KIND TAKES THE REIGNS

AS NESCA’S 29TH PRESIDENT Go Top

Robert H. Kind, a partner with Teal, Becker & Chiaramonte, CPAs, P.C., was elected president of NESCA for 2001-02 at the association’s June 14th membership meeting held at the Century House. Bob became NESCA’s 29th president, succeeding Steven R. Dewey of All-Lifts, Inc. He has served as NESCA’s vice president, treasurer and secretary during the last three years respectively, following many years of service representing NESCA’s service companies on the Board of Directors.

Teal, Becker & Chiaramonte, CPAs, P.C. is a regional certified public accounting firm that has a high concentration of subcontractors and suppliers for clients. Bob’s career with the firm began in 1974 after he graduated from SUNY Albany. He obtained his CPA certificate in 1976 and is licensed in New York and Florida. In addition to its participation in NESCA, Teal, Becker & Chiaramonte is active in several regional Chambers of Commerce, GBC, ECA, the Albany Area Builders Association, NAWIC and AGC. Bob has been active in NESCA since 1978, and at various times has served on the association’s program, long range planning, education, retention, membership, legislative and ways & means committees.

Also elected as 2001-02 officers at the June 14th meeting were: James M. Elacqua of AFSCO Fence Supply Co., Inc. as vice president; Jeffrey Senft of S & O Construction Services, Inc. as treasurer and Kevin Garrity of Rose & Kiernan, Inc. as secretary.

DOL TO PUBLISH WAGE SCHEDULES ONLINE Go Top

The New York State Department of Labor has announced that it will be publishing the 2001-02 (and subsequent year’s) prevailing wage schedules on the Department’s web page. Effective July 1, 2001, subcontractors will be able to access DOL’s new “electronic prevailing wage schedule” at http://www.labor.state.ny.us./ Prevailing wage schedules will be shown separately on the web page for “General Construction Projects” and “Residential Construction Projects”, on a county-by-county basis. Once the rate schedules are posted, any corrections and changes to the schedules will be posted on the first day of each month. As such, it will be important for members to check the web page for any changes on a regular basis.

In addition to the wage schedules the DOL web page will include general information on the laws covering workers on public works contracts, and will also allow access to public work-related forms (payroll certification; request for a dispensation to work overtime, etc.) available in a PDF format.

PRESIDENT’S MESSAGE Go Top

As NESCA begins its new fiscal year, I’d like to thank the membership for providing me the opportunity to serve as president of the association over the next 12 months. I assure you I will do everything I can to promote the interests of subcontractors and suppliers doing business in Northeastern New York. And I hope that next June I will be able to report to you the many new accomplishments NESCA has chalked up during our 2001-02 year.

Okay, okay. I know I am an accountant and not a subcontractor. I don’t spend my time estimating and bidding work or constructing projects. I spend my time crunching numbers. However, I crunch YOUR numbers! I have many subcontractor clients, and I see first-hand the many difficulties subcontractors face on a day-to-day basis. I see subcontractors struggle to comply with Department of Labor regulations regarding prevailing wage supplemental benefits. I assist subcontractors when they encounter additional reporting and paperwork requirements under the workers’ compensation payroll limitation law. I work with subcontractors as they combat cash flow difficulties while waiting months to receive progress payments and even longer for retainage. I observe subcontractors regularly operate on margins which would be considered abysmally low in almost any other industry. I advise subcontractors as they struggle with business ownership succession issues. So you see, while not a subcontractor myself, I have worked with subcontractors for years and I have grown to appreciate the trials and tribulations of operating a construction business.

The point of all this is, since my firm provides professional services to subcontractors and other construction-related companies, our membership in NESCA has helped me immeasurably to assist our subcontractor clients by keeping me on top of the most important issues which affect them. NESCA allows me to stay completely informed and up-to-date on matters affecting my clients. This, in turn, helps me to provide better service to those clients. So if membership in NESCA can be that valuable to an accounting firm, just think of how valuable membership in the association should be to subcontractors and suppliers! As far as I’m concerned, NO subcontractor in our area should be without the information and advocacy NESCA provides!

As we begin the new year, it is my intention to be an active president and to promote NESCA and subcontractor interests to the best of my ability. I hope and I urge each and every member to take full advantage of NESCA’s many benefits and services. I also urge you to be as active in the association as you possibly can be. Membership in NESCA is a company membership. So even if you can’t attend all of our meetings, seminars and other activities, please consider sending others from your company to attend in your place. The more active your company is in NESCA, the higher the return will be on your membership investment.

Robert H. Kind

President

CONTRACTOR FAILING TO PROVIDE PROPERTY OWNER AS ADDITIONAL INSURED WITH SUFFICIENT INSURANCE IS LIABLE TO OWNER FOR UNINSURED DAMAGES Go Top

In the case of Nrecal v. Fisher Liberty Co., 723 NYS 2d 26 (1st Dept. 2001), the Appellate Division held a maintenance contractor liable for potential damages to a property owner resulting from a third party’s personal injuries sustained in a slip and fall. The maintenance contractor’s liability arose from his failure to provide the property owner as a named additional insured with adequate contractually required insurance.

The Appellate Court held that the trial court erred in denying the owner’s conditional summary judgment motion on its cause of action for breach of contract against the maintenance contractor.

The parties’ maintenance contract and the maintenance contractor’s insurance policy established that while the contractor was obligated to obtain liability insurance naming the owner as an additional insured and providing combined single limit coverage of at least $2,000,000, the policy the contractor obtained had a combined single limit coverage of only $1,000,000. Accordingly, the maintenance contractor was held liable to the owner for any potential damages that the owner may have to pay in excess of $1,000,000 and less than $2,000,000.

