Tag: Taxes

Private Sector Can Help Our Government

During the Coronavirus Pandemic, Governor Wolf issued an Executive Order to shutdown all non-life sustaining businesses in Pennsylvania. The General Contractors Association of Pennsylvania (GCAP) was torn internally, with one faction thinking that this shutdown was necessary and another group that thought it was too excessive and businesses should still operate. Despite this conflict among our leadership and members, we had complete consensus that the health and safety of our workforce is our top priority.

Instead of advocating for construction to reopen, GCAP got to work on what we agreed on and in late March we published the Construction Industry’s COVID-19 Response Plan. It was a comprehensive safety plan with proper social distancing, PPE requirements, sanitizing, etc. I believe we were the only construction-related organization in Pennsylvania that did not lobby to reopen.  Because the health and safety of the worker was extremely important to us, I believe we gained the trust of Governor Wolf and that’s why I believe he used our safety plan to create his construction guidelines. (Governor Wolf’s press release.)

Heading into 2020 no one could have foreseen the conditions that we find our Commonwealth in. Unemployment went through the roof. Tax coffers are projecting shortages in the BILLIONS. Yes, it’s true, COVID-19 has steered us into uncharted times.

Citizens in this Commonwealth need public services now more than ever. From the nursing home residents to the young school kids looking for their next meal and to every age in between, Pennsylvanians are hurting. We cannot leave our neighbors stranded and simply chop out needed services in this year’s 2020/2021 budget negotiations when they resume after the short-term budget gets us through the fall elections.

However, what can happen is that a thorough review of all expenditures can make sure tax dollars are efficiently spent. Our Commonwealth is fortunate to have dedicated and intelligent legislators from both sides of the aisle involved in this review process. Additionally, much like Governor Wolf turned to the private sector in creating the Commonwealth’s safety guidelines, the legislature should continue to look to the private sector to incorporate proven best practices to improve the way our government operates. Each industry sector should join the process to help our Commonwealth.

When it comes to construction, Senate Bill 823 is a vehicle that can address construction procurement reform. This legislation, which has a diverse coalition and also has labor support, can save our Commonwealth 10% on public construction. Pennsylvania is the only state in the country that mandates an inefficient process known as the multiple prime delivery method (THE ONLY STATE IN THE COUNTRY – LET THAT SINK IN). Now is the ideal time to address inefficiencies in our procurement process on behalf of taxpayers.

Our Students Deserve Better – Support House Bill 163 & Senate Bill 823

Bravo to Governor Tom Wolf and to Sen. Vincent Hughes for raising awareness and wanting to address the dangerous lead and asbestos contamination in structures and water systems across Pennsylvania. Concerning the school buildings, our students deserve better than current conditions (if you have not seen the videos on Sen. Hughes’ website click here: https://www.senatorhughes.com/toxicschools/).

Wanting our children to be educated in 21st century schools is commendable; however, constructing and renovating the schools with a procurement law enacted in 1913 is foolish and wasteful. Over a hundred years ago, Pennsylvania legislature enacted the Separations Act. This Act mandates that public construction projects be delivered by multiple prime contractors. Every time you drive by a public construction project just think to yourself: this project has (at least) four companies in charge. This process often leads to delays, lawsuits, conflicts, etc., and it averages about 10% more than contracting methods that the rest of the country utilizes. Because of the inefficiencies of the multiple prime contracting method, Pennsylvania is the only state left to require such a cumbersome construction delivery process. 49 states join the federal government and the private sector in allowing choice in project delivery. It’s time for Pennsylvania to do so as well.

There are two pieces of legislation that can modernize the Separations Act: House Bill 163 and Senate Bill 823. These bills can allow for savings in public construction. Tax dollars do not grow on trees and with that in mind we should be stewards of tax dollars to assure construction projects are built efficiently. Additionally, it’s a big election year so we’ll likely hear a lot about education and jobs. Just think if the $1 billion that Governor Wolf is suggesting for public infrastructure comes to fruition and the Separations Act is modernized, we can spend it wisely resulting in more school projects, which results in more construction jobs.

