Construction Outlook October 2018

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

UCANE Presidents Highlight Their Recent Projects

Route 79/Interstate 195 Interchange & Braga Bridge Rehab

Alewife Sewer Separation Project

Logan Airport Runway 4R-22L Rehab & Pier Replacement

Emergency Sewer Force Main Break

UCANE Interview Senator John K eenan

• Treasurer Goldberg A nnounces Over $7.5 Million in Grants • Safety Corner : The Unseen Danger

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OCTOBER, 2018

Years of Excellence 1954-2018

OCTOBER, 2018

IN THIS ISSUE

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

President-Elect MARCELLA ALBANESE

Albanese Brothers, Inc.

Treasurer RYAN McCOURT

McCourt Construction Company

Secretary BRIAN COONEY

C. C.Construction Inc.

BOARD OF DIRECTORS 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.

5 President’s Message:

Local Partnership Part of the Solution

7 Legislative Update: • • • •

State Looks to Conduct Overview of Natural Gas Infrastructure Administration Announces Funding for Innovative Wastewater Treatment Initiatives Framingham Looks to Repair and Maintain Water Infrastructure Town of Mashpee Looking at Potential Surcharge to Address Water Infrastructure Needs • Treasurer Goldberg and the Massachusetts Clean Water Trust Continue to Fund Water Infrastructure • Special Commission on Transparency and Public Records Access Meets

17 UCANE Interview:

Senator John Keenan, Chairperson, Senate Committee on Bonding, Capital Expenditures and State Assets

21 Under the Hard Hat with UCANE’s Officers & Board Members: Q&A with UCANE Board Member Chris Valenti (GVC Construction, Inc.)

25 UCANE’s Annual Christmas Party & Scholarship Auction 27 Treasurer Goldberg Announces Over $7.5 Million in Grants for 17 Municipal Water Projects 37 Insurance Perspective: What is My Bonding Capacity?

41 UCANE Welcomes New Members 42 UCANE’s September Dinner Meeting:

UCANE Presidents Highlight Their Recent Work

57 Construction Safety & Compliance:

An Interview with Patrick Saltmarsh, Corporate Safety Director, J. Derenzo Co.

59 Spotlight on Cape Cod:

Selectmen Approve Regional Wastewater District Legislation

AL MORTEO

61 Safety Corner:

FED. CORP.

The Unseen Danger

JOHN OUR

65 Technology in Construction:

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

What You Need to Know About Massachusetts Data Regulations (Part 2 of 2)

69 Financial Management:

• Supreme Court Decision in Wayfair Affects Online Sellers • Buy-Write Strategies for a Flat Market • Bond Ladders May Hedge Interest Rate Hikes

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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MAY, 2018

Local Partnerships Part of the Solution To state the obvious, over the years UCANE has spent a tremendous amount of time advocating for water infrastructure. It was one of the main reasons our Association was established back in 1954. Over the years the one constant has been that we push for additional public investment, whether it is for new water systems, treatment plants, or replacing and rehabbing old pipes and facilities. It is good for the economy and the environment; and providing safe and clean drinking water to Massachusetts citizens should always be a top priority of our public officials.

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hat has changed over the years is how we pay for these investments. As late as 1977, the federal government contributed over 60% of the total spent on water infrastructure. In recent years, that number has dipped to under 10%. The state’s Clean Water Trust, along with the MassDEP, do a tremendous job leveraging the federal dollars we get through the State Revolving Loan Fund (SRF) program, along with additional state funds. But it is not enough to close the $20 billion funding gap Massachusetts faces over the next 20 years. That is why UCANE will continue to propose and support legislation that creates a dedicated revenue stream for water infrastructure such as the recent “Short-Term Rental” legislation, which would provide much-needed funding to towns on Cape Cod who are under court order to fix their water quality issues.

One thing that everyone agrees with is that there is an urgent need to upgrade our water infrastructure and that no one should go it alone. Massachusetts cities and towns recognize the need to partner with both the state and federal government to create incentives so that these projects become a reality. All levels of government need to work together in order to close the funding gap.

Drilling down on these partnerships even furOCTOBER, 2018

ther, neighboring municipalities that work together to tackle water issues have seen success. I have observed firsthand how this can work, having served on a local water/sewer commission and a regional sewer commission. While each city or town has to deal with their individual water needs, there are tremendous advantages to collaborating and pooling resources when there are common issues and needs. This approach has begun to take hold on Cape Cod, where contaminated watershed areas often cross into several adjacent towns. These inter-municipal agreements allow the towns to determine which percentage of the cost each is responsible for and “share the burden.”

However, reaching these types of agreements are not without difficulty. Negotiating to determine what each town’s burden will be can be time-consuming and politically sensitive, and so can the process to get an agreement approved by each municipality at their Town Meeting. But the effort can be well worth it as these agreements ultimately lead to lower costs for the taxpayers of each community.

There is one other thing that is agreed upon as our elected and appointed officials at all levels of government continue to look for ways to fund water infrastructure, UCANE will be there leading the effort. n

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Mark Molloy, Esq., Lynch Associates, Inc.

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State Looks to Conduct Overview of Natural Gas Infrastructure

he Massachusetts Department of Public Utilities (DPU) recently announced that the agency will hire an outside evaluator to examine the safety of natural gas infrastructure across Massachusetts. The move comes as certain residents and businesses in the Towns of Andover, North Andover, and the City of Lawrence begin to rebuild after the natural gas incidents of September.

According to the DPU, the evaluator, who will be picked on an expedited basis with consultation from the federal Pipeline and Hazardous Materials Safety Administration, will examine "the physical integrity and safety of the natural gas distribution system and the operation and maintenance policies and practices of all natural gas distribution companies operating within the Commonwealth.”

As reported by the State House News Service, Gov-

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ernor Charlie Baker described the evaluator's inquiry as "sort of a soup to nuts review of both the current physical state of the infrastructure as well as the protocols that are being used by the companies and by DPU to oversee that physical infrastructure." The review is part of a 60-day plan to restore natural gas service. The DPU aims to perform an additional examination of the physical condition and safety of the distribution system, as well as the operational and maintenance functions of natural gas companies. The review will be funded by a DPU mandate on all natural gas distribution companies in the state.

It is anticipated that the Massachusetts legislature will hold oversight hearings later this fall or at the beginning of the 2019-2020 legislative session to determine additional means for preventing future incidents from occurring.

Administration Announces Funding for Innovative Wastewater Treatment Initiatives

he Baker-Polito Administration announced at the end of September that it had awarded $402,000 in grants to four municipalities and technology providers to support innovative technical advancements for publicly-owned wastewater treatment plants in Amherst, Fairhaven, Pittsfield, and Westfield. The funding, awarded through the Massachusetts Clean Energy Center's Wastewater Treatment Pilot program, will support publicly-owned wastewater treatment districts and authorities that demonstrate innovative water technologies that increase energy efficiency, recover resources, and remediate nutrients such as nitrogen or phosphorus.

According to a press release from the Massachusetts Department of Environmental Protection (MassDEP) and the Massachusetts Clean Energy Center (MassCEC), funding for these programs comes from MassCEC's Renewable Energy Trust, which was created by the Mas-

OCTOBER, 2018

sachusetts Legislature in 1998 as part of the deregulation of the electric utility market. The trust is funded by a systems benefit charge paid by Massachusetts electric customers of investor-owned utilities, as well as municipal electric departments that have opted to participate in the program.

Each project being awarded is a partnership between a municipality and a technology provider. The four municipalities provided a cost-share of $547,384. The following municipalities and technology providers were awarded: MICROrganic Technologies and the Town of Pittsfield ($56,888). The funding will be used to implement an energy-neutral technology to potentially replace current energy-intensive processes. The team will aerate organic waste without blowing air through it, which will significantly decrease the Town of Pittsfield's energy costs. continued on page 9

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Legislative Update continued from page 7 Nanostone Water Inc. and the Town of Amherst ($145,027). The funding will be used to treat wastewater using innovative treatment and oxidation methods. The goal of this pilot project is to demonstrate the effectiveness of these new methods regarding reuse of water for non-potable uses.

Microvi Biotech, Westech Engineering Inc., and the Fairhaven Water Pollution Control Facility ($150,000). The funding will be used to demonstrate a dual-pronged innovation for treating wastewater.

The process focuses on two kinds of nutrient removal technology that is expected to reduce energy usage at the facility by 15-20%.

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Hach, Woodard & Curran and the City of Westfield ($50,000). The funding will be used to demonstrate the benefits of ammonia-based aeration control. This demonstration aims to define the benefits and further quantify the expected 10% energy savings.

For more information about the MassCEC’s Wastewater Treatment Pilot program, please visit: https://www.masscec.com/innovation-wastewatertreatment-plants-0. continued on page 11

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Legislative Update continued from page 9

Framingham Looks to Repair and Maintain Water Infrastructure

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ccording to the MetroWest Daily News, the City of Framingham’s Mayor Yvonne Spicer and city officials said they plan to increase water rates 2% to fund operations in fiscal 2019, which began in July. With the proposed increase, the average family would see its water bill increase by $18.48, from around $783 per year to $801.

Fees charged to the city by the MWRA, which supplies local drinking water, represent a large share of the roughly $22.9 million water budget. As reported, city officials said the community is also playing catch-up on costly water infrastructure projects, which were neglected for years.

When Framingham was a town, water and sewer rates were previously set by the Board of Selectmen.

The new city charter is silent on the authorities who are intended to have rate-setting power under city government, though city lawyers say state law vests power in the mayor to set the water rates, and the City Council to set sewer rates. The council is currently studying a request from the mayor to transfer rate-setting authority over sewer rates to the executive branch.

The budget of $22,896,254 for the Framingham water department is comprised of: $8.2 million for the MWRA assessment; $7.5 million for debt service; $5.5 million for department operations and about $1.7 million for other indirect costs. In terms of historical rates, costs are up about 5% compared to last year, or about $1.1 million. The City will use retained earnings of $1.15 million in its utility enterprise fund to help limit the increase on residents’ bills to 2%.

Under the current proposal before the mayor, water rates would increase by 14 cents for users who consume the least amount of water, going from $6.01 per unit of water to $6.15. A unit is equivalent to 750 gallons. At the highest tier, rates would increase 25 cents, going from $11.10 to $11.35.

The City of Framingham’s efforts to address their water infrastructure needs are in line with many other municipalities who have had to look at their rate structure in recent years. As noted by the Massachusetts Water Infrastructure Finance Commission and confirmed by the Massachusetts Office of the Auditor, the Commonwealth and its municipalities face a $17 billion to $21 billion funding gap for water infrastructure over the next 20 years. As part of the effort to address these needs, municipalities are recognizing that water and sewer rates must be increased to account for maintenance of their existing water infrastructure systems. continued on page 13

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Legislative Update continued from page 11

Town of Mashpee Looking at Potential Surcharge to Address Water Infrastructure Needs

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he Mashpee Enterprise recently reported that taxpayers in Mashpee may be asked to approve a new surcharge on their tax bills for wastewater cleanup. In considering the proposal, the Town of Mashpee would potentially mimic the efforts of the Town of Sandwich, which may also charge for sewer and other water-quality projects pending a town-wide vote.