Contractors and subcontractors should protect themselves against the potential liability exhibited in this case by closely reviewing contract provisions containing “additional insured” clauses and assuring that the required insurance amounts and coverages have been met.

Terence J. Burke, Esq.

NESCA Legal Counsel

RETAINAGE BILL REPORTED OUT OF SENATE JUDICIARY COMMITTEE Go Top

GENERAL CONTRACTORS TRYING TO KILL IT

A bill being advanced by the Empire State Subcontractors Association (ESSA) that would require retainage held on private construction projects be placed in an interest-bearing escrow account, was reported out of the Senate Judiciary Committee to the Senate Rules Committee on May 22, 2001. With that hurdle cleared, ESSA has focused its attention on getting the bill reported out of the Judiciary Committee in the Assembly. ESSA’s bill would require that retainage held by owners and contractors on private projects in excess of $50,000 (except for residential projects involving housing accommodations for less than five families) be deposited in a separate interest bearing escrow account. At the time of the deposit of the retained funds, such funds shall become the property of the contractor or subcontractor to whom they are owed. Upon satisfactory completion of the contract, all funds accumulated in the escrow account together with interest earned shall be paid immediately to the contractor or subcontractor.

Unfortunately, the General Building Contractors of New York State (GBC) has submitted written opposition to the bill expressing a number of somewhat vague concerns. GBC’s memo states that requiring private owners to establish an escrow account for retainage on each project would be “overwhelming” and “will impose significant new costs on construction projects and will spawn a new industry just to manage these escrow accounts”. GBC also holds that “private parties should have the right to freely contract” and the ESSA bill would “interfere with that right”. GBC further argues that “the need for this legislation has not been established” and “the lien law provides protection” if funds due and owing on a construction project to unpaid for unjustifiable reasons.

Clearly, ESSA disagrees with the GBC on all of these points. It is ESSA’s position that requiring each project owner to establish a single escrow account to hold retainage will not present an overwhelming burden to the owner. Further, there are numerous examples in law where the State has established parameters for private contractual arrangements, so the GBC’s argument that parties should have the right to “freely contract” holds little water. Finally, ESSA believes the need for this legislation has been clearly established through member surveys showing that on average, retainage is held by private owners for excessively long periods of time.

WELCOME NEW MEMBERS Go Top

Atlantic Surface Prep, Inc.

33 Railroad Ave.

Albany, NY 12205

(518) 438-3033; Fax (518) 438-2622

Contact: Victor Cipolla

Group Services, LLC

1422 Euclid Avenue, Suite 817

Cleveland, OH 44115

(216) 621-8366; Fax (216) 621-8450

Contact: Edward Riley, Jr.

Vanacore, DeBenedictus, DiGovanni & Weddell, CPAs

P.O. Box 10009

Newburgh, NY 12552

(845) 567-9000; Fax (845) 567-9228

Contacts: Thomas DiGovanni, Robert Marchione

RETAINAGE REDUCTION AND DISCHARGE BOND BILLS SHOWING MOVEMENT IN LEGISLATURE Go Top

Several subcontractor-friendly bills being promoted by NESCA’s state affiliate, the Empire State Subcontractors Association, have been reported out of committee in the State Assembly.

On June 12, 2001, ESSA’s bill (S2898/A5412), which would require a 50% reduction in retainage on all public works projects upon completion of 50% of the project, was reported out of the Assembly Local Government Committee to the Rules Committee. This bill would get a large portion of the money currently held as retainage on public projects back into the pockets of subcontractors. Efforts are being made to get the bill reported out of the Rules Committee to the floor of the Assembly, and to move the bill out of the Senate Local Government Committee

On June 19,2001, another ESSA bill (S3707/A7178) was reported out of the Assembly Judiciary Committee to the Rules Committee. This bill would statutorily set the amount of an undertaking to discharge liens at 110% of the amount of the lien. Currently in New York State, undertakings to discharge liens, which are usually in the form of a bond (“bonding off the lien”), are required to be set by a judge with or without a stipulated agreement between the surety providing the bond and the lienor. This often results in haggling between the attorneys for each side as to what the proper amount should be. The time and expense of this procedure would be eliminated by simply setting the amount of the undertaking in statute. ESSA is now lobbying to have this bill reported out of the Assembly Rules Committee and the Senate Judiciary Committee.

DO YOU KNOW THE PAYMENT AND RETAINAGE LAW IN NEW YORK? Go Top

A number of members have recently contacted the NESCA office with questions about payment and retainage on public projects in New York. Payment and retainage is governed by Section 139-f of the State Finance Law (for state agencies) and Section 106-b of the General Municipal Law (for municipalities). With regard to payment and retainage on public projects, subcontractors should understand the following basics:

(1) The prime contractor is required to pay subcontractors within fifteen days of receipt of payment from the public owner.

(2) Failure by the prime contractor to pay subcontractors within this fifteen day period shall result in the commencement and accrual of interest.

(3) The prime contractor may not hold more than five percent retainage from the subcontractor unless prior to entering into the subcontract, the subcontractor is unable or unwilling to provide performance and payment bonds, in which case the prime contractor may hold up to ten percent retainage.

This payment/retainage law was drafted and lobbied into law by ESSA back in 1978 and covers work let by state agencies, municipalities and other local government entities, and public school districts.