Year: 2018

Over the last month, the U.S. Department of Treasury and Internal Revenue Service have issued several proposed rules that provide guidance and implement changes to the tax code under the Tax Cuts and Jobs Act. Signed into law nearly a year ago, the historic tax reform bill included several key provisions that affect the construction industry, and the recently issued proposals provide critical information for construction employers on how to comply with the law:

• On Oct. 29, the IRS issued a proposed rule that provides guidance relating to gains that may be deferred as a result of a taxpayer’s investment in a qualified opportunity fund. The new Opportunity Zone tax incentive, created by the TCJA, is designed to spur investment in distressed communities throughout the country through tax benefits.
• On Nov. 23, the IRS proposed regulations to implement recent legislative changes to the basic exclusion amount used in computing Federal gift and estate taxes. The proposal will affect donors of gifts made after 2017 and the estates of decedents dying after 2017.
• On Nov. 26, the IRS issued a proposed rule to implement a provision of the Tax Cuts and Jobs Act, which limits the business interest expense deduction for certain taxpayers. Under the recently issued proposal, certain small businesses whose gross receipts are $25 million or less and certain trades or businesses are not subject to the limits under this provision.

ABC welcomes and will continue to review these proposals to determine their benefit to the construction industry.

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Updates to equal employment opportunity regulations that apply to all sponsors of apprenticeship programs registered either with the U.S. Department of Labor’s Office of Apprenticeship or a state apprenticeship agency are just around the corner. The final rule updating EEO regulations was issued in 2016 by the Obama administration and went into effect on Jan. 18, 2017; however, some of the provisions were delayed for two years until Jan. 18, 2019. The deadlines are different for sponsors registered with a state government apprenticeship agency that has submitted language implementing the new EEO standards and is awaiting federal approval. To determine whether your state has its own state apprenticeship agency or is regulated directly by the federal Office of Apprenticeship, see this list.

Among other changes, the new rule requires apprenticeship program sponsors to make prescribed efforts to achieve a new goal of seven percent disabled apprentices. To meet the goal, sponsors are required to implement written affirmative action plans that provide for significant new outreach to the disabled community, invite apprentices and applicants to voluntarily identify themselves as disabled and engage in “utilization analysis” of the number of disabled apprentices. Similar affirmative action steps and utilization analyses are also required in order to meet targets for racial minorities and women in apprenticeship programs.

The final rule updates equal opportunity standards to include age (40 or older), genetic information, sexual orientation and disability among the list of protected bases upon which a sponsor must not discriminate against an apprentice or applicant for apprenticeship. This is in addition to prohibited discrimination based on race, color, religion, national origin and sex. The EEO pledge in the final rule clarifies that sex discrimination includes discrimination on the basis of pregnancy and gender identity. To learn more about the nondiscrimination and EEO obligations of sponsors, see the FAQs and fact sheet.

Further, as under the previous regulations, sponsors are required to maintain affirmative action programs. The final rule updates the requirements and adds AAP obligations for individuals with disabilities. To learn more about which sponsors are required to have an AAP and what needs to be in an AAP, see the FAQs and fact sheet.  

For an overview of what sponsors need to know regarding the apprenticeship EEO regulations, watch an instructional DOL video and find additional resources and tools on the DOL website.

Upcoming requirements under the final rule:

Additional requirements will go into effect on Jan. 18, 2019 for DOL OA-registered sponsors, including:

• Drafting written AAPs
• Conducting workforce analysis for race and sex
• Conducting workforce analysis for individuals with disabilities
• Conducting initial review of personnel practices
• Beginning invitations for apprentices to self-identify as having a disability at pre-offer and post-offer stages
• Disseminating one-time invitation to self-identify as having a disability for all current apprentices

Continue to monitor Newsline for more information on the final rule.

This article is intended for informational purposes only and does not constitute legal advice or opinion.