According to officials in Mashpee, the Town is expected to accrue a little under $1 million a year. The additional funds under the wastewater surcharge will be able to be used for the cleanup of its estuaries and watersheds. While Mashpee currently makes use of a 3% surcharge for its Community Preservation Act account, it may consider lowering the percentage to provide some relief to residents and businesses.

The effort to implement a potential water surcharge is the result of a Town effort to identify different

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funding options for the first phase of the Town’s sewer project. Areas identified included betterments to surcharge taxes and state-approved 0% interest loans.

Mashpee is entering into the first phase of its 25year comprehensive nitrogen mitigation plan, which calls for the construction of sewers and the planting of shellfish. The first phase calls for the design and construction of an estimated $39 million sewer treatment plant near the transfer station.

Town officials are also aware of the potential to receive funding from the short term rental legislation, which was returned to the legislature with an amendment. The short term rental funding would include 5.5% tax to the state, up to 6% local option tax, and 2.75% surcharge to be used for the water protection fund. The legislation, which is supported by legislative leadership and the Governor, may be acted on after the November elections.

Treasurer Goldberg and the Massachusetts Clean Water Trust Continue to Fund Water Infrastructure

ccording to a press release from the Office of the Treasurer, Treasurer Deb Goldberg, Chair of the Massachusetts Clean Water Trust, announced more than $7.5 million in loan principal forgiveness for 17 projects in nine communities statewide. The principal forgiveness funds are administered on a competitive basis to cities and towns most in need of financial assistance to help pay for improvements to drinking water and infrastructure.

The Massachusetts Clean Water Trust improves the water quality in the Commonwealth through the provision of low-cost capital financing to cities, towns, and other eligible entities. Due to the reduction of loan principal funded by this program, impacted communities will see their bi-annual loan repayments reduced, freeing up capital for other local needs. The loans were originated to pay for municipal water projects, such as upgrades to water treatment facilities and stormwater and sewer improvement projects.

The communities that earned loan principal forgiveness are: Brockton, Fall River, Gardner, Gloucester, New Bedford, Revere, Wareham, Webster, and West Springfield.

The $7.5 million in loan forgiveness funds is asso-

OCTOBER, 2018

ciated with a total original loan amount of more than $109 million. The Massachusetts Clean Water Trust lends financial assistance to the Commonwealth under the State Revolving Loan Fund program, which offers subsidized loans to cities, towns, and regional agencies to help protect their water resources and drinking water.

Since its establishment in 1989, the Trust has loaned nearly $7.3 billion to improve and maintain the quality of water in the Commonwealth. An estimated 97% of Massachusetts' residents have benefited from the financial assistance of the Clean Water Trust.

One of the greatest job creators in the Commonwealth, the Massachusetts Clean Water Trust sits under the Office of the Treasurer and is managed by a three person Board of Treasurer Goldberg, MassDEP Commissioner Martin Suuberg, and Secretary of the Executive Office of Administration and Finance (A&F) Michael Heffernan.

For more information about the projects receiving the aforementioned funds, please visit: https://www. mass.gov/news/officials-announces-over-75-millionin-grants-for-17-municipal-water-projects. continued on page 15

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Legislative Update continued from page 13

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Special Commission on Transparency and Public Records Access Meets

hearing agendas, public testimony and commitn an effort to analyze the potential for improvtee votes; (v) rules and scheduling requirements ing access to information before the Massafor committee reports; (vi) content of commitchusetts legislature, the Special Legislative tee reports, such as summary, explanatory and Commission Regarding Public Records met for analytical materials; (vii) contemporaneous and the final time in September to hear testimony on permanent online access to open sessions of ways to improve transparency in government. The the House of Representatives and Senate; (viii) ACLU, Common Cause, MASSPIRG, the Maspublication of records concerning House of Repsachusetts Newspaper Publishers Association, resentatives and Senate sessions including, but the Pioneer Institute, and the New England First not limited to, roll call votes; and (ix) publication of Amendment Coalition all testified before the Comproposed amendments to legislation and votes. mission to express concern over the current law and their shared desire to see the Massachusetts The Special Legislative Commission Relegislature subject to the public records law. garding Public Records is also charged with examining the constitutionality and practicality of According to coverage provided by the State subjecting the Massachusetts General Court, House News Service, the special commission, the Executive Office of the Governor and the which was created under the 2016 public records judicial branch to the public records law. In unreform law, will issue a report by December 2018. dertaking its examination, the commission shall On June 3, 2016, Governor Charlie Baker signed examine the procedures used by legislatures in into law the first update to the Massachusetts’s other states and those used by the United States public records law since 1973. The law, as amendCongress for making information concerning the ed, changed how Massachusetts public record relegislative process available to the public. quests are made and how state and local governments respond to them. The amendments sought For further updates on the Special Legto make government entities more accountable, islative Commission Regarding Public Reaccessible, and efficient in their management of records, please visit: https://twitter.com/ma_ quests for information, and they include stricter obpubrecscomm?lang=en n ligations for municipality and agency compliance.

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Senator John K eenan Chairperson, Senate Committee on Bonding, Capital Expenditures and State Assets Senator Keenan first got involved in politics while in elementary school, volunteering to deliver campaign literature for a neighbor, admittedly for the chocolate donuts that followed the work. While in high school, he served in student government, volunteered on the campaign of a candidate for the Quincy City Council, and attended City Council meetings. He would also watch broadcasts of the State Legislature on WGBH. The Senator first ran for office in 1987, for a ward seat on the Quincy City Council. Although he lost that election, thereafter he was appointed as Chairperson of the Quincy Mayor’s Commission on Handicapped Affairs. Since that appointment he has been continuously involved in government and politics, serving on the Zoning Board of Appeals, as the Executive Secretary/Chief of Staff to Quincy Mayor James Sheets, on the Quincy City Council for nine years, as Director of the Norfolk County Retirement System for nine years, and now as State Senator for the Norfolk and Plymouth District for the past eight years. He stated that it has been a fascinating and rewarding experience.

Q:

Please give your thoughts on how Massachusetts can best continue to find local aid to cities and towns to help support basic municipal services, specifically water infrastructure.

the Legislature and signed by the Governor.

Q:

A:

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. Can you discuss some of the water and sewer infrastructure concerns your district has been addressing?

Beyond local aid, the Commonwealth and the various authorities charged with delivering water and sewer services should offer as many incentives to local municipalities as possible for water and sewer infrastructure projects, such as the Clean Water Trust, a low-interest loan program for water infrastructure projects that was funded at $60.3 million and included in the Environmental Bond Bill recently passed by

The water and sewer infrastructure issues in my district are many. In all communities, and especially in Quincy, it is the continuing high costs of upgrading aged water and sewer lines. In Braintree and Holbrook, it is determining the next steps in addressing the outdated regional water plants, whether to build one new plant or switch to the MWRA. Then of course, it’s how do we fund whatever approach is decided upon. In Rockland and Abington, it is ensuring adequate water supply and sewer services.

In Abington especially, it’s ensuring compliance with federal permits so as to allow for further residential and commercial development. continued on page 19

The more local aid the Commonwealth can provide to cities and towns, the greater ability municipalities have to address infrastructure needs, especially those that are so important to the everyday lives of all their residents, such as water and sewer infrastructure. This legislative session, state revenues increased and the Fiscal Year 2018 budget showed a significant budget surplus, some of which has been used to increase the balance of the Commonwealth’s stabilization fund and some of which may be available to support infrastructure in local communities in the future.

OCTOBER, 2018

A:

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Interview continued from page 17

It is incredibly important that the construction industry has enough skilled workers, and to ensure this, state government must continue its efforts to promote vocational and technical training in our high schools, in our community colleges, and through apprentice training programs.

Q:

The construction industry continues to deal with workforce development issues as it searches for the next generation of workers.

Can you give us your thoughts relative to the importance of making sure that the construction industry and trades are able to fill these much-needed jobs in the coming years?

A:

It is incredibly important that the construction industry has enough skilled workers, and to ensure this, state government must continue its efforts to promote vocational and technical training in our high schools, in our community colleges, and through apprentice training programs. Recent economic development legislation included a $75 million bond authorization for new equipment at career technical education training programs, as well as an increase in funding to the Workforce Competitiveness Trust Fund. These will provide additional job training in industries with critical vacancies. We must also continue to encourage STEM education, so there are enough surveyors, engineers, project managers, and the likes to meet the staffing demands of the many construction projects across the Commonwealth. It is especially important that this training and education be flexible enough to accommodate existing and anticipated workforce needs.

For instance, as the real estate market thrives, a great number of construction industry workers are now working on residential and commercial development projects. We must ensure that there are enough workers as well for critical infrastructure work.

Other important legislation included a comprehensive criminal justice reform bill, legislation addressing the opioid epidemic, and bills to outlaw bump stocks and prevent access to weapons by those considered to pose extreme risk to themselves or others. Several bills were passed protecting women’s and workers’ rights, including the Pregnant Workers’ Fairness Act, Paid Family and Medical Family Leave Act, and an increase in the minimum wage.

Next year’s priorities are many, but include increasing the Commonwealth’s stabilization account, increasing local aid and state education funding, passing Chapter 90 funding for road construction, continuing work to combat the opioid epidemic, and passing a comprehensive housing production bill. n

With construction booming across most parts of the country, there will be increasing competition for workers. To ensure that the Commonwealth has workers to meet its construction needs, it is also important that we have affordable housing, quality education, safe work environments, and accessible and affordable healthcare

Q:

Now that the 2017-2018 session has ended, what were the Legislature’s most significant accomplishments and what are your priorities looking ahead to next year?

A:

The Legislature had many significant accomplishments during the 2017-2018 session. We passed bond bills authorizing $1.15 billion in funding for public infrastructure improvements and technical and workforce training; $3.9 billion in funding to address the state’s capital needs, including higher education campuses, health and human services facilities, public safety facilities, and courts; $1.8 billion in funding to address the state’s low- and moderate-income housing programs, including housing for tenants with disabilities; and, $2.4 billion in funding to protect the Commonwealth’s environment.

OCTOBER, 2018

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with UCANE’s Officers and Board Members How did you get started in the underground construction industry and what was your first job?​ My first job in construction was at a very young age, during summer vacations, working for my grandfather’s construction company in Marshfield. I worked every summer from high school through my time at Wentworth Institute of Technology.

