Construction Trends

Small Business Jobs Act Benefits Offers Help




On Sept. 27, President Obama signed into law legislation (H.R. 5297) that gives small businesses $12 billion in tax breaks beginning this year. The bill also establishes a $30 billion Small Business Lending Fund.

The bill is designed to help small businesses access capital through a $30 billion Small Business Lending Fund. It allows addition write-offs for purchases of equipment and machinery, and double the amount of start-up costs that can be deducted by taxpayers starting a small business. The bill also allows self-employed taxpayers to deduct the cost of health insurance for their families when calculating self-employment taxes for 2010.

Here are highlights of the major provisions of the bill issued by the U.S. Senate Committee on Finance.

Helps Small Businesses Access Capital


• Incentivizes investors by giving 100 percent exclusion from capital gains taxes on small business investments.

• Gives $1.5 billion in grants to support $15 billion in new small business lending through already successful state programs.

• Reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax, freeing up capital for expansion and job growth.

• Creates a targeted $30 billion Small Business Lending Fund to provide small community banks with capital to increase small business lending.

• Increases Small Business Administration loan limits and improves access and lowers costs for small business to access SBA loans.

Increases Small Businesses’ Ability to Make Investments

• Increases Section 179 expensing—permitting up to $500,000 in capital investments that businesses can expense.

• Extends Bonus Depreciation—allowing taxpayers to immediately write off 50 percent of the cost of new equipment.

Promotes Entrepreneurship


• Increases to $10,000 the tax deduction for start-up expenditures—doubling the current levels.

• Creates new tools to help small businesses export goods, which will leverage more than $1 billion in exports.

• Establishes a new State Export Promotion Grant Program, which would increase the number of small businesses that export goods to other countries.

Promotes Fairness in Competition


• Improves tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.

• Allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.

• Improves small business contracting by clarifying that no single contracting program receives priority over another program when competing for federal contracts.

The new law also increases penalties for failure to file Form 1099 reports with the Internal Revenue Service. A number of organizations, including the American Subcontractors Association, are seeking repeal of the new Form 1099 reporting requirements enacted earlier this year as part of the landmark Patient Protection and Affordable Care Act. Those new requirements, scheduled to take effect in 2012, will force all businesses and tax-exempt organizations to issue a Form 1099 to vendors from whom they buy goods totaling $600 or more annually.

Meanwhile, the American Institute of Architects applauded the Congressional action and announced it will continue to press Congress for additional relief affecting credit access and healthcare.

OSHA Reaches Out to Prevent Distracted Driving

In conjunction with Drive Safely Work Week, the U.S. Department of Labor’s Occupational Safety and Health Administration announced on Oct. 4 an education campaign calling on employers to prevent work-related distracted driving, with a special focus on prohibiting texting while driving.

Part of OSHA’s education outreach is a new Web page aimed at those whose workplaces are the cars, vans and trucks that deliver the goods and services on which the nation’s economy depends, and their employers. This online resource will inform workers of their rights, and employers of their responsibility to provide safe workplaces, and offer best practices and policies on achieving safe workplaces in motor vehicles. Information and continual updates are available at www.osha.gov/distracted-driving.

An open letter to employers, also posted online, requests that companies examine their policies and practices, informs them that they have a legal obligation to prohibit workplace hazards such as texting while driving, and asks them to immediately remove any incentives that may motivate employees to text while behind the wheel.

The Transportation Department reports that in 2009 more than 5,400 people died in crashes linked to distraction and thousands more were injured. In particular, texting while driving has become such a prominent hazard that 30 states now ban text messaging for all drivers. Learn more about combating texting while driving and other distracted driver hazards at the Transportation Department website, www.distraction.gov.

August Construction Advances 6 Percent


New construction starts in August climbed 6 percent, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The seasonally adjusted annual rate was $433.6 billion.

The lift came from nonbuilding construction, comprised of public works and electric utilities, McGraw-Hill reported. However, nonresidential building slipped back in August after the improvement reported in July, and residential building continued to lose momentum. For the first eight months of 2010, total construction on an unadjusted basis came in at $277.7 billion, down 4 percent from the same period a year ago.

