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Backyard Experience

 

By Mark Morris

On a Thursday in February while snow fell on the region, Bob Schwein was answering a steady stream of phone calls at Drewnowski Pools.

Sure, some calls were from people who use their spas year-round, but many more inquiries were to schedule swimming-pool openings.

“Swimming-pool owners know that if they want to schedule a pool opening for Memorial Day, when thousands of other people want to open their pools, they need to schedule now,” said Schwein, sales manager for Drewnowski.

Early spring is typically when he receives calls to replace vinyl pool liners and to repair or renovate pools made from gunite, a concrete product used for many inground pools. “Repairs to gunite pools can take weeks, and people don’t want to interrupt the middle of their swimming season, so we usually schedule these early in the year.”

With his business growing over the last five years, Schwein said backyard pools are not what they used to be, particularly inground pools (see photo above).

“It used to be a rectangle with a three-foot concrete walk around the pool and a fence surrounding it by itself in the yard,” he noted. “Now, the pool is part of an entire backyard experience.”

That trend — toward creating an experience right outside the back door — is one that many different types of outdoor-improvement contractors can attest to, particularly during the era of COVID-19. BusinessWest spoke with several who said people are spending more money on their homes simply because they are spending more time at home.

The oft-heard story is that people were encouraged to only go out when necessary, and those who were fortunate enough to work from home during this time have been able to save some money, while also becoming more acutely aware of repairs and renovations they may have been putting off. As a result, many contractors reported their most successful year of business in 2020.

As many of the pandemic restrictions continue, people are not sure how long they will continue to work and attend school from home. It reminds Brian Rudd, owner of Vista Home Improvement, of the uncertainty that emerged during a different historic time.

“After 9/11, we saw people start to nest, and they began to see their home as their kingdom,” he said. “Since the pandemic, the desire to nest at home has happened to an even larger degree.”

“Right now, people are addressing the aesthetics of their houses because they are home more and able to address these things now.”

And they’ve been increasingly looking outside the home, not just inside. After a record year in 2020, Rudd reported that even more customers want new siding and new windows. “Right now, people are addressing the aesthetics of their houses because they are home more and able to address these things now.”

It’s not unusual for customers to call Dave Graziano, landscape project manager for Graziano Gardens, to replace old, overgrown plantings with new ones. Last year was different because, along with replacing old plantings, customers wanted to make other improvements to their property.

“Whether it was adding a big patio or simply hanging flower baskets, people wanted to create more outdoor living space, no matter how large or small their yard might be,” he said.

Brian Campedelli, president of Pioneer Landscaping, said his business doubled in 2020 because people decided to invest in their homes rather than vacations. “The money they would have spent on vacation instead went into their backyards, where we helped them create an outdoor entertainment area.”

Both Graziano and Campedelli noted that firepits have become one of the most popular additions to the backyard.

“While we build a lot of circular firepits, people are getting creative and asking us for square or triangular pits to match the seating they have around it,” Campedelli said.

A worker with Pioneer Landscaping places patio stones.

A worker with Pioneer Landscaping places patio stones.

Once considered only for warmer climates, outdoor kitchens are also a growing part of his business, with many designs incorporating a pizza oven.

“In the past, people would not build outdoor kitchens because of the short season to use them, but I don’t hear that as much anymore,” he said. “I think people are just going for it.”

 

Dive Right In

‘Going for it’ is an increasingly common mindset when it comes to buying an inground pool as well, Schwein noted.

While Drewnowski sells inground and above-ground pools, installation is handled by its parent company, Juliano Pools of Vernon, Conn. As busy as Juliano was last year, many who wanted pools couldn’t get them, due to higher demand than normal combined with shortages of materials and labor. Schwein said 2021 is off to a good start because those who couldn’t purchase last year can do so this year.

“We have a spillover of people from last year and new people who have decided to buy a pool this year, so I’m positive that combination will mean another banner year,” he told BusinessWest.

For years, many believed that houses with inground pools would be tough to sell. The red-hot real-estate market since last spring seems to have made that concern a moot point. Many first-time homebuyers are also first-time pool owners who are calling Schwein for advice on how to maintain their inground asset.

“From what I’ve seen, people are not afraid to buy a house with an existing pool. In fact, to many, it’s a selling point,” he said. While a typical home inspection does not cover the condition of a swimming pool, Drewnowski has pool inspectors available to help prospective buyers understand what they are getting.

With less inventory in the housing market, Rudd observed that many people choose to upgrade the house they have. By the same token, when people do purchase a home, they often come to see him, armed with plans.

“From what I’ve seen, people are not afraid to buy a house with an existing pool. In fact, to many, it’s a selling point.”

“When people move, they improve. And when they don’t move, they improve,” he said with a laugh.

Sprucing up a house isn’t complete until landscaping provides the final touch. In addition to landscaping services, Graziano Gardens has a retail store for those who want to tackle backyard projects themselves. Graziano saw new faces in the garden center last year, resulting in what he termed a “mini-explosion.”

“We sold out of trowels, shovels, gloves, watering cans, things we’ve never sold out of before,” he said. Also hard to come by were grown items such as hanging baskets, vegetable plants, and even evergreen hedges. “It seems like people just wanted to fill in that spot.”

Brian Campedelli says customers are looking for more creativity in firepit design.

Brian Campedelli says customers are looking for more creativity in firepit design.

Dry, warm temperatures early last spring, combined with parents and kids cooped up in their homes, might have led to a shortage in pool heaters. Schwein said he took many calls from exasperated parents who bought a heater and opened their pool earlier than usual to get their kids outside and squeeze a few more months out of the swimming season. That logic was fine until manufacturers ran into COVID issues and Schwein could no longer get them.

“The demand was high, and the supply was low,” he said. “Heaters are something that would normally take six days to get, but last year we ran into three-month delays.”

The pandemic also forced several contractors to find new ways to do business. A summer ritual for many involves periodic trips to the local swimming-pool retailer with samples of pool water to make sure the chemical balance keeps the water clean and safe. When COVID first hit, Schwein said, customers were no longer allowed into his store. “We had to change our business model.”

Specifically, customers left water samples outside the door where employees would test the sample and call the customer with a list of what chemicals were needed. After completing the transaction over the phone, an employee would deliver the chemicals to the customer’s house. Schwein admits it put a strain on his staff and customers, but everyone adjusted well.

“Our customers were able to get what they needed, but the way we had to do everything was different.”

When the pandemic first hit, Rudd and his staff were forced to become familiar with 10 years of new technology in less than three months. Beyond Zoom meetings, Vista consultants used satellite technology to measure houses for roofs and siding when they could not visit a client in person. While skeptical in the beginning, he now calls the technology “amazing.”

Dave Graziano says his garden center sold out of many popular plants last year.

Dave Graziano says his garden center sold out of many popular plants last year.

“I’m from the days of using a tape measure and a pencil, so at first I took comparison measurements to make sure the satellites were accurate,” he said. “It’s scary how accurate they are.”

Rudd enjoys using computer-design tools to give homeowners a good idea of how their space will look with improvements.

“We take a picture of the house, upload it into one of our applications, and change the house right in front of them,” he explained. “It leads to great interaction with the client and lets them have control of their purchase, with us there to guide them.”

Campedelli said it’s difficult for clients to envision a dramatic renovation of their backyard, so computer design goes a long way toward sealing the deal.

“Once they see the design, they want to move forward,” he noted, adding that, once the job is done, he enjoys how thrilled customers are with the result. “It changes their lives in a positive way.”

 

Getting Ahead

With spring around the corner, contractors are preparing for another busy year. Schwein pointed out that his phone is ringing now because customers have learned from the pandemic.

“Last year, people were patient and understood slowdowns due to COVID issues, so they are calling now because they don’t want to hear the COVID excuse this year,” he said.

After a busy 2020 as both a contractor and a retailer, Graziano’s main takeaway from last year was that people want to make their properties into their own oasis.

“Whether they do it themselves or they hire a landscape professional, I think that trend will continue through this year,” he said.

In the meantime, he’s got what he called a “good problem” — figuring out how many more shovels and watering cans to order for 2021.

Features

Work After the Pandemic

By John Graham

It’s been a year now since we came under the relentless domination of the coronavirus. After all this time, the picture isn’t pleasant. The end is uncertain, and the implications for the future are far from clear.

McKinsey reports that “75% of employees in the United States and close to a third in the Asia-Pacific region report symptoms of burnout. European nations are reporting increasing levels of pandemic fatigue in their populations. The number of those who rate their mental health as ‘very poor’ is more than three times higher than before the crisis, and mental-health issues are still likely to rise.” In spite of their severity, such figures should get our attention, but do they?

Perhaps the most dangerous part of the coronavirus is its divisiveness. More often than not, outside attacks — wars, famines, and natural disasters — bring us together to slay the dragon. But the pandemic has driven us further apart. Who would have thought life could take such a painful turn?

Overnight, workers were told to leave their jobs and work from home. Not only did they do it, they liked it. Now, many are ready to refuse to go back to claustrophobic cubicles or vacuous open spaces where they lacked privacy. To express their pleasure at working from home, they remodeled their bedrooms, kitchens, and basements; upgraded their internet connection; purchased all sorts of digital devices and office equipment; and didn’t miss a beat.

They’re choosy, too. “You want me in the office? I don’t think so.” Some moved to Boise or some other place in the middle of nowhere that welcomed them with open arms and lower living costs. They donned their sweats, popped open a laptop, jumped on virtual meetings, adjusted the lighting, turned on a monitor or two, and went to work in their new, $999 office chair, or decided to stay in bed and make it their office that day. To the utter surprise to everyone, productivity went up.

That’s just the first chapter. The McKinsey report also notes that “there is a veritable flood of new small businesses. In the third quarter of 2020 alone, there were more than 1.5 million new-business applications in the United States — almost double the figure for the same period in 2019.” That’s not all. The fourth quarter found Apple ripe for success with the highest revenue in its history — and the company wasn’t alone.

 

Four Lessons

All this adds up to an amazing, but totally counter-intuitive, story. But what does it mean to all of us who must live it? Literally, what in the world is going on? Even more to the point, what’s the message about the future — our future? Here are four thoughts about that.

“Overnight, workers were told to leave their jobs and work from home. Not only did they do it, they liked it. Now, many are ready to refuse to go back to claustrophobic cubicles or vacuous open spaces where they lacked privacy.”

The genie is out of the bottle. It’s finally happened. To put it another way, like no other phenomenon in modern history (perhaps in all of history), the pandemic released a level of momentum sufficient to turn the world and everything in it upside down in an instant. It may also be the catalyst that changes everything, from politics, government, and public policy to health and medicine, education, work-life balance, business, entertainment, culture, industry, and science. When Jeff Bezos, the CEO of Amazon, steps back, we can be sure profound change is in the air.

 

Far more people have seats at the table. We talked for so long, but nothing changed. Then, suddenly, we became keenly aware of those who had long been invisible to us. We raised our hands and called them ‘heroes’ but never raised their wages. Now, all of a sudden, we’ve finally figured out that when everyone has a seat, we have better healthcare, better jobs, stronger families, and happier communities. Could it possibly be that it took a painful pandemic to make more room at the table?

 

Everything is under a microscope. Again, counter-intuitive but nevertheless true: the number of applications for fall 2021 at the University of California are breaking all records. It’s happening at the same moment when millions of young Americans are questioning the value of a college education, particularly if it will take decades to free themselves from the sobering shackles of student debt. Those who went before them, the Millennials, are dogged in determining their own way in the world. Don’t be surprised. The lens of the microscope may never rest.

 

Don’t drink the Kool-Aid. There are dangers in the tension-filled, stressful times in which we find ourselves. Someone has aptly described it as “hitting the pandemic wall,” and it’s felt at home and at work. It’s when we reach out for relief so we can get our lives on a better path. Simple, quick, and easy answers are what sell in turbulent times: “buy this or do that, and your problems vanish, and your dreams come true.” We’re too resilient to do that to ourselves.

 

Bottom Line

Now, go back to where we started, the original question: “Who will have the upper hand after the pandemic: employers or employees?

All this leads to the final question. Through the pandemic frenzy, who will come out ahead, the workers or employers? The way it looks at the moment, it just may be the workers. But, as we all know, things can change. u

 

John Graham of GrahamComm is a marketing and sales strategy consultant and business writer. He is the creator of Magnet Marketing and publishes a free monthly e-bulletin, “No Nonsense Marketing & Sales Ideas”; [email protected]

 

Home Improvement

Fueling Interest

By Mark Morris

EcoBuilding Bargains

EcoBuilding Bargains, celebrating 20 years this year, has been a trendsetter in repurposing reclaimed and surplus building materials.

John Majercak likes to say the Center for EcoTechnology (CET) has been successful for 45 years because it’s willing to try out approaches to saving energy that in time become a normal way of doing business.

“We helped invent the energy audit in the 1970s, and now it’s a routine thing that lots of people have done, and it’s having a huge impact,” said Majercak, president of CET.

In 2021, the organization marks several noteworthy milestones. In addition to CET’s 45th birthday, Majercak celebrates 30 years with the organization, serving as president since 2010. In his time there, he has seen a growing mainstream awareness of the connection between the community, the economy, and the environment.

“It used to be that environmentalism was thought of as a fringe thing or a nice thing to have,” Majercak said. ”But the work we do in saving energy and reducing waste helps people live better lives, as well as addressing the urgent issue of climate change.”

CET also runs EcoBuilding Bargains, the largest reclaimed and surplus building-materials store in New England. Launched in 2001, the reuse store celebrates its 20th anniversary this year. When it opened, the store was one of only a few of its kind that existed. Today, thousands of stores sell reclaimed building materials.

From the beginning, people liked the idea of saving money and helping the environment by giving a second life to used cabinets, lighting, plumbing fixtures, and hundreds of other items. Through the years, awareness increased as EcoBuilding Bargains was featured on several home-improvement TV shows, most notably This Old House.

Located in Springfield, EcoBuilding Bargains sells products in all 50 states and several other countries thanks to the internet. Once reusing materials became fashionable, Majercak said, interest in the store exploded.

“When reusing materials became stylish, it allowed people to bring their own character to a piece,” he noted. “On top of personal creativity, it’s an inexpensive purchase that helps the environment, so it’s a home run.”

Majercak pointed out that the current boom in home improvement — fueled by the pandemic and people being in their homes much more than would be considered normal — has created both a supply and a demand for items at EcoBuilding Bargains.

“It used to be that environmentalism was thought of as a fringe thing or a nice thing to have. But the work we do in saving energy and reducing waste helps people live better lives, as well as addressing the urgent issue of climate change.”

“All the home improvement that’s going on means more materials we can capture for donation and reuse,” he noted. “Then, when people renovate with these materials, they can save lots of money, help the planet, and make their homes look super-cool.”

Likewise, the pandemic hasn’t slowed business for the store. EcoBuilding Bargains is open for people who want to shop in-person and also offers virtual appointments so people can shop over the phone. With video calls, Majercak said, staff can show items, and customers can ask more specific questions about a piece.

Other parts of CET’s business have also adopted a combination of in-person and virtual interaction. Energy audits, for example, have a whole new feel that creates opportunities and challenges.

“We have people who are happy to get on a Zoom call and show us around their home or business for an energy audit,” Majercak said. “On the other hand, those who wanted an in-person visit are on a waiting list until after the pandemic is over.

“After the pandemic, I’m sure we’ll be doing plenty of things in person again, but we will continue to go virtual for those who prefer that approach,” he went on. “In that way, it opens more opportunity for mission impact.”

 

Cool Ideas

With a stated mission to “research, develop, demonstrate, and promote those technologies that have the least disruptive impact on the natural ecology of the earth,” one of CET’s goals involves reducing carbon emissions equal to removing 100,000 cars off the road for a year by 2022.

There are many ways people can reduce their carbon footprint, all of which use less energy without compromising comfort. Converting to LED lights and adding insulation are two easy ones.

John Majercak says a central focus for CET over the years has been pursuing technologies with the least disruptive impact on the environment.

John Majercak says a central focus for CET over the years has been pursuing technologies with the least disruptive impact on the environment.

“Weatherization is a good example because installing air-sealing insulation in the home increases the comfort dramatically and uses less energy — and, therefore, less carbon,” Majercak said. “We’ve been doing these programs for years, and they save lots of energy and carbon.”

He cited a recent effort in which CET has partnered with colleges in the Community Climate Fund, which provides support for local carbon-reduction projects. By investing in the fund, colleges support the community, as well as creating learning opportunities for students who conduct research and gather data. Projects range from recovering used building materials or helping a homeowner get a heat pump to providing loans to farmers so they can make energy improvements to their operations.

“The Community Climate Fund is a great way to extend the impact of our programs and get even more done,” he told BusinessWest.

Massachusetts recently unveiled a plan to achieve a 45% reduction in carbon emissions by 2030 and to be carbon-neutral by 2050. Majercak has reached out to utilities to encourage them to align their energy-efficiency programs with these climate goals. CET is currently working with a municipal utility company to test an energy-efficiency program that measures carbon reduction, as opposed to just energy savings. It’s one of the first programs of its kind in the country.

“Anytime you save energy, it reduces carbon, but the kind of energy you save and the kind of energy you use also affects carbon,” he said, noting that the car you drive and the lawnmower you use can also make a difference in changing your carbon footprint. “For the foreseeable future, we will be studying energy issues by looking through the lens of carbon reduction.”

CET is also working with utilities on promoting the use of air-source heat pumps for houses. While they have existed for years, Majercak said heat pumps were primarily used in warmer climates. With recent technology improvements, they can now withstand the sustained cold temperatures of a New England winter. Unlike traditional heating systems, heat pumps take heat from outside air (yes, even frigid cold air has heat in it) and move it into the home.

For cooling, the heat pump does the reverse and removes heat from the house to the outside. Instead of using oil, natural gas, or propane, heat pumps run on electricity. As long as renewable energy becomes a larger part of the grid, he said, electric power is the logical choice.

“This is good from a carbon perspective because, as the power grid gets greener and as more people use heat pumps and drive electric cars, the more carbon reduction we’ll get,” Majercak noted, adding that heat pumps are just catching on, and we will see a lot more of them in the coming years.

And they represent only the latest cutting-edge technology that CET has helped establish in its 45 years.