In 1993, I left working for my family to work as an engineer for UCANE past President Jon D’Allessandro and his firm D’Allessandro Corporation. From 1997 to 2000, I worked on the Central Artery Tunnel Project in Boston relocating underground utilities for Webster Engineering. ​ How long have you been with the company you currently work for?

My wife Geselle incorporated GVC Construction in the spring of 2000 and I joined her shortly thereafter. We started as a two-person firm performing small water and sewer projects and grew into a firm with 35 full-time employees performing underground utilities, general contracting, and landscape maintenance.

How long have you been involved with UCANE? My wife and I decided to join UCANE in 2004. I started attending meetOCTOBER, 2018

UCANE Board Member Chris Valenti GVC Construction, Inc.

ings of the Government Relations Committee and got to see all the issues that UCANE was dealing with in order to protect contractors. I learned a lot from those meetings about our industry, and listening to input from successful contractors helped our young company and myself tremendously. I was very proud to be asked by my peers to join the Board of Directors in 2014.

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

Our industry is facing several challenges in the coming years, the first being a shortage of funding for wacontinued on page 23

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

Under the Hard Hat continued from page 21 ter and sewer projects. Our cities, towns, and state have been deferring infrastructure maintenance and replacements for years and it has now caught up to them. Our elected politicians need to step up and bring our State’s infrastructure up to modern standards that residents deserve. The can has been kicked down the road long enough. We are also seeing increased regulations from every direction, many of which raise the cost of routine infrastructure projects. The construction industry also needs to do a better job of promoting the trades to young people as a career so that we can have enough skilled tradespeople for the future. Also, projects are getting larger and many have unrealistic completion dates, both of which limits competition for the owner and hurts smaller contractors.

Although some of these industry challenges seem daunting, I take solace in knowing that I am part of an association that is standing up for my business every day.

I would encourage every contractor to try a couple of years on the Board of Directors. If you want changes to occur in the industry, there is no better way to try and make it happen than by being a member of the Board and having a “voice” in the decisionmaking process. You can’t make changes from your Lazy-Boy. n

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We know you face many risks above and below ground.

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UCANE’s Annual Christmas Party & Scholarship Auction Wednesday Evening December 5, 2018 5:00 p.m.

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43 Scanlon Drive Randolph, MA Our members’ commitment to our Scholarship Program begins when our Association holds its Annual Christmas Party and Scholarship Auction. It is through the generosity of members who donate cash and auction items, and those who attend and bid for items that money is raised for our scholarships... all this to make certain that our Scholarship Program continues.

Strategic legal counsel.

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Our ability to provide value and deliver results through strong relationships, practical legal advice and counsel has earned us a first-tier national ranking in U.S. News and World Report’s “Best Law Firms” for the LitigationConstruction category.

We specialize in solving complex issues and provide a full range of construction law and dispute resolution expertise including Compliance, Crisis Response & Management, Dispute Resolution, Government & Internal Investigations, Procurement, Risk Management & Surety and Transactions.

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OCTOBER, 2018

Treasurer Goldberg Announces Over $7.5 Million in Grants for 17 Municipal Water Projects Funds will help cities and towns pay for improvements to drinking water and wastewater infrastructure

B

OSTON — State Treasurer Deb Goldberg, Chair of the Massachusetts Clean Water Trust, announced more than $7.5 million in loan principal forgiveness for 17 projects in nine communities statewide. The principle forgiveness funds are administered on a competitive basis to cities and towns most in need of financial assistance to help pay for improvements to drinking water and infrastructure.

"Providing these funds to local communities will save the ratepayers money and protect the health of the citizens and the environment," said Treasurer Goldberg. "This $7.5 million is another example of the excellent work the Trust does saving our local communities money."

The Massachusetts Clean Water Trust improves the water quality in the Commonwealth through the provision of low-cost capital financing to cities, towns and other eligible entities. Due to the reduction of loan principal funded by this program, impacted communities will see their bi-annual loan repayments reduced, freeing up capital for other local needs. The loans were originated to pay for municipal water projects such as upgrades to water treatment facilities and stormwater and sewer improvement projects.

The communities that earned loan principal forgiveness are: Brockton, Fall River, Gardner, Gloucester, New Bedford, Revere, Wareham, Webster, and West Springfield.

"The challenges to maintain and operate water infrastructure are significant for communities in Massachusetts," said Commissioner Martin Suuberg of the Massachusetts Department of Environmental Protection (MassDEP), which is a member of the Clean Water Trust. "The Baker-Polito Administration is pleased to be able to direct some additional financial assistance to maintaining and improving water infrastructure and protecting the health of residents in these communities."

OCTOBER, 2018

The $7.5 million in loan forgiveness funds is associated with a total original loan amount of more than $109 million. The Massachusetts Clean Water Trust lends financial assistance to the Commonwealth under the State Revolving Fund program which offers subsidized loans to cities, towns, and regional agencies to help protect their water resources and drinking water.

Since its establishment in 1989, the Trust has loaned nearly $7.3 billion to improve and maintain the quality of water in the Commonwealth. An estimated 97 percent of Massachusetts' residents have benefited from the financial assistance of the Clean Water Trust.

A list of communities and loans impacted by the grants are as follows:

M assachusetts Clean Water Trust 2017 Principal Forgiveness Projects Project Descriptions

Clean Water Projects Gardner - CWP-17-23 and CWP-17-23-A The goal of this project is to remove two existing belt filter presses and replace them with two centrifuges. The project will include structural upgrades to the building, replacement of the polymer feed system and other ancillary support equipment, including piping and pumps. These upgrades will provide operational efficiency leading to cost savings and better wastewater treatment.

Gloucester - CWP-17-24 Gloucester is essentially an island community surrounded by ocean, marshes and beaches. Residents of Gloucester, as well as people from all over the North Shore, enjoy these everyday natural resources for walking, swimming and boating. The Gloucester Department of Public Works (DPW) and continued on page 28

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Grants continued from page 27 Goose Cove pumping stations are both located close to these important resources. An evaluation of wastewater pump stations in Gloucester was completed in 2010. The evaluation determined that the DPW and Goose Cove pump stations have the first and second highest priority rehabilitation needs of the 29 pump stations in the City. The reason being the large volume of daily flow as well as the age and condition of the stations. Rehabilitation of these two stations will ensure continued protection of Gloucester’s important natural resources.

New Bedford - CWP-17-16 and CWP-17-16-A Three pumping stations in the City of New Bedford that are high priority for the near future will be upgraded with this project. These recommendations are based on an integrated plan currently being developed. Upgrades are necessary to ensure adequate system capacity and effective wastewater treatment.

New Bedford - CWP-17-17 The Wastewater Collection System Improvements project involves several improvements to the City's infrastructure. Projects include an interceptor

and collector sewer rehabilitation program, a lateral sewer rehabilitation program, an illicit discharge removal program, and an over-under access manhole program. The progression of these programs will further the City’s progressive efforts to dramatically lessen or eliminate infiltration/inflow (I/I) issues, reduce combined sewer overflows (CSOs), reinforce the critical components of the City's sewer system, address capacity, management, operations and maintenance (CMOM) and regulatory requirements, and eliminate illicit discharges. These programs will address needs identified in the City's integrated plan.

Revere - CWP-17-26 Continuing the implementation of construction contracts for the Illicit Connection and Sump Pump Removal Program is essential for the City of Revere to meet its goals and comply with a consent decree. There is a significant number of illicit sump pumps, roof drains, roof leaders, driveway drains, yard drains, etc. connections from private homes and businesses that must be removed from the sewer to remove inflow and increase the wastewater capacity of the City's sewer system.

Revere - CWP-17-27 The Phase VIII Construction Project will include continued on page 29

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OCTOBER, 2018

Grants continued from page 28 the removal of inflow/infiltration (I/I) from the City's sewer system. I/I causes excessive water volume in the sanitary sewer, which contributes to overflows and capacity issues. Construction will include the redirection of public and private inflow sources discovered during the Phase VIII Field Investigations project, illicit discharge detection and elimination (IDDE) source removal, and drainage improvements. Construction will also include pump station improvements (both stormwater and wastewater), cured in place pipe (CIPP) lining, sewer spot repairs, replacements, new sewer lines, cleaning, and additional wastewater metering.

West Springfield - CWP-17-30 The sewer pump station project implements cured in place pipe (CIPP) recommendations. These recommendations include replacing outdated pumps, controls, emergency power generators, emergency lighting, the ventilation and air quality monitoring system, dry well flood alarms, heating systems, and building foundation repairs. This inflow/infiltration (I/I) project will implement sewer system evaluation survey (SSES) recommendations for 11 sewer disconnections. This project will also involve 128 manhole rehabilitations including grouting, wall rehabilitation and corbel repair, 250 ft of CIPP liners, 600 ft of closed circuit television

OCTOBER, 2018

(CCTV) inspection, 14 spot liner repairs, and 83 sewer lateral inspections. The flood control pump station improvements involve critical electrical improvements including upgrade of main load centers, light panels, exterior lights and emergency lighting. Improved efficiencies provide better, more efficient and more costeffective treatment.

Drinking Water Projects Brockton - DWP-17-10 The City of Brockton has been working to locate, clean, and operate all crossover and mainline valves within the 24” transmission mains connecting Silver Lake Water Treatment Plant and the Brown’s Crossing Pump Station (East Bridgewater). This assessment was done in response to a pipe failure within this line. The crossover valves could not be operated to isolate the pipe break. This caused a shutdown of the plant for a day and great concern for the integrity of these pipes and their valves. Several crossing locations have been identified through an assessment and will be replaced to prevent these issues from occurring in the future.

Fall River - DWP-17-08 The Phase 17 Water Main Improvements project continued on page 31

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228 Cherry St. Plymouth, MA 02360 508.747.1800 F: 508.747.6017

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OCTOBER, 2018

Grants continued from page 29 involves the rehabilitation or replacement of approximately 16,100 linear feet of cast iron water mains and 30 lead service lines. A priority of the Massachusetts State Revolving Fund (SRF) program is to prevent potential serious health threats to major water system components. The cast iron water mains are severely deteriorated and need to be replaced to ensure adequate flow and capacity for supply and fire protection. Replacing lead service line connections addresses the critical health threat presented when lead is in drinking water. The adverse health effects of lead exposure in children and adults are well documented and no safe blood level threshold in children has been established. Lead exposure causes neurological and cognitive impairments in children and fetuses. It can also cause high blood pressure and kidney problems in adults. This project will prevent a serious problem in the distribution system and provide safe and reliable drinking water to consumers in the City of Fall River.

Fall River - DWP-17-12 This project will allow the City to implement an “Advanced Meter Infrastructure” (AMI) system. An AMI system will allow the City to remove meter reading vehicles from the street, along with vehicle over-

head, emissions and safety issues. Personnel costs and meter reading errors can be controlled with precise daily and hourly meter reads. Combined with the replacement of commercial and industrial meters, the project will enhance the water department’s revenue, streamline office procedures and provide the means for continuous investment. An AMI system offers leak detection notification, which in turn leads to water conservation and less pumping costs.

