 at the Dennis Senior Center, representatives of the three towns met to reaffirm their commitment to the regional approach. Dennis and Harwich selectmen publicly reaffirmed their support for the approach, but several Yarmouth selectmen balked at the idea, preferring to hold off on a final vote until their meeting Tuesday evening, March 27.

At Tuesday night’s meeting, Selectmen Erik Tolley, one of those who hesitated to affirm support for the regional approach, explained his strategy.

“I never intended to object to it, but I didn’t want to be put on the spot so somebody could have a PR moment,” Tolley said. He reiterated that he has concerns about partnerships between towns, but sees value in

MAY, 2018 SEPTEMBER, 2016

a regional approach. ’The fact that this will save $100 million is not lost on me,” he said.

Yarmouth selectman Mark Forest was more enthusiastic about the regional approach than some of his colleagues, both at last week’s meeting and at Tuesday night’s selectmen’s meeting. He pointed out that under a regional agreement, federal and state assistance is more likely, further reducing the cost to individual towns.

Tuesday night, Forest said that with grant money in hand, he hopes the towns can begin to define the project. “I’d like to see a better, clearer time frame,” Forest said.

Forest said the regional approach is preferable for dealing with wastewater because the Bass River is being affected by contamination from both Dennis continued on page 68

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Cape Cod continued from page 67 and Yarmouth and Lewis Bay is impacted by wastewater from Yarmouth and Barnstable.

In response to concerns by selectmen, Yarmouth Town Administrator Daniel Knapik emphasized that the action being requested through this spring’s town meeting warrant articles is not final.

“This allows us to continue to meet with our partners. It allows legislation to be enacted to develop a future entity.”

The three-town agreement will not affect a separate plan to send wastewater from West Yarmouth to a treatment plant in Barnstable and wastewater from East Harwich to go to a treatment plant in Chatham.

What is envisioned is a regional partnership that may develop sewers in some areas, and a regional septage treatment facility to treat wastewater to a point where it can be used to irrigate golf courses and wash municipal vehicles.

“We would re-use the highly treated effluent.

We want to look at it as a product, not waste material,” said David Young of CDM Smith, the consultant working with the towns on developing a regional plan.

Young reminded everyone at the meeting that towns already have developed plans to deliver water to residents.

“Each town has already implemented a similar program to deal with water. Now they are looking at the wastewater side,” Young said.

The wastewater partnership, if all the towns agree to it, would ultimately have the ability to issue bonds to raise funds for its work. Assessments would be passed along to the member towns.

At the March 22 meeting of the three towns, Selectman John Terrio, the liaison from Dennis to the three-town group, expressed strong support for the regional approach. “It would have been fiscally irresponsible not to include the towns of Harwich and Yarmouth,” Terrio said.

Written by John Basile. Reprinted from Wicked Local Dennis. n

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A Recipe for Successful Customer Care A work environment where happy employees follow these professional service standards will attract and keep good customers.

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eter Drucker famously writes in The Practice of Management that the purpose of a business is to create and keep a customer. Unfortunately, the latter of these is often overlooked. With the papers, online content, and mailers filled with so many ways to attract new customers, what businesses tend to forget is that they spend almost three times as much on attracting new customers as they do retaining the customers they already have.

Every business has a culture, and the culture defines whether the office is customer-, time- or technology-focused, exhibiting either a sense of negativity or an attitude of joy. The standards and values of the team can become apparent to a customer as soon as the phone is answered. When the emphasis of the office is placed on exceptional customer care, the team becomes an asset that will continue to grow the business over time. The significance of creating greater customer satisfaction begins with a total team approach.

The following three ingredients form the secret sauce to create a work environment that generates raving fans and, in turn, develops an organic marketing strategy that brings in friends and family of your satisfied customers.

Personal Attention Customer service is the first step in effective marketing. When a customer walks in your front door, how do they feel? Is it cold and sterile or warm and inviting? Do you look up and smile when a customer enters the room? Do you realize you can change someone’s entire outlook with a simple smile? Personal touches, like shaking hands and individual greetings, provide an immediate differentiator and project a form of professionalism that people expect from a business encounter. By ensuring that someone feels like you are glad they are there, they will only leave your office feeling happy and — even better — they will go tell all their friends.