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The 2018 Design-Build Project award winners were announced at an awards dinner during the Design-Build Conference & Expo, Nov. 7-9 in New Orleans. From university buildings to bridge replacements, this year’s winners are some of the best construction projects in the country. The ABC members below are part of award-winning teams and were honored by DBIA for their accomplishments:

• The Beck Group won an award for the Texas Health Recovery and Wellness Center, a facility in Mansfield, Texas, dedicated to providing residential treatment for clients in need of professional help to fight addictions; 
• Cadence McShane Construction Company won an award for the Riata Vista Corporate Campus in Austin, Texas, which includes six four-story office buildings, a café, conference center, utility plant and three multi-story parking decks;
• Clark Construction Group won an award for The Spark at Washington State University in Pullman, Washington, where they transformed an academic facility’s construction into a journey that will further the university’s desire for a state-of-the-art learning center;
• Hensel Phelps Construction Co. won an award for the East County Hall of Justice, a project in Dublin, California, comprised of a five-story courthouse building and two-story county building;
• And PCL Construction Services Inc. won an award for the University of California Irvine’s Transmission Electron Microscope Facility, a world-class electron microscopy facility in Irvine, California, which provides a space to house major scientific breakthroughs.

Visit the DBIA’s website to view the full list of 2018 winners.

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The ABC Board of Directors elected Tony Rader, telecom vice president for National Roofing Partners, to serve as the 2019 national chair during the association’s annual Leadership Institute in Las Vegas. Ray Zamora, president of AnchorBuilt Inc., was elected chair-elect, and Steve Klessig, vice president of architecture and engineering, Keller Inc., was elected secretary.

“Strong leadership is indispensable to ABC’s mission to develop people, win work and deliver that work safely, ethically and profitably in our communities across the United States,” said Michael Bellaman, ABC president and chief executive officer. “I look forward to working closely with Tony, Ray, Steve and our 2019 Executive Committee to continue to strengthen our efforts to promote and advocate on behalf of the merit shop construction industry.” 

Members of ABC’s 2019 Executive Committee who will take office Jan. 1, 2019 are:

– Tony Rader, telecom vice president, National Roofing Partners, Coppell, Texas, chair
– Ray Zamora, president, AnchorBuilt Inc., Albuquerque, New Mexico, chair-elect
– Steve Klessig, vice president of architecture and engineering, Keller Inc., Kaukauna, Wisconsin, secretary and Midwest region vice chair
– Kenneth Hedlund, principal, Somerset CPAs, P.C., Indianapolis, treasurer
– George R. Nash Jr., director of preconstruction, Branch & Associates, Herndon, Virginia, immediate past chair
– Tim Keating, president, R.C. Stevens Construction Co., Winter Garden, Florida, Southeast region vice chair
– Paul Lemley, executive vice president, BC Construction Group LLC, Brighton, Michigan, Mid-America region vice chair
– Milton Graugnard, executive vice president, Cajun Industries LLC, Baton Rouge, Louisiana, South Central region vice chair
– Diane Koester-Byron, founder and owner, I.E.-Pacific Inc., Escondido, California, Pacific region vice chair
– Buddy Henley,* president, Henley Construction Co. Inc., Gaithersburg, Maryland, Mid-Atlantic region vice chair
– Stephanie Schmidt, president, Poole Anderson Construction, State College, Pennsylvania, Northeast region vice chair
– Chris Garvey,* president and CEO, ABC Chesapeake Shores Chapter, chapter presidents’ liaison
– Michael Bellaman, ABC National, president and CEO
– The ABC Mountain West region chair has yet has yet to be appointed

* Newly elected member of the ABC Executive Committee.

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On Nov. 9, the Occupational Safety and Health Administration published a final rule that updates its standard for cranes and derricks in construction to ensure crane operators are qualified to safely operate equipment.

The final rule requires employers to train operators as needed to perform assigned crane activities, evaluate them and document successful completion of the evaluations. OSHA clarifies that employers who have already evaluated their operators prior to Dec. 9, 2018, will not have to conduct those evaluations again, but will need to document when they completed the evaluations. 

The rule also requires crane operators to complete certification and receive ongoing training as necessary based on the crane’s type and capacity, or type only, revising a provision of the 2010 rule that specified that crane operator certification must include rated lifting capacity.