Rate payers will receive better service. At the same time, the City’s water department will operate more efficiently.

New Bedford - DWP-17-03 Phase I of the City of New Bedford’s lead service line replacement program is the beginning of an aggressive, multi-year program to replace all remaining lead service lines (LSLs) in the City. The first phase of this program will replace approximately 1,000 to 1,500 LSLs in a two-year period throughout the City’s water distribution system. The adverse health effects of lead exposure in children and adults are well documented. No safe blood level threshold in children has been established. Lead exposure causes neurological and cognitive impairments in children and fetuses. It can also cause high blood pressure and kidney problems in adults. The City is committed to protectcontinued on page 33

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Grants continued from page 31 ing public health and continuing to provide safe drinking water to all its consumers. This aggressive lead service line replacement program also shows the City is committed to complying with the EPA’s Lead and Copper Rule.

New Bedford - DWP-17-06 This large meter and advanced metering infrastructure (AMI) upgrade program includes two distinct but related elements: (1) The City will conduct testing, repair, and/or replacement of some of its largest consumer meters. These meters are older and are under-registering. This is leading to increased unaccounted water and decreased revenue.

(2) The City will upgrade its meter reading equipment for the entire water system., This will allow the use of the latest technology and eliminate estimated meter reads (and therefore reduce unaccounted for water and lost revenues) due to failing meter transmission units (MTUs).

New Bedford - DWP-17-07 The High Hill Reservoir Rehabilitation project will involve much needed and required structural repairs to the reservoir and its roof, replacing inoperable inlet and outlet valves, cleaning the entire reservoir, re-

moving accumulated sediment on the reservoir floor, installing a new mixing system in the reservoir to improve circulation and water age, and performing other needed repairs and upgrades. Recent inspections identified serious deficiencies with the reservoir’s roof and support system. Deficiencies include failed beam connections, broken anchor bolts, and beams that have moved on their supports. The roof is in danger of failure and collapse and there are inoperable inlet and outlet valves that need to be replaced. This work will improve water quality and ensure reliability and flow capacity in the distribution system.

Revere - DWP-17-14 This project involves the replacement of approximately 600 lead service lines (LSLs) throughout the City of Revere. The City has identified 250 active LSLs to date throughout an ongoing automatic meter replacement program. Based on the number of properties in the City that have been inspected and the estimated value of the identified LSLs found to date, it is believed that approximately 600 LSLs will need to be replaced. The adverse health effects of lead exposure in children and adults are well documented. No safe blood level threshold in children has been established. Lead exposure causes neurological and cognitive impairments in children and fetuses. It can also cause high blood pressure and kidney problems in adults. Removing LSLs addresses a critical public health risk.

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Water Works Specialist Tel:781-878-8098 Fax:781-878-5298 This project includes the conWater Works Specialist Tel:781-878-8098 struction ofFax:781-878-5298 a 3 million gallons per Tel: 781-878-8098 Fax: 781-878-5298 day (MGD) ground water treatment “Our Products the Most Trusted NamesNames in theinIndustry” “OurIndustry” Products Are the Most Trusted in the Industry” plant withNames the capacity to expand to “OurAre Products Are the Most Trusted the

� U.S. Pipe ● Cultec Chambers U.S. Pipe ● Cultec Chambers 4.5 ●MGD. project will need to � Mueller Fire Hydrants NationalThis Pipe & Plastics • U.S. Pipe • Cultec Chambers include iron manganese remov� Mueller Tapping Sleeves & Valves ● ADS Pipeand & Chambers Mueller Fire Hydrants ● National Pipe & Plastics • Mueller Fire Hydrants • National Pipe� &Smith Plastics Blair Clamps & Couplingsal to ● comply General Foundry Castings with secondary stanMueller Tapping Sleeves & Valves ● Valves ADS Pipe Chambers • Mueller Tapping Sleeves & • &ADS Pipe & Chambers Mechanical Services dards.

Disinfection with ultraviolet � Tapping Sleeves & Gates Installed / Cut • Clamps Smith & Blair Clamps & Couplings • General Foundry Castings Smith Blair Couplings ● General Foundry Castings � Line Stop / EZlight Valves and/or free chlorine is needed Mechanical Services � Cutting of Chilled Water Lines & Steam Lines to address the groundwater rule Mechanical Services � Pressure Testing & Disinfection of New Mains � Tapping Sleeves & Gates Installed / Cut or the possible as � Installation & Testing of Backflow Preventers reclassification 24 Hours • Tapping Sleeves & Gates Installed / Cut Sales& Service � Large Diameter groundwater Hydraulic Pipe Cutting under the � Line Stop / EZ Valves influence of Serving all of • Line Stop / EZ Valves � Hydrant Installation & Repair New Englandcontrol is surface water.

Corrosion � Cutting of Chilled Water Lines & Steam Lines � Electronic Leak Detection • Cutting of Chilled Water Lines & Steam Lines alsoat needed.

This work will remove “Water-Sewer-Drain Supplies a Competitive Price” • Pressure Testing &&Disinfection � Pressure Testing DisinfectionofofNew NewMains Mains www.hoadleyandsons.com the public health threats posed by • Installation && Testing ofof Backflow � Installation Testing BackflowPreventers Preventers 24 24Hours Hours672 Union Street Rockland, MA 02370 various contaminants and ensure • Large Diameter Hydraulic Pipe Cutting Sales& Service Sales & Service � Large Diameter Hydraulic Pipe Cutting excellent drinking water quality.

• Hydrant Installation & Repair Serving ofof Servingallall � Hydrant Leak Installation & Repair New • Electronic Detection NewEngland England Webster - DWP-17-04 � Electronic Leak Detection This project involves the con“Water-Sewer-Drain Supplies at Supplies a Competitive Price” Price” “Water-Sewer-Drain at a Competitive struction of a water treatment www.hoadleyandsons.com www.hoadleyandsons.com plant (WTP) and associated appurtenances. The Memorial Beach 672 Union Street MA Rockland, 672 Union Street Rockland, 02370MA 02370 continued on page 35

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Grants continued from page 33 Wells WTP project corrects serious existing problems within the Webster water supply. This project returns compromised drinking water sources to operation and mitigates potential long-term public health threats by reducing elevated levels of manganese and ensuring corrosion control at the new entry point into the distribution system. In addition, this project will address elevated levels of iron above the secondary maximum contaminant limit (SMCL), provide 4-log disinfection, and provide additional system redundancy to ensure availability and flow capacity.

West Springfield - DWP-17-13 and DWP-17-13-A This project involves a new 300,000-gallon elevated water storage tank, a transmission main from the existing high-pressure service area to supply the new pressure zone, and improvements to the existing pumping station serving the high-pressure zone to meet increased demand. Work also involves replacing approximately 2,200 existing meters and a townwide leakage testing plan and implementation. This will enable the Town to recover costs of under-registering meters and significantly reduce the amount of unaccounted water. It will also ensure adequate water supply for drinking and fire protection. n

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OCTOBER, 2018

Russ Corner II

Starkweather & Shepley Insurance Brokerage Inc.

What is My Bonding Capacity?

What is my bonding capacity? This may be one of the most frequently asked questions by contractors and probably the most difficult to answer on an on-going basis. This article is not intended to be an all-inclusive guide to time tested underwriting guidelines but rather is designed to shed some light on an often misunderstood concept in the surety industry. To help clarify this mysterious question, let’s take a look at the definition of capacity, discuss some of the factors considered in determining a contractor’s bonding capacity and highlight what you can do as a contractor to impact your bonding capacity.

C

apacity is defined by the Insurance Institutes of America Principles of Suretyship as a “contractor’s ability to perform a project successfully.” It is one of the three C’s (capacity, character, and capital) of surety credit analysis used by contract underwriters when evaluating the creditworthiness of their clients. Capacity is generally expressed in terms of the largest single project the surety would be willing to issue and the maximum amount of contract backlog a contractor can hold.

More commonly, capacity is referred to as single job limit and aggregate limit.

Now that we have an idea of what capacity is, what is some of the most common information analyzed to determine capacity? The list below identifies some elements that weigh heavily but, as you will notice, not all are able to be simply fit into a mathematical equation to calculate the result.

• Financial resources • Current work on hand • Performance record/Overall experience • Plant, equipment and labor force • Management control • Credit reports • Bank line of credit

OCTOBER, 2018

Financial resources. Working capital and net worth are the two most talked about when it comes to surety. A good rule of thumb for total capacity is 10x net worth. Cash flow is another critical measure affecting capacity. Cash flow allows the contractor to support the costs for insurance, bonding, labor, materials and overhead until receipt of the first contract payment. A continuous focus on collecting receivables is critical to successful operations.

Current work on hand. This report, more than any other, provides a snapshot of the performance of a contractor. It can be a powerful tool to reveal inefficiencies in construction operations and to better understand company performance and factors affecting profitability. Regular analysis of the work in process can help contractors and other decision makers (surety company, bank, etc.) identify areas of success and issues of concern that can be addressed prior to project completion.

Past performance/experience. A contractor’s past experience is vital. Being able to demonstrate a successful track record for similar types of projects is very reassuring to the surety. A surety is not likely to offer routine support for a $10 million continued on page 39

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Insurance Perspectives continued from page 37 dollar project if the largest successfully completed project was only $1 million. In addition, as a contractor takes on more projects the importance of the other factors such as financial strength, cash flow, organization, and managerial experience becomes magnified.

Physical resources. Does the contractor have the right equipment and labor force to handle this new project and the existing backlog of work?

The question of labor has become increasingly relevant as the industry struggles to maintain a skilled labor force.

Management control. This deals with how well the management team understands the current state of the business. Every business has a system.

For some it may be pen and paper, for others it may be one person who “knows everything.” Depending on the size of the organization and the projects pursued, the surety is most concerned with the ability to gather information and evaluate the performance of different organizational resources like human, physical, financial and also the business as a whole in light of the organizational strategies.

Credit reports. Does the ownership have adequate personal credit? This is an indication of the

value the ownership places on paying bills.

Bank line of credit. Are there sufficient funds available, if needed, to assist in case of a temporary situation where the contractor may not be paid on time? Having a large line of credit without ever having to use it is highly regarded by the surety.

While these key metrics can demonstrate to the surety the contractor’s ability to handle a project and their backlog of construction projects, unfortunately, there is no single formula to calculate a contractor’s capacity. The true answer lies in the interplay of these elements listed above, as well as additional criteria that may be project specific and the risk tolerance of the surety.