MAY, 2018

Be Punctual A major complaint from customers is the wasted time they spend, either waiting for scheduled meetings or for the equipment to arrive. Customers don’t enjoy being forced to wait without knowing the reasons for the delay or how long the delay will be. These long waits may be interpreted as a sign of disrespect for the time and efforts your clients and customers spend to ensure their calendars are clear.

Staying on schedule (or close to it) is a major factor in customer retention — perhaps even one of the biggest. A clear message of indifference is sent when people frequently experience long wait times. Prevent delays by avoiding overscheduling your office staff or technicians. And when the inevitable delay occurs, be sure to communicate with the customer, explaining the situation. Telling them about a five- or 10-minute delay may diffuse any anger or frustration. Be honest as soon as you know there will be a wait time.

Focus on Professionalism This area is lacking in so many businesses as society becomes more casual about so many things.

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Recipe continued from page 69 pany uniforms or not, appearance should always be neat and clean. A wrinkled outfit looks no better than a pair of ripped jeans. Generally speaking, revealing or tight clothing is a no-no. Avoid clothing that is too low, too high, too tight or too revealing.

Don’t hide from your mistakes. As hard as it may be to do, take ownership of your mistakes and do your best to correct them. Try not to make the same mistake twice. Never blame others, but set an example so that those who shared in the mistake can step forward and admit it. By the same token, don’t constantly call others out on their mistakes; rather, help to teach them the right way.

Be a team player. A true professional is willing to help co-workers when they are overburdened.

Don’t hesitate to share knowledge, opinions, or simply an extra pair of hands. One person’s success reflects well on everyone in the workplace.

All About Respect Customers will always appreciate excellent customer service. While you put so much emphasis on the new customer, what about the returning customers? You need to woo each one equally. Give the personal attention everyone longs for in every aspect of

their lives. Treat customers with respect at all times. If you maintain a culture of respect, your customers will know they are truly being well cared for. Work together as a team to maintain schedules, and when someone falls behind, let the customer know there will be a wait.

Conduct yourself in a professional manner at all times; this includes how you look, what you say and how you treat others. Keep an open line of communication with your clients, and ensure prompt attention to any issues that may arise.

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John E. Merchant, CPA IN THIS ISSUE

Cullen, Murphy & Co., P.C.

• The New Tax Law Will Change Divorce Tactics • Stretching for Yield...Carefully • No Tax Deductions for Business Entertaining

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The New Tax Law Will The new tax law will change divo Change Divorce Tactics

hen couples divorce, financial negotiations often involve alimony.

The tax rules regarding alimony were dramatically changed by the Tax Cuts and Jobs Act (TCJA) of 2017, but existing agreements have been grandfathered. In addition, the old rules remain in effect for divorce and separation agreements executed during 2018. Next year, the rules will change, and the roles will be reversed.

Under divorce or separation agreements executed in 2018, and for many years in the past, alimony payments have been tax deductible. Moreover, these deductions reduce adjusted gross income, so they may have benefits elsewhere on a tax return. While the spouse or former spouse paying the alimony gets a tax deduction, the recipient reports alimony as taxable income.

Shifting into Reverse Beginning with agreements executed in 2019, there will be no tax deduction for alimony. As an offset, alimony recipients won’t include the payments in income.

Example 1: Joe and Kim Alexander get divorced in 2018. Joe expects to be in a 35% tax bracket in

MAY, 2018

Smart tax, business and planning ideas from y

an offs paymen

Examp divorce 35% tax anticipa that the $3,500 the future, whereas Kim anticipates being in a 22% bracket. Suppose that the proposed agreement has When couples divorce, financial negotiations Joe paying $3,500 a month ($42,000 a year) in alioften mony. involve alimony. The tax rules regarding alimony were Joe will savedramatically $14,700 in tax changed (35% timesby $42,000), but Kim will owe $9,240 (22% times $42,000).

Net, the Tax Cuts and Jobs Act (TCJA) of the couple will save over $5,000 per year in taxes.

2017, but of existing agreements been This type calculation will affect have the negotiations, as it has in the past.

