FHWA makes video on Skagit bridge repair

November 4th, 2014 by Ben

The Federal Highway Administration has produced a nine-minute video detailing how the Interstate 5 bridge over the Skagit River was repaired so quickly. The project, both temporary and permanent bridges, has won several awards since its completion. Check out the video below, it’s worth another look.

Amazon builds film sets around DJC Building

October 9th, 2014 by Ben

MHC_mainshote

 

Crews from Amazon.com descended on the Journal Building this week to film an episode of the new TV series “The Man in the High Castle.”

Before the film crews set up, construction workers were busy transforming the streets around the building and the Journal’s press bay to resemble an early 1960s New York scene — with a twist.

That twist? Germany, Japan and Italy won World War II, with the East Coast under Nazi control and the West Coast occupied by the Japanese. That’s in following with Philip K. Dick’s novel, which the series is based on.

Some of the props made by the workers include a mock subway staircase, street signs bearing the swastika and a sign for Lariat Shipping & Moving in Post Alley. The DJC even printed up some faux newspapers, including the “Reich Chronicle.”

For the subway stairs, workers aged the wood with a special coating and made the plexi-glass canopy look old by scuffing the surface and placing some debris that looked like dried vegetation on the edges.

Word has it that Amazon’s crews have also been filming in Georgetown, Capitol Hill and the International District.

Check out these photos from the DJC’s own Jeff Miller.

 

 

 

Has the “Services Addendum” Contract Model Run Course?

September 23rd, 2014 by Todd

The “services addendum model” of contracting seemed to be all the rage for a while.   In a talk I gave a while back entitled “21st Century Subcontracting,” it warranted—wait for it–two very informative PowerPoint slides.  But after Division II of the Washington Court of Appeals issued its published decision in Bravern Residential II, LLC v. Dep’t of Revenue on September 23, it looks like it might be the end for that contracting model.

Some really smart lawyer or accountant must have come up with the model.  It was a device used by developers to lessen the tax burden associated with hiring a general contractor to build a speculative building.  Generally, a general contractor’s services (including particularly, the labor it provides to a project) are subject to both retail sales (WSST) and Washington Business and Occupation (B&O) taxes.  In today’s world with municipalities’ WSST rates up to nearly ten percent (both Seattle and Bellevue are at 9.5%), taxes on a general contractor’s work adds up quickly on a large project.

As with most big projects today, developers create a single-purpose entity (generally, a limited liability company) that is the “developer” and “owner” of the project.  The members of that LLC are generally the project’s investors, including often a traditional real estate development firm.  The extra entity layer further insulates project investors from potential liability.  In the service addendum model, the developing LLC makes the erstwhile general contractor a one-percent member, with the investor-members contributing land and capital, and the general contractor contributing “services” to the LLC.   By asserting that the LLC is actually the “speculative builder” of the project (by virtue of the “services” being provided to it by the contractor-member), the LLC could take advantage of two provisions in the Washington Administrative Code, one which exempts “speculative builders” from both WSST and B&O on the builder’s direct labor, and one which provides tax exemptions for the transfer of “capital assets,” i.e., that there was no “sale” of the services.  No sale = no sales tax.

In Bravern, the Court of Appeals upheld the 2008 decision of the Department of Revenue, which said neither exemption applied.  The Bravern LLC, having lost its appeal at the agency level, paid more than $107,000 in disputed taxes, and then sued the Department to get those taxes back.   In dueling motions for summary judgment, the trial court sided with the Department, and Bravern appealed.    The Court of Appeals agreed that because PCL—not Bravern—was required to perform the construction work, it was not a “speculative builder” under the WAC definition.

Further, the court ruled that the transfer of credits to PCL’s “capital account” was the kind of transfer of “capital asset” that allows tax to be avoided.  Rather, the Court, citing a 42 year-old case, said that “capital assets” are “a device or article kept, maintained, employed and utilized in the conduct and operation of the business,” in other words, something tangible.   “Services,” the court said, do not fall under that definition, and therefore tax on such services cannot be avoided by transferring their value between the members of an entity.

The “services addendum” model was always a conundrum to construction lawyers.  And, many of us thought that a decision like this was just a matter of time, if for no other reason than the state would want developers to start paying these taxes.  In one instance, I represented a subcontractor trying to negotiate a contract with the contractor-one percent-member of a developing LLC.   Though the subcontract purported to incorporate the “Main Contract” by reference, I was repeatedly denied access to that contract.  When finally granted a chance to review it, I was told I could see it only at the contractor’s office, and was initially denied a copy of it.   It turned out to be a heavily marked-up AIA A 111/A201 Guaranteed Maximum Contract, retitled “Services Addendum” in which the duties of the contractor to the Owner had been altered to be its “contributions” to the developing LLC.