Nonresidential building, at $152.0 billion (annual rate), decreased 4 percent in August. Office construction fell 48 percent from its heightened July amount, which included the resumption of work on World Trade Center Towers 2 and 3 in New York, N.Y. If these two large projects are excluded from the July construction start data, office construction in August would be up 15 percent. Hotel construction in August stayed weak, falling an additional 6 percent. Stores and warehouses in August showed some improvement, rising 23 percent and 28 percent respectively, although both categories remain at very low levels, McGraw-Hill reported.

On the negative side, the institutional sector showed a large decline for healthcare facilities, which retreated 33 percent in August after its elevated pace in July. While July included the start of four large hospital projects, August included just one such project. The public buildings category, comprised of courthouses and detention facilities, continued to lose momentum in August, falling 9 percent, according to McGraw-Hill. On the positive side, educational buildings in August climbed 9 percent, and amusement-related work in August improved 12 percent. Transportation terminal work rebounded 49 percent, following an extremely low level of construction starts in July.

Residential building in August slipped 2 percent to $108.8 billion (annual rate). Single-family housing dropped 3 percent, marking its fifth straight monthly decline, as the pullback that began in the second quarter continued. On a year-to-date basis, single-family housing was still able to hold onto a lead relative to last year, up 14 percent in dollar terms, although the lead in recent months has been shrinking. The year-to-date 2010 gain at the national level for single-family housing was due to this performance at the regional level—the Northeast, up 20 percent; the South Atlantic, up 19 percent; the Midwest, up 16 percent; the West, up 14 percent; and the South Central, up 8 percent.

Multifamily housing in August receded 1 percent, which marked its fourth straight month of slower contracting.

The 4 percent shortfall for total construction on an unadjusted basis during the January–August period of 2010 reflected a mixed performance by sector. Nonresidential building fell 14 percent year-to-date, due to this pattern: commercial building, down 23 percent; manufacturing building, down 30 percent; and institutional building, down 8 percent. Residential building year-to-date advanced 11 percent. By region, total construction starts showed the following year-to-date performance: the Northeast, up 6 percent; the Midwest, down 1 percent; the South Central, down 4 percent; the West, down 7 percent; and the South Atlantic, down 10 percent.

FMI’s Nonresidential Construction Index Shows Growth in Third Quarter
At 51.3 for the third quarter of 2010, the NRCI is in growth territory for the second quarter in a row; however, it retreated somewhat from the more positive outlook of 54.5 last quarter, according to FMI Corporation, Raleigh, N.C.

States and municipalities are expected to make significant budget cuts due to lower tax revenues next year, and the federal stimulus support for the market will start to wind down over the next year. The concern now is that banks and private investors are sitting back and waiting for stronger signs of economic improvement until they repair their balance sheets.

Although new construction growth is slow to materialize, we asked if owners were showing more interest in improvements and alterations projects. Fifty-nine percent of panelists said owners were increasing their interest in projects for general modernization, energy improvement, green and sustainable upgrades and other projects. This work will not replace new construction business lost in the recession, but will provide new markets for contractors able to focus on this service-oriented work. In fact, we find some strong signs in panelists’ comments this quarter that contractors are becoming more customer-service oriented to assure that they win over new customers and retain current ones.

As the economy continues to look for traction, there is a sense we are facing what everyone is referring to as the “New Normal” where slower growth is the norm along with greater uncertainty, especially in global markets.

New-Home Sales Remain Flat in August


Sales of newly built, single-family homes were unchanged in August, holding at a seasonally adjusted annual rate of 288,000 units and matching July’s revised sales figures, according to data released Sept. 24 by the U.S. Commerce Department.

Sales of new homes increased in the Northeast and West by 16.7 percent and 54.3 percent, respectively. The Midwest and South posted double-digit declines of 26.1 percent and 10.8 percent, respectively.

The latest figures indicated that builders are continuing to keep a tight rein on the inventory of new homes for sale. That inventory, at 207,000 units in August, was 1.0 percent lower than the month before. The pace of sales activity was essentially unchanged, with the month’s supply of homes dropping to 8.6 from 8.7 in the previous month.