Assuming the the relevant rules are grandfathered.

In addition, old rules followed, it may make sense to tip the agreement remain in effect for divorce and separation toward Joe paying alimony to Kim, perhaps in return for agreements executed during 2018. Next year, other considerations. the rules will2:change, roles will be Example Assumeand that the the Alexanders’ neighbors, Len and Marie Baker, have identical finances. reversed.

They divorce in 2019. If Len pays $42,000 a year in alimony,divorce he will or getseparation no deduction and won’t get the Under agreements $14,700 in annual tax savings that Joe did in examexecuted in 2018, and for many years in ple 1. Marie, on the other hand, will pocket $42,000, the past,without alimony been tax-free, thepayments $9,240 tax have bill faced bytax Kim in example 1. continued on page 74 deductible. Moreover, these deductions

reduce adjusted gross income, so they may haveIN benefits elsewhere on a tax return. 73 “BUY FROM THE ADVERTISERS CONSTRUCTION OUTLOOK” While the spouse or former spouse paying

Joe wil $42,00 times $ over $5 calcula it has in rules ar to tip th alimony conside

Examp neighbo identica Len pay get no annual Marie, o tax-free Kim in

Financial Management continued from page 73 Moving Things Along

Trusted Advice Defining Alimony

Just as people shouldn’t “let the tax tail wag the Payments to a spouse or former spouse must investment dog,” so taxes shouldn’t dominate divorce meet several requirements to be treated as alimony or separation proceedings. However, it’s also true for tax purposes. The following are some key tests: that taxes shouldn’t be ignored. If you are in such a • The payments are made under a divorce or situation, your accountant can help explain to both separation agreement. parties the possible savings available from executing an agreement during 2018, rather than in a future • There is no liability to continue the payments year. after the recipient’s death.

The new rules will be in effect beginning in 2019.

• The payments aren’t treated as child support With no alimony deduction and a tax exemption for or a property settlement. alimony income, it may be desirable to consider after• The payments are made in cash (including Area Boston tax, rather than pre-tax, income when making decichecks or money orders).

Locations sions. Speaking very generally, there may be less cash for the couple to use after2 Dexter Street tax.

Everett, MA 02149 Boston Area Keep in mind that, as of 2019, Boston Area Locations not all states will have alimony tax Locations 431 Second Street laws that conform to the new fedEverett, MA 02149 2 Dexter Street 2 Dexter Street eral rule. Your state may still offer

Everett, MA 02149 Everett, MA 02149 tax deductions for alimony payments and impose income tax on 431 Second Street 431 Second Street alimony received. That’s all the Everett, MA 02149 more reason to look at after-tax reEverett, MA 02149 BOSTON AREA LOCATIONS

sults when calculating a divorce or

2 Dexter Street 431 Second Street separation agreement.

Everett, MA 02149

Getting Personal

Everett, MA 02149

The impact of the new TCJA on spousal negotiations may go beyond the taxation of alimony.

Among other provisions to consider, the TCJA abolishes personal exemptions. As a tradeoff, the standard deduction was almost doubled (see Financial Management, April 2018).

Minichiello Bros./Scrap-It, Inc., Minichiello Bros./Scrap-It, Inc. In some past instances, diServes over 2500 customers a week and is one of New England’s largest customers a week and is one New England's largest buyers, vorcing spouses would Serves agree over 2500 buyers, sellers, and processors of scrap metal.

Forour overgoal 60 years goal sellers and processors of scrap metal. For over 60 years has our remained that the high bracket party the would remained the same - to in provide the best along prices in thetop industry along with same - tohas provide the best prices the industry with notch top notch service!

Fred Rogers at 617-595-5505 claim the children’s personal ex- service! customer Callcustomer Fred Rogers at Call 617-595-5505 emptions, which effectively Minichiello Bros./Scrap-It, Inc., were Minichiello Bros./Scrap-It, Inc., tax deductions, in return for some Serves over 2500 customers a week and is one New England's largest buyers, other consideration. Now those sellers and processors of scrap metal.