The fact is that bonding is as much of an art as it is a science and these two disciplines can be viewed as complimentary or conflicting, depending on your viewpoint. One principle will always serve you well - bonding capacity will always favor those contractors who have high quality financial information and who are in a position to provide that information in a timely and transparent manner. This ability demonstrates organization, commitment, and provides piece of mind to the surety that problems arising during the normal course of business will be identified and dealt with immediately. Makcontinued on page 40

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Insurance Perspectives continued from page 39 ing this a priority in your business increases the chances that bonding capacity will meet or exceed expectations.

Lastly, it has become increasingly important to make sure your internal accounting department, your CPA and your professional surety agent are on the same page. Get this group together and give each a voice. The ultimate decision on growth vs. tax planning is yours, but having the different perspectives allows you to make business decisions based on all the pertinent information. If not, you may very well be missing out on your opportunity to maximize your bonding capacity.

(DISCLAIMER: This is intended to be a simple perspective on bonding capacity and not an all-inclusive guide to how capacity is underwritten. There are also programs based solely on the personal credit of the owners that will have more structured capacity.) n

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UCANE Presidents Highlight Their Recent Work

Vin Barletta

Barletta Heavy Division

Marco Gioioso

P. Gioioso & Sons, Inc.

UCANE contractors have completed some of the most complex and challenging projects in Massachusetts history.

At UCANE’s September Dinner Meeting, four members who run some of our Association’s largest companies, spoke about their recent projects and the challenges they faced.

Members and guests filled the Sheraton Four Points Hotel in Norwood, MA to hear the presentations and discussions from Vin Barletta, Marco Gioioso, Ryan McCourt, and John Our. UCANE President Richard Pacella opened the meeting by thanking Woodco Machinery, Inc. for sponsoring the dinner meeting and for their ongoing support. He also thanked the panelists for participating and then introduced UCANE Assistant Executive Director Jeff Mahoney, who began the evening’s program.

OCTOBER, 2018

Ryan McCourt

McCourt Construction Co.

John Our

Robert B. Our Co., Inc.

Barletta Heavy Division The first presenter was former UCANE President Vincent Barletta, President of Barletta Heavy Division. Vin talked about the massive Fall River Route 79/I-195 Interchange Improvements and Braga Bridge Rehabilitation Project. He said it was one of five megaprojects under MassDOT’s Accelerated Bridge Program. He went on to describe the massive scope of this design/build project, which consisted of the reconfiguration of the Route 79/I195/Route 138 Interchange, as well as structural repairs to the iconic mile-long Braga Bridge, which carries I-195 over the Taunton River and Route 79.

Over a mile of new highway and 20 acres of roadway were constructed. Nine new bridges were built and two were rehabilitated. Twenty retaining walls were constructed with over 75,000 square feet of exposed face.

His multi-media presentation showed how crews overcame several issues such as severe weather, traffic management, coordination with other utilities and railroads, and engineering challenges. To no one’s surprise, Barletta Heavy Division was able to attain full beneficial use 77 days earlier than the contractual milestone and also achieved substantial completion 211 days earlier than required by the contract. continued on page 45

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Dinner Meeting continued from page 43 The project also opened the city’s waterfront to the community with advanced multimodal access, and better safety for pedestrians and bicyclists through the addition of signalized intersections, wider sidewalks, dedicated bike lanes, and two miles of shared-use paths. It changes the landscape of the Southcoast and laid the groundwork for future economic development. (See page 49 for photos.)

P. Gioioso & Sons, Inc. Next, Marco Gioioso of P. Gioioso & Sons, Inc., presented his company’s completion of the historic Alewife Sewer Separation Project in Cambridge, MA. Marco pointed out that this was last of the court-mandated projects as part of the Boston Harbor Cleanup. The main goal was the removal of 42.7 million gallons of combined sewer overflows (CSOs) annually from the Huron/Concord neighborhood to Alewife Brook, Mystic River, and Boston Harbor. He discussed how the scope of the project, combined with having to work in the dense confines of the city of Cambridge, provided some significant hurdles that they were able to overcome.

Marco said that although the primary goal of the project was to protect local waterways by reducing the frequency and severity of CSO discharges and to improve sanitary and stormwater services, the project also took advantage of the opportunity to improve other elements of the neighborhood’s infrastructure. Gioioso upgraded water and natural gas mains and enhanced water quality by constructing six bio-basins for stormwater treatment, porous asphalt, pervious planting areas, and by planting over 300 street trees.

A Complete Streets design approach to the 7.5 miles of roadway and 15 miles of sidewalk resulted in curb extensions and raised crosswalks for pedestrian safety and traffic calming in conformance with state and federal accessibility regulations. Designated and buffered bicycle lanes were incorporated where possible.

Thanks to P. Gioioso & Sons, Inc., the completion of this project met the federal court milestone for sewer separation in December 2015, marking a significant achievement for the City, MWRA, and the region. CSOs from the area have now been eliminated, directly improving the water quality of Alewife Brook, Mystic River, and Boston Harbor. (See page 51 for photos.)

McCourt Construction Company McCourt Construction Company President and UCANE Treasurer Ryan McCourt was next up to present the Logan Airport Runway 4R-22L Rehab and Pier Replacement that his company recently completed. This was no small task considering over 120,000 passengers fly in and out of Logan daily, with over 1,500 flights per day on six runways.

Ryan said Runway 4R-22L is the most frequently used runway at Logan, and Massport wanted to minimize disruption continued on page 47

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Dinner Meeting continued from page 45 of service during construction. McCourt was very familiar with this type of job and has been working at Logan Airport consistently since 1946 and has constructed or reconstructed all of the active runways and taxiways including the newest runway, 14-32.

There were 11 phases of construction and Ryan said that the contract specified that weather would not impact the completion date. The Runway work was done 24-hours a day seven days a week to comply with the 40-day completion date for that phase of the project. Unfortunately, there were seven rain days, which McCourt had to make up for in the schedule, which they did, completing the job on time. There were 77,000 tons of paving over two miles of conduit, over 1,000 lights to adjust, and 135,000 square yards of grooving, which are all perpendicular grooves that take water away from the runway.

The ALSF light pier replacement was the other major element of the project. The original pier was a wood pier on wood piles. McCourt utilized this pier for access to the new shafts and demolished it in stages.

The new pier was set on 60-foot long, 7-foot diameter drilled shafts, drilled 10-feet into bedrock. Each drilled shaft had a rebar cage which weighed over 35 tons and were preassembled in the factory. This portion of the contract needed to be completed in 84 days and, like the runway, weather could not impact completion.

Ryan was happy to report that McCourt, once again, was able to achieve their goal. The project was awarded the 2018 New England Infrastructure Project of the Year by the Construction Management Association of America. (See page 53 for photos.)

Robert B. Our Company, Inc. Next, former UCANE President John Our highlighted the final project of the evening: the emergency sewer force main repair on Nantucket completed by the Robert B. Our Co., Inc., in January of 2018.

John began his presentation by discussing how the antiquated system on Nantucket, combined with massive flooding and subzero temperatures, led to the catastrophic force main break, causing millions of gallons of untreated sewage to spill into Nantucket Harbor. The town called the Robert B. Our Co. for the emergency repair as they had successfully performed many water and sewer projects on Nantucket.

However, transportation to and from the island was very difficult due to the harsh winter conditions.

The Coast Guard was called in to transport personnel and equipment via Blackhawk helicopters. As John mentioned, it was an interesting way to commute, to say the least! Once on the island, they were able to quickly locate the force main bypass connections and complete the bypass repair work to get the system back up and running. This was no small task continued on page 48

OCTOBER, 2018

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47

Dinner Meeting continued from page 47 when you consider the conditions and frozen ground that crews had to work through.

John then went on to discuss how the emergency work turned into contract work, as the company worked to replace the sewer main that was originally put in place around 1930 and relined in the 1980s.

The project also included a rehabilitation of the Sea Street Pump Station. Not surprisingly, the Robert B. Our Co. had the job completed in time for the Sea Street business district to be up and running for the summer season. (See page 55 for photos.)

The participants closed the evening by addressing the most pressing issues facing the construction industry today. While each panelist had their own perspective, there was a consensus that the major issues were safety training, bid specs put out by awarding authorities, dealing with advances in technology, and workforce development.

UCANE would like to thank all of our panelists for taking the time to participate. The feedback on the presentations has been extremely positive, and we look forward to doing it again at a future dinner meeting! n

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hedule and Cost Changes Alewife Sewer Separation Project

Gioioso & Sons,with Inc. heavy utility schedule changes areP. consistent This project removed 42.7 million gallons of combined sewer overflows annually from tion in dense urban environments.

Huron/Concord neighborhood to Alewife Brook, Mystic River, and Boston Harbor.

urces of cost increases:

ment of 40” water transmission main on enue (FPP to Gurney)

contract coordination with utilities (3 s, private utilities, etc.)

ependent trees and plantings

resequencing required for December er separation deadline

e modifications to reduce impacts on and businesses (e.g. limiting Huron Village nt construction during holiday months)

enue Design

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Logan Airport Runway 4R-22L Rehab and Pier Replacement McCourt Construction Company The runway work was done 24-hours a day seven days a week to comply with the 40-day completion date for this phase of the project. The ALSF light pier replacement was the other major element of the project which had to be completed in 84 days.

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OCTOBER, 2018

Construction Safety & Compliance: An Interview with Patrick Saltmarsh Corporate Safety Director J. Derenzo Company UCANE’s Construction Outlook magazine editors recently caught up with Patrick Saltmarsh at a busy construction site in Boston, MA. Patrick is the Corporate Safety Director for UCANE member company J. Derenzo Co. We were able to get a few minutes of Patrick’s time to talk about the importance of Safety in today’s heavy construction industry.

What is your background in Construction Safety?

I have been working in the construction industry, in various capacities, since 2000. In May of 2015, I began working as a Safety Manger for J.Derenzo Co. and in July 2016, I was promoted to Corporate Safety Director of J.Derenzo Companies.

My safety career began as a firefighter/first responder with the Mattapoisett Fire Department, where I rose to the rank of Lieutenant and finished my career as a Fire Inspector. After the Fire Service, I worked as a National Environmental Health & Safety Inspector for the U.S. Department of Health and Human Services before coming to J. Derenzo Co. Tell us about the culture of safety that exists at J. Derenzo Co. The safety culture at J.Derenzo Co. is one of support. Support from the owners to make changes and create/build something very unique with regards to how we address jobsite safety.

We currently employ six full-time EHS Managers, however if you were to ask me, “How many Safety Managers does J.Derenzo Co. have? I would answer 78. Understandably, you would look at me strangely and question, 78?” Simply put, J.Derenzo Co. views each of its Foremen as Safety Managers. These frontline managers are responsible for the daily work product they are assigned to perform, therefore they

OCTOBER, 2018

Patrick W. Saltmarsh, CHST, CFI-II, Corporate Safety Director at J. Derenzo Company, with Foreman Hildeberto Matos and his crew at the Ben Franklin School jobsite in Franklin, MA are equally responsible for the daily work practice of our employees.