The final rule, with the exception of the evaluation and documentation requirements, will become effective on Dec. 9, 2018. The evaluation and documentation requirements will become effective on Feb. 7, 2019. 

REMINDER: OSHA issued guidance on Nov. 5 detailing how employers should comply with crane operator certification requirements until OSHA’s new final rule on operator certification and qualification becomes effective. Read more about OSHA’s guidance in Newsline. 

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The Construction Legal Rights Foundation supports efforts to preserve, protect and defend the free enterprise system in the construction industry. 

Watch ABC’s new video to find out how the foundation offers financial support through legal and issue advocacy campaigns. Learn about the three types of applications—legal, issue advocacy and rapid response—available for financial support. Visit abc.org or email legal@abc.org to request an application. 

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Construction prices rose 0.5 percent in October and are 7.9 percent high than at the same time a year ago, according to an analysis of Bureau of Labor Statistics Producer Price Index data conducted by ABC. Prices for nonresidential construction inputs also increased 0.5 percent on a month-over-month basis and are up by more than 8 percent on a year-over-year basis. 

Metals prices declined, with iron/steel prices falling 0.5 percent and steel mill prices down 0.8 percent on a monthly basis; however, prices for these categories are 13.9 percent and 18.2 percent higher compared to last year, respectively. Crude petroleum prices continued to increase in October, rising 7.5 percent since September and 49.7 percent on a year-over-year basis.  Although, oil prices have been dipping rapidly in November, which stands to be reflected in the next producer price index report. 

“For much of the year, construction materials prices were marching higher,” said ABC Chief Economist Anirban Basu. “However, during the late-summer, materials prices began to moderate for a number of reasons, including a slowing global economy and rising production of key inputs in response to higher prices. The expectation has been that the moderation in materials prices would only be temporary given still strong demand for construction inputs in America, which was realized in October.

“While there is anecdotal evidence suggesting that higher materials prices have stalled certain construction projects due to weaker pro-formas, for the most part demand for construction services has continued to ramp higher,” said Basu. “ABC’s Construction Backlog Indicator has recently attained record levels. The Architecture Billings Index also signals strong construction service demand going forward, especially in the southern and western United States. Public construction spending has surged over the past year due in large measure to healthier state and local government finances as well as ongoing rebuilding from last year’s storms and wildfires. Accordingly, there is little reason to expect a dip in demand for construction materials during the months ahead.

“That said, there is at least one scenario under which materials prices could fall from current levels,” said Basu. “There is evidence that the synchronized global economic expansion is becoming more uneven as nations such as Turkey and Argentina face growing headwinds. There is also evidence of economic slowing in China, though some of these reports may prove exaggerated. The recent decline in oil prices below $60/barrel does suggest, however, that the global economy is not growing as smoothly as it had been last year. Should financial markets remain volatile, there could be a general dip in asset prices globally, which would tend to suppress future commodity price and construction materials price increases. Still, the most likely outcome is for ongoing gradual increases in materials prices from quarter to quarter.”

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While some races have yet to be decided, the American electorate voted for Democrats to take the House majority while increasing the Senate majority held by Republicans. 

The number of seats controlled by Democrats in the House of Representatives is projected to be around 230 seats, with Republicans holding around 206 seats, giving Democrats a majority of approximately 24 seats. In the U.S. Senate, Republicans maintained and grew their majority. It is projected that Republicans will win the remaining Senate races in Arizona, Florida and Mississippi, giving Republicans a 53 to 47 majority. The final count for both chambers will not be announced for some time, as recounts have already been called for. Democrats performed well in state elections, making dents in near historic GOP control of governorships and state legislatures, but missed a number of opportunities to flip legislative chambers or governorships in key battleground states. 

Democratic trifectas (party control of both chambers and the governorship) increased from 7 to 14 states, while GOP trifectas decreased from 26 to 23 states. The GOP now controls 62 of 99 legislative chambers, a decrease from 67 chambers. Of the 26 governorships the GOP defended this cycle, Democrats picked up seven new governorships, and the GOP prevailed only in Alaska out of 10 possible pickup opportunities.