Pennsylvania’s Top Construction Stories of 2017

The news was overwhelming in 2017. From healthcare mergers and insurance coverage to gender inequality to natural disasters to international relations to political squabbling…. Every time you looked at your phone or watched the nightly news there appeared to be another breaking news crisis being reported. Meanwhile the construction industry kept chugging along, adding jobs to the payrolls and improving the quality of life. That’s not to say that 2017 was just another typical year for the construction industry. No not at all. Last year we experienced some remarkable events.

Below are the top Pennsylvania construction stories of 2017 according to me. I kept them brief so you can breeze through it quickly, but if you want more information on any item listed please don’t hesitate to contact me at 717-731-6272 or Jon@KeystoneContractors.com.

Lastly, let me know what you think. What construction story in your mind did l leave off my list? Or what item did I list that is not a big deal?

Enjoy and keep in mind they are not listed in any particular order:

Amazon H2 Fever

After an announcement that it would build a second North American headquarters, online retail giant Amazon snagged 238 bids for its “HQ2” and the construction industry was on the edge of its seats wondering if this massive project would be built in their region. But I think construction professionals and the general public also were hoping that any sort of tax incentives included in the bid would not hurt their region too much in the future. Pennsylvania had numerous sites submit a bid. For more on Amazon H2 and the crazy amount of incentives click here:   http://www.businessinsider.com/amazon-hq2-cities-developers-economic-tax-incentives-2017-10/#memphis-tennessee-60-million-1.

 

Silica Standard Arrives

After a lengthy extension to review input from industry stakeholders, OSHA’s new silica standard went into effect on September 23, 2017. What that means for the construction industry is that contractors who engage in activities that create silica dust, such as cutting, grinding/ blasting concrete, stone and brick, must meet a stricter standard for how much of that dust workers inhale. The same goes for the employers of the tradespeople working around such activities. Numerous trainings were held and educational materials were produced to prepare the industry for this new standard. Many organizations, like KCA, even teamed with OSHA to host informational roundtable discussions. For more information please contact the KCA or visit: https://silica-safe.org/regulations-and-requirements/osha.

 

Opioid Crisis Continues to Plague Construction

The opioid epidemic is hurting America. Scary stats when you consider that our country makes up 5% of the world’s population, yet we consume 80% of the opioid supply and we are losing 100 people a day. The construction industry has been suffering along with most every other industry too. While it is not an easy task to find the stats by industry, insurance underwriter CNA estimates that 15.1% of construction workers have been affected by the opioid crisis. Much like the rest of society, KCA finds these stats unacceptable and we are doing something about it. Our plans are currently developing and we could use your help to implement them. If you want to join the fight to help Pennsylvania’s construction industry tackle the opioid epidemic, get in touch with us. This offer is extended to all – KCA members, nonmembers, organizations, etc. Together, we can make a difference.

 

USGBC releases LEEDv4 and AIA Updates its Contracts

Both of these items are similar in that in both instances two groups – U.S. Green Building Council and AIA National – worked with their respective memberships and industry stakeholders to update something that is of value to the construction industry. The USGBC issued its updated version of LEED version 4 and AIA issued its 10-year update of its contract documents. Both are also similar in that while they might have been updated in 2017, the industry can still use the previous version a little bit longer to have time to get acquainted with the newer version. The overall sentiment is that both are improvements from the previous version, encouraging collaboration in construction. For more information on LEEDv4 click:  https://www.usgbc.org/leed-v4-old-new and for information AIA contracts: https://www.aiacontracts.org/.

 

Philadelphia is Carrying Good Times into 2018!

By all accounts, 2017 was a great year for the construction industry in the City of Brotherly Love. But 2018 is going to a new level in Philadelphia. More than 8 million square feet of development is forecasted in Philly. To put this into perspective, during 2017 Philadelphia finished 3.3 million square feet of construction. A big chunk of this upcoming work will come from Aramark’s new headquarters, uCity Square on Market, and One Franklin Tower in Logan Square. For more information click here:    https://philly.curbed.com/2017/11/30/16715170/philadelphia-new-construction-analysis-2018.

 

Separations Act Gets Some Attention

As stated in my blog last week, the Separations Act had some memorable moments in 2017. To read this post click:   https://wordpress.com/post/buildingpa.blog/267.