Rather than relying solely on site visits from a company Safety Manager to oversee the safety of the jobsite, we have been working towards empowering our Foremen with the knowledge of safe work practices, safe behavior and employee decision making that goes along with it. Changing the perception of safety and the pre-task mental checklist of our employees will forever change the course of safety in our company. continued on page 58

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Safety & Compliance continued from page 57 What are some of the biggest challenges you face as a safety director?

One of the biggest challenges we face with jobsite safety, is complacency. Each company is hired for its specialty service, and with that particular service comes a “rinse and repeat” component. Employees engaged in repetitive tasks, can become desensitized to the inherent dangers of this business and the job they are performing on a daily basis.

More often than not, companies have a tendency to focus in on the high hazard tasks, being sure to perform safety stand-downs and the review of Job Hazard Analysis (JHA) prior to work. In reality, it is the daily activities performed by employees that pose the greatest challenge. This risk of injury (large or small) can come at any time during the work day, especially when employees stop thinking about risk.

What advice do you have for new safety directors, specifically pertaining to the current construction climate/current jobsite risks?

My best advice for a newly appointed Safety Director, would be to perform a process analysis. That is, take the time to look at how your employees perform those tasks your company has been hired for. Look at the steps it takes to complete the work product. Upon doing this, you will begin to see patterns in both good and not so good behaviors.

Once identified, you can then work towards improving safe operating procedures, employee decision making, and frame safe employee behavior in a way that appeals to your company’s workers.

How do you think contractors as well as their workers can benefit from organized and OSHA endorsed events like Safety Week and the National Safety Stand-Downs?

OSHA’s Stand-Downs and Safety Week events offer a great opportunity to distribute safety information to large groups of workers across the industry. Training and refresher training is a valuable tool regardless of trade. The repetitiveness of daily tasks can breed complacency, therefore safety stand-downs assist companies in reintroducing employees to key safe behaviors and remind them of steps that need to be taken to work safely. n

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Selectmen Approve Regional Wastewater District Legislation HARWICH — The board of selectmen Monday night (Sept. 17) voted to approve draft special legislation allowing the establishment of a Dennis, Harwich, and Yarmouth Clean Water Partnership, which could lead the three towns into an agreement to share a wastewater treatment plant located in Dennis.

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he special legislation seeks to lay down the groundwork for the powers, duties and liabilities of the partnership and establish the commission that will oversee operations. It is very similar to legislation that established a regional wastewater district in the towns of Mansfield, Foxborough and Norton.

Dennis Board of Selectmen Chairman Paul McCormick told selectmen Monday night his board was wrestling with some of the same issues the Harwich board has been dealing with, but the board has approved the legislation unanimously. He said the costsavings of the three towns working together was a major plus.

“Our feeling is everything is tied up in the agreement and we can make all three towns happy with it,” McCormick said. A separate agreement will define many of the details of the operation of the district.

The Harwich board has been wrestling with a few issues in the enabling legislation over the past few weeks. Selectman Donald Howell expressed concern that the district would become a separate and distinct entity that transcends town oversight.

“I'm opposed to it because it creates an extra body outside town meeting,” Howell said. “It's not a partnership, it exists on its own, its own entity. It has

OCTOBER, 2018 SEPTEMBER, 2016

taxing authority on its own.”

Town Counsel John Giorgio said he listened to concerns expressed in an earlier meeting and heard many of the same concerns in Dennis. Based on those comments, Giorgio said he has looked at ways to address transparency. The three towns need to create an agreement they are happy with, provides cost estimates for each town and identifying the specific percentage each town will be required to pay, he said. But nothing goes forward unless it is approved by town meeting in each town.

“This gives the most transparency to the voters,” Giorgio said.

Howell said his concern is formation of a commission that is a separate entity; once town meeting votes to create it, they'll never vote on it again, he continued on page 60

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59 00

Cape Cod continued from page 59 said. If town meeting doesn't appropriate money for the district the commonwealth can sue the town, he added.

“There is no public input into this,” Howell said.

“I don't disagree with you,” Giorgio said. “My point is when voters vote on this, they'll fully understand what they're voting for.”

David Young of CDM Smith, the town's wastewater consultant, said the boards of selectmen will appoint the commission for the district. He said it can be spelled out who serves on the commission, whether it be a selectman or member of the finance committee or others.

There is the potential saving of $30 million in the plant and an additional $1 million in operating expenses under the regional proposal, said Selectman Larry Ballantine. “The benefits are outstanding and I don't want to lose sight of the big picture,” he said.

Young said the Yarmouth selectmen have also endorse the legislation. But he back-peddled on that statement after Selectman Michael MacAskill and Howell said they were told by Yarmouth selectmen they have not yet had a formal vote. Young said in July they stated their support, but it may not have been a formal vote.

MacAskill cautioned that once the legislation is approved, stipulations cannot be changed in the subsequent agreement. Giorgio stressed the partnership would not come into existence until all three boards of selectmen sign it and town meetings approve the agreement.

MacAskill said he shares Howell's concerns, but putting the agreement before town meeting is acceptable. He wanted to know why there was a push to move ahead at this time. Young pointed out the grant provided to the three towns to upgrade the agreement and cost impacts expires next spring. The towns must decide if they want to bring the agreement to town meeting at that time.

MacAskill said people are concerned about additional costs from borrowing from the projects.

Young said there would be a smaller portion of borrowing with this project than in phase four under the comprehensive wastewater management plan when the town would seek funding to build its own plant.

“It could take a peak off some of the numbers,” Town Administrator Christopher Clark added.

“I don't see a need to hold up the draft legislation,” Selectman Ed McManus said. “The agreement will address all the issues we care about – who gets

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appointed and how the funding gets voted.”

Wastewater support committee member Noreen Donahue suggested the special legislation stipulate the district commission can be either elected or appointed. It now requires that it be appointed, Giorgio said, but later he added because the town has a home rule charter it could be changed to an elected commission and it would be deemed consistent with the legislation.

There was also discussion that making major changes to the legislation could cause delays in enactment. The draft legislation is current under review by legislative counsel. McCormick said he was told by State Representative Tim Whalen, R-Brewster, to keep changes simple. McCormick said it was felt an appointed commission was better because it was more likely professionals would be named to it.

McManus offered a motion to approve the draft legislation as proposed and to ask the Legislature to approve it.

“My vote reflects moving forward,” MacAskill said. The motion was approved on a 4-1 vote. Howell opposed the motion.

Written by William F. Galvin. Reprinted from The Cape Cod Chronicle. n

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The Unseen Danger One of the Most Common Risks in Excavation is Hearing Loss, but There are Tools Out There to Keep You and Your Crews Safe

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ndustry veteran and Jarvis Septic & Drain owner Gene Morris can attest to the dangers of noise exposure over time: “I’m 56, and my hearing above 2,000 hertz is gone. It’s just from not wearing hearing protection in my younger days.”

It’s a common trend among older operators and contractors. Despite regulations for hearing protection, this safety issue struggles for recognition and enforcement.

“We as young men think we’re Superman, and we’re never going to have those kinds of issues,” Morris says. “I do think the noise coming off the equipment, and even in general — the years and years and years of riding in the trucks — does take its toll on the hearing of the driver.

“Most of those older gentlemen who have experienced some hearing loss realize, ‘Oh, I better do something before it’s completely gone.’ I certainly think it’s something that needs to be addressed by the business owners to protect their employees because there is definite hearing loss associated with the industry.”

Industry Regulations

Contractors wear Sonetics headsets to protect their hearing from the loud trucks they are using each day. The devices allow communication to continue between the operators.

Risk of damage to your hearing is a combination of how loud the sound is, how close you are to the source of the noise, and how long you’re exposed to that noise. “It isn’t a solid, continuous sound at a particular level. The measurement that they require is what they call a time-weighted average,” says Julie Steding, marketing manager for Sonetics.

Normal conversation is around 60 dB. OSHA guidelines require mitigation when sound reaches 90 dB over an eight-hour shift.

Though that seems like a small difference, “The decibel scale is logarithmic; it’s not linear. A 1 dB increase is a tenfold increase in the actual level of sound, so it scales up very quickly,” Steding says. “The difference between 60 and 90 is very noticeable. There’s no mistaking that there’s loud noise going on.”

At 100 dB, the allowable time frame for exposure is two hours. At 115 dB, OSHA guidelines show damage can occur after only 15 minutes of exposure or less. continued on page 62

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Safety Corner continued from page 61 “If you stand at the back of a vacuum truck and you open the valve and let the air free flow into the vacuum truck, you’re looking at the equivalent of a jet engine,” Morris says. “We’re in excess of 120 dB standing at the back of the truck.”

The burden is on business owners to provide mitigation when sound passes the OSHA threshold, meaning owners are also responsible for monitoring sound levels at their facilities and job sites. Fortunately, there are many ways to reduce noise for employees.

“What the regulation specifies is simply a noise level at which sound attenuation is required, or some sort of noise mitigation effort is required, and that’s one thing that I think people overlook sometimes; it doesn’t necessarily have to be exclusively or only hearing protection devices that you employ to try to mitigate the sound,” Steding says.

Sound mitigation falls into three categories: isolation, passive protection, and active protection.

Sound Isolation Noise mitigation efforts may begin by trying to isolate the source of the noise from the general population. “So you put loud equipment in a quiet room with extra sound insulation to protect the rest of the facility

from the noise of that equipment,” Steding says.

This sound isolation can be an important factor when choosing equipment. Many manufacturers, such as Imperial Industries, consider sound level in their product design.

“On our vane pumps, we locate the oil catch muffler on the other side of the truck, and with the blower, typically we locate the silencer on the opposite side of the truck as well. That helps bring down the noise,” says Kyle Haase, Imperial Industries commercial sales manager.

Remote-controlled rigs are another option, allowing operators plenty of distance from the equipment.

“Remote is the big push on our end,” Haase says. “You’re not directly in front of the pump when you’re operating. Usually you’re at the actual lid or the hole, and that’s where you’re doing all of your operations with the wireless remote, so the end user is not standing directly in front of the pump.”

If a particular manufacturer doesn’t have soundmitigating options, there are ways for contractors to limit noise on their own.

“I have found that some of the camlock fittings we use on our hoses produce a different decibel of sound,” Morris says. “I stumbled on it by accident, continued on page 63

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OCTOBER, 2018

Safety Corner continued from page 62 and I’ve actually switched all my hose couplings.”

The configuration of the coupling makes a difference on the airflow, changing the pitch. Morris also recently changed his vacuum truck over from a vane pump to a blower, which he thinks is quieter — but it may not be as simple as one being quieter than the other.

“A lot of our units use the National Vacuum Equipment blowers, and they’re fully enclosed in a cabinet that is all insulated as well, so that helps reduce the noise,” Haase says.