“I’m very proud of the people at CET because they’ve always been real innovators and have helped change the way things work,” he said. As one example in the realm of waste and recycling, CET helped to establish the Springfield Materials Recycling Facility (MRF), which serves 65 communities in Western Mass. Back when recycling was a new approach, CET worked with towns to help them prepare their recycling programs for the Springfield MRF.

In the 45 years since CET has been in operation, energy conservation has hit peaks and valleys in politics and policies on the national level. Majercak noted that the state and regional levels have been more consistent, and asserted that CET has never been, nor ever will be, a political organization.

“We’re a solutions organization; we work with everyone,” he noted. ”As long as we keep that focus, we will be successful.”

Elaborating, he said the key is to meet people where they are and help them either solve a problem or achieve a goal.

“If you’re a small business, your goal may be to save money and have your business perform better. Energy efficiency, as well as waste and recycling management, can help you reach that goal,” he said. “A homeowner might want to be more comfortable or lower their electric and fuel bills. We can do that for you, and it doesn’t matter what you think about climate change.”

“All the home improvement that’s going on means more materials we can capture for donation and reuse. Then, when people renovate with these materials, they can save lots of money, help the planet, and make their homes look super-cool.”

For all the energy-saving opportunities out there, Majercak understands that spreading the word about what CET does and how it can help is essential. “Even when people are aware and want to do something to save money or save the environment, we still do a lot of hand holding to get it done.”

Spreading the word through workshops and social media definitely helps to engage people. Majercak pointed to one effort in which EcoBuilding Bargains runs a “Reuse Rockstar” contest on social media that encourages people to post the creative ways they have used items from the store.

“It’s inspirational to see how people apply their creativity and elbow grease to make beautiful houses and rooms for a fraction of what they would normally cost,” he said.

 

Going for the Green

Because climate change is a global problem, it’s easy for people to feel overwhelmed and doubtful they can make a difference, said Majercak, who assures them that they do not have to solve climate change all by themselves, and shows them different ways they can have an impact.

“When someone switches out their lightbulbs, buys an electric vehicle, or installs used cabinets, these are not overwhelming actions,” he told BusinessWest. But when CET helps tens of thousands of people do these little things, they start to add up.

“Consider that people across the state, the country, and the world are doing similar things, and it’s easier to see how each effort contributes to making a real difference. We are firm believers in little things with big payback.”

In addition to turning new approaches into normal processes, Majercak looks forward to the growth potential for EcoBuilding Bargains as it sells more products to people through eBay and, soon, through its own e-commerce site.

When he considers CET’s 45-year history, he appreciates how far the organization has come, but he’s even more excited about the near future.

As much as we’ve done, I think we will really accelerate and see much more progress in the next 10 to 15 years,” he said. “It’s an exciting time to be doing the work we do.”

Technology

Learning on the Fly

Kimberly Quiñonez says her professors

Kimberly Quiñonez says her professors encouraged her to overcome the challenges of online learning and succeed.

Springfield Technical Community College (STCC) had a long-term plan to ramp up online and digital learning.

But then came the COVID-19 pandemic, which forced staff working at STCC’s Center for Online and Digital Learning to move faster than they ever imagined. The staff includes instructional designers who assistant faculty in online teaching methods they incorporate into the classroom experience.

To maintain the safety of students, faculty, and staff, STCC moved classes to remote instruction last March. Instructional designers worked with faculty over the summer to prepare for fully online teaching in the 2020-21 academic year.

Faculty and administrators acknowledge the abrupt change to remote learning created great challenges and, for some, led to a less-than-ideal learning environment last spring. The sudden need to vacate campus resulted in the use of a slew of digital tools to communicate with students, including e-mail, FaceTime, Google Hangouts, and teleconferencing by phone and Zoom.

“Many faculty had been using online tools for the delivery of their face-to face classes. However, for those faculty who were not familiar with the digital space or whose courses required hands-on instruction, the ‘lift’ to online was great,” said Geraldine de Berly, vice president of Academic Affairs at STCC. “Since the summer, STCC invested in tools and training to assist faculty in developing the best truly online experience possible, including the hiring of a third instructional designer. Today, all online instruction occurs in a single platform, supplemented by class discussions using tools such as Zoom.”

The college anticipates spending nearly $800,000 through May 2021 helping faculty develop hundreds of online classes and labs, de Berly said. Today, more than 80% of the credits are offered online, a jump from 12% prior to the pandemic. Over the coming year, STCC also expects to expand its online-only options in addition to its existing in-person and hybrid degree programs.

STCC English Professor Denise “Daisy” Flaim has years of experience teaching students on campus in classrooms, so converting to the online experience was a big adjustment. But she worked closely with the online team at STCC to prepare for the transition, and now feels confident.

“We’re learning technology, just as the students are learning technology,” Flaim said.

Daniel Misco, an STCC alumnus and faculty member in the Digital Media Production program, said he’s well-versed in the online teaching world. Today, he teaches most of his classes online, but misses the face-to-face interactions with students in a classroom.

“I considered myself a face-to-face instructor,” Misco said. “I always excelled in the classroom. I liked being there with students to build a rapport with them.”

The adjustment to online learning can be challenging for some students, but Misco said faculty try to do all they can to help.

STCC student Kimberly Quiñonez, who is studying social work, expressed gratitude for the support from faculty over the past year.

“My experience as an online learner has really been amazing, although there were times I felt like quitting,” she said. “During those times, my professors would reach out and check in with the class. In the very beginning, I must admit that it was quite challenging transferring from an actual classroom to a computer. The classroom brought security to most students because questions were answered immediately. With online learning, you may have to wait for a response through e-mail.”

Aminah Bergeron, a mechanical engineering technology student at STCC, said she found benefits to online learning, noting she has “gotten the hang of it” after a year of studying from home.

“It wasn’t as difficult as I thought it would be. It was for sure different, but a ‘good’ different,” she said. “I didn’t have to worry about getting ready, or making sure my house doors are locked, or even thinking in the back of my head, ‘did I leave the faucet running?’ I just had to open my laptop and start my schoolwork, whether at my own pace or scheduled Zoom meetings. I also had much more time to research and not worry about calculating the time I’d lose on commuting from one location to another.”

STCC will return to face-to-face, on-campus instruction when it’s safe to do so, de Berly said, but will continue to offer online options and apply digital tools to enhance the classroom experience.

Manufacturing

Keeping Pace

Both the immediate and long-term future of the manufacturing industry will be defined by the development of a number of ever-evolving and prominent trends, according to the Assoc. of Equipment Manufacturers. These trends are poised to have a significant impact in 2021 (and, in many cases, beyond), so it’s critically important for manufacturers to develop a keen understanding of what they are, how they will grow over time, and how they will impact the industry and the customers it serves.

 

COVID-19 and Employee Safety

It almost goes without saying that workplace safety and compliance with CDC guidelines and OSHA regulations (along with local safety measures) will remain front of mind for manufacturers as 2021 gets under way. With COVID-19 cases on the rise in many parts of the world, organizations will need to continue to be vigilant in their efforts to protect employees. Doing so, however, requires a significant investment of time, effort, and resources on the part of company leaders.

While an efficient rollout of an effective vaccine for COVID-19 would bode well for an eventual return to normalcy for the manufacturing industry, the impact of such a rollout won’t be felt for some time. In the interim, organizations will need to continue practicing social distancing in the workplace, restricting visitors to facilities, encouraging the practice of good hygiene, and ensuring employees are healthy and fit for work before allowing them on the job.

It’s been nearly a year since the COVID-19 pandemic took hold in the U.S., and it remains a major challenge for manufacturers across the country and around the world. While companies do have plans and protocols in place to combat the virus, adhering to them and ensuring the health and well-being of employees is — and will continue to be — no small task.

 

Connected Workforce

The desire to equip workers with technology capable of allowing them to connect and collaborate from a distance has long been on a trend on the rise within the manufacturing industry. As older generations continue to leave the workforce and are replaced by younger employees, and the rise of the big-data era in manufacturing takes shape, finding tools and technologies to make an increasingly spread-out and remote workforce as productive as possible is a top priority for companies today.

As a recent article from McKinsey explained, the ongoing COVID-19 pandemic has led to an increased reliance on digital collaboration to establish and maintain a connected manufacturing workforce. An increased emphasis on safety and changes to work processes, in an effort to maintain social distancing and minimize physical contact, has led organizations of all types and sizes to adopt cutting-edge ways to allow for workers to communicate and interact virtually.

While the widespread impact of the pandemic has caused this trend (and the adoption rate of related tools and technologies) to grow, it remains critical for manufacturers to provide training and resources to employees as they try to maximize productivity from afar. Why? Because doing so is poised to pay off over time. According to McKinsey, “by digitizing processes to improve equipment management and optimize physical assets, digital collaboration tools give manufacturers ways to boost productivity while enhancing quality.” And those who do it first — and well — will achieve a significant competitive advantage.

 

Internet of Things

The Internet of Things (IoT) has long been a trend to watch in manufacturing, and this year is no different. As it continues to grow in prominence and becomes more and more widespread over time, IoT technology will drive value for the industry by allowing organizations to make measured, informed decisions using real-time data in an effort to increase efficiency and positively impact their bottom lines.

According to a recent study conducted by the MPI Group, approximately 31% of manufacturing production processes now incorporate smart devices and embedded intelligence. Furthermore, more than one-third of manufacturers have established plans to implement IoT technology into their processes, while 32% plan to embed IoT technology into their products.

IoT technology offers both remote-monitoring and predictive-maintenance capabilities, making it even more valuable for organizations looking to maintain visibility of equipment performance from afar. With the COVID-19 pandemic continuing to impact the industry in 2021, IoT technology will continue to be a go-to for manufacturers looking to maintain efficiency and productivity.

 

Localized Production and Near Sourcing

The rise of customization and personalization has given way to large opportunities for manufacturers willing — and, perhaps more importantly, able — to succeed in a localized economy. By rethinking the way products get out to the public, organizations can craft an ecosystem of smaller, flexible factories located near existing and prospective customers.

Manufacturers are used to thinking on a global level. However, shifting their focus to a local level, they may be better able to meet the ever-changing needs, wants, and preferences of the markets they serve. Consumers are making it abundantly clear that authenticity matters, and a localized approach to manufacturing is proving to be among the most effective ways to for organizations to respond accordingly.

The impact of COVID-19 also cannot be discounted. The pandemic has led manufacturers to re-evaluate and reconsider sourcing, largely due to supply chain disruptions (especially in the earliest days of COVID-19). As a result, manufacturers have made a concerted effort to bring their operations closer to where their offerings are sold, and there has been an increasing desire on the part of many companies to source raw materials from domestic suppliers. All this is being done in an effort to avoid pandemic-related disruptions and support the U.S. economy during these uncertain times.

 

Predictive Maintenance

It’s no secret that the ability for manufacturers to predict impending equipment failures and — more importantly — prevent equipment downtime is incredibly impactful to their bottom lines. Advancements in technology now allow organizations to do just that (and much, much more).

The benefits, according to a recent blog post from EAM-Mosca Corp., showcase why predictive maintenance (PM) is so valuable to organizations today. PM helps companies reduce costs, decrease failures, minimize scheduled downtime, and optimize parts delivery

Effectively conducting predictive maintenance is no easy task, however. Adopting a (successful) predictive maintenance model requires manufacturers to gain insights into the variables they are collecting and — more importantly — how often those variables present themselves on factory floors. Therefore, it’s imperative for manufacturers to possess accurate and relevant knowledge about their equipment. They must know what previous failures have taken place, and they need to make decisions around lead time — becausem the closer to failure a machine is allowed to go, the more accurate the prediction will be.

 

This article was written by the Assoc. of Equipment Manufacturers.

Autos Special Coverage

Revving Up

By Mark Morris

 

In the early days of the pandemic, people huddled in their homes while streets were abandoned by nearly all traffic. Area auto dealers, understandably, braced for a slow year.

Instead, sales for many dealers hit record highs in 2020.

It was that kind of year for Jack Sarat, dealer principal for Sarat Ford, who said the pandemic definitely kept sales down in March. “After that, business rebounded, starting with a strong finish in April, and then every month following kept getting better.”

Auto-manufacturing facilities and many of their subcontractors around the world experienced shutdowns early in the pandemic. Steve Lewis, owner and president of Steve Lewis Subaru, said the delays kept inventories low at many dealerships and were also a factor in sluggish sales early in the spring.

“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build,” Lewis said. “Believe it or not, 2020 was our best year ever.”

“After [March], business rebounded, starting with a strong finish in April, and then every month following kept getting better.”

Even with inventory delays, Lewis continued to take pre-sell orders, so when new cars began rolling into the lot, nearly 65% of them were already sold.

Gary Rome, president of Gary Rome Auto Group, said the Korean factories where Hyundai and Kia are made were fortunate, with only brief shutdowns due to COVID-19 concerns.

“Hyundai and Kia never took their foot off the gas when the pandemic hit,” Rome said, which set the table for a strong year. “Our sales increased nearly 20% in 2020; it was one of the best years we’ve ever had.”

Every year, Presidents’ Day represents the first big sales push for local dealerships. Sarat pointed out that Presidents’ Day as a sales event tends to be more of a Northeast phenomenon.

Jack Sarat (left) and Jeff Sarat

Jack Sarat (left) and Jeff Sarat are among many area dealers reporting strong sales down the stretch in 2020 and into 2021.

“In Virginia, if you ask about the Presidents’ Day sale for cars, they don’t even know what you’re talking about,” he said, adding that ‘Presidents’ Month’ might be a more accurate name because the manufacturers heavily promote sales incentives throughout February.

With an already strong January in the books, Lewis approaches this Presidents’ Day understanding each year is a different experience.

“Last Presidents’ Day, we had a great weekend. Some years sales are magnificent, other years we are slow,” he said, adding that he defines the weekend as running from the Thursday before the holiday through Presidents’ Day Monday.

Good weather is the key to strong President’s Day sales, Rome said. Encouraging car sales on Presidents’ Day has often been a way for people to start thinking about spring and new beginnings.

Steve Lewis

“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build. Believe it or not, 2020 was our best year ever.”

This year, they may be especially clamoring for spring; on top of the normal winter doldrums, everyone has endured nearly a year of pandemic disruption and isolation. In that environment, auto dealers expect plenty of pent-up demand.

 

Rolling Along

Each of the dealers who spoke with BusinessWest shared his thoughts on why people continue to buy cars during the pandemic.

Those who did not suffer a job loss due to COVID-19 were able, in many cases, to increase their savings. After months of staying inside people, Lewis said, people started doing the math and realized that, with used-car values remaining high, they could trade up to a newer vehicle without spending lots of money.

“They capitalized on it, we capitalized on it, and everybody’s happy,” he added.

Sarat talked about customers who canceled vacations that involved air travel but still wanted to get away. “Several customers told me they were buying vehicles just so they could drive to their vacation,” he said.

While zero-percent interest rates across the industry have helped reluctant buyers, Rome said a job-assurance program gave Hyundai customers more comfort about making a purchase. “Through this program, if you buy a car and lose your job, Hyundai will make your payments for up to six months.”

He also believes battling COVID fatigue played a role in many vehicle-purchasing decisions. “People started realizing that life is short, and this might be a good time to do something nice for themselves.”

The pandemic has produced an interesting economic situation in which many homeowners made big investments in their homes, resulting in an extremely successful year for construction and landscape contractors. Sarat reaped the benefit of the contractors’ good fortune in his commercial-truck business. Contractors tend to replace their vehicles in December to obtain a tax credit against their income for the year, so it’s not unusual to see more sales activity then. Thus, the boom in home improvements in 2020 contributed to record sales in December for Sarat.

“We sold twice as many Super Duty trucks than a normal December,” he said. “Contractors were replacing vehicles and, in some cases, adding to their fleet.” Super Duty trucks are a popular choice among contractors because they can be adapted to a variety of trade professions.

While online shopping and purchasing a vehicle are not new, the pandemic brought out more people interested in using this no-touch approach to buying. Before the pandemic, Lewis noted, nearly 45% of his business was generated from the internet, where customers would do their research online, then come in for a test drive before buying the car. Since the pandemic, that’s increased to 70%.

“What’s different now is that people are taking delivery of vehicles they’ve never seen or have driven,” he said, adding that customers who do this are relying on the brand’s reputation.

Website upgrades since the pandemic allow Rome’s customers to complete their entire vehicle purchase online. From figuring out the value of a trade-in to applying for credit, the entire purchase or lease can be generated online and finished off with an electronic signature. “We will even bring the car to your home to test drive if you want,” he added.

Before internet research, the average customer would visit three or four dealers before purchasing a vehicle. Sarat cited industry statistics showing that customers now visit, on average, only 1.3 dealers before making a purchase. “Because they’ve done the research online, they’ve usually made a decision on what they want to buy before they even come in.”

 

Shifting Gears

For several years, buying trends have shifted away from passenger cars and toward SUVs and crossover vehicles.

“SUVs make up 68% of our sales, compared to sedans,” Rome said. “It used to be the inverse.”

He credits the shift to SUVs handling more like a car than earlier models, which were built on truck frames. He also noted that, as buyers age, they prefer a higher vehicle to make it easier to enter and exit.

“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong . I think it’s going to be an exciting year.”

Nearly every model in Lewis’ showroom is an SUV or crossover vehicle. “The crossover is really a replacement for the old station wagon,” he said. “It’s designed to open up the hatchback, put the back seats down, and throw in your junk.”

Ford is another of the many manufacturers moving away from traditional sedans and toward crossovers and SUVs. In addition, Sarat sells one of the most popular vehicles in the U.S., the Ford F-150 pickup truck, calling it his “bread and butter.”

Ford recently released a hybrid version of the popular pickup truck, and the new Ford Mustang Mach E is an all-electric vehicle. And Sarat has made a move toward all-electric vehicles among commercial cargo vans as well. Jeff Sarat, general sales manager, said these vans can run up to 300 miles a day and then plug in for recharging overnight.

“For business owners, it significantly reduces the cost of ownership,” he said, noting that an electric motor eliminates traditional maintenance and substantially reduces the vehicle’s carbon footprint. “We’ve got a lot of good things coming down the road, and our electric vehicles are going to be on people’s shopping list when they look for their next car.”

While hybrid and electric vehicle sales represent about 5% of Rome’s sales, he expects that number to rise to 10% soon.