 

Federal Tax Legislation Helps Construction Industry

Before ringing in the New Year, Congress passed a comprehensive tax reform legislation that will lower rates, spur economic growth and have a positive impact on construction businesses for years to come. The AGC of America put together a comprehensive chart to illustrate the benefits of this tax reform package:  http://images.magnetmail.net/images/clients/agca/attach/1218_House_Senate_Tax_Reform_Comparison_v6.pdf.

 

Harrisburg has Big Plans in its Sights

During 2017 two mega projects having been moving closer to the bidding/construction stages. The one project, the Federal Courthouse, has been in the works for the better part of the past decade, but it received a big boost early in 2017 when it received funding authorization. Since this funding announcement, the GSA has been moving quickly on this $200 M-plus, 243,000 square foot Federal Courthouse project. This project has encountered a few snags this past Fall, but hopefully it will break ground soon. Here is a blog post I wrote about this project: https://wordpress.com/post/buildingpa.blog/51.

Another project on the mega scale includes the vision that Harrisburg University has in constructing the tallest building in Harrisburg. In the Fall of 2017, the school announced plans to build a 36-story, $150 M mixed-use tower that will feature 200,000 square feet of educational space that includes fitness center, conference space, hotel, and housing for 300 college residents. For more information:  http://www.cpbj.com/article/20171115/CPBJ01/171119902/harrisburg-university-plans-to-build-citys-tallest-tower.

Separations Act in 2017

During 2017, there were some memorable stories involving Pennsylvania’s  Separations Act. Today I’m going to touch on a few of the major stories.

But before jumping right into the fun, here’s a quick explanation of the Separations Act: this law requires public construction projects in Pennsylvania to build utilizing a multiple prime delivery system and hire at least four prime construction companies for one project. Our state is one of three states that require this handcuffing of public agencies to build in this cumbersome manner – don’t get me wrong the multiple prime delivery system can be a good option depending on numerous factors (owner’s expertise, complexity of project, budget, schedule, etc.), but multiple prime is one of many delivery options. The construction industry has evolved over the years and we now have more innovative and collaborative team approaches to consider, yet our state only allows one delivery option. Considering that the multiple prime delivery system is rarely used in the rest of the country, federal government, and private sector, it’s time for our state to amend our law and allow options in construction delivery systems.

Here we are in 2017 and PA is still mandating we follow this ancient law that impedes the construction industry from progressing. However, our current state is led by a self-proclaimed Harrisburg outsider, so maybe Governor Wolf will play a vital role in advancing the construction industry, and maybe, just maybe the Harrisburg outsider moniker played a role in kick-starting efforts in advancing the construction industry in 2017. Without further ado, here are my top Separations Act stories of 2017:

2017 Senate Appropriation Hearing

On Monday, February 27, 2017, the Separations Act got off to a good first step this year during the PA State Senate Appropriations Committee hearing. At this event, the Governor’s appointed Department of General Services Secretary Curt Topper said: “we face some significant constraints that the private sector does face when it comes to managing our money efficiently. So, for example the Commonwealth, when we go to market in order to contract to do construction, we are bound by the Separations Act of 1913. We are one of only three remaining states in the U.S. that has a Separations Act. That Separations Act requires that we do business less efficiently than we could otherwise do business.” Bravo to Governor Wolf for appointing a forwarding-thinking individual like Secretary Topper who sees an issue and wants it addressed to improve the Commonwealth. Plus, bravo to Secretary Topper for knowing that you were appointed to do a job and you didn’t let politics get in the way.

Click here to Secretary Topper’s hearing:  http://www.pasenategop.com/budget-hearings-summary/

Here is an OpEd on his testimony:  http://www.yorkdispatch.com/story/opinion/contributors/2017/03/07/oped-s-time-repeal-separations-act-pa/98857412/

Here is commentary from Philly Inquirer’s John Baer: http://www.philly.com/philly/columnists/john_baer/Another-old-PA-law-enters-the-states-fiscal-follies.html

 

Pennsylvania Organizations Want Change

What happened on that Monday in February of 2017 had tremendous reach beyond the room where the Senate Appropriations hearing was held. Organizations across the Commonwealth had a bounce in their step, as an executive in the governor’s cabinet publicly supported modernizing the Separations Act. This newly formed coalition mobilized in 2017 and even launched an online petition (located here:

https://www.change.org/p/time-to-modernize-the-pa-separations-act). More to come from this coalition in 2018.