For overa60week years ourisgoal Serves over 2500 customers and onehas Newremained England's largest buyers exemptions don’t exist, so they the same to provide the best prices in the industry along with top notch sellers and processors of scrap metal.

For over 60 years our goal has remain shouldn’t be part of divorce negocustomer service! the Callsame Fred -Rogers at 617-595-5505 to provide the best prices in the industry along with top notch tiations. If you previously entered

customer service! Call Fred Rogers at 617-595-5505 into an agreement that included

the treatment of children’s personal exemptions, you may want Turn your metal into money today! to consult with counsel to see Turn your metal into money today! about possible revisions.

Minichiello Bros. Inc./Scrap-It Inc. Minichiello Bros. Inc.,/Scrap-It Inc. continued on page 75

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MAY, 2018

Financial Management continued from page 74

Stretching for Yield...Carefully

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ypically, bond funds with low yields have relatively low risk (see Financial Management, March 2018). That doesn’t mean that these funds are riskless, though. With interest rates expected to rise this year, all types of bond values could drop, leading to an overall pullback in the prices of bond fund shares.

One way to respond to this unwelcome outlook is to diversify your fixed income holdings.

Example: Jane Miller has a target asset allocation of 60% in stocks and 40% in bonds. Working with her financial adviser, Jane puts half of that fixed income allocation (20% of her entire portfolio) into bond funds that mainly hold short-term issues from government entities and financially sound corporations. Such funds are likely to have low yields, but they probably will hold most or all of their value in the coming months and years.

These lower risk funds may be considered core fixed income investments.

Beyond the Norm Assume that Jane can tolerate some volatility in her portfolio. If so, she might put the other half of her fixed income allocation into these types of bond funds: • High-yield funds. These funds typically invest in corporate bonds that are unrated or low rated by specialized agencies, perhaps because the issuers are not in excellent financial condition. Fund holdings may be known as junk bonds. Yields are relatively high, but bond prices might drop in times of economic weakness, which can raise doubts about the companies’ ability to meet interest and redemption promises. This danger, known as credit risk, may be reduced if the fund holds many issues because most of a professionally chosen portfolio is likely to avoid defaults.

• Emerging markets bond funds. Holdings include bonds from governments and companies based continued on page 77

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Financial Management continued from page 75 in areas considered to be developing economically.

For example, such places could range from Brazil to Russia to South Africa. Currency movements may affect returns positively or negatively, but there might be little influence from U.S. interest rate moves.

• Bank loan funds. As the name indicates, such funds purchase loans made by banks. The borrowers are usually companies; frequently, the loans are used to finance acquisitions. Questions about the borrowers’ ability to repay the debt make these funds vulnerable to recessions and low growth periods. On the other hand, bank loan funds generally invest in variable rate debt, so borrowers’ payment obligations (and the dividends to investors) can go up when interest rates rise.

• Preferred stock funds. Whereas familiar stock funds own common stock of issuers, these funds buy preferred shares. The name indicates that investors will be paid before common stock holders, in case the issuer can’t meet all its obligations. Preferred stock payouts come before dividends on common shares.

In practice, preferred shares tend to pay fixed bondlike yields, and trading prices may have low volatility.

Preferred stock funds can be considered more like bond funds than stock funds.

• Municipal high yield funds. These funds hold tax-exempt municipal bonds from issuers that do not have a sterling credit rating. In essence, these funds are the tax-exempt cousin of the high-yield funds mentioned previously in this article, which pay taxable interest.

As is the case with all municipal bonds and muni bond funds, they should be held in taxable accounts to use their exemption. The other types of funds covered here may be favored for tax-deferred accounts

Did You Know?

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mong Baby Boomers (age 52 and older), 46% considered delaying retirement beyond the original target date in 2017. In 2015, the percentage was 47%. By comparison, 41% of Millennials (age 18–35) considered such a delayed retirement in 2017, up from 30% in 2015.

Source: T. Rowe Price such as IRAs, for which the high dividend payments can compound without a current tax haircut.

Staying Put All of the fund categories mentioned in this article have numerous entrants, so yields will vary from fund to fund. You may be able to find yields around 5% in some funds, whereas core bond funds might be yielding 3% or 2% or even less. Over a lengthy holding period, the difference between compounding a 5% yield and compounding a 2% or 3% yield can be sizable.