“The manufacturers have jumped into this market with both feet. Within two years, we expect to offer a dozen hybrid or electric vehicles,” he said, adding that hybrid vehicles can improve mileage up to 140 miles per gallon, while some all-electric vehicles can go 386 miles on a full charge.

“In some ways, it’s like owning an iPhone, where you want to get a new one every three years to stay up on the latest technology,” he added.

Another shift this year has taken place in the used-car market. The economic shutdown last spring affected new-car production, and dealers found they had more empty spaces on their lots. “When fewer new vehicles are coming in, it also creates a lack of used inventory because people are not trading in their cars,” Sarat said.

For this reason, all the dealers we spoke with said used-car prices stayed high last year and will continue to remain strong in 2021.

Rome acknowledged the strength of the used-car market, but said his business runs somewhat counter to the normal trend.

“In our world, we sell about two new cars to every used car,” he explained. “If you can buy a new car with a 10-year, 100,000-mile warranty for about the same price as a used car, why would you buy the used car?”

 

No Slowing Down

With his business finishing 2020 with a 19% sales increase, Rome predicts an 18% increase on top of last year’s success for 2021.

With his dealership in Hadley, Lewis noted that he is located two miles from five colleges and universities. When students and faculty all abandoned campus early in the pandemic, it cut deep into his business. He is hopeful these sales will return as everyone comes back to campus.

“Despite all that, we had our best year ever, and we’re hoping 2021 is as good as 2020,” he said.

Jack Sarat anticipates at least some supply disruptions due to COVID in 2021, but remains optimistic for a good year ahead as well.

“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong,” he said. “I think it’s going to be an exciting year.”

Community Spotlight Special Coverage

Community Spotlight

By Mark Morris

Paul Bockelman said he’s worked with chamber and BID leaders

Paul Bockelman said he’s worked with chamber and BID leaders to address the urgent needs of the business community during the pandemic.

 

Epictetus, the Greek philosopher, first made the observation, “it’s not what happens to you, but how you react to it that matters.”

While Epictetus did not live in Amherst, town officials and business leaders there have certainly adopted the philosopher’s adage in their robust efforts to return the town to vitality in the face of a pandemic.

Last March, when COVID-19 began to affect life in communities everywhere, Amherst took a broader hit than most because UMass Amherst, Hampshire College, and Amherst College all shut down earlier than other area institutions.

Gabrielle Gould, executive director of the Amherst Business Improvement District (BID), said the suddenly empty campuses posed a shock to the system.

“We lost 40,000 people in a 48-hour period,” she recalled. “It was like turning off a light switch.”

With college closings and retail activity coming to a screeching halt, Amherst Town Manager Paul Bockelman said his town lost its two major industries because of the pandemic. Still, he noted, “despite all that, the town has been resilient, and we are prepared to emerge from the pandemic in a very strong way.”

Early on, Amherst quickly mobilized a COVID-19 response team as Bockelman and the department heads of the Police, Fire, Public Works, and other departments met daily to strategize, he explained. “We prioritized the health of our workforce because we wouldn’t be able to help residents if our fire, police, and DPW staff weren’t healthy.”

The next priority was to maintain continuity of government functions. Amherst migrated town staff to remote work and incorporated Zoom meetings to assure key bodies such as the Town Council and the School Committee could keep moving forward. Permit-granting committees soon followed.

“We prioritized the health of our workforce because we wouldn’t be able to help residents if our fire, police, and DPW staff weren’t healthy.”

As plans were coming together to allow outdoor dining, the Town Council passed a special bylaw to delegate simple zoning decisions to the building commissioner. This move sped up the permitting process and cut down on much of the bureaucratic red tape.

“For example, permits for serving alcohol outdoors or expanding the footprint of a restaurant could be done through one person instead of going through an often-lengthy permitting process,” Bockelman said.

To address the urgent needs of the local business community, he also met weekly with Gould and Claudia Pazmany, executive director of the Amherst Area Chamber of Commerce. The BID and chamber share office space on Pleasant Street, so Pazmany and Gould worked together to learn about the many grants available to local businesses impacted by COVID-19. The main goal was to help owners stay in business.

Claudia Pazmany

Claudia Pazmany says one of her most important roles has been helping business owners navigate the grant system.

“We knew that closing their doors would mean closing their doors forever,” Pazmany said. “That’s what we were trying to avoid.”

 

Granting a Reprieve

Before the pandemic, the chamber would host 56 events in a typical year. Pazmany said she quickly moved to digital events to keep everyone together. “We went from 56 events to 56,000 connections on Facebook and other social media.”

More importantly, in addition to helping local businesses apply for the federal Paycheck Protection Program (PPP), Gould and Pazmany have successfully secured grant programs at the state and federal level.

A number of Amherst businesses received grants through the state COVID-19 Small Business Grant Program, which provided a total of $668 million for Massachusetts businesses. Amherst also secured $140,000 in federal Community Development Block Grant funds for local businesses.

State Sen. Joan Comerford helped the Chamber and BID to fund the recently formed Relief and Resiliency Microgrant Program. Originally designed to provide $500 microgrants, Pazmany said they were able to secure matching dollars, so $1,000 grants will soon be awarded to 18 of Amherst’s small-business owners in the first round of the program.

“The microgrant money will help defray some costs and allow people to keep going,” she said. “Many of these business owners are not even paying themselves; they just want to pay their bills.”

One of the more important roles Pazmany and Gould have taken on involves helping business owners navigate the grant system. Whether it’s identifying eligible funding, helping to fill out forms, or solving technical issues, Pazmany said they are not limiting their support to just chamber members. “Right now, it makes no difference if you are a chamber member or not. If you need help and you cross our threshold, we will help you.”

While outdoor dining and takeout have enabled restaurants to keep their doors open, the BID launched an effort to do more, buying meals from local restaurants and giving them to families in need. The effort began two months ago with the moniker December Dinner Delights and recently received funding to continue through April. Gould sees this as a win-win.

“We pay the restaurants $1,500 twice a week to help them sustain business, and we provide meals for families in our community,” she noted.

Another effort to support local business involves a gift-card program run by the chamber. Launched at the beginning of the holiday season, the gift cards can be redeemed at more than two dozen local businesses, from restaurants to a cat groomer. Pazmany said she has had to reorder cards to keep up with demand. “It works because you are able to give someone a gift and, at the same time, support a small business; it’s the best type of reinvestment in our community.”

As for town-run programs, last spring, municipal leaders had to figure out what to do about the farmers’ market it runs every Saturday from April through November. In the past, it was held in a cramped parking lot that would not conform to social-distancing protocols. Because the town common had no activities scheduled, the farmers’ market set up there — and had its most successful year ever.

“Right now, it makes no difference if you are a chamber member or not. If you need help and you cross our threshold, we will help you.”

“Our town common is a bucolic setting, and people who were cooped up all week could safely come and buy things,” Bockelman said. The manager of the farmers’ market reported the average sales week in 2020 equaled the best sales week in 2019, and the booths sold out of their products every week.

The farmers’ market was a highly visible way to revitalize interest in Amherst, as are continuing “quality-of-life developments,” as Bockelman called them, such as the newly opened Groff Park and the building of a new playground at Kendrick Park.

But smaller acts, like making picnic tables available in parks and other public places, were popular as well, he added. “As soon as we put out the tables, people were immediately using them. It was awesome.”

 

Forward Thinking

Looking to the future, Amherst is making decisions on four major capital projects slated for construction in 2022. On the drawing board are a new elementary school, a new library, a new Public Works facility, and a new fire station.

“We are trying to incorporate these projects into our ongoing budget so the taxpayer does not have to take on too much of a burden,” Bockelman said.

The desirability of Amherst as a place to live keeps housing prices high, which he calls a two-edged sword because it hurts the town’s ability to build a diverse socioeconomic community.

“People value diversity in Amherst,” he said. Still, he added, “it’s much more diverse than most people realize, especially our school district.”

To deepen that diverse profile, Amherst is looking to invest in property to develop more affordable housing. Bockelman pointed to a recently approved development on Northampton Road and a potential land purchase on Belchertown Road as additional projects in the works. “The town is willing to make the investment to develop and retain affordable-housing units in Amherst.”

To better address diversity in business, the chamber makes available an open-source document for proprietors who want to identify their business as being run by a woman, minority, or LGBTQ individual.

Pazmany said it’s simply good for business, noting that “we are getting steady requests from people who want to do business with various self-identifying businesses.”

Amherst at a Glance

Year Incorporated: 1759
Population: 39,482
Area: 27.7 square miles
County: Hampshire
Residential Tax Rate: $21.82
Commercial Tax Rate: $21.82
Median Household Income: $48,059
Median Family Income: $96,005
Type of Government: Town Council, Town Manager
Largest Employers: UMass Amherst; Amherst College; Hampshire College
* Latest information available

One element in the town’s strategy emphasizes Amherst’s potential as a tourist destination. Several national news articles have suggested that this decade may become a second “roaring 20s” with a renewed emphasis on cultural attractions. If that’s so, Pazmany pointed out, Amherst has plenty to offer, such as Museums10, a collaborative of 10 area museums, of which seven are located in town. Together, the museums cover various aspects of history, art, literature, and the natural world.

“In a normal year, Museums10 will bring more than a half-million people to the area,” she said. “The Emily Dickinson Poetry Festival itself is a global event.”

For the more immediate future, the plan is to have outdoor dining up and running by April 1. The BID was able to supply enough table umbrellas and heaters during the summer to boost last year’s effort. Because there are so many barriers in place to ensure safe outdoor dining, the BID also paid 35 artists to turn the plain concrete into a medium to express themselves.

“The barriers became nice displays of public art, and they give downtown a bit of an art-walk feel,” Gould said.

Simple touches like the artwork and adding planters around town generated positive comments from visitors and business owners alike. Pazmany appreciated the boost of confidence. “In this next phase, we just want our businesses to be up and running so they can take a paycheck and start to rehire people.”

Most Amherst leaders, in fact, look to the coming year with great anticipation. Bockelman noted that the town has several fundamental strengths, including the university and colleges. Pazmany added that UMass has already reported an increase in enrollment for the coming fall.

Gould admits that pushing forward on grants and other relief efforts helped Amherst through the worst of the pandemic. “Despite how hard everyone was hit, we’ve created a resiliency that kept our businesses here.”

Bockelman agreed. “Everyone’s efforts worked because they were sequential and were patiently done. We just kept moving forward.”

Epictetus would be proud.

Features Special Coverage

Entering a Partnership?

 By Brenden Cawley and Gabriel Jacobson 

 

The COVID-19 pandemic has caused several partnerships local to Western Mass. to either consider or actually effect a change in ownership. When navigating the complexities of these changes in ownership, partnership basis is a vital component.

For tax advisors and taxpayers alike, basis would be better as a four-letter word. However, understanding the basics of cost basis can prevent future headaches.

 

Understanding the Basics of Basis

It stands to reason that the cash spent or provided to acquire an asset would be the cost (basis) of that asset. However, when analyzing partnerships, understand the concepts of ‘inside’ and ‘outside’ basis. The difference is a shift in perspective. The outside basis is established when the partner joins or forms the partnership through the contribution of cash (or property, which adds additional complexity). The partnership then uses that cash to purchase assets.

The cash outlay to acquire those assets establishes the total inside basis of the partnership. Based on each partner’s ownership, a share of the inside basis of the individual assets is assigned accordingly. This inside basis does not fluctuate with changes in market value of the assets. When a tax year closes, the partners each receive a Schedule K-1 and adjust their outside basis by the income, expense, gain, or loss disclosed on the Schedule K-1.

Brenden Cawley

Brenden Cawley

“For tax advisors and taxpayers alike, basis would be better as a four-letter word. However, understanding the basics of cost basis can prevent future headaches.”

Over the life of the partnership, cash or property will be distributed to the partners, which will decrease their outside basis. The inside basis of the partnership will similarly be reduced as the cost of assets is removed from the books through sale or distribution. When the partnership is in need, the partners may contribute additional cash or property. Additional contributions have the same positive impact on outside basis as the initial contribution that formed the partnership or acquired an interest.

As time goes by, differences can arise between the inside and outside basis of the partner(s). As the inside and outside basis of the partnership fall out of alignment, the partners can experience negative tax consequences. Each taxpayer is responsible for maintaining their own outside basis, so consult your tax advisor if questions arise. Through a Section 754 election, the partnership has an opportunity to avoid these consequences.

Like anything worthwhile, this election takes work. It is perhaps especially laborious if the partner or partnership have not been actively tracking the inside and outside basis disparity. The partners’ Schedule K-1s could offer a lifeline. Prior to 2020, each partner’s capital account in item L could be prepared on a book, GAAP, Section 704(b), or tax basis. It is possible that the partner’s capital account prepared using book, GAAP, or Section 704(b) is a reasonable approximation for the inside basis of the partner.

This is a highly simplified approach that needs to be vetted with the partnership’s tax advisor. Starting in 2020, the IRS has mandated that Item L of Schedule K-1 must be prepared on a tax basis. The partner’s tax capital account is a good starting point for both outside and inside tax basis. Again, this simplified assumption needs to be discussed with a tax advisor. Please note that tax capital reported on the Schedule K-1 is not equivalent to outside tax basis. Instead, outside tax basis considers liabilities of the partnership for which the partner is individually responsible and partner-specific adjustments.

 

Everyday Example

In year one, Ann and Bob purchase a building for $200,000 and split the cost evenly, giving them each 50% ownership in ABC Partnership. Initially, they each had outside basis equal to their inside basis of $100,000. In year two, as a result of COVID-19, Bob wants to exit the partnership. The building has appreciated in value to $300,000, so he sells his interest in ABC Partnership to Carl for $150,000. Bob will recognize a $50,000 gain in year two as a result of the excess cash received compared to his cost basis.

First, let’s imagine the partnership does not make a 754 election at this point. Carl steps into Bob’s inside basis of $100,000. However, his outside basis equals the total amount he paid, or $150,000. In year three, Ann and Carl decide to sell the building (for simplicity’s sake, let’s assume no depreciation has been expensed), which is still valued at $300,000 and therefore results in a gain of $100,000. Both Ann and Carl receive Schedule K-1s with a $50,000 gain for the year because they both had an inside basis of $100,000 prior to the sale.

Gabriel Jacobson

Gabriel Jacobson

“Partnerships may be relatively easy to form, but the tax implications can be very complex.”

After recording the gain, their inside basis increases to $150,000. Ann’s inside and outside basis remain aligned, but Carl’s basis disparity persists as the $50,000 of gain impacts his inside and outside basis in the same manner. In year four, Carl and Ann decide to dissolve the partnership. At this point, the $300,000 cash they received from the sale of the building is distributed to both partners evenly. Ann receives $150,000 in cash, which equals her outside basis. For this reason, she recognizes no gain or loss on the dissolution of the partnership.

Alternatively, Carl recognizes a $50,000 loss outside of the partnership since his total outside basis is $200,000. At this point Carl is kicking himself because he paid taxes on a $50,000 gain in year three only to recognize a loss of $50,000 one year later. If Carl does not have any capital gains in year four, he can only utilize $3,000 of the capital losses on his tax return. The remaining losses are carried forward indefinitely.

Now let’s imagine the partnership made the 754 election when Carl purchased his 50% interest in year two. At that time, his inside basis would have been increased by $50,000 to match his outside basis. The partnership would have adjusted Carl’s inside basis in the building to $150,000, matching his outside basis. Then in year three, when Ann and Carl sell the building, Carl would not recognize any gain because his inside basis matches his share of the sales proceeds ($150,0000).

In year four, when the partnership dissolved, Carl would not recognize a loss on the distribution of cash from the partnership because his portion of the partnership’s cash balance ($150,000) equals his outside basis ($150,000). Carl avoided the timing issue regarding any taxable gain on the building sale and any loss on dissolution by making the 754 election.

 

On an Income-tax Return

If Carl and Ann decided to hold onto the building instead of selling in year three, Carl could deduct from his Schedule K-1 the basis adjustments related to the Section 754 election. The total Section 754 adjustment of $50,000 is reduced to zero over time using the same mechanics as the depreciation on the building. The 754 adjustment reduces both Carl’s inside and outside basis equally. The benefit is that he will receive deductions on line 13 of his K-1 against income on his tax return each year until the $50,000 is fully deducted.

Partnerships may be relatively easy to form, but the tax implications can be very complex. Section 754 is important for a partner purchasing an interest and for existing partners looking to secure a new partner to help their business. Accurate tracking of inside and outside basis is of the utmost importance to reduce negative tax consequences down the line.

 

Brenden Cawley is a senior associate at the Holyoke-based accounting firm Meyers Brothers Kalicka P.C., and Gabriel Jacobson is an associate with the firm; (413) 536-8510.

Class of 2021

For This Youth Leader, Opportunities Make All the Difference

By Mark Morris

Leah Martin Photography

Bill Parks like to tell the story of a former ‘Youth of the Year’ at the Boys & Girls Club of Greater Westfield who was discussing possible careers with a staff member.

“She wanted to be a marine biologist but said, ‘I know that will never happen,’” Parks recalled, but the staffer assured her that her desire was most certainly possible. This led to numerous conversations with the young woman about what she could do at the club and in her studies to make this dream a reality.

“He convinced her to think in terms of ‘yes, I can do this,’” Parks said. “Today, she is working in Florida as a marine biologist.”

And it’s not a surprising outcome to someone who believes life is about opportunities and relationships. As the club’s executive director, he follows this guiding principle, which, as much as anything else, is responsible for his being named a Difference Maker.

His own experience with the Boys & Girls Club actually began when he was a young boy attending the Marlborough Boys Club. He enjoyed going there because it was a place to meet up with friends, play basketball, and take part in activities. At that time, the club was for boys only, but Parks credits his sister with breaking the gender barrier and becoming the first girl to become a member.

“We snuck her into a Halloween party one year,” he said with a laugh. “After we did that, the staff decided to allow girls be part of the club.”

Once in high school, the club provided Parks his first job. “I worked at the gym, in the game rooms, and at the front desk,” he remembered. “It taught me how to deal with the public and how to work with kids.”

As a basketball player for Marlborough High School, Parks was recruited to play basketball at Fitchburg State College, allowing him the opportunity to become the first member of his family to attend college.

“That small gesture, to make sure I could go back to school, had a huge impact on my life. I’ve never forgotten it, and it’s been a goal of mine to always pay that forward.”