Passive vs. Active Protection Even when doing everything possible on the equipment side, it’s still heavy machinery. At a certain point, the focus needs to shift onto operators, and the simplest solution comes down to earplugs and earmuffs, which OSHA defines as passive protection.

“Passive noise attenuation is a reduction in the sound pressure level that reaches your eardrums,” Steding says. “So earplugs and earmuffs tend to be passive noise attenuation, meaning they work by virtue of covering up your ears, or plugging up your ear canal.

They are not employing any kind of active strategy.”

There are different levels of protection even within this basic category.

“Depending on the manufacturer and the style, they have differing amounts of noise attenuation, or sound reduction that goes on,” Steding says, but contractors need to use them properly. “I emphasize wearing them properly because there’s a way to wear them improperly that will reduce their effectiveness.

You don’t want to just hand someone a hearing protector without any kind of instruction.”

Going one step further, an active attempt for hearing safety would be some sort of technology in the hearing protector that further reduces the amount of noise a contractor is exposed to. This kind of upgrade provides added safety and communication ef-

Another form of hearing protection are these foam earplugs from Radians. ficiency on top of noise attenuation.

For example, Sonetics’ wireless communication headsets provide 20 dB of passive protection, also incorporating “listen-through technology.” It is an adjustable noise control technology that lets in certain amounts of outside sound to balance protection and awareness on any particular job site.

Keep Your Hearing In industries saturated with rules and regulations — like excavation and construction — it can be easy to overlook something as seemingly innocuous as hearing safety. Contractors who have been around long enough can tell you it’s worth keeping in mind — and not just for the benefit of employees.

“Hearing protection should be provided. It should be mandatory that it be worn,” Morris says. “Even though it’s not popular, if the employee is not using the hearing protection, the business owner should write them up, in order to protect themselves from a possible OSHA violation.”

As the invisible threat, its effects can take a long time to manifest, as Morris and many contractors like him are lamenting in their latter years.

“It’s something that young men need to realize — that you can lose your hearing around this type of work,” Morris says. “Like I said, in our younger days we think we’re Superman and we’re invincible. Reality catches up with you, but by the time it does, it’s too late.”

Written by Jared Raney. Reprinted with permission from Dig Different. n

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Brian MacFee, Systems Support Corporation

What You Need to Know About Massachusetts Data Regulations Part 2 of a 2 Part Article What’s the Worst that Can Happen?

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ell me if you’ve ever done this analysis in your head before: If I don’t make it to the meeting on time, what’s the worst that can happen? My seatbelt is uncomfortable, if I don’t fasten it, what’s the worst that can happen? If I forget to send a birthday card to my mom, what’s the worst that can happen?

Every day, and almost every hour we think through some form of worst-case scenario analysis.

The topics can range from the minor detail of another cup of coffee to the major move of investing in your friend’s crazy business scheme. The final question is always the same: what’s the worst that can happen?

And as we work through that question it’s usually a step of possible outcomes. “If I don’t fasten my seatbelt, I could get a ticket. That’s not so bad. However, if I don’t fasten my seatbelt and I get into a car crash, I could get ejected through the windshield and die.

But I’m a great driver, so I know I won’t crash today.

I’ll stay unbuckled.”

That sounds pretty irresponsible, doesn’t it? To not buckle up just because it’s uncomfortable? Let’s tie it back to cyber laws. Here’s a sample thought process that’s along the same lines: “Changing passwords at work every other month is such a pain. I’m not going to start that policy at my business because everyone will constantly forget their passwords. What’s the worst that could happen? Someone figures it out and sends out a bunch of spam emails? Someone could grab some of my financial information and execute a few wire transfers. Or worse, steal all the account numbers that I

OCTOBER, 2018

use to bill my customers. I’m not going to worry about it though, the chances of someone getting my password is really low.”

Sure, the consequences of someone stealing sensitive data are terrible, but how likely is it for a data breach to happen? It happens with shocking regularity. According to the Attorney General, in 2017, there were 1,700 breaches related to residents of Massachusetts. That’s five companies a day reporting a data breach. That means it’s not a question of if it will happen, but when.

At this point we’ve covered what cyber laws may apply to your business. We also know that a breach of some kind will happen in the future. So if I don’t follow what the law asks me to do, what’s the worst that can happen? To answer the question, we’ll look at two parts: how does legal action start for cyber laws, and what are the consequences of not following the law? continued on page 66

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Technology in Const. continued from page 65

consequence here is a bad image by the perception that one’s software platform did not have robust security.

The next case is one between the Commonwealth of Massachusetts and Beth Israel Deaconess Medical Center. A laptop containing Personal Health Information was stolen from a physician containing the medical records of 4,000 people. The Attorney General’s office levied a judgment against Beth Israel to the tune of $100,000 due within 10 days after an effective date.

The case study doesn’t give the details of how the Attorney General found out about the stolen laptop, but one could infer that reporting the laptop as stolen kicked 4.625 x 7.5 9-16:Dennis K. Burke 10/24/16 2:18 PM Page continued on page 67

One caveat before we continue, we at Systems Supports are not lawyers, and we are not providing legal advice. Please consult your attorney with any specific questions you may have about any laws.

Also, I’d like to thank Jeff Katzenstein of Halaby Law Group for providing me with some fascinating case studies of 201 CMR 17 – related court cases.

So how does the legal action start? For starters, there are no active inspections for cybersecurity compliance. Neither the Attorney General’s office, Office of Civil Rights, or other consumer-related bodies are Burke Wicked HD out actively looking for any violations. That’s why you never get a call asking where your Wireless Internet Service Provider (WISP) is and further scheduling a time to come to your office and inspect it. Legal action normally starts after something has happened like a data breach (stolen laptop, someone hacks in, etc.) or through some other claim.

The first example is of the case Katz vs. Pershing. Straight from the US District Court, here is the case overview: “Plaintiff, a brokerage firm's customer, alleged that customers' non-public personal information was vulnerable to unauthorized access by third parties because Just behind the Green the software platform provided by Monster in Fenway Park, defendant, a brokerage clearing Bostonʼs iconic CITGO Some days, it’s just one tough services company, lacked robust sign has become a welljob after another. That’s why information technology security. know and beloved local CITGO produces an extensive landmark, partly due to Plaintiff did not have standing under its appearances in the line of heavy-duty lubricants.

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OCTOBER, 2018

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Technology in Const. continued from page 66

away at the curb, the fine could be $10,000. That’s an expensive piece of trash. off the process! While this case is specific to HIPAA, The last case we’ll consider is Adams vs. Conit is important to take a moment here to highlight the gress Auto Insurance Agency Inc. The case centers financial ramifications of violating 201 CMR 17, the conaround an employee of Congress Auto Insurance sumer information law. The first portion is the standard who looked up information on Adams within the comfor disposal of records containing personal information pany’s claim database. The employee at Congress under Chapter 93I of Massachusetts law: Auto Insurance admitted that she used her position “Any agency or person who violates the provisions (and subsequently the company database) to get of this chapter shall be subject to a civil fine of not information about Adams and had her boyfriend inmore than $100 per data subject affected, provided timidate Adams. A classic case of a rogue employee. said fine shall not exceed $50,000 for each instance While the employee did not steal any financial reof improper disposal. The Attorney General may file a cords or company secrets, she did abuse the percivil action in the superior or district court in the name sonal information she had at her disposal to commit of the Commonwealth to recover such penalties.” a crime. The case goes on to detail that “a jury reaBoston Area sonably could find that the agency breached its duty $100 per data subject!

If you have a 100 personal Locations to protect the confidential information entrusted to it information records on a laptop that you just throw (or safety) by failing to prevent a 2 Dexter Street conflict of interest that arises from Everett, MA 02149 Boston Area Boston Area its employees having unrestricted Locations Locations access to their own claim informa431 Second Street tion.” This is another part of cyberEverett, MA 02149 2 Dexter Street 2 Dexter Street security: Not only is it passwords

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In summary, it pays to follow what the law says upfront. It is impossible to predict when a laptop could be stolen, someone clicks on the wrong email, an employee uses company data for nefarious purpose, or when Minichiello Bros./Scrap-It, Inc., any other breach may occur.

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IN THIS ISSUE

• Supreme Court Decision in Wayfair Affects Onlline Sellers • Buy-Write Strategies for a Flat Market • Bond Ladders May Hedgeand Interest Rate Hikes Smart tax, business planning ideas from your Trusted

Business Advisor

Supreme Court Decision in Wayfair Affects Online Sellers

October

SM

Supreme Court decision in Wayfair affects online sellers

In this iss 1

Suprem decision affects o

2 Buy-writ for a flat

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3 Bond lad hedge in hikes

use tax instead of a sales tax, but states4 Tax cale fIfyour companymakes makes sales to out- South your company sales to out-ofDakota v. Wayfair have found it difficult toofenforce compliof-state buyers, do you need to colstate buyers, do you need to collect state The 20th century reasoning the physical ance with their use did taxes.) lect sales tax? Supreme Until recently, salesstate tax? Until recently, Court presence requirement not recognize th Supreme Court from declared the 20 Because they must collect sales tax,Money fro decisions from decisions the 20th century the realities of the 21st century, a divided century declared that would not necesin-state retailers signifithat would not necessarily be the case.

(5-4) Supreme Courthave found been earlier at thisayear.

U.S. househ sarily be the case.

In Southdisadvantage Dakota v. Wayfair, Inc., 6/21/18, cant versus out-of-state worth topp Example ABC Corp., basedbased in Alabama, Courtwho helddon’t that the physical presence sellers collect sales tax.

Example1:1: ABC Corp., in Ala- the trillion for th sendssends a catalogue to customers and requirement no longer applied, paving the bama, a catalogue to customers South Dakota v. Wayfair in early 201 A consumer who lives of a South Dakota law andprospects. prospects.

A consumer whoin lives in way for enforcement th 20 many century reasoning of to thecollect physicalvalues rose Wyoming placesaa$100 $100 order. order. thatThe requires “remote” sellers Wyoming places presence requirement did not recognize the applicable sales tax on purchases by SouthrealiAssume that ABC has neither employties of the 21st century, a divided (5-4) Supremeoffsetting a Assume that ABC has neither employees Dakota residents.

Court found earlier this year. In South Dakota v.stock mark ees nor property in Wyoming. ABC would nor property in Wyoming. ABC would not Wayfair, Inc., 6/21/18, the Court held that the physinotbe berequired required to collect Wyoming sales to collect Wyoming sales tax The majority in the Wayfair cal presence requirement nodecision longer applied, pavtaxon onthe the $100 purchase and to remit pointed $100 purchase priceprice and remit to some favorable ofDakota law ing the way for enforcement aspects of a South to Wyoming under those Supreme Court Wyoming under those Supreme Court the Dakota For one, it applies thatSouth requires manylaw. “remote” sellers to collect apdecisions hadno no“physical “physical only plicable sales tax on purchases

by South decisionsbecause because ABC ABC had to remote sellers with at least 200 Dakota presence” thatstate. state.