Moreover, bond funds tend to buy new bonds because of bond sales, bond redemptions, and new money from investors. If interest rates are rising, fund purchases will bring higher yields, whereas lower yielding bonds are replaced. Again, investors should plan on holding for the long term in order to maximize the value of using bond funds with relatively high yields.

Proceed with Caution

High yields generally mean substantial risks, so you may want to mix such bond funds with lower yielding but less volatile bond funds. You could hold funds from every category mentioned here, or MBO Precast Inc. you could select only one or two 4 Marion Drive • Carver, MA 02330 categories to perhaps improve T: 508-866-6900 • F: 508-866-5252 fixed income returns. www.MBOPrecast.com If you already hold mutual funds and you’re pleased with the results, you might want to see Stone Strong Retaining Wall Systems if the fund company has a highManholes / Catch Basins / Custom Structures yield fund, an emerging markets Septic Tanks / Leaching Products bond fund, and so on. Look at the fund’s past performance, manager tenure, and investment philosophy before making decisions.

The same criteria apply if you’re choosing among funds from other companies on your own or if you’re working with an adviser. continued on page 78

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Financial Management continued from page 77

No Tax Deductions for Business Entertaining

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he good news is that the TCJA of 2017 lowered corporate tax rates from a graduated schedule that reached 35% to a 21% flat rate. The bad news? Many business expenses are no longer tax deductible. That list includes all outlays that might be considered entertainment or recreation.

As of 2018, tickets to sports events can’t be deducted, even if you walk away from the game with a new client or a lucrative contract. The same is true if you treat a prospect to seats at a Broadway play or take a valued vendor out for a round of golf. Those outlays will be true costs for business owners without any tax relief.

Drilling Down Does that mean that you should drop all your season tickets supporting local teams? Cancel club memberships? Pack away your putter and your tennis racquet? Before taking any actions in this area, take a breath and crunch some numbers.

Example: In recent years, Luke Watson spent about $20,000 a year on various forms of entertainment, which his company claimed as a business expense. Indeed, these were valid expenses and helped his LW Corp. grow rapidly.

Assume that LW Corp. paid income tax at a 34% rate. In 2017 and prior years, business entertaining was only 50% deductible. Thus, LW Corp. deducted $10,000 (half of Luke’s expenses) and saved $3,400 (34% of $10,000). With $3,400 of tax savings and $20,000 of out-of-pocket costs, Luke’s net cost for entertaining was $16,600 under the law in effect during 2017. continued on page 79

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Financial Management continued from page 78

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Now suppose that Luke has the same $20,000 of entertainment costs in 2018 and that those costs would have still been 50% tax deductible at the new 21% tax rate. His tax savings would have been only $2,100, so the net entertainment cost would have been $17,900. As it is, under the new law his actual entertainment cost would be the full $20,000 with no tax benefit.

This example assumes that LW Corp. pays the corporate income tax on its profits. If Luke operates his business as an LLC or an S corporation, with business income passed through to his personal tax return, the calculation would be different, but the principle would be the same.

Business entertainment has been done mainly with after-tax dollars. Under the new TCJA, you’ll entertain clients and prospects solely with after-tax dollars. You should be careful about how this money is spent and judge the expected benefit. Nevertheless, if business entertaining has paid off for your company in the past, it may still prove to be valuable even without tax breaks.

Fine Points Meal expenses associated with operating a trade or business, including employee travel meals, generally continue to be 50% tax deductible. However, keep in mind that the rules have changed for meals provided for the employer’s convenience. Previously, these were 100% deductible if they were excludible from employees’ gross income as de minimis fringe benefits. That might have been the cost of providing free drinks and snacks to employees at the workplace. Now outlays for such meals are only 50% deductible and they’re scheduled to become nondeductible after 2025.

On the bright side, the new law doesn’t affect expenses for recreation, social, or similar activities primarily for the benefit of a company’s employees, other than highly compensated employees. So, your business likely can still pay for holiday office parties with pre-tax dollars.

Reprinted from CPA Cilent Bulletin. n

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