But the Division III college does not award scholarship money for athletes, and his parents — his father worked in a shoe factory, and his mother provided day-care services in the home — couldn’t afford to send him. To make matters worse, a local bank rejected his student-loan application.

Parks was worried he would have to give up his college plans, but when the club’s executive director heard about the rejection, he got involved, and gave Parks the name of a banker at First National Bank of Marlborough who was willing to approve the loan request. “You’re all set,” Parks recalled the director telling him. “You’re going back to school.”

It’s a story he recalls often as a moment that changed him forever. “That small gesture, to make sure I could go back to school, had a huge impact on my life,” he said. “I’ve never forgotten it, and it’s been a goal of mine to always pay that forward.”

By paying it forward through his role at the Boys & Girls Club of Greater Westfield — by helping other young people act on opportunities they don’t see as possible — Parks is truly a Difference Maker.

 

View to the Future

While the story of the marine biologist is inspiring, Parks told BusinessWest, it’s not really about any particular job.

“It’s more important for young people to see the opportunities they have to develop their futures,” he said. “Our latest campaign is called ‘Building Futures’ because that’s who we are and what we do.”

Education has been a driving force in Bill Parks’s life

Education has been a driving force in Bill Parks’s life, and he emphasizes its importance to those he serves.

Parks’ professional career with the Boys & Girls Club began in Eastern Mass., serving as executive director for clubs in Billerica and Waltham. Before he joined the Westfield club in 2004, he spent two years with the Jason Foundation, where he helped introduce STEM programs to Boys & Girls Clubs on a national level.

While he enjoyed the work at the foundation, he missed the interaction with all the staff and families who form the culture of a Boys & Girls Club. He found that again in Westfield, which was, in some ways, a return to his geographic roots, as he was born in Springfield and moved to Marlborough as a young child.

Applying what he’d learned in his earlier executive roles, Parks began to lay out a vision and a course of action for the Westfield club. He also understood that he could not accomplish his goals alone but needed to convince others to get behind his vision.

“One of the things I am most proud of is that people in the community wanted to be part of the vision we had for the club,” he said.

When he started in Westfield, the club provided services for nearly 100 children every day with an annual budget of $600,000. Now the club provides day-care, educational, and meal services for 350 children and teens every day with an annual budget of nearly $3 million.

Parks credits his staff for helping to make the vision a reality. Many staffers have long tenures on the job, and several started there even before he arrived.

“When you can maintain your existing staff, it allows you to do big things because you are not constantly changing people and roles,” he said, adding that the staff has also grown to 12 full-time and more than 40 part-time workers, making the organization a “decent-size employer in the city.”

A dedicated and consistent staff that gets results, he noted, makes it easier to attract potential donors. One donor told Parks he supports the club because he is confident that the contribution will generate efforts to help young people succeed, adding, “I like what you are doing, and I believe it will have an impact on our community.”

The role of Boys & Girls Clubs today has greatly changed from the days when Parks played basketball with his friends in Marlborough. Once he began his career there, he saw education becoming a more vital part of the organization’s mission.

Bill Parks says, the club became a critical resource

During the pandemic, Bill Parks says, the club became a critical resource for both kids with their remote learning and their parents who had to work.

“It was easy to see that, in addition to having a gym director and game-room director, clubs also needed an education director,” he said, adding that relationships with the School Department and the community at large are essential to his club.

“We are a part of the city of Westfield,” he said. “We think about what’s outside the walls of our club and how to help the overall community because, in the long run, that’s going to help the kids who are members of the club and kids who are members of the community.”

In 2011, the Westfield club was licensed to provide daycare for 77 children. Concerned he was running out of space and anticipating increased demand, Parks led a $3 million fundraising campaign titled “Raise the Roof.”

“We literally took the roof off the gym, raised the gym up to the second floor, and built classrooms underneath for the licensed childcare program,” he said, adding that the club also expanded the education room and technology lab. Now, the facility is licensed to provide daycare services for 200 children.

 

Learning Experiences

When COVID-19 hit, the Boys & Girls Club of Greater Westfield was available for virtual learning for students, and in September, the club became a remote-learning site for the School Department. The city of Westfield provided every school-age child with a Chromebook tablet, and, with club staff making sure to keep age groups separated and properly distanced, students are linked into the school system for a full day of learning via their Chromebooks. Middle-school and younger kids make up most of the students in this program, which has proven to be a vital resource for families.

“Some of the students couldn’t link in from home, while others have parents who have to leave the house for work during school hours,” Parks said. “With no one at home to take care of them, they have the option to come here and not miss school.”

With all those young minds at work, the club has become a significant meal provider for children as well.

“Parents can drop off kids at 7:30 in the morning, and they will get breakfast, lunch, a snack, and a hot meal every day,” he explained. The club also provides meals at three public-housing sites, resulting in the staff serving nearly 600 meals a day. Like remote learning, Parks sees the meals program as essential to the organization.

“A working parent can pick up their kid at the club and know their homework is done and they’ve been fed,” he said. “It allows parents to interact more with their kids instead of rushing around to put a meal on the table.”

Right now, Parks has plans to expand the club and its services further with a 15,000-square-foot addition, which will allow the club to offer services to an additional 100 children.

“We think about what’s outside the walls of our club and how to help the overall community because, in the long run, that’s going to help the kids who are members of the club and kids who are members of the community.”

The building plans originally called for an 11,000-square-foot expansion, but the pandemic forced engineers to increase the square footage per child and redraw the now-larger plans. The addition is scheduled to be completed by August with a September opening, in time for the new school year.

For Parks, the new structures are exciting, but the real payoff is the impact the programs have on people’s lives. “One of the things I’m most proud of is that people in the community say, ‘let’s call the Boys & Girls Club because they can probably help us or help these kids.’”

Thinking back to the time he got some needed help, Parks said he learned, years after graduating from college, that the banker who approved his student loan was on the board of directors for the Marlborough club. Likewise, he credits his current board of directors as the “guiding force” that supports all the Westfield club’s efforts, and points with pride to the cross-section of community members who make up the board.

“It’s not always easy to encourage people to be on your board,” he said. “We’ve been fortunate that people have reached out to us with an interest in joining ours.”

They are people, he added, who are willing to step up and help a kid in the community, and who recognize the value of paying it forward. His future was changed when he was able to go to college, and he’s dedicated his career to changing lives and finding ways to truly make a difference.

Accounting and Tax Planning Special Coverage

Reading the Fine Print

By Julie Quink

 

The economic stress created by the COVID-19 pandemic compelled business owners and individuals to apply for the relief funds provided by the Small Business Administration (SBA) in the form of Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL).

The rollout of these programs came at a time when the reality of the pandemic began to unfold, creating a frenzy for businesses and individuals to apply for the funding, in some cases, before the funding ran out.

Before the ink on the guidance and requirements for these stimulus funds was dry, applications for the funding were being processed, and funds were in the hands of businesses and individuals. To expedite getting funds to those who needed them, much of the clarification about the use of the funds, taxability of the funds, and criteria for forgiveness were ironed out after the funding was in hand and being spent by the recipients. What ensued was months of additions to the SBA’s frequently-asked-questions (FAQ) document clarifying the eligible uses of the funding to ensure forgiveness and further attempts by Congress and the SBA to adjust program requirements as the pandemic continued.

More than 50 FAQs were issued to clarify the PPP requirements, and 20 relating to the EIDL loans.

In the frenzy to obtain the funding for the PPP and EIDL loans, it became clear that not everyone read the fine print, or that the fine print changed as clarity was provided for these programs. The fine print provided recipients with additional requirements for the funding they may have been unaware of at the time of application or even during the spend-down period.

As trained professionals, accountants and business advisors spent months learning the requirements and pivoting as they changed. It would be unreasonable to assume that those who received the funding could keep up with the fast-paced changes that were occurring, including the fine print. For accountants, there have been times we could barely keep up with the changes.

Julie Quink

Julie Quink

“With the second round of PPP funding recently released and requirements more recently clarified, reading the fine print should hopefully not be such a daunting or surprising task.”

The result is that those receiving the funding need to be aware of those items in the fine print for the PPP funding and the EIDL loans that may impact them.

 

EIDL

Recipients of the EIDL loans, which could be up to $2 million in amount, were required to sign loan paperwork, outlining the terms of the funding. In the fine print of these loan documents are provisions that the borrower should look out for and be aware of. Some of the provisions are:

• For loans under $25,000, collateral is not required. For loans of more than $25,000, the SBA is provided collateral through business assets, current and future. Transfers or sales of collateral, except inventory, require prior SBA approval. In addition, prior approval is required by the SBA in the event these business assets will be used to secure other financing;

• Borrowers are required to keep itemized receipts, paid invoices, contracts, and all related paperwork for three years from the date of disbursement;

• Borrowers are encouraged to the extent feasible to purchase only American-made equipment and products with the proceeds of this loan;

• Borrowers must keep all accounting records five years before the loan and three years after in a manner satisfactory to the SBA;

• Borrowers must agree to audits and inspection of assets, if requested by the SBA, at the expense of the borrower;

• Borrowers have a duty to provide hazard insurance on collateral and may be asked to provide proof;

• Within 90 days of the borrower’s year end, financial statements, in the format specified by the SBA, are required to be furnished by the borrower;

• The SBA may require a review-level financial statement for a borrower upon written request by the SBA at the borrower’s expense;

• Prior approval from the SBA is required for distributions of the borrower’s assets to the owners or employees, including loans, gifts, or bonuses;

• Borrowers must submit, within 180 days of receiving a loan, an SBA certificate or resolution. For most borrowers, the SBA has followed up or is following up on this requirement now;

• Default under the provisions may result if a borrower merges, consolidates, reorganizes, or changes ownership without prior SBA approval; and

• The loans can be prepaid, without penalty, if the borrower does not need the funds or secures other financing.

For most borrowers, the requirements may be routine considerations, but for others, these may be new requirements.

 

PPP

In the fine print of the PPP loan documents are also provisions that the borrower should consider, as follows:

• For borrowers who received a PPP loan greater than $2 million, the SBA has indicated it will likely audit those borrowers for compliance with spending requirements;

• Although Congress has confirmed that the proceeds of the PPP loan are not taxable and the expenses paid with PPP are deductible, some states, such as Massachusetts, are not following the federal laws relative to forgiveness of the PPP loans as they have their own rules. For individuals in Massachusetts, the loan forgiveness is taxable income. This affects sole proprietors, S-corp shareholders, and partners of partnerships. A bill, co-sponsored by state Sen. Eric Lesser, state Rep. Brian Ashe, and five other co-sponsors, has been proposed to allow for non-taxability of the forgiveness amounts in Massachusetts;

• Depending on when the PPP loan was funded, the borrower may have a repayment term of two or five years for the loan; and

• Although forgiveness may be granted, the borrower should retain the records used for forgiveness. Generally, most records should be retained for seven years.

 

Bottom Line

Navigating the fine print is key for those who received the PPP and EIDL loans. The navigation becomes increasingly more difficult when the requirements continue to change and the funds have already been received and used to operate the business.

With the second round of PPP funding recently released and requirements more recently clarified, reading the fine print should hopefully not be such a daunting or surprising task.

 

Julie Quink is managing partner with West Springfield-based Burkhart Pizzanelli; (413) 734-9040.

Insurance Special Coverage

Are You Covered?

By Mark Morris

Christine Fleury

Christine Fleury says making alterations to the home — a common sight during the pandemic — could change insurance needs.

Call it the great migration indoors.

When the pandemic first hit, many people were forced to quickly convert their homes into offices, schools, and entertainment centers. Some in the insurance industry predicted this might lead to more homeowners insurance claims. In reality, it didn’t.

Similarly, as people spend more time in their homes, they also depend more on their water, electrical, and heating systems to work. While some insurance claims have been filed due to these systems failing after increased use, the increase has not been notable.

In fact, Christine Fleury, Personal Lines manager at Encharter Insurance in Amherst, said companies have actually seen a decrease in severe claims from homeowners. “As people spend more time at home, they are catching that large loss before it happens.”

Corey Murphy agreed, noting that, because people are home, they are noticing and taking care of seemingly minor problems like leaky gutters.

“As people spend more time at home, they are catching that large loss before it happens.”

“As people pay more attention to fixing the small issues, they prevent the larger problems from ever happening. A little preventive maintenance goes a long way,” the president of First American Insurance Agency in Chicopee noted.

Most homeowners insurance claims are the result of severe weather incidents. When COVID-19 first hit, winter was ending, and warm weather soon followed. Bill Trudeau, executive vice president and partner at HUB International New England in Agawam, said the mild winter this year has helped keep claims down.

“Other than a couple isolated wind events, the weather has behaved itself, and that means claims have tended to be in line with company projections.”

The pandemic has thrown a few wrinkles into the home-insurance picture this year, however.

For instance, many homeowners were motivated to invest in substantial improvements to their homes. Home construction and improvement contractors point directly to being cooped up in the house as the main motivator for people choosing to make improvements to their property.

What impact does all this renovation work have on the homeowners insurance carried on the house? The answer depends on what improvements are made and what kind of coverage is already in place.

Everyone BusinessWest spoke with agreed that, for small or cosmetic improvements, there is no need to contact an insurance agent. Some larger projects, however, may require altering or increasing a home’s coverage.

“Adding square footage to your home, doing a full remodel, or building a garage would all be reasons to consult your agent to make sure you have enough coverage,” Fleury said.

Even if they are not taking on home improvement projects, Trudeau advises people to call their insurance agent at least every couple of years so they understand the coverage that’s in place and whether they may need additional coverage.

“You can work with your agent to run a cost estimator,” Trudeau said. “It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”

With the lifestyle changes wrought by the pandemic, it’s more important than ever to make sure the home — and everyone in it — are protected. Here are some key factors to consider.

 

Home Work

While they may not have set foot in the office in months, people who work from home are still protected from on-the-job injuries by workers’ compensation coverage. Office workers tend not to get injured on the job, but the coverage is in place if there is an incident.

“There has never been a distinction between whether employee actions emanate from an office at the company or from an office at the person’s home,” Trudeau said. “Because this coverage is broader in scope, COVID did not force us to make changes to workers’ comp plans.”

Bill Trudeau

Bill Trudeau says claims have been kept in check recently by a mild winter.

It’s not unusual for people working from home to have a computer, monitor, and even a printer that belongs to their employer. Murphy said some jobs may require employees to have additional business assets in the home, so it might be wise to make sure everything is covered. “Most policies will pay a little toward assets being home, but it’s usually a minimal amount.”

With homes serving as business offices and classrooms, more people — and their pets — are home at the same time. According to Trudeau, homeowners’ insurance policies consider any issues with an animal as a “strict liability event,” meaning there is no way to defend the action.

“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim,” he explained, adding that, as people acquire more pets, the likelihood of claims increases. Most insurance companies keep a list of dog breeds they will not cover because those breeds have higher incident rates.

“You can work with your agent to run a cost estimator. It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”

Murphy encourages pet owners to speak with their agent because these restrictions can vary widely among insurers. “Just because one company doesn’t want to cover your breed of dog, check with another company; it’s not a universal list.”

Whether they have pets or not, Fleury advises her clients to carry personal liability coverage, commonly known as an umbrella policy, that supplements both homeowners and auto coverage.

“When we write home and auto policies for a customer, we always recommend buying personal liability coverage as well because it gives you that additional safety net,” she said. A typical umbrella policy costs less than $200 but can provide up to $1 million in additional liability coverage when the limits of homeowners or auto coverage are exceeded.

While dog bites and leaking water pipes are obvious reasons to carry homeowners insurance, it can be much harder to detect a leak when personal data is compromised. A significant increase in identity theft has motivated insurance companies to begin offering identity-theft protection as part of their homeowners policies.

“With everyone at home and increased online activity, it’s more important than ever to safeguard your privacy from someone getting into your system and doing real damage,” Trudeau said.

Apart from identity-theft insurance, he advises everyone to follow best practices such as using multi-factor authentication. For example, when working on an important account online, a code is sent to the user’s personal phone that must be entered to gain access.

Corey Murphy

As people pay attention to small issues in the home, Corey Murphy says, they can prevent larger issues from ever arising.

When fraudsters accesses online bank accounts, they often add a payee into the account. Trudeau advises customers to check with their bank to make sure it uses multi-factor authentication to prevent an outsider from accessing their accounts and to make sure it’s turned on at home.

“If someone has logged into your computer and they don’t have your phone, they can’t get that code,” he said.

Fleury said her agency includes identity-theft coverage in all its homeowners policies. “We feel it is important insurance and recommend at least $5,000 worth of coverage for identity theft.”

 

From a Distance

The pandemic has changed the insurance business in other ways. Typically, when a homeowner files an insurance claim, an adjuster will visit the home and walk through to personally inspect the damage. With COVID-19 concerns, that’s happening much less often.

“In some ways, COVID is moving insurance companies along the digital side of things,” Murphy said. “They are allowing homeowners with a claim to submit photos and even have video calls if the insurer is set up for it.”

The trend toward relying on consumer photos rather than a visit by an adjuster follows what’s been happening on the auto-insurance side for some time.

“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim.”

“Many auto insurers have created apps where the person making the claim takes a photo of the damage, uploads it for an adjuster to review, and then the payment is processed,” Fleury said.

The move toward more digital interaction is no surprise to Trudeau.

“Long before COVID, people e-mailed pictures and documents to us,” he said. “Companies have simply accelerated the move to modernization by using many tools they already had.”

Murphy likes to remind customers that every insurance company offers something a little different that their competitors. That’s why it’s important to put some thought into selecting a homeowners insurance policy.

“People need to assess what they have, in terms of their house and what’s in it, and then speak with an agent about what needs to be covered,” he said, adding that it’s about matching a person’s situation with the company that can best provide coverage for their needs — especially at a time when those needs, and demands on the home, are still in flux.

Community Spotlight

Community Spotlight

By Mark Morris

Jennifer Nacht

Jennifer Nacht says a heavy focus on outdoor experiences last year helped Lenox weather the economic impact of the pandemic.

For the past year, the town of Lenox showed what happens when uncertainty meets a can-do attitude.

Despite the formidable challenges of COVID-19, Town Manager Christopher Ketchen said, Lenox residents and businesses have been remarkably resilient.

“Throughout the pandemic, our residents demonstrated how much they love our town,” Ketchen said. “They make their homes here, and our businesses are invested in their customers and their community.”