 

A Union Uses Separations Act to Gain Marketshare Over Another Union

In a bizarre twist of fate, a school in the Pittsburgh area signed a project labor agreement (PLA) which pleased the union construction sector in that area. Promoted as a tool to assure labor harmony, West Jefferson Hills School District could not imagine their PLA project being shut down when one building trades union sued the school district, architect, construction manager, and others – but that’s exactly what happened. The plumbing contractor filed suit claiming that the site utility work outside the building footprint should have been assigned to them and not the general trades contractor. It is typical on a construction project (public and private) to have the plumbing contractor perform plumbing work from inside the structure to five feet outside the building. Yet, this plumber wanted work to exceed the ‘typical’ scope of work and this contractor wanted the site utility work assigned to them, which took work from the general contractor, site contractor and the Laborers Union. The Court of Common Pleas of Allegheny County sided with the plumbing contractor stating that the project ‘willfully’ violated the Separations Act. This ruling changes years of precedence that could have major consequences on construction in Pennsylvania – both public and private.

 

 

Separations Act Project a Mess on a Grand Stage

The saying goes, that nothing attracts a crowd like a crowd. Well, in construction, nothing attracts the masses like a massive project. Originally set to open during November of 2015, the State Correctional Institution Phoenix in Montgomery County, PA, which is the largest public building project in our state’s history, is way over-budget and years past schedule. Since this project is so mammoth and expensive, it has the attention of many people statewide, from construction professionals who want to see how it’s built to concerned tax payers who want tax dollars spent efficiently. But a disastrous, multiple prime construction project should have been foreseen since it took years to bid the project, bidding three times over the timeframe of two Governors – Ed Rendell and Tom Corbett. I could go on and on about the mess that is the SCI Phoenix, but I think the PA Corrections Commissioner John Wetzel summed it up best in a Senate Budget hearing when he said: “It’s been a terrible construction project.”  For more information on this developing, and apparently never-ending story, click here to read one of the many articles on it:   http://www.philly.com/philly/news/crime/prison-graterford-phoenix-phila-convention-center-20170901.html

 

Well those are my top Separations Act stories of 2017. They were each briefly presented but if you would like additional information on any item listed please do not hesitate to contact me. Also, if you have an opinion on these stories or think I’m missing an item, I’d like to hear from you.

Let’s Spend PA Tax Dollars Efficiently

Today we are a few days away from the month of October. In Harrisburg, it should be a time that our legislature is working on crucial issues – education, healthcare, energy, opioid epidemic, etc., but instead our state is still trying to complete its budget. One Pennsylvanian even tracks it daily and any minute today we should see his post about the budget now being 89 days late.

Every time I think about the budget debacle, as a construction professional I think about a major issue that drives up the cost of public construction, that being the Separations Act. 10 to 13% – that is amount that we overpay for construction services in Pennsylvania. Think about that every time you drive around and see a public construction project underway – our state is paying 10 to 13% more from your tax dollars to construct that building than what Maryland would pay for it. Next time you hear that your local school district is holding a school board meeting, think about all the topics they cover under their buildings and grounds report and how those projects will cost tax payers 10 to 13% more than what New Jersey would pay due to a meaningless mandate.

The Separations Act requires Pennsylvania to build in an archaic manner where multiple prime contractors take a lead role, and point fingers at each other while standing next to their attorneys every step of the way. Claims, lawsuits, delays – those are the norm for public construction projects in our state and those are the factors that drive up the cost of construction. In other states, like West Virginia, Ohio, and 47 other states in our nation, they are free to choose the most efficient construction delivery method. Our federal government and the entire private sector are also free to choose the most cost-effective delivery method.

So next time you read a newspaper article on the state budget impasse, just think about how we overpay for construction services by 10 to 13%. Let that fact sink in while you start your day, the 89th day that we are late on this year’s budget.

Please share this petition with your contacts, urging them to sign:  https://www.change.org/p/pennsylvania-repeal-pa-separations-act. Also contact your legislators and let them know that you want action on Senate Bill 744 and House Bill 1529.