There were a number of things about that agreement that made subcontracting a little tricky.  The standard form subcontract that the general was proposing didn’t really fit too well given that the general was, in essence, the project’s owner.   First, all the pass-through provisions that purported to make the sub’s duties to the general mirror those of the general to the owner were hard to understand.  “But, aren’t you the owner?,” I would ask, a bewildered look on my face.

And, curiously, the general insisted that my client, whose subcontract amount was to be substantial, agree to a “pay if paid” provision.  This really stumped me.  If the general contractor was the project owner, what possible meaning or effect could the risk shifting provisions of a “pay if paid” clause even have?   As I understood it, the reason for “pay if paid” was to put a subcontractor in the same position as a general in regard to the risk of the owner’s non-payment.   But, if the general was the owner, did that risk even exist?  As you might guess, it was all a little confusing.

But at least for now (I guess a petition for review by the Washington State Supreme Court is still possible), it seems that the Court of Appeals has closed the “services addendum” loophole (if it ever existed).   And so, perhaps we’re back to the straight-over-tackle owner-general-sub flow down contracting that old guys like me grew up with and are so used to.  At least until some really smart person comes along with another bright idea.

Bid now on pink pallet jack

September 10th, 2014 by Ben

Pink Pallet

UPDATE: Pallet jack sold for $4,150 and there were 11 bidders. The high bidder was John Souza, a principal at J&K Trucking in Pleasanton, Calif. Way to go John!

Raymond Handling Concepts has started the bidding for a pink walkie pallet jack on ebay that will benefit breast cancer charities on the West and East coasts.
Raymond provides material handling equipment on both coasts and has a Seattle-area branch in Auburn. Proceeds from the auction will go to HERS Breast Cancer Foundation of Fremont, California, and The Community Foundation for South Central New York, a partner of the Tina Turner Memorial Golf Classic in Greene, N.Y.
Breast Cancer Awareness Month is October.
The auction for the model 102XM machine started on early Wednesday at $350. As of Wednesday evening, eight bidders had submitted 22 bids to drive the price to $2,000. The auction will close at 11:59 p.m. on Sept. 16.
Here’s a link to the listing: http://tinyurl.com/PinkPallet
Happy bidding!

Watch Atkinson make quick work of SR99 bridge over Broad Street

August 27th, 2014 by Ben

The state Department of Transportation made a time-lapse video of last weekend’s work on SR99 that required closing the highway for several days.
Crews from Atkinson Construction and subcontractor Dickson Co. took just 48 hours to replace the section of SR 99 that crosses above Broad Street. They demolished the old roadway and then added fill to the now-closed section of Broad to level it up with the rest of the highway.
The highway reopened Wednesday.
Nice work!

Video courtesy of WSDOT

Got some mad crane skills? Show them off at local competition

August 12th, 2014 by Ben

CraneComp

The organization called Crane Institute Certification is holding a regional crane skills competition in Woodland (southwest Washington) that will send two finalists on expense-paid trips to a championship event in late 2015 at a “high profile” venue.
The regional competition will be hosted on Sept. 5 by Industrial Training International at its training headquarters. It’s the second year ITI has hosted the regionals and the fourth year of the competition.
For this year’s competition, there will be more emphasis on skill and less on speed, and organizers have added new twists such as a rigging challenge.
ITI will also have an open house, vendor showcases and several hands-on workshops, including three staged accident scenes.
Last year, operators from Washington, Oregon and Idaho competed at the Northwest event. Organizers want to get additional operators from western Canada and northern California.
Operators can sign up at www.cicert.com/news/compete. The registration fee is $50.

Contractors and friends support boatshop revamp

August 7th, 2014 by Jerry

In the fall of 2012, AGC’s Seattle District began a partnership with the Center for Wooden Boats (CWB) to improve and repair CWB facilities. The most difficult project to come out of the relationship was the installation of a hoist system to mechanically raise historic small craft out of the water and into the floating boatshop.

 

This complex project was designed and engineered under the supervision of Dan Chandler at OAC Services and his team of professionals. OAC redesigned the existing boatshop by changing the roof line at the north end of the shop and strengthening the rafters to accommodate the 30-foot steel I-beam that cantilevers out over the water.