What began as a normal year of planning events at the Lenox Chamber of Commerce was suddenly derailed in March. Once they realized the pandemic was going to last more than a couple months, Executive Director Jennifer Nacht said, chamber members and town officials quickly met to put together a plan to salvage at least some activity for Lenox.

“We went through each season and developed a general outline of things we could do,” Nacht said. “Even though we did not know what the year was going to look like, we were able to turn around some great activities.”

Like many towns, Lenox encouraged restaurants to offer tented outdoor dining and allowed them to expand outdoor seating into public parking spaces. The town also added covered dining terraces in public spaces around town.

“The select board lifted alcohol restrictions so people could bring a bottle of wine to Lilac Park, for example, where we had set up a dining terrace,” Nacht said.

“You couldn’t get a parking place at the trailheads in town. Even obscure trailheads that were once known only to a handful of locals were crowded.”

Some developments last spring were rough. In May, the town learned that, due to COVID-19 concerns, Tanglewood had canceled its 2020 season. For some perspective on the importance of Lenox’s largest summer attraction, a Williams College study in 2017 estimated the economic impact of Tanglewood to Berkshire County and Western Mass. at nearly $103 million annually.

Because they didn’t know what to expect when Tanglewood called off its season, Nacht said everyone concentrated their efforts on making Lenox a welcome and inviting place. Outdoor dining was a first step that helped to establish a more vibrant atmosphere, and it inspired further activities.

For example, the Lenox Cultural District and the chamber organized Lenox Loves Music, an initiative that featured live music performed at the Church Street Dining Terrace for seven straight Sundays in August and September. It was a hit.

“Because we were able to turn on a dime and get everything set up, we were able to make the outside experience fun,” Nacht said. “As a result, we were better able to weather the financial impact of the pandemic.”

 

Hit the Road

If entry points to walking and biking trails are any indication, Ketchen said the pandemic helped many people discover the town’s outdoor attractions for the first time. “You couldn’t get a parking place at the trailheads in town. Even obscure trailheads that were once known only to a handful of locals were crowded.”

For more than 40 years, Lenox has held Apple Squeeze, a harvest celebration that takes over much of the downtown area with 150 food and craft vendors. The event was canceled for 2020 because of concerns that, even with restrictions, too many people would gather, leading to unsafe crowd sizes.

Lenox Loves Music

Lenox Loves Music was a hit during a time when live music was in short supply.

As an alternative, the chamber and American Arts Marketing developed the Lenox Art Walk and scheduled it for the late-September weekend when the Apple Squeeze would have taken place. Forty artists set up in different areas around town in ‘artist villages,’ which were arranged so no more than 50 people could be in one area at a time. Foot-traffic flow was also designed to keep people moving through the exhibits.

Nacht said the Art Walk received great feedback, and the artists involved loved exhibiting their work. The event also led to phone calls from event organizers from several Eastern Mass. towns who wanted to know how to stage a similar event.

The old adage about necessity being the mother of invention definitely has proven true for Lenox. “We just tried some different things that we probably would have never attempted, or done so quickly, had it not been for the pandemic,” Nacht said.

In the beginning of the summer, traffic in town was about half of what it would be during a normal season. As the weather became warmer and travel restrictions eased around the state, both traffic and business picked up.

“We began seeing more day trippers, many from the Boston area who had never been out our way,” Nacht said, adding that good weather in the summer and fall extended the outdoor season nearly to Thanksgiving.

While lodging in the area was restricted by the number of rooms that could be offered, she noted, from September through November, inn and hotel rooms were booked to the capacity they were allowed.

As the owner of the Scoop, a Lenox ice-cream store, Nacht was one of many business owners forced to move customer interactions outdoors. She found a fun way to adjust.

“We did it sort of Cape Cod style, where people order at one window and pick up their ice cream at a second window,” she explained, adding that, while 2020 was not as successful as previous years, the Scoop still saw steady business throughout its season. Even non-food stores, inspired by all the outdoor activity, set up tents in front of their shops to add to the vitality.

In a normal year, Lenox Winterland is a tradition to kick off the holiday season that features a tree-lighting ceremony and Santa Claus meeting with children. In this very-not-normal year, Winterland was forced to cancel.

Instead of losing their holiday spirit, however, the Cultural District and chamber presented a creative alternative. Local businesses and artists teamed up to decorate 30 Christmas trees, which were displayed in a tree walk through town. Nacht said the inaugural Holiday Tree Walk was so well-received, plans are in the works to expand and make it an annual event.

“Despite the obstacles of COVID, we had a decent tourism business,” she said. “We’ll continue to offer more fun events to keep the vibrancy of the town going and improving.”

 

Passing the Test

Lenox has always been proud of its cultural amenities, such as Tanglewood, Edith Wharton’s house at the Mount, Shakespeare and Co., and others. As those were scaled back, Ketchen said, the town’s outdoor amenities gained exposure they might not have otherwise.

“Once we are allowed to enjoy our cultural institutions to their fullest again, people will also have more awareness of all the recreational opportunities Lenox has,” he told BusinessWest. “That’s a big positive for us as we look to the future.”

While Nacht hopes to see Tanglewood up and running, at least in some form, in 2021, she admits the past year was quite the learning experience. “We are so dependent on Tanglewood, it was an interesting test to see what we could do without Tanglewood there.”

Despite the challenges put on municipal budgets, Ketchen said Lenox was able to pursue several modest infrastructure projects in 2020, such as maintaining roads and public-utility infrastructure. “When folks are ready to come to Lenox for the recreation and the culture, the public utilities and infrastructure will be waiting for them.”

“We began seeing more day trippers, many from the Boston area who had never been out our way.”

In short, Lenox is not only weathering the COVID-19 storm, it’s finding ways to come out stronger on the other side. Indeed, when this community, which depends on cultural tourism, was challenged to find creative solutions to stay afloat, it answered the call. Nacht credited Lenox businesses for making quick and significant adjustments in their operations.

“It was really inspiring to see our businesses make the best out of a not-so-great situation,” she said. “It says a lot about their commitment to our town.”

Undaunted by the near future, Nacht noted several businesses are planning for April openings. And she looks forward to the new year knowing that Lenox can present all the outdoor events that worked well in 2020.

“With knowledge, you just learn to do things better, and we learned a lot last year,” she added. “Once the tulips come out, that’s when we start to see everything come alive again.”

Accounting and Tax Planning

Round 2

By Jonathan Cohen-Gorczyca, CPA, and Amila Hadzic

On Dec. 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law to assist businesses who have been financially impacted by the COVID-19 pandemic. As a result of the Economic Aid Act, the Paycheck Protection Program’s second-draw loan program was created.

This program will allow the U.S. Small Business Administration to provide eligible businesses with additional loans, similar to those from the original Paycheck Protection Program (PPP). The last day to apply for the second-draw loan is March 31, 2021, and there are eligibility and documentation requirements that need to be met during the application process.

 

Eligibility

This loan can only be made to a business that has received a first-draw PPP loan and has used the full amount of the loan on eligible expenses before the disbursement of the second loan. A business that was ineligible for the first loan cannot receive the second-draw PPP loan.

In order to be eligible for this second-draw PPP loan, the business must have 300 or fewer employees. The business must have also experienced at least a 25% reduction in revenue in 2020 compared to 2019. The revenue reduction can be calculated by comparing one quarter in 2019 with the same quarter in 2020. However, if the business was not in operation for the full year in 2019, there are other periods that can be used for this calculation. If an entity was in operation for all four quarters in 2019, then the annual revenue can be compared with 2020.

 

Loan Amount

The maximum loan amount for the second loan is the lesser of $2 million or two and half months of the business’ average monthly payroll. For those who are assigned a NAICS code with 72 or are a seasonal employer, the loan amount can be greater than two and a half months. The borrower can use either total wages paid in 2019 or wages paid in a 12-month period before the loan was made to calculate average monthly payroll. There is also the option to use 2020 wages.

 

Application and Documentation

In order to apply for this loan, the SBA Form 2483-SD needs to be completed. Form 941, state quarterly wage unemployment forms for the applicable quarter used, and other payroll records may be needed depending on the payroll period used to calculate the loan amount. For ease of applying for a second-draw loan, it is recommended that you apply using the same lender, as much less payroll documentation will be needed because it should already be on file with the institution.

The documentation requirements are similar to the first PPP loan. If the loan is greater than $150,000, documentation will be needed to show the revenue reduction at the time of application. Bank statements, annual tax forms, and quarterly financial statements can be provided as documentation. For loans under $150,000, this information can be submitted during the loan-forgiveness process.

 

What If I Did Not Receive a First-draw PPP Loan?

The SBA is also accepting applications for first-time PPP borrowers. The loan is capped at $10 million for eligible businesses. If the loan is used to pay for payroll and other eligible expenses during the eight- or 24-week period, it is eligible for forgiveness. Eligible costs for both the second-draw loan and first-draw PPP loan include payroll costs, business mortgage interest, rent, lease payments, utility payments, worker-protection costs, property damage costs due to looting and vandalism not covered by insurance, and other supplier and operation costs. Payments made to an independent contractor do not qualify.

As with the first-draw PPP loan, it is best to reach out to both your accountant and loan provider to find out if a second-draw PPP loan is right for you. They will be able to help you determine what is right for your business and help walk you through the application process.

 

Jonathan Cohen-Gorczyca, CPA, is a manager, and Amila Hadzic is a staff accountant with the accounting firm Melanson, which has offices in Greenfield and Andover, as well as Merrimack, N.H. and Ellsworth, Maine.

Accounting and Tax Planning

A Tax-planning Checklist

By Dan Eger

 

It is that time again, your favorite and mine, tax season!

As we have made it through hopefully the worst of the pandemic, dealing with all the ups and downs of learning this new normal in life, one thing will remain the same — the IRS still wants our money. At some things have not changed due to COVID-19.

Here are some steps to take now to help make filing for the 2020 tax season easier. Below is a list of items to gather. These are the most common required forms and items. The list is not all-inclusive, as everyone’s tax situation is different. Also included are a few other things for you to consider as you prepare to file your 2020 tax return.

 

Documentation of Income

• W-2 – Wages, salaries, and tips

• W-2G – Gambling winnings

• 1099-Int and 1099-OID – Interest income statements

• 1099-DIV – Dividend income statements

• 1099-B – Capital gains (sales of stock, land, and other items)

• 1099-G – Certain government payments

— Statement of state tax refunds

— Unemployment benefits

• 1099-Misc – Miscellaneous income

• 1099-S – Sale of real estate (home)

• 1099-R – Retirement income

• 1099-SSA – Social Security income

• K-1 – Income from partnerships, trusts, and S-corporations

 

Documentation for Deductions

If you think all your deductions for Schedule A will not add up to more than $12,400 for single, $18,650 for head of household, or $24,800 for married filing jointly, save yourself the time required to itemize deductions and just plan to take the standard deduction.

 

• Medical Expenses (out of pocket, limited to 7.5% of adjusted gross income)

— Medical insurance (paid with post-tax dollars)

— Long-term-care insurance

— Prescription medicine and drugs

— Hospital expenses

— Long-term care expenses (in-home nurse, nursing home, etc.)

— Doctor and dentist payments

— Eyeglasses and contacts

— Miles traveled for medical purposes

 

• Taxes You Paid (limited to $10,000)

— State withholding from your W-2

— Real-estate taxes paid

— Estimated state tax payments and amount paid with prior year return

— Personal property (excise)

 

• Interest You Paid

— 1098-Misc – mortgage-interest statement

— Interest paid to private party for home purchase

— Qualified investment interest

— Points paid on purchase of principal residence

— Points paid to refinance (amortized over life of loan)

— Mortgage-insurance premiums

 

• Gifts to Charity (For 2020, filers who claim the standard deduction can take an additional deduction up to $300 for cash contributions.)

— Cash and check receipts from qualified organization

— Non-cash items, which need a summary list and responsible gift calculation (IRS tables). If the gift is more than $5,000, a written appraisal is required.

— Donation and acknowledgement letters (over $250)

— Gifts of stocks (you need the market value on the date of gift)

 

• Additional Adjustments (Non-Schedule A)

— 1098-T – Tuition statement

— Educator expenses (up to $250)

— 1098-E – Student-loan interest deduction

— 5498 HSA – Health savings account contributions

— 1099-SA – Distributions from HAS

— Qualified child and dependent care expenses

— Verify any estimated tax payments (does not include taxes withheld)

 

Sole proprietors (Schedule C) or owners of rental real estate (Schedule E, Part I) need to compile all income and expenses for the year. You need to retain adequate documentation to substantiate the amounts that are reported.

 

Other Items to Consider

Identity-protection PIN

If you are a confirmed identity-theft victim, the IRS will mail you a notice with your IP PIN each year. You need this number to electronically file your tax return.

Starting in 2021, you may opt into the IP PIN program. Visit www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin to set up your IP PIN. An IP PIN helps prevent someone else from filing a fraudulent tax return using your Social Security number.

 

What If You Have Been Compromised?

How do you know if someone has filed a return with your information? The most common way is that your tax return will get rejected for e-file. These scammers file early. You may also get a letter from the IRS requesting you verify certain information.

If this does happen, there are steps to take to get this rectified:

1. File Form 14039 (Identity Theft Affidavit).

2. Paper-file your return.

3. Visit identitytheft.gov for additional steps.

 

New for 2021: Recovery Rebate Credit

Eligible individuals who did not receive a 2020 economic impact payment (stimulus check), or received a reduced amount, may be able to claim the Recovery Rebate Credit on their 2020 tax return. There is a worksheet to use to figure the amount of credit for which you are eligible based on your 2020 tax return. Generally, this credit will increase the amount of your tax refund or lower the amount of the tax you owe.

 

Who Will Prepare My Return?

Are you going to be preparing your tax return, or will you hire someone to file on your behalf? You might want to plan that out now so you know the required information you will need and the fee structure you can expect to pay for completion of all applicable forms. In addition to all the items listed above, the tax preparer will ask you for a copy of your last tax return that was filed. The IRS offers a ‘file free platform’ to file your tax return if your income is under $72,000. You can find this at irs.gov or the IRS2Go app. There are also some local tax-assistance and counseling programs, depending on your age and income levels (VITA/TCE).

 

Interactive Tax Assistant

The Interactive Tax Assist (ITA) is an IRS online tool (irs.gov) to help you get answers to several tax-law items. ITA can help you determine what income is taxable, which deductions are allowed, filing status, who can be claimed as a dependent, and available tax credits.

 

Be Vigilant

Finally, be especially careful during this time of year to protect yourself against those trying to defraud or scam you. The IRS will never — let me repeat that: NEVER — call you directly unless you are already in litigation with them. They will not initiate contact by e-mail, text, or social media. The IRS will contact you by U.S. mail.

However, you still need to be wary of items received by mail. Anything requesting your Social Security number or any credit-card information is a dead giveaway. Watch out for websites and social-media attempts that request money or personal information and for schemes tied to economic impact payments. You can check the irs.gov website to research any notice you receive or any concerns you may have. You can also contact your tax practitioner for help and assistance.

 

Dan Eger is a senior associate at Holyoke-based accounting firm Meyers Brothers Kalicka; (413) 536-8510.

Insurance

Expanding the Footprint

Lussier-Dowd’s new office

Lussier-Dowd’s new office at 181 Park Ave. in West Springfield expands the merged company’s footprint to six locations.

The Dowd Agencies and the J. Raymond Lussier Insurance Agency announced last week they have merged their operations and will be known as Lussier-Dowd Insurance.

The merger and addition of a branch in West Springfield expands Dowd’s footprint to six offices located throughout the Pioneer Valley. The new office, located at 181 Park Ave., is minutes from Routes 5 and 20, and Interstates 91, 291 and 391. An open house will be planned at a later date.

“We’re excited for the Lussier Agency to be part of our team. I have known the Lussier family for many years, and they have always been a highly professional, customer-driven insurance agency,” said John Dowd Jr., president and CEO of the Dowd Agencies. “We are also excited to have a location in the fine town of West Springfield.”

The West Springfield office will be a full-service insurance agency providing personal, commercial, wealth-management, and employee-benefits products and services.

A native of West Springfield, David Griffin Jr., vice president of the Dowd Agencies, said he is excited about his company planting roots in his hometown. “I was born and raised in West Side, so it is particularly exciting for me. More importantly, West Side is a great and vibrant town here in Western Mass.”

The Lussier-Dowd Insurance Agency is open Monday through Friday, from 8 a.m. to 4:30 p.m., and can be reached by calling (413) 737-5359.

A full-service agency, the Dowd Agencies has been helping individuals and businesses in Western Mass. with their personal insurance, commercial insurance, employee benefits, and financial needs for more than 120 years. Established in Holyoke in 1898, the Dowd Agencies is the oldest insurance agency in Massachusetts with operations and management under continuous family ownership.

 

Opinion

Opinion

By Chris Geehern

The unprecedented upheaval of 2020 will change the way we live and work for years to come, says John Regan, president and CEO of Associated Industries of Massachusetts (AIM).

Regan punctuated his annual State of Massachusetts Business Address with a call for state policymakers to support the recovery of an economy that remains fragile in the wake of the ongoing public-health crisis.

“Hundreds of thousands of our friends and neighbors in Massachusetts remain out of work because of the pandemic. Many have left the workforce altogether,” Regan said during a virtual speech to the AIM Executive Forum. “Addressing the COVID crisis by shutting down the economy again and impeding the ability of people to support their families is not a solution. Neither is imposing Draconian tax increases to address the state’s fiscal issues on the backs of businesspeople trying to keep people employed amid permanent, structural changes to the way we live and work.”

Regan noted that the unprecedented convergence of the COVID-19 pandemic, a cataclysmic recession, and a reckoning on racial equity combined to alter the economy, the workplace, healthcare, manufacturing supply chains, and transportation. It affected schools, government, family life, shopping patterns, the housing market, race relations, and social interactions.

The upheaval has accelerated ongoing seismic shifts in the nature of the workplace, Regan noted. “What the e-commerce revolution did for physical stores, the telepresence revolution could do for office-adjacent employment. Some of the repercussions are positive — less traffic in major urban areas, more flexibility for workers, and expanded opportunities for employers to hire talented people virtually anywhere.”