Several ABC members ran for federal and state offices yesterday. The results:

• Steve Cona (R-Fla.) won the election for Hillsborough County School Board 1 in Florida.
• Chuck Goodrich (R-Ind.-29) won the election for Indiana’s 29th State House District.
• Bill Lee (R-Tenn.) won the election for governor of Tennessee.
• Carol Miller (R-W.Va.-3) won the election for West Virginia’s 3rd Congressional District.
• Mick Rich (R-N.M.) lost the New Mexico Senate race. 

Don’t forget to participate in ABC’s post-election webinar on Thursday, Nov. 8, at 4 p.m. EST. Exclusively for members, ABC National government affairs team members will discuss how the election results are likely to affect state and federal politics and policy. Register today.

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Eugene Jowers, a Project JumpStart graduate and employee of ABC member Regional Contracting Services, was featured in a Nov. 2 CNBC segment that also ran on PBS Nightly Business Report highlighting ABC’s efforts to attract more workers to the construction industry. 

Project JumpStart, a partnership between the Job Opportunities Task Force and ABC’s Baltimore Metro Chapter, trains and places city residents who are interested in pursuing well-paying jobs in the construction industry. ABC and its members are working to promote the message that fulfilling careers in construction are available for women, minorities, veterans, students, non-graduates and people seeking new careers, re-entry to the workforce or a second chance at achieving the America dream—with or without college degrees. 

Larry Lopez, president of Green JobWorks and ABC Diversity Committee chair, currently needs to hire 20 skilled full-time workers to keep up with demand for staffing and cleaning services and demolition jobs. Lopez is trying to attract talent by promoting the company’s employee benefits, including paid time off and health insurance programs. Lopez says providing attractive benefits is critical to the success of his company. 

Mike Bellaman, president and CEO of ABC, was also interviewed in the segment about the benefits of choosing a career in construction. “We will teach you the trade you want to learn, we will pay you while you do that, and when you graduate from that competency-based or time-based apprenticeship program, you’ll be making a great living,” he said. 

Jowers, Lopez and Bellaman were also featured in an article on CNBC’s website.

ABC, employees like Jowers and leaders like Lopez are working towards building the construction workforce of the future in an industry that is constantly searching for talent. The U.S. construction industry added 30,000 jobs last month, but there are currently more than half a million positions available and waiting to be filled. 

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On Nov. 5, the Occupational Safety and Health Administration issued guidance on how to comply with crane operator certification requirements until OSHA’s new final rule on operator certification and qualification becomes effective. OSHA also made available a pre-publication version of the final rule on its website.

In the press release announcing the guidance, OSHA states:

OSHA proposed a rule in May 2018 to revise certification requirements, as recommended by construction stakeholders. OSHA is preparing to publish a final rule, but OSHA’s existing certification requirements will take effect on Nov. 10, 2018, because OSHA’s final rule will not become effective prior to that date. The existing rule requires certification by crane type and lifting capacity. However, until the effective date of the new rule, once it is published, OSHA will accept operator certifications issued by type only, or by type and capacity.

Additionally, the forthcoming final rule will clarify that employers who wish to certify operators by both type and capacity may continue to do so or can rely on certifications based on crane type alone. Finally, the rule will establish minimum requirements for determining operator competency.

Background

On Nov. 9, 2017, OSHA published a final rule extending the operator certification compliance date until Nov. 10, 2018, in order to provide the agency with additional time to complete its upcoming rulemaking to address stakeholder concerns related to the Cranes and Derricks in Construction standard.

On May 21, 2018, OSHA issued a proposed rule to update its standard for cranes and derricks by permanently extending the employer duty to ensure that a crane operator is qualified to safely operate equipment and removing a provision of the 2010 final rule that requires different levels of crane operator certification based on rated lifting capacity of equipment. ABC submitted comments on OSHA’s proposal on July 5. 

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