Housing Starts Rise 10.5 Percent in August

< Nationwide total housing starts rose 10.5 percent to a seasonally adjusted annual rate of 598,000 units in August, bringing the pace of production more in line with the level of construction activity before the popular home buyer tax credit temporarily stimulated housing sales earlier this year, according to U.S. Commerce Department figures released Sept. 21. While most of the month’s gain occurred on the multifamily side, single-family housing production, which increased 4.3 percent to 436,000 units, was still 9.1 percent below August 2009 as builders struggled to obtain finance and remained cautious about sustained demand. Most of the gain in housing production in August was due to a 32.2 percent jump to 160,000 units on the more volatile multifamily side. Three regions registered improved starts activity in August, with the Midwest, South and West posting gains of 21.7 percent, 7.0 percent and 34.3 percent, respectively. The Northeast posted a 24.3 percent decline in starts this August. Permit issuance, which can be an indicator of future building activity, rose 1.8 percent to a seasonally adjusted annual rate of 569,000 units in August. All of the gains were on the multifamily side, which rose 9.7 percent to 168,000 units. Single-family permits fell 1.2 percent to 401,000 units. This was 6.7 percent below August 2009. Regionally, permits were up 19.0 percent in the West, remained flat in the Northeast and fell 5.3 percent in the Midwest and 2.5 percent in South in August. Rhode Island is the First State to Adopt IGCC


Rhode Island is the first state to adopt the International Green Construction Code. The Rhode Island Green Buildings Act identifies the IGCC as an equivalent standard in compliance with requirements that all public agency major facility projects be designed and constructed as green buildings. The rules and regulations to implement the act take effect in October.

The IGCC applies to new and existing, traditional and high-performance commercial buildings. It includes ANSI/ASHRAE/USGBC/IES Standard 189.1 as an alternative compliance requirement.

In August, Richland, Wash., became the first city globally to adopt the IGCC as a non-mandatory document for commercial buildings.

New California Wall and Ceiling Association Is Launched

The Contracting Plastering Associations of Central Valley and Northern California (East Bay, Fresno, Sacramento, San Francisco and South Bay) along with the Capitol Drywall/Lathing Contractors Association and the Northern California Drywall Contractors Association have merged into one combined organization, the Wall and Ceiling Alliance. The Wall and Ceiling Alliance’s strategic partnership was created to give its member associations a stronger presence in the plaster and drywall industry in Northern California.

On Sept. 9, 2010, the boards of directors from each association came together to elect an executive board for the Wall and Ceiling Alliance that is representative of the size, work scopes and geography of each of the seven associations merging into the new group. A select group of 13 directors from the various associations make up the new executive board of WACA. The new board of directors comprises the largest group of union drywall and plaster contracting companies in Northern California serving 107 contractor members who are broad-based across the plaster and drywall industry. WACA will serve and represent plastering and drywall contracting members for all of Northern California’s 46 counties.

The Wall and Ceiling Alliance will focus on improving member resources, geographical outreach and labor relations and intends to make its combined resources available to a much larger membership in today’s challenging construction marketplace.

Insulating Concrete Form Association Announces Excellence Award Program Expansion

Elizabeth Steiner, executive director of the Insulating Concrete Form Association, announced changes to the Association’s Excellence Award Program.

“The ICFA Board of Directors decided to expand its Excellence Award Program with new criteria designed to showcase sound technical installation practices. Installation techniques will be a major component in judging along with the design, innovation and energy saving criteria formerly used,” Steiner said. “We also are going to streamline the application process to encourage increased industry participation.”

ICFA will open its Excellence Award Program to applications on Nov. 15, 2010. Award criteria and application forms will be available on the ICFA website, www.forms.org, and from the association office. Deadline for application submission is Feb. 15, 2011.

The winning projects will exemplify how insulating concrete forms are used in a variety of commercial and residential projects and will demonstrate “best installation practices.” Past ICFA Excellence Awards winners demonstrated remarkable achievements, with energy savings of more than 50 percent common.

The ICFA Excellence Awards recognize the industry’s premier innovative and noteworthy ICF projects. Projects must be completed (ready for occupancy) and have been built within the last three years. Gold, Silver and Bronze Awards were given in each category. Categories and general entry requirements are also included.

People in the News


Plastic Components announces the addition of two new personnel: Mel Kurpinski is the new architectural representative for Florida, and Ken Bashear is the new Central Florida territory manager.