The bad news? “Cities like Boston that have thrived on proximity-driven innovation and community intellectual energy could see that energy dissipate as companies accelerate the move toward virtual operations,” he said. “Given the OK to go remote, workers may use their freedom to move to cheaper metros where they can afford more space, inside and outside.”

“What the e-commerce revolution did for physical stores, the telepresence revolution could do for office-adjacent employment. Some of the repercussions are positive — less traffic in major urban areas, more flexibility for workers, and expanded opportunities for employers to hire talented people virtually anywhere.”

Four distinguished economic experts offered commentary about which changes generated by the pandemic might be lasting. Pamela Everhart of Fidelity Investments, Edward Glaeser of Harvard University, Dr. Lee Schwamm of Mass General Brigham, and Nada Sanders of Northeastern University said the nature of any long-term structural economic shifts will become evident only after governments moderate the spread of the pandemic.

Regan said AIM and its 3,300 members look forward to working with state and federal leaders to craft a long-term economic recovery for the Commonwealth.

“Massachusetts businesses have responded responsibly to the pandemic by prioritizing their employees and customers, investing in workplace-safety protocols, adapting operations to ensure compliance with business-specific requirements, and finding creative ways to offer services and goods while remaining operational,” Regan said. “Businesses prioritized these things because this is what our businesses do. They invest, they change, and they adapt. These are the qualities that have made Massachusetts an economic leader for decades.” v

 

Chris Geehern is executive vice president of Associated Industries of Massachusetts.

Insurance

Premium Concerns

By Mike Horan

Insurance costs have already been rising — the property and casualty space has seen 11% rate increases annually, on average — due to uncertainty around pandemic losses, catastrophic natural-disaster claims, a lack of capacity in the reinsurance market, low interest rates, and increased size of claims due to social inflation.

Now, just a couple weeks into Joe Biden’s presidency, we are asking ourselves: how will the incoming administration impact businesses like yours, and, consequently, the insurance marketplace and your premiums?

With the inauguration of Biden on Jan. 20, we expect a return to a highly pro-union, pro-workers’-rights administration similar to what we saw under President Obama (and Vice President Biden) from 2009 to 2017. This could very well come with a change of leadership at the Occupational Safety and Health Administration (OSHA). The current acting administrator, Loren Sweatt, has been in the role as an interim since 2017, and experts anticipate a changing of the guard.

“To prepare for the incoming administration and the changes that will accompany it, we encourage you to prioritize your safety practices. OSHA will be examining this much more closely, and so will the insurance companies.”

Most importantly for your business, you can count on a shift back to heavier enforcement of OSHA workplace violations. During his campaign for the presidency, Biden called on OSHA to “double the number of OSHA investigators to enforce the law and existing standards and guidelines.” Based on this, we expect more inspectors visiting businesses to ensure compliance, and heavier fines for infractions. We also anticipate a return to practices such as issuing press releases publicly naming companies that have been fined for workplace-safety violations, in an effort to discourage other businesses from making the same mistakes.

At Webber and Grinnell, we place heavy emphasis on loss control and creating a culture of safety within our clients’ operations. This is not just because we care about doing the right thing and keeping everyone safe (although that is certainly the primary reason). It’s also because we know that insurance companies are scrutinizing safety and losses more than ever due to the aforementioned facts about rising costs in the marketplace. They are rewarding safe companies and penalizing unsafe companies. One of the primary resources they use to make these decisions is OSHA records, so it is absolutely essential that you adhere to OSHA’s policies and guidelines.

To prepare for the incoming administration and the changes that will accompany it, we encourage you to prioritize your safety practices. OSHA will be examining this much more closely, and so will the insurance companies.

You need to be a step ahead by doing everything you can to create a culture of safety. Long-term benefits include fewer injuries, less downtime, lower insurance costs, better employee morale, and a work culture that will attract the best talent.

 

Mike Horan is a business insurance specialist and RiSC consultant at Webber and Grinnell Insurance.

 

Construction Special Coverage

Space Jam

By Mark Morris

Nick Riley

Nick Riley says he had to reschedule in-home jobs at the start of the pandemic until he could figure out how to do them safely.

For home builders in Western Mass., 2020 brought opportunity and challenge in equal measure.

For example, Nick Riley, owner of N. Riley Construction, said 2020 was his best year based on the number of projects, but COVID-19 posed obstacles to nearly all facets of the job. In fact, when the pandemic first arrived, he rescheduled all his in-home projects until he could learn how to safely do those jobs.

“We were fortunate that we had several new construction projects that kept us working until we could figure out the right way to get our in-home jobs done,” Riley said.

Other home builders shared similar stories of adjusting to a new reality on the fly.

When many industries were mandated to stop working back in March, home builders were deemed an essential business by Gov. Charlie Baker’s administration. That was the right call, said Bill Laplante, president of Laplante Construction. “We had projects with critical work that needed to be completed so people, in some cases, could get back into their homes.”

“We had to postpone jobs like kitchen renovations where people were still trying to live in the space we were working on.”

The builders who spoke with BusinessWest all construct new houses as well as additions and renovations to existing homes. On balance, they say, renovations and additions account for more business than new home construction.

“Most of the calls we get are from people who want to stay where they are, so many of them are looking to build additions or do a renovation,” said A.J. Crane, partner at A. Crane Construction.

Of course, staying put became nearly universal as COVID-19 mandates resulted in many people working from home. Even those who continued to work at their place of business found themselves at home more often because so many recreational activities and destinations had been curtailed or shut down.

And that posed opportunity for builders. As Laplante observed, the more time people spend at home, the more looking around they do. “They start thinking about adding a room or renovating part of the house to make their space more comfortable.”

In the age of COVID, that means builders must approach job sites differently than in the past. For starters, more people — both adults and children — are likely to be at home while the work is getting done. While workers follow screening protocols before going into the home and wear PPE once there, Laplante instructs his crews to isolate the work area from the residents as much as possible. That’s easy to do for additions and outside renovations, but some work is just more intrusive.

“We had to postpone jobs like kitchen renovations where people were still trying to live in the space we were working on,” he said, adding that other projects were pushed off because customers were simply not yet comfortable with outside workers in their homes during the pandemic.

But enough homeowners were OK with their presence to generate a successful, if unusual, year for the home-building and renovation industry.

 

Slow-building Issues

Keeping work crews and homeowners safe was only one challenge builders faced due to COVID-19. In a normal year, the process of getting a permit for a new home or addition is fairly straightforward. Builders bring plans to the appropriate municipal office and pick up the permit a week or two later. As COVID-19 shifted city and town business to e-mails and Zoom calls, it delayed the permitting process — in some cases, for months.

“When you go down the street to the local lumber yard to pick up a pressure-treated two-by-four and they don’t have any, it throws you for a loop.”

Meanwhile, supply-chain shortages of common consumer goods such as toilet paper and cleaning products marked the early days of the pandemic. The manufacturing supply chain around the world was disrupted for many building products as well. Riley said appliances and electrical components such as circuit breakers were often delayed by as much as three or four months. As another example, Crane learned that window companies were having trouble getting glass.

“As a result, we were only getting three-fourths of the windows we ordered for a job,” he said. “This created a delay that frustrates the homeowner and puts a big dent into our profit margin.”

In short, COVID-19 kept people at home, they wanted to improve their space, creating high demand for building materials at a time when many manufacturers were already experiencing delays due to the coronavirus, resulting in shortages. And in the wake of those delays, price increases followed.

Andy Crane

Andy Crane says he wants to present a home show this year, but only if he can do so safely.

“We saw a 45% spike in the cost of building materials,” Laplante said. “That was difficult to deal with because we had jobs that were already under contract.”

Shortages of special-order or custom materials were no surprise to the builders, but everyday items were affected, too.

“When you go down the street to the local lumber yard to pick up a pressure-treated two-by-four and they don’t have any, it throws you for a loop,” Crane said.

While they acknowledge that delays, shortages, and price hikes will be here for the near term, all three builders are optimistic about 2021. Because mortgage interest rates remain at historic lows, Riley does not expect a slowdown anytime soon. “For 2021, our company is operating full steam ahead for both new construction and remodeling projects.”

“I know a lot of folks who switched to remote work, and they are not going back into the office. I believe people working from home or their vacation home will continue into the foreseeable future.”

One challenge going forward, he noted, is finding property in Western Mass. to purchase at a reasonable price where he can make a profit on new construction.

For 2021, Laplante has plenty of new construction and renovation projects in the pipeline both in Western Mass. and on Cape Cod, where he recently opened a satellite office.

“We’ve always done work on the Cape, but this is the first year we made it official with an office,” he told BusinessWest. “We’re seeing a tremendous amount of activity and opportunity there.”

Expanding to Cape Cod is a bet Laplante is willing to make because he believes that the pandemic has severely shifted consumer trends. As he sees it, the people who would have sought out exotic travel to places like Europe are now spending their money on their home or investing in a vacation home close to where they live.

 

On with the Show?

For 66 years, hundreds of home projects started with a tour of the Western Mass Home and Garden Show held in late March on the Big E fairgrounds. In 2020, the show was canceled for the first time in its history as the initial wave of COVID-19 swept across Massachusetts just before the event.

Will there be a show in 2021? Andrew Crane, executive director of the Home Builders and Remodelers Assoc. of Western Massachusetts, faces a common dilemma in this time of COVID-19: there is plenty of interest in holding the show, but no one knows if conditions will allow it to take place.

“When things clear up and people can safely go out and stay healthy, we will run a home show, and not until then,” he said. At the same time, his organization, which runs the home show, has nearly sold out all available booths.

“We don’t even have dates for when the home show will happen, but I sold two booths this week,” Crane said, noting that his members are involved in nearly all areas of home improvements. As most of them had success in 2020, they would like to keep the momentum going this year.

Bill Laplante

Bill Laplante says the more time people spend at home, the more they think about how to improve their homes.

When BusinessWest spoke with vendors in preparation for last year’s event, several said a key strength of the home show was the opportunity for people and contractors to speak with each other, as well as the ability to see and touch the latest products in home improvements.

Plexiglass dividers, one-way aisles, and mandatory mask wearing are among the different ways Crane and his staff are looking to configure this year’s show. He doesn’t want a situation, however, in which a member pays for an expensive booth only to allow one person at a time to visit.

“That’s not fair to the vendor or the people attending the show,” he said. “It’s not even fair to the folks who just drop by a booth to take the candy.”

Because planning events is so difficult these days, Crane continues to move forward in planning the home show, but understands that nothing is certain. “There’s a light at the end of the tunnel, but we don’t know if it’s a freight train or if it’s the vaccine coming to solve our problems.”

Even with an effective vaccination rollout, Laplante predicts the home-building industry will continue to thrive locally. In addition to new construction, he has several whole-house renovations in the works — projects in which an existing house is torn down and a new one is built on the same lot. With many projects in the pipeline, Laplante believes people have changed their behavior long-term, and the home will continue to be a focal point long after COVID-19 is under control.

“I know a lot of folks who switched to remote work, and they are not going back into the office,” he said. “I believe people working from home or their vacation home will continue into the foreseeable future.”

Community Spotlight Special Coverage

Community Spotlight

By Mark Morris

For MJ Adams, 2020 felt like someone had pushed a ‘pause’ button.

Adams, director of Community and Economic Development for the city of Greenfield, had taken part in a dynamic public forum early in the year titled “A Deliberate Downtown” that focused on revitalization plans for Greenfield.

Then the pandemic hit. And when it became clear the pause would last for more than a few weeks, she and her staff shifted their focus.

“We knew there was going to be an immediate cash-flow problem for local businesses, so we moved quickly to develop a small-business assistance program to provide micro-enterprise grants,” Adams said.

Working with other Franklin County towns, Greenfield pooled its available block-grant funds with those from Montague, Shelburne, and Buckland.

“Because small businesses are such a critical piece of the economy in Greenfield and Franklin County, we worked together to quickly design a program that didn’t exist before,” Adams said. “The micro-enterprise grants provided a cash source for small businesses until they were able to access funds from the federal Paycheck Protection Program.”

On the public-health side of the pandemic, Mayor Roxann Wedegartner credited the emergency-management team in Greenfield for their early and quick action.

“We were one of the first communities in the state to attempt to manage the public-health side of COVID-19 from the get-go,” she said, adding that her team also set up contact tracing early in the pandemic. The John Zon Community Center has served as an emergency-command area for COVID testing for Greenfield and surrounding communities. First responders are now able to receive COVID-19 vaccinations at the facility.

Greenfield Mayor Roxann Wedegartner

Greenfield Mayor Roxann Wedegartner says major projects along Main Street speak to a sense of momentum despite pandemic-related obstacles.

Like most communities, Wedegartner admits Greenfield has taken an economic hit due to the pandemic. She pointed to the micro-enterprise grants as an important early step that prevented a tough situation from becoming worse. Inaugurated to her first term as mayor a year ago, Wedegartner said finding herself in emergency public-health and safety meetings a month later was quite a shock.

“While I’m pleased that we started planning early for the pandemic, I have to say it’s not where I thought I would be in my first year in office.”

 

Great Outdoors

Wedegartner is not letting COVID-19 challenges dampen the many good things happening in Greenfield. She pointed with pride to the approval of a new, $20 million library and the ongoing construction of a new, $17 million fire station. Groundbreaking at the library is scheduled for April 21, while firefighters are expected to move into their new facility in July. Once complete, Adams noted that both ends of Main Street will be anchored with major public investments.

“It’s a clear statement that the town is very much committed to public safety, as well as culture and education,” she said.

These qualities, and a resilient business community, are why Greenfield is poised to bounce back quickly, according to Diana Szynal, executive director of the Franklin County Chamber of Commerce. She specifically mentioned the area’s many outdoor recreation options as assets that contribute to the local economy.

“Because small businesses are such a critical piece of the economy in Greenfield and Franklin County, we worked together to quickly design a program that didn’t exist before.”

“For spring and summer, we will put a strong focus on outdoor recreation because it’s a safe and healthy thing to do,” Szynal said. “You don’t have to travel far, and you can access some of the best river rapids around. We have ski areas and great golf courses — basically four seasons of outdoor activities.”

Before the pandemic, Adams and her staff were working with local restaurants to consider outdoor dining. Of course, COVID-19 accelerated those plans as moving outside was one way eateries could generate at least some revenue. With restaurants scrambled to figure out ad hoc ways to set up outside, Adams said now is the time to see how to make this concept work better for everyone for the long haul.

“We’re looking at Court Square to see if we can shut down the street that runs in front of City Hall to make that a more permanent outdoor dining space,” she said, admitting there are traffic-impact and access issues that need to be considered before the street can be closed. “We’ve been wanting to do this for some time and even have conceptual drawings to see how that space would look.”

Szynal emphasized that restaurants are one key to bringing more people to downtown Greenfield, so she hopes to draw more places to eat. While outdoor dining presents challenges, she believes the net result is positive. “Dining outside helps the downtown become a little more pedestrian. It’s a different vibe, a good vibe.”

Greenfield at a Glance

Year Incorporated: 1753
Population: 17,456
Area: 21.9 square miles
County: Franklin
Residential Tax Rate: $23.55
Commercial Tax Rate: $23.55
Median Household Income: $33,110
Median Family Income: $46,412
Type of Government: Mayor, City Council
Largest Employers: Baystate Franklin Medical Center, Greenfield Community College, the Sandri Companies
* Latest information available

Wedegartner promotes the fact that Greenfield has a walkable downtown and plenty of housing within a short walk of it. A former Realtor in Franklin County, she still has contacts in real estate who tell her that houses in Greenfield barely hit the market before they are sold.

Adams said the city is poised to take advantage of welcoming new people to the area. “As we start to emerge from the pandemic, there’s a discussion about how much people miss the feeling of community and how to re-establish that. At the same time, there are people who want to live closer to nature and further away from the heavily populated cities. Greenfield can satisfy both of those concerns.”

Because the pandemic has resulted in so many people working from home, Szynal predicts a shift in where people choose to live.

Wedegartner concurred, citing the example of a couple who recently moved to Greenfield from the Boston area after learning they would be working from home for the next two years. “They bought one of the more beautiful homes in town for a fraction of what they would have paid for that type of home in the Boston area.”

While real-estate sales have been brisk across Western Mass., Franklin County has been particularly robust. Szynal shared statistics from October that compared sales among Hampden, Hampshire, and Franklin counties. Total sales for all three were up 9.2%, while in Franklin County alone, sales increased more than 32%. She credits that growth to a number of factors, including the affordability of housing and an active arts and culture scene.

“If you have the ability to work remotely,” she asked, “why not relocate to somewhere that is beautiful and more affordable?”

 

Downtown Vision

Wilson’s Department Store, a mainstay in Greenfield for more than a century, wrapped up its final sales and closed last February. While that came as sad news to many, Wedegartner and Adams are hopeful about interest in the building from Green Fields Market, the grocery store run by the Franklin Community Co-op. While Green Fields representatives have not committed to the Wilson’s site, they have shown an interest in locating downtown.

“I would love to keep the co-op downtown,” Adams said. “A grocery store where you have residents living is an important part of a livable, walkable downtown.”

A former brownfield site, the Lunt Silversmith property has been cleaned up and will be available for redevelopment later this year. The site is near what Adams called “the recovery healthcare campus” where Behavioral Health Network and a number of other social-service agencies provide care and support for people in recovery.

Another redevelopment project involves the First National Bank building across from the town common. Adams said the initial vision was to make the building an arts and cultural space. After studying that as a possibility, it now appears that’s not going to happen.

The building is important, Adams noted, because it provides a face to the town common. “While the First National Bank building won’t be what we originally hoped it would be, our challenge is to figure out the right use for it.”

Just before COVID-19 hit, Adams and her team conducted a survey of residents and businesses to help define the future of downtown Greenfield. The large number of responses from both residents and businesses impressed even the survey consultants.

“The high rate of return on the surveys speaks to people’s interest and engagement of what our future will look like,” Adams said.

As people start receiving the vaccine, she believes the region will be able to put the coronavirus era in the rear-view mirror fairly soon.

“I’m a planner, so it’s exciting that there is a plan to get people vaccinated and that we are headed in the right direction,” she said.

Which would finally get the city off that pause button — and into ‘go’ mode.

Features

The Consumer’s Dilemma

By John Garvey

“If you’re not paying for the product, then you are the product.”

That’s a quote from Daniel Hövermann in The Social Dilemma. If you have not seen the Netflix documentary, here are the important parts: a bunch of really rich people explain how creepy and addictive social media is, how most of them repeatedly and for different companies built it to be so, and how bad they feel about doing all that.

They explain, as their makeup artist prepares them for their actual interview, how social-media algorithms monitor our every move on the platforms. Nefariously, according to The Social Dilemma interviewees, this data is provided in anonymized form to advertisers so that they can get you to buy their products. In that way, you are the product — well, actually, your data is the product — that is offered by the platform (Facebook, Instagram, LinkedIn, Google) to the advertisers.

Actually, your attention is the product and has always been what marketers and platforms seek. Data can help get your attention, but it is a big mistake to think that data is going to drive conversion. Attention does.

Enter the feds and 46 attorneys general and one of the biggest anti-trust cases in U.S. history. They are suing Facebook essentially because, years ago, it bought Instagram (2012) and WhatsApp (2014) with FTC approval and then got really good at growing them. The charge is that they got so good at it, they made it bad for consumers and advertisers. Or, as the FTC put it, “suppressing, neutralizing, and deterring serious competitive threats.”

New York Attorney General Letitia James suggested on NPR’s Here & Now that the malfeasance goes even further. “Facebook’s monopoly means that users can’t pick up and go to another platform because they have no other meaningful alternatives.”

I’m guessing she is not on TikTok, although that platform has attracted its own turbulence from the Trump administration with the president’s determination that it is a national security risk.

It’s a safe bet that the courts will be dealing with all of this mess for some time.

John Garvey“Apple is acting to protect user privacy right now, and Facebook is freaking out. Apple’s upcoming version of iOS will require that apps ask user permission to track their activity across different apps or sites.”

So, where are the more near-term digital privacy protections and marketing changes coming from? This is a bit of a shocker because digital privacy protection is coming from two main sources these days: the European Union (EU) and Apple.

You know those annoying ‘accept cookies’ messages when you visit a new website? You can thank the EU and the General Data Protection Regulation obligations that went into full effect in May 2018. Because it is too hard to have one way of operating here and another there, generally EU regulations end up impacting if not protecting us as well.

There is regulation on the way. The EU’s Digital Service Act and Digital Markets Act are likely to create a new rulebook that will dramatically change the operations of online platforms as well as bolster the rights of consumers.

That’s all in the future. Apple is acting to protect user privacy right now, and Facebook is freaking out. Apple’s upcoming version of iOS will require that apps ask user permission to track their activity across different apps or sites. Even if the user gives that permission to track, iOS 14 — the software that runs the iPhone — will allow that user to turn it off at any time.

Think of it this way: Facebook will have to ask you, if you are an iPhone user, “hey, can I track a bunch of stuff you do on this phone and sell it to companies?” What would your answer be?

Apple’s iPhone controls more than 50% of the mobile-device market, so it’s no wonder why Facebook is freaking out. According to Inc., “Facebook is saying that iOS could result in a 50% drop in revenue for what is known as Audience Network. That’s Facebook’s advertising product that serves up ads within apps based on a user’s activity elsewhere. Audience Network is only a small part of the $70 billion in advertising revenue the company rakes in, but it isn’t hard to see why Facebook would be concerned.”

Recently, Facebook started running its own ads that highlight the harm users controlling access to their personal data will have on small business. The #SpeakUpForSmall campaign urges all users to take a stand for small businesses everywhere and add their voice in the comments section of their ad. At the time of this writing, there were three.

Facebook, whom Fast Company named “the worst brand of the year,” could use more likes.

 

John Garvey is founder of Garvey Communication Associates Inc., a digital marketing and PR agency with offices in Springfield and Los Angeles.

 

Banking and Financial Services

Tax Planning in a Gig Economy

By Ian Coddington

 

In recent years, we have seen a rise in so-called side hustles and gig work, where individuals take on part-time jobs or project-based work for additional income.

This ‘gig economy’ has been accelerated by the effects of the coronavirus outbreak; Americans are being laid off or have to remain at home or socially distance. Without a primary income source, people have turned to other solutions to pay their bills.

Ventures like DoorDash, Uber, Amazon, and Fiver all offer individuals the ability to earn income by doing work for companies and individuals. However, this does not make up the entire market of gig work.

Ian Coddington

Ian Coddington

“This form is different from your W-2 in that 1099 income is considered self-employment earnings, which is taxed differently than W-2 wages.”

People who sell artwork or wrap Christmas presents, handymen, and movers are all examples of individuals who could earn income on the side. We have seen how some side hustles can turn into profitable ventures, while others just use it to have extra spending money. If you took on additional sources of income during the pandemic, there might be some tax considerations you might not be aware of.

 

Self-employed Vs. W-2

Unlike a normal employed job where you receive a Form W-2, most gig work will consider workers independent contractors, and issue you a Form 1099. The most common form received for this work was a 1099-MISC, which is now replaced with the new Form 1099-NEC.

If you were paid at least $600 from a business that was not your employer, you can expect one of these forms come tax time. This form is different from your W-2 in that 1099 income is considered self-employment earnings, which is taxed differently than W-2 wages. When you work for an employer, they will withhold a percentage of your wages for taxes. However, when you are self-employed, you are subject to self-employment taxes and might be subject to estimate payments.

Depending on your level of income and other withholdings, one benefit of this is a self-employment tax deduction, where you can deduct what an employer would have paid on your tax return. For delivery drivers, it is important to track your mileage, as you can deduct the allowable mileage expense against your self-employed earnings. If you used a home office for business, you could potentially deduct a portion of your mortgage, utilities, and even repairs to that space. Prior to taking this deduction, you should review the rules closely.

 

Meet with an Advisor

These benefits sound good, but what if you have unique situations for your side hustle? What if you are paid through cash apps like Venmo or Zelle? Can you deduct the transaction fees paid to payment processors like PayPal or Stripe? What if you receive a Form 1099-K? Questions like these can be answered by an advisor, like a licensed tax preparer. Here is a quick list of things to bring to a meeting with a tax preparer:

• Any W-2s or 1099s received;

• Personal or business bank statements;

• Information on your home office, including square footage;

• Log of mileage; and

• Purchases for the business.

Working a side hustle can be an exciting and hopefully profitable venture; however, it can add complexity to your tax return. Take charge of the additional complexity, gather the required documentation, and minimize your tax liability.

 

Ian Coddington is an associate at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

 

Construction

Building Confidence

Construction may be on the upswing in 2021, according to a report by Associated Builders and Contractors (ABC).

“While many contractors enter 2021 with significant trepidation, the most recent backlog and confidence readings suggest that the onset of vaccinations has generally led to more upbeat assessments regarding nonresidential construction’s future,” said ABC Chief Economist Anirban Basu. “Backlog is down substantially from its year-ago level, and profit margins remain under pressure, yet many contractors expect to enjoy higher sales and to support more staff six months from now.”

The organization’s Construction Backlog Indicator rebounded modestly to 7.3 months in December, an increase of 0.1 months from November’s reading, according to an ABC member survey conducted from Dec. 18 to Jan. 5. The backlog is 1.5 months lower than in December 2019.

“While many contractors enter 2021 with significant trepidation, the most recent backlog and confidence readings suggest that the onset of vaccinations has generally led to more upbeat assessments regarding nonresidential construction’s future. Backlog is down substantially from its year-ago level, and profit margins remain under pressure, yet many contractors expect to enjoy higher sales and to support more staff six months from now.”

ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels all increased in December. The sales index climbed above the threshold of 50, indicating contractors expect to grow sales over the next six months. The index reading for profit margins remained below that threshold. The staffing level index increased to 56.3 but remains well below its December 2019 reading.

“The baseline expectation is that, by the spring, the U.S. economy will blossom,” Basu said. “With many households sitting on mounds of savings and sustaining pent-up demand for many goods and services, the U.S. economy is set for rapid growth as it reopens more fully during mid- to late 2021. While it will take time for that to fully translate into new construction projects, some that were postponed earlier during the pandemic are likely to come back to life over the next several months. That should help many contractors begin to rebuild backlog, and to eagerly await 2022.”

The report comes on the heels of news that the construction industry added 51,000 net new jobs in December, according to ABC analysis of data released by the U.S. Bureau of Labor Statistics. During the last eight months, the industry has added 857,000 jobs, recovering 79.1% of the jobs lost during the earlier stages of the pandemic.

“The expectation remains that, as vaccination proceeds, the U.S. economy is poised for a significant uptick in growth during the latter half of 2021,” Basu said. “That will set the stage for improving industry performance in 2022 and beyond, particularly if the new administration is able to push forward an aggressive infrastructure stimulus package.”

 

Construction

Something to Build On

By Joe Bousquin

The term ‘construction’ appears 636 times in the $908 billion pandemic relief package and $1.4 trillion omnibus spending bill passed by Congress and signed by President Trump at the end of December.

In other words, while the relief package was less than half the size of last spring’s $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, there’s still plenty in the overall bill for contractors to be happy about.

“Lots of construction spending is always a good thing, as long as everyone has access to it,” said Kristen Swearingen, vice president of Legislative and Political Affairs at Associated Builders and Contractors. Her cautionary tone refers to the Protecting the Right to Organize Act, which many non-union contractors oppose, potentially being passed in the 117th Congress after Democrats regained control of the Senate earlier this month.

But in general, construction advocates said the new pandemic relief package should be viewed as a win.

“This bill for the construction industry has a lot of good things overall,” said Jimmy Christianson, vice president of Government Relations at Associated General Contractors of America. “I would say, on the list of the many things we were asking for, we got probably 80%.”

“This bill for the construction industry has a lot of good things overall. I would say, on the list of the many things we were asking for, we got probably 80%.”

Nevertheless, one lament is that the package doesn’t include liability protection for employers against lawsuits from employees who were exposed to or became infected with COVID-19 at work.

Here’s a closer look at some of the provisions that should help contractors in 2021:

• Paycheck Protection Program. There are several wins for contractors in the the legislation’s renewed PPP funding, including a provision to ensure expenses paid for with forgiven PPP loans are tax-deductible, an issue many contractors were wringing their hands over last fall.

• Expansion of the Employee Retention Tax Credit. This gives qualifying employers a $5,000 credit per worker for employees not paid with PPP funds in 2020, as well as a $7,000 credit per worker per quarter in the first half of 2021.

“That’s a huge deal for construction companies and employees to help manage the continuing uncertainty that’s still happening,” Christianson said.

• State transportation funding. One of the headline numbers for contractors is the $10 billion earmarked for state DOTs, many of which saw their funding decline in 2020. That should provide relief for road and other civil builders who have increasingly felt the impacts of stalled projects.

“It will help mitigate the impact of bid-letting delays and project cancellations that we saw in 2020 throughout the country,” Christianson said. “And the fact that it’s dedicated funding means that states can’t use it for other things.”

• School construction. The package also includes $82 billion for education, at least some of which can be used for construction and renovations post-COVID-19, when students return en masse to classrooms.

 

Joe Bousquin reports on the construction industry for Construction Dive.

Opinion

Opinion

By Sandra Doran

We’re just days away from watching the accomplished, inspiring Kamala Harris become the next vice president, and it doesn’t escape me that this thrilling milestone comes at the same time the Bureau of Labor Statistics reports 1.1 million American workers have left the pandemic-challenged labor force — and 865,000 (80%) of them are women. The contrasts of this moment provide some context for understanding the significance of women’s colleges, and for championing the important place they hold in our world.

The Women’s College Coalition counts just 36 American women’s colleges, down from 46 six years ago and about 230 in 1960. Our numbers have dwindled against a backdrop of social, political, and economic shifts for women, shifts that have resulted in more options and opportunities across the board, but especially in the realm of higher education, where women students have outnumbered men for five decades, prompting many to ask: what purpose do today’s women’s colleges serve?

A recent study by Kathryn A. E. Enke, published by the Women’s College Coalition, looked at access, opportunity, and outcomes at today’s American women’s colleges and compared them with coed liberal-arts colleges and public universities. Her findings reveal a modern profile of women’s college students that may surprise those who still view these schools as places where America’s elite daughters are groomed to uphold the professional, and personal, status of their forebears.

Rather than resembling the student population at private liberal-arts colleges, women’s college students are demographically akin to students at public colleges and universities, meaning they’re older, more diverse, and less economically advantaged. While we still imagine that the average college student is 18 to 24 years old, that age bracket includes only 50.6% of students at women’s colleges; at private liberal-arts colleges, it’s 90.9%, and at public universities, 77.5%.

More than half of students at women’s colleges identify as students of color (51.2%), compared to 38.5% at private liberal-arts colleges and 43.6% at public universities. Enke also found that full-time, first-time undergraduates at women’s colleges are more likely to have been awarded a Pell Grant than students at liberal-arts colleges (43.2% vs. 32.6%), meaning they are more likely to come from families with limited financial means. At Bay Path, 56% of our students are Pell-eligible.

Why is this significant? According to an analysis published by the Pell Institute, low-income, first-generation students disproportionately come from ethnic and racial minority backgrounds, and they tend to be older, less likely to receive financial support from parents, and more likely to have multiple obligations outside college, all factors that require a more intentional and supportive college experience.

One real power of women’s colleges exists in the influence of academic and social experiences, which the Pell Institute describes as “studying in groups, interacting with faculty and other students, participating in extracurricular activities, and using support services.” These experiences are shown to foster success in college, and intentionally, repeatedly, and enthusiastically creating a learning environment and culture that embeds these experiences into the educational model is what defines women’s colleges.

Our schools don’t just shepherd women to their diplomas; we create a distinct and dedicated space for women to build intellectual confidence, enduring community, and unwavering tenacity — because we know they’re going to need every last bit of it as they pursue their ambitions.

Enke’s research also measured retention and completion rates at women’s colleges at 62.2%, private liberal-arts colleges (which tend to serve the most economically privileged students) at 68.9%, and public schools at 54%. We’re proud to note that the retention rate of all traditional undergraduates at Bay Path is 77%.

The past year has laid bare the persistent circumstances that continue to disrupt women’s ambitions, impede our incomes, and restrict our potential. With women’s colleges up against the financial and demographic headwinds shaking the entire higher-ed sector, we must dig deeper, hold faster, and aim higher, while keeping the initial mission of women’s education at the center of all we do: to expand access, create space, and nurture the intellect for women who deserve to realize their dreams.

 

Sandra Doran is president of Bay Path University.

Law Special Coverage

Ringing Out the Old

By Amy B. Royal, Esq.

Most of us are happy to leave 2020 behind.

It was a year wrought with struggles both at home and in the workplace. Many companies faced closures, near-closures, reduced capacities, and reduced business all because of the impact of the COVID-19 global pandemic. Companies were also hit with several new, COVID-related laws, such as paid emergency leaves of absence, furthering the burdens they were facing during an already-difficult time.

It isn’t surprising that we are ready to ring in and embrace this new year. And, with the new year here, v is a good time to shift gears, reboot and regroup, and return to building better business practices. With that said, the new year provides an opportunity to proactively take a look at your company’s current employment-law practices to ensure compliance with the myriad evolving employment laws affecting your company.

 

Paid Family and Medical Leave and Minimum Wage

Two noteworthy laws take effect in Massachusetts this January: the Paid Family and Medical Leave (PFML) law and the revised minimum-wage law.

PFML law takes effect in the Bay State this January. While employer obligations under PFML commenced on Oct. 1, 2019, as of Jan. 1, 2021, employees can begin to apply for and receive paid leave for most medical and family leaves of absence. The remaining leave provisions will take effect on July 1, 2021. Under PFML, employees can take paid leaves for their own serious health condition, to bond with a newborn child, to bond with a child after adoption or foster-care placement, to care for a family member with a serious health condition, or to manage family affairs when a family member is on active duty in the armed forces.

All private Massachusetts employers are covered under the law regardless of their size. Leave entitlements range from 12 weeks to 26 weeks depending on the type of leave needed, and employees can take leave intermittently, if medically necessary, for medical leave for an employee’s own serious health condition or take family leave to care for a covered service member or to care for a family member with a serious health condition.

Amy B. Royal

Amy B. Royal

“With the new year here, it is a good time to shift gears, reboot and regroup, and return to building better business practice.”

Intermittent leave cannot be used to bond with a child. PFML and federal FMLA run concurrently. The same is true for the Massachusetts Parental Leave Act. Employees can choose to use but may not be required to use other forms of paid time off. PFML provides job protection and restoration rights akin to the federal FMLA. Employers are required to restore employees who take leave to their previous position, or to an equivalent position, with the same status, pay, benefits, length-of-service credit, and seniority as of the date of leave.

On Jan. 1, 2021, the Massachusetts minimum wage increased from $12.75 to $13.50 per hour. The service rate also increased from $4.95 to $5.55 per hour. Premium pay for Sunday retailer workers decreased. The next step in our minimum-wage rise is to $15 per hou, slated to take effect in 2023.

 

Proactive Employment Steps

The new year can serve as a good reminder and placeholder for reviewing and auditing your employment practices. Doing so will enable you to be strategic about that piece of your business and move toward creating a detailed and updated personnel plan going forward.

A good plan starts with an annual review of employment policies and manuals, written job descriptions, and employee-training programs to ensure that your company is compliant with state and federal laws and that your employees are properly trained in your processes and procedures.

Well-crafted employment policies are important because they communicate expectations to employees and help insulate your company from certain legal liabilities. When crafting employment policies, know that certain ones are legally required, while others are good business practice. Depending on your company’s size, required employment policies may include anti-discrimination, anti-harassment, parental leave, paid family and medical leave, and sick time. The implementation of other policies may be a good idea, such as codes of conduct, discipline and termination, workplace safety, off-duty conduct and the use of social media, drug and alcohol use and testing, use of cell phones, and use of company computer equipment and other electronic resources.

Written job descriptions are also a good practice. While not legally mandated, they can be a good tool to assess and evaluate prospective and current employees and also can reduce your company’s exposure to certain lawsuits. Accurate job descriptions that set forth the essential functions of a position can minimize liability when your company is faced with either internal requests for accommodations or external disability claims. Providing an accurate job description to an employee’s medical provider can also help determine whether an employee can perform their job with or without an accommodation or qualify for a leave of absence.

Another good business practice is employee training. Training managers and supervisors is especially important. Indeed, such trainings can help them understand company policies and their roles and responsibilities under these policies. Particularly important trainings for managers include anti-discrimination and anti-harassment, employee disabilities and recognizing requests for reasonable accommodations, and effective employee discipline and documentation.

Many employment issues that eventually evolve into litigation stem from actions or inactions of managers or supervisors. Employers should regularly conduct trainings to give these key employees the knowledge and skills required to enable them to properly handle situations as they arise.

The cost of defending expensive litigation far exceeds the investment in taking proactive, preventive steps to reduce the risk of litigation. Therefore, employers should consider conducting an internal audit at the beginning of each and every new year.

 

Amy B. Royal, Esq. is a litigation attorney who specializes in labor and employment law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council; (413) 586-2288; [email protected]

Community Spotlight Special Coverage

Community Spotlight

By Mark Morris

As the world looks to generate energy from different sources and reduce waste, a new facility just opened in Agawam that contributes to both efforts.

What looks like a plain green building on Main Street is actually a plant that converts food waste into natural gas and fertilizer. Vanguard Renewables, based in Wellesley, approached Agawam Mayor William Sapelli about locating an organics-recovery facility in Agawam. After addressing some initial concerns about truck traffic and potential odor from the plant, the town gave the go-ahead.

“Because Agawam is a designated green community, it’s important for us to bring in facilities like this,” Sapelli said, noting that this is only the second plant of its type in Massachusetts.

Here’s how it works. Let’s say the nearby Hood dairy plant has a pallet of yogurt that does not meet specifications or has expired. Hood can bring that pallet to the Agawam facility, where large extracting machines separate the packaging from the yogurt. The packaging gets bundled and brought to a recycling facility, while the yogurt is mixed with other food waste and water. This forms a slurry, which is then delivered by tanker truck to an anerobic digester, a large, dome-shaped structure. (The closest digesters to Agawam are located on farms in Deerfield and Hadley.)

The slurry is mixed with farm-animal waste in the digester, where two things happen. First, biogas rises from the mix and gets converted to renewable natural gas for heating and cooling. Then, the remains of the slurry, known as digestate, are used as low-carbon fertilizer for area farmers.

“In the past, all this waste was incinerated or dumped into a landfill, but now it’s being turned into energy and fertilizer,” Sapelli said, calling the process “amazing.” As the Agawam facility ramps up to full capacity, it will be able to process 250 tons of food waste per day, according to Vanguard.

Mayor William Sapelli

Mayor William Sapelli

“Because Agawam is a designated green community, it’s important for us to bring in facilities like this.”

That’s just one project that has Agawam officials excited as they move past a challenging 2020 for all municipalities. While the pandemic is still a daily reality, they say this town is focused on growth as a new year dawns.

 

Bridge to Tomorrow

For the past couple of years, the largest infrastructure project in Agawam has been the rebuilding of the Morgan-Sullivan Bridge connecting Agawam and West Springfield. The original completion date was scheduled for May 2022. After Sapelli met with Lt. Gov. Karyn Polito to incentivize the project contractor, Northern Construction, to work overtime and weekends to shorten the deadline, the date was moved to August 2021.

Once the pandemic hit and fewer people were out and about, bridge construction accelerated further. Favorable weather, as well as lighter traffic from both vehicles and pedestrians, allowed crews to get more done every day. Then, the Big E canceled its 2020 fair.

“By contract, the crews had to stop work during the Big E,” Sapelli said. “When the fair was canceled this fall, it gave them an extra 17 days to work on the bridge.” While noting that he is not putting pressure on the construction crews, he predicted the bridge may now be completed by June 2021.

The mayor is also pleased that many of the headaches and traffic jams that usually occur with a major construction project have not materialized. “It’s been a great project,” he said. “You don’t hear a mayor say that very often.”

Like every community, Agawam has had to deal with COVID-19. In fact, the mayor himself had a false alarm after testing positive on a quick test. After going into self-quarantine for several days and not experiencing any symptoms, he took a PCR test (referred to as the ‘gold standard’ of COVID testing), which revealed he had never been infected with coronavirus.

the Morgan-Sullivan Bridge project may now be done by June

With the pandemic reducing traffic and accelerating the pace of work last year, the Morgan-Sullivan Bridge project may now be done by June.

“I asked if I was asymptomatic or if I’d had it a week before, and the answer to both was, ‘no, it was a false positive,’” he said.

While state mandates have limited public access to Town Hall, Sapelli explained that, even if it were open to the public, the building’s layout just doesn’t work well with COVID-19 mandates.

“For example, the public area in the Collector of Taxes office measures about five feet by eight feet,” Sapelli said. “With social distancing, that means no more than one person can stand there; anyone else would have to wait in the hall, which is also cramped.”

Still, with an emphasis on safety first, Sapelli said Town Hall is open for business for anyone who calls ahead for an appointment.

In order to reduce COVID-19 risks and still encourage in-person education, Agawam’s public schools have adopted a hybrid model. Students whose last names begin with the letters A-K attend class on Monday and Tuesday, while those with L-Z last names attend Thursday and Friday. On the three days they are not scheduled in person, students attend class remotely.

The Department of Health and the superintendent of schools are employing the hybrid model as long as COVID-19 cases within the education community remain low compared to the community as a whole. As a former Agawam school superintendent, Sapelli supports this direction.

“The hybrid approach has been working for Agawam. First, we’re making sure everyone is safe so we can get our students in front of teachers,” he said, adding that parents who are uncomfortable with the hybrid model may choose remote learning full-time.

Bars and restaurants everywhere have greatly suffered during the pandemic from mandated closings, limited seating, and other restrictions. To support those businesses in Agawam, the City Council and the mayor have co-sponsored a resolution to waive the $1,500 liquor-license fee in 2021 for all bars, restaurants, and banquet halls.

“We recognize they’ve lost a lot of revenue and have not been able to host the types of events and gatherings they normally do,” Sapelli said. “Waiving the fee is one thing we can do during the pandemic to help local businesses in these tough times.”

Agawam at a Glance

Year Incorporated: 1636
Population: 28,718
Area: 24.2 square miles
County: Hampden
Residential Tax Rate: $16.83
Commercial Tax Rate: $31.61
Median Household Income: $49,390
Family Household Income: $59,088
Type of government: Mayor; City Council
Largest Employers: OMG Inc., Agawam Public Schools, Six Flags New England, Whalley Computer Associates
* Latest information available

The fee waiver is just one of the ways the City Council and the mayor are working together to help local businesses, he added. “We are business-friendly. When a new business wants to locate in Agawam, we try to expedite the permitting process by having a team meeting that includes everyone from our fire and police departments to the health inspectors and building inspectors. They all meet together with the business owner, so it becomes one-stop shopping.”

 

House Calls

That cooperative attitude makes life easier for Marc Strange, director of Planning and Community Development in Agawam, who told BusinessWest about several projects in the area of South Westfield Street in the Feeding Hills section of town. One of the most anticipated projects is the Villas at Pine Crossing, an over-55 community that will add 44 units of senior housing to the market.

“Our office frequently gets calls from residents who are looking to downsize, but they want to stay in Agawam,” Strange said. “The designs at the Villas are more friendly for an aging population, something that is desperately needed in Agawam and everywhere else.”

He said he’s grateful the developer chose Agawam for the Villas, and welcomes similar projects. “We’re hoping this will trigger future developments for 55-plus communities in Agawam.”

The land parcel that was once the Tuckahoe Turf Farm sits adjacent to the Villas at Pine Crossing. After years of considering new uses for the property, Agawam officials are now looking at a solar-energy installation for part of the site. “The revenue from the solar field will allow us to develop the rest of the property for recreational uses, such as walking trails and such,” Sapelli said.

Agawam also completed a project in 2020 to convert all its streetlights to LED fixtures, which emit brighter light but also help the city reap potential savings of $220,000 every year. “Agawam is looking to save about $100,000 per year in energy costs and nearly $120,000 per year in streetlight maintenance,” Strange said.

During construction of the Morgan-Sullivan Bridge, crews are using two desirable land parcels to stage and store equipment. Once the bridge is complete, those two parcels will be available for development as well.

“To be clear, as exciting as it is to market prime commercial sites, the new bridge will have an impact on the town that goes well beyond those two parcels,” Strange said.

All of which promises a brighter future for Agawam — literally and figuratively.

Law

A Question of Mandates

By Timothy F. Murphy

 

Employers have a key role to play in ensuring the successful rollout of COVID-19 vaccines and that people are safe at work. Many employers may wish to adopt vaccine mandates, especially if their employees work in close contact with others. But before doing so, employers need to consider a number of things.

 

Can Employers Require Vaccinations?

Yes. Non-union employers can unilaterally require employee vaccinations because employment relationships are ‘at will,’ and they have a legal duty to provide a safe and healthy workplace. Many employers already require workers to get inoculated against certain infectious diseases.

 

Can Employees Object to Vaccine Mandates?

Yes. Anti-discrimination laws provide disabled and religious employees with legal protections from vaccine mandates. Employers that require employees to receive the COVID-19 vaccine must meet certain requirements under those laws.

Timothy F. Murphy

Timothy F. Murphy

“Non-union employers can unilaterally require employee vaccinations because employment relationships are ‘at will,’ and they have a legal duty to provide a safe and healthy workplace.”

A worker with a covered disability may seek an exemption from a vaccine mandate. For instance, medical advice to avoid a vaccine due to an employee’s underlying health condition may legally justify a vaccine refusal. In such situations, the employer must explore whether an exemption is a reasonable accommodation given the disability and job duties — so long as it isn’t an undue burden for the employer. Accommodations — like telework or working in isolation from co-workers — that would allow the unvaccinated employee to perform essential job functions would likely not be an undue burden.

According to recent guidance from the Equal Employment Opportunity Commission, sincerely held religious beliefs may also justify a vaccine refusal. An employer must provide a reasonable accommodation “for the religious belief, practice, or observance” that prevents the worker from receiving the vaccine, unless that accommodation poses more than a “de minimis” cost or burden. Employers may seek verification of such beliefs only if they have an objective reason for doing so.

 

Government Vaccine Mandates Appear Unlikely for Now

A general state vaccine mandate does not appear to be in the cards anytime soon. On the federal level, President-elect Biden has signaled that he is not considering a vaccine mandate at this time. It also appears unlikely that the federal agency charged with workplace safety, the Occupational Safety and Health Administration (OSHA), would require employers to mandate a COVID-19 vaccine. In the past, OSHA has permitted employers to require employees to receive the flu vaccine.

 

Public-health Experts Warn Against Mandates for Now

Even if employers can legally mandate COVID-19 vaccinations, U.S. Surgeon General Jerome Adams recommends against it. “Right now, we are not recommending that anyone mandate a vaccine,” Adams said in a recent interview with Yahoo Finance, noting that Pfizer’s vaccine hasn’t been fully approved yet. According to Saad Omer, a vaccinologist and infectious-disease epidemiologist at Yale University, “mandates shouldn’t be the frontline policy option.”

 

Avoid the Backlash

A vaccine mandate could trigger employee-morale issues. Vaccine hesitancy is a concern across the country. One study revealed that more than one-third of Americans would refuse a COVID-19 vaccine if offered one. However, other data suggests that Americans’ willingness to take a COVID-19 vaccine has risen as data on the vaccines’ efficacy have emerged. Many people have said they are more comfortable waiting a few months to get the vaccine. Employers need to be sensitive to employee concerns if vaccination is mandated as soon as it becomes publicly available.

 

Reduce Potential Legal Liability

Employees injured by a mandated vaccine may bring legal claims for workers’ compensation, negligence, and OSHA violations. It is difficult to predict the success of such claims. The ability to argue that government recommendations were followed would go far in defending against them. Limiting a vaccine mandate to high-risk positions or workplaces may also reduce potential legal liability and employee backlash.

 

Wait and See Is the Way to Go

Most Massachusetts non-healthcare employers and their employees are not going to have access to any vaccines before the spring of 2021. So most employers can wait to decide to mandate vaccines simply because there won’t be vaccines immediately available.

In the meantime, employers should be prepared to provide reliable information; reinforce other steps to protect employees and the public, like continued screening, fitness-for-duty programs, and contract tracing; implement employee incentives for voluntary vaccinations; and consider mandatory rapid testing, as those products come to market, as an alternative to mandatory vaccination.

 

Timothy Murphy is a partner at Skoler, Abbott & Presser, P.C., focusing his practice on labor relations, union avoidance, collective bargaining and arbitration, employment litigation, and employment counseling.

Law

To Contest or Not to Contest?

Benjamin Coyle, Esq.

 

None of us want to think that, after we pass away, our loved ones may someday fight over an inheritance. But as we all know, family relationships are complex, and can be particularly so when finances are involved. Add in the grief of losing a loved one, and suddenly, relatives who have always gotten along well may find themselves at odds. Keeping peace in the family is often a vital consideration in estate planning.

One of the most important components of a person’s estate plan is the document that ultimately directs the final disposition of their property, both real and personal, upon their passing. In most circumstances, that document is either a last will and testament or a trust. A question that often arises during the drafting process is: “what can I do to make sure that no one fights over my estate?”

Benjamin Coyle

Benjamin Coyle

“Family relationships are complex, and can be particularly so when finances are involved. Add in the grief of losing a loved one, and suddenly, relatives who have always gotten along well may find themselves at odds. Keeping peace in the family is often a vital consideration in estate planning.”

While an attorney can never guarantee that heirs or beneficiaries will not fight, there are provisions that can be made to deter an interested person from contesting the terms of a will or trust. For wills, Massachusetts law recognizes a provision purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate. For trusts, the courts in Massachusetts have upheld the enforceability of ‘no-contest’ (or ‘in terrorem’) clauses.

In 2012, Massachusetts adopted the Uniform Probate Code (UPC), a model code adopted by 18 states in order to standardize probate laws. However, in adopting the UPC, Massachusetts did not incorporate the model’s no-contest provision, which essentially allowed for challenges or contests where probable cause exists. Rather, Massachusetts determined that the Commonwealth would maintain its historic baseline regarding no-contest provisions, and, in doing so, the Legislature provided that such clauses are enforceable as a matter of law, subject to some limitations as determined by the court.

Generally speaking, a no-contest provision is a clause within a will or trust with specific language stating that any person who challenges the estate must then forfeit their share. One of the primary purposes of including such a provision is to deter an interested person from bringing a challenge against the estate.

Typically, if an interested person believes they are not receiving what they may consider to be their fair share of the estate, that perception can provoke a desire to fight the terms of the will or trust. Emotions tend to run particularly high if a sibling or family member may receive a larger portion, or if someone is left out of an estate altogether. These challenges are not often successful, so long as the creator of the will or trust complied with all statutory requirements, was not subject to undue influence or duress, and had the appropriate mental capacity to execute the document.

Occasionally, though, when an interested person is able to present evidence of duress or incapacity, a successful challenge to a will could result in the entire document being invalidated, which would naturally include the no-contest provision. If the no-contest provision is eliminated as a result of the challenge, the contesting party may then be eligible to receive a share of the estate or trust, depending upon the other circumstances at hand.

When administering any will or trust, whether a no-contest provision is included or not, the fiduciary in charge (that is, the trustee of a trust, or the personal representative under a will) must still comply with all the other terms of the document, and the fiduciary is still responsible to beneficiaries. They are required to account to the beneficiaries for the assets under their control, as this is a matter of public policy that the courts have determined cannot be avoided with a no-contest provision.

Typically, we might see no-contest provisions enforced within the discretion of the fiduciary, for frivolous matters involving the administration of the will or trust. Occasionally, a beneficiary may ask the court for an interpretation of the provisions of a will or trust, to make sure the fiduciary is complying with its terms. Provided they are not trying to challenge or change the provisions in the document, the court is unlikely to invoke the no-contest provision when a request for interpretation is made by an interested person.

If you are a beneficiary of a last will and testament or a trust, it is extremely important to review the document to see if it contains a no-contest provision. If it does, and if a challenger comes forward, the court is likely to uphold the no-contest clause, which could result in the forfeiture of an inheritance. One must carefully weigh the options and potential outcomes before asserting a challenge.

On the other hand, if you are preparing your own estate plan and are concerned that disagreements may erupt among beneficiaries, you may wish to consider including a no-contest provision in your documents. Keeping the family peace in the future is certainly worth spending some time and effort today.

 

Benjamin Coyle is a shareholder with Bacon Wilson, P.C. He specializes in matters of estate planning and administration and also has extensive experience with real estate, business, corporate, and municipal law; (413) 781-0560; [email protected]

Women in Businesss

Undervalued Again

By Alex Thornton

The COVID-19 pandemic, and the economic downturn it has caused, have hit everyone hard. But the impact has not been spread equally. A new report by UN Women has found clear evidence that, although both genders have seen their unpaid workloads increase, women are bearing more of the burden than men.

Even before the pandemic, women were spending on average three times as many hours as men on domestic chores, childcare, and looking after vulnerable or elderly loved ones. Widespread restrictions on daily life, school closures, disruption to businesses, and a big rise in working from home have made many tasks more time-consuming and arduous. And more women than men have reported an increase in their workload in almost every aspect of domestic life.

The data also shows more men saying they usually don’t do a particular task. The average woman now spends nearly the equivalent of a full-time job doing unpaid childcare — a full working day a week more than the average man. Nearly one-third of women report spending more time cooking and serving meals, compared to just under one-fifth of men. Half of all men say they don’t normally get involved in preparing food at all.

A similar picture emerges when looking at childcare. Research for UN Women carried out by Ipsos in 16 countries showed that, before the pandemic, women spent an average of 26 hours per week looking after children, compared to 20 hours a week for men. That has now risen by 5.2 hours for women, and just 3.5 hours for men. As a result, the average mother now spends nearly the equivalent of a full-time job doing unpaid childcare — a full working day a week more than the average father.

There are big regional differences. Although every nation surveyed showed a rise, the effects were most pronounced in less affluent countries in Latin America, Asia, and Africa, compared to wealthier countries.

The pandemic has reaffirmed the persistence of gender bias in social and cultural norms. All but a small fraction of men acknowledge that their wives or partners are doing more around the house, while just two-thirds of women say the same of their husbands or partners. Perhaps more concerning for gender equality in the future is that parents are more likely to notice their daughters doing more to help than their sons.

The overall effect is that the gradual progress toward gender equality seen in recent decades could not only stall, but be reversed.

Already, more than 28 million women over age 25 are estimated to have left the labor market altogether in 55 high