Dan then recruited other northwest companies to build the project. BNBuilders provided a team of carpenters for two weeks to complete the retrofit of the shop and installation of the beam. Additionally, they footed the bill for the construction materials provided at cost by Gray Lumber. BNB also recruited Precision Electric to rewire the area affected by the retrofit. Yakima Steel fabricated and supplied the custom beam for the shop, while Scott Galvanizing of Ballard finished the raw steel. Ballard Hardware donated the trolley for the I-beam, and Al Wirta of Wirta Architectural in Sultan fabricated the overhead winch and pick-frame system capable of pulling a one-ton keelboat out of the water.

In photo, CWB recently hoisted it first historic Blanchard  knock-about  from the water into the boat shed for repairs — a task  that, for thirty  years, had been accomplished with sheer manpower using  a cranky old  float plane drydock.

One more band-aid for highways

August 1st, 2014 by Jerry

Never mind.  My last post talked about what could happen if Congress lets the federal highway trust fund goes dry.

But, as AGC of America reports, after weeks of back and forth between the House and Senate, a short-term extension of the current transportation authorization with a temporary funding patch for the Highway Trust Fund was passed before Congress left town for its August recess.  The Senate, by a vote of 81 to 13, agreed to drop support for its amended version of HR 5021 after the House earlier in the day voted to reject it. The Senate version  would have reduced the amount of the transfer by $3 billion and set December 19, 2014 as the authorization deadline.

The final bill transfers $10.8 billion into the Highway Trust Fund, allowing the Trust Fund to support an extension of MAP-21 authorization for the highway and transit programs through May 31, 2015. This transfer was necessary to ensure that the trust fund could meet its funding obligations for the duration of the extension.

H.R. 5021 originally passed the House with an overwhelmingly bipartisan majority on June 15.  On Tuesday, the Senate voted to amend the House-passed bill to shorten the length of the extension from May 31, 2015, to Dec. 20, 2014, and cut the general fund transfer to the Highway Trust Fund from $11 billion to $8 billion.  The passage of the Senate amendment started a game of legislative ping-pong where the House voted to disagree to the Senate amendment by a vote of 271-149 with 226 Republicans and 45 Democrats voting for and 147 Democrats and two Republicans voting against.  Following House action, the Senate withdrew its amendment and the original House bill was sent to the president.

Federal reimbursements to WSDOT could mean fraction of cash-on-hand

July 17th, 2014 by Jerry

The fate of the Highway Trust Fund has been a popular topic in recent media reports. The fund faces potential insolvency unless Congress acts by to prevent that from happening. This is a cause of concern for all states, and especially those that heavily depend on federal reimbursements to pay for transportation projects.

As most people know, the Congress has failed to pass a long-term federal highway bill.  As reported by AGC of America, this week the House, by a vote of 367 to 55, approved H.R. 5021, a $10.8 billion Highway Trust Fund patch which provides sufficient revenue to maintain current funding levels through May 2015.  The action now heads to the Senate where there is expected to be debate about limiting the extension until December 31, 2014 with the hope of forcing consideration of a long term transportation bill with sufficient revenue to support it following the mid-term elections in November.

Meanwhile, WSDOT Secretary Lynn Peterson released the following statement:

USDOT Secretary Anthony Foxx informed states on July 1 that if Congress fails to act by Aug. 1, 2014, the Federal Highway Administration will institute uniform cash management procedures to distribute the flow of federal dollars twice a month. So, what does this mean for WSDOT’s programs? It means that over the short term, the amount FHWA will reimburse WSDOT will be limited to a share of the available cash in the fund. Our share is based on our portion of the FFY 2014 federal-formula apportionment, 1.72 percent.

We’ve been good stewards of our resources and by using our strategic investment goals – managing to meet our priorities and critical needs, we can sustain the proportional payments of federal dollars under this plan for four to six months.

We remain hopeful that Congress will act in time to stave off more significant, long-term impacts. Look for more updates as their deadline approaches.

Lynn Peterson, Secretary of Transportation

Sedge of cranes return to roost in Seattle?

June 24th, 2014 by Jerry

That’s right, I said “sedge.”  That’s the name for a group of cranes (the bird kind)…you can look it up.

My AGC colleague Sean Lewis shot the video below from our offices on Lake Union.  He counts 18 construction cranes on the city skyline, a pretty high number for our informal “crane index”.  Back in the heyday of 2007, there were 22.  By 2010 there were, oh, zero.  But now we’re all the way back up to 18.  Our crane index is backed up by some recent, and actual, economic data: Construction employment in  Washington State grew 5.5% in the last year — one of the largest increases in  the nation, as reported by AGC of America.  Plus, the Census Bureau  recently announced that Seattle is the fastest growing big city in the  country.

It’s great to see this sedge; long may it roost in Washington State!