(Wyoming, like transactions residents. presence”in in that (Wyoming, like most or $100,000 in revenue from continued most states, requires consumers to pay a states, requires consumers to pay a use tax South Dakota buyers in a calendar year.on page 71 instead of a sales tax, but states have found Therefore, a company that occasionally it difficult to enforce compliance with their ships a few moderately priced items across “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 69 OCTOBER, 2018 use taxes.) state lines needn’t master all the sales tax rules pertaining to South Dakota buyers and

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OCTOBER, 2018

Financial Management continued from page 69 The majority in the Wayfair decision pointed to some favorable aspects of the South Dakota law.

For one, it applies only to remote sellers with at least 200 transactions or $100,000 in revenue from South Dakota buyers in a calendar year. Therefore, a company that occasionally ships a few moderately priced items across state lines needn’t master all the sales tax rules pertaining to South Dakota buyers and collect the tax and remit it to the state.

In addition, South Dakota is a party to the Streamlined Sales and Use Tax Agreement, which reportedly has 24 member states. This agreement, designed to standardize taxes in order to reduce administrative and compliance costs, provides sellers access to sales tax administration software.

Going Forward After this Supreme Court decision, many (perhaps most) states will consider new legislation that requires out-of-state vendors to collect and forward sales tax, even without a physical presence in the buyer’s state. However, Congress might pass a federal law addressing the issue of interstate sales tax collection.

If no federal law is passed, the focus will remain

on states’ actions. Assuming that states follow the format of the South Dakota law, companies that do a minimum amount of online retailing may not be greatly affected.

Conversely, small businesses that do a great deal of selling online, or plan to do so, might have to make extensive efforts to collect and forward sales tax to multiple states. Your accountant can help such companies comply with any requirements that arise. continued on page 72

Did You Know?

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Financial Management continued from page 71

Buy-Write Strategies for a Flat Market

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p one month, down the next. The stock market this year has offered lots of excitement. As of this writing, broad market indexes have provided little sustenance for bulls or bears, with results not far from early 2018.

One strategy that may be appealing in a relatively flat stock market is to use covered calls. Even if the actual stock you own goes nowhere, trading in options may deliver meaningful investment income.

The downside of this approach is that any gains in a strong upturn may be limited.

Selling the Upside A covered call strategy can begin with the purchase of a stock that seems appealing.

Example: In October, Carl Wagner buys 200 shares of XYZ Corp., trading at $50, for $10,000. He instructs his adviser to sell (or “write,” in option lingo)

two call options on XYZ stock at a $55 exercise price, expiring in January, which is three months away. Each call gives the option owner the right to buy 100 shares of XYZ for $55 apiece until a given date in January.

In this hypothetical example, Carl receives 90 cents per share from his sale of the call option. For his 200 shares, that’s $180. From that point on, several things can happen.

Flat Market Say that XYZ shares bounce around $50 for three months. They never top $55, so it never pays for the owner of the option to buy Carl’s shares. The call option expires unexercised.

Here, Carl’s $180 income from selling the call would be 1.8% of his $10,000 investment in XYZ. He’d also collect the quarterly dividend, which might be, say, 0.5%, if XYZ pays a 2% annualized dividend. That’s a 2.3% total return in a quarter of a year, or 9.2% annualized, while XYZ shares went nowhere. Going forward, with the option not exercised, Carl can write another continued on page 73

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Financial Management continued from page 72 call on the shares of XYZ he still owns.

This is a simplified, hypothetical example. Trading costs aren’t included, for one thing. Nevertheless, a “buy-write” strategy might produce desirable results if stocks are in a trading range.

Up Market In another scenario, XYZ shares break above the $55 exercise price, and the call options are exercised. As this is a “covered” call, Carl can fulfill his obligation under the option contract by delivering the 200 shares of XYZ that he owns.

Here, Carl gets a 10% return ($5 profit after buying at $50 per share), plus the 1.8% return from selling the call, and perhaps the quarterly dividend, as well. Not a bad profit for holding this stock for three months.

Of course, XYZ might zoom past $55 to $60 or $65, and Carl would miss out on a greater profit after relinquishing his shares. That’s a key disadvantage to this strategy.

Down Market Carl’s shares of XYZ might plummet because of company news or a broad stock retreat. The $180 in cash from selling the call would be scant consolation

if his $10,000 outlay drops to $9,500 or $9,000 or lower. Carl could sell another call, after the option expiration, pocketing more income but still bearing most of the stock’s exposure to loss.

Go With the Pros The market for listed call options can be complex.

Should you sell an “out-of-the-money” call, as Carl did? An at-the-money-call (exercise price equals current trading price)? An in-the-money call (lower exercise price)? Take a close or distant expiration date?

Buy back the call you’ve sold because you decide to keep your shares?

Investors may like the concept of using covered calls but might be reluctant to make all the necessary decisions. This has led to the creation of buy-write funds. With these vehicles, financial professionals decide which assets to purchase and which options to sell, covered by holdings in the fund.

There are many forms of covered call and buy-write funds, with different methods of squeezing income from selling options. Tax treatment also can vary because some of these funds make distributions that are part long-term capital gain, part short-term capital gain, and part untaxed return of principal. If you’re interested in such a fund, determine how your money will be invested. continued on page 74

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Financial Management continued from page 73

J

Bond Ladders May Hedge Interest Rate Hikes

ust as volatility and high prices might make some investors leery of stocks now (see “Buy-write strategies for a flat market”), the threat of rising interest rates may worry fixed income investors.

Rising rates tend to depress bond prices.

Again, a time-tested strategy might be useful in the current environment. You could put together a bond ladder to hold the fixed income portion of your asset allocation. A ladder might consist of many individual issues with staggered maturities. As the nearest “rung” on your ladder is redeemed, the proceeds are reinvested in a bond with a longer maturity.

Example 1: Paula Morris decides to allocate $200,000 of her fixed income

holdings to a bond ladder. She invests $25,000 in bonds maturing in 2019, $25,000 in bonds expiring in 2020, and so on, out to 2026. Typically, the longer the maturity, the higher the bonds’ yields and the greater the exposure to price drops if interest rates rise.

When the bonds that make up Paula’s 2019 rung are redeemed at maturity, she invests the $25,000 proceeds in bonds maturing in 2027, and so on, year after year.

Flex Plan With such a ladder, Paula will have $25,000 worth of bonds maturing each year. If interest rates rise in the future, as many observers expect, Paula continued on page 75

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Financial Management continued from page 74

tax as well as federal tax.

will be able to buy higher yielding bonds, raising her periodic cash flow from investment interest.

For IRAs and other tax-deferred retirement accounts, bond ladders generally should be constructed from corporate bonds or other taxable issues. Yields generally are higher than they are in comparable municipal bonds, and those yields can compound inside the tax-deferred plan.

Conversely, interest rates might surprise the “experts” and move lower. Paula will be re-investing at a lower yield, it’s true, but she likely will be glad that she has locked in higher-than-current yields with her bonds on the later rungs.

Ultimately, Paula will wind up with a ladder that comprises bonds that were all bought at 8-year maturities. Historically, that has been a relatively attractive place on what is known as the yield curve, a plot of yields and maturities. Eight-year bonds often have yields much greater than those of very shortterm bonds as well as moderate exposure to rising rates. That is, a bond issued with an 8-year maturity may not suffer a price drop as steep as a 10- or 20year bond will experience, if interest rates trend much higher.

Taxable or Tax-Exempt Investors often use tax-exempt municipal bonds for their bond ladders. If so, the bond ladder should be held in a regular taxable account to take advantage of the tax break. Bonds issued within the buyer’s state of residence often avoid state or local income

Either way, if you are building a bond ladder now, buying existing, rather than newly issued, bonds, be aware that older bonds generally trade at a premium because they have higher yields than today’s new issues.

Example 2: When Paula puts together her bond ladder, she pays $27,500 to buy bonds maturing in 2026 with a face value of $25,000. She builds in a $2,500 loss in return for receiving above-market yields for the next eight years, up until maturity.

You shouldn’t expect huge profits from a bond ladder. Instead, you should consider a bond ladder as an arrangement that could possibly improve portfolio income and stability over a long period of time. Every year, you can expect an untaxed bond redemption that you can spend or save as you choose.

Reprinted from CPA Client Bulletin. n

Trusted Advice Bond Premium Taxation • If you pay more than face value to buy tax-exempt bonds, you must amortize the premium each year. The amount of the taxexempt interest from the bonds that you report on your tax return is reduced by the amortized amount.

• Amortization of the premium reduces your basis in the bond by the amortized amount; the amortized amount is not deductible.

• If you pay more than face value to buy taxable bonds, you can choose to amortize the premium. If you choose to do so, the amortized amount is deductible, and your basis in the bonds is reduced by the amortized amount.

• If you choose not to amortize the premium on taxable bonds, the premium will create a tax loss when the bonds are redeemed at face value.

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Advertisers’ Index ATS Equipment, Inc. .............................................................14 Aggregate Industries - N.E. Region.......................................70 American Shoring, Inc........................................ Ins. Back Cvr. Aon Construction Services Group.........................................64 B2W Software, Inc.................................................................48 BakerCorp..............................................................................72 Boro Sand & Stone Corp.......................................................75 Brennan Consulting...............................................................48 Dennis K. 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L. Edwards, Inc..................................................................58 Ferguson Waterworks............................................................23 Gorilla Hydraulic Breakers.....................................................19 L. Guerini Group, Inc.............................................................. 11 HD Supply Const. & Industrial AH Harris/White Cap............20 Hinckley Allen LLP.................................................................26 John Hoadley & Sons, Inc.....................................................33 Industrial Safety & Rescue....................................................62 JESCO...................................................................................56 P. A. 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H. Perkins Construction Co., Inc.......................................76 Podgurski Corp......................................................................35 E. J. Prescott, Inc................................................Ins. Front Cvr. Putnam Pipe Corporation......................................................31 Rain For Rent-New England....................................................8 Ritchie Bros. Auctioneers......................................................68 Rogers & Gray Insurance......................................................24 Schmidt Equipment, Inc............................................. Back Cvr. Scituate Concrete Products Corp..........................................38 Scrap-It, Inc............................................................................67 Shea Concrete Products, Inc. ...............................................32 SITECH New England............................................................22 Smith Print..............................................................................64 Starkweather & Shepley Ins. Brokerage, Inc.........................44 Systems Support Corporation...............................................40 Tonry Insurance Group, Inc................................................... 11 United Concrete Products...................................................... 74 United Rentals Trench Safety..................................................6 Webster One Source.............................................................50 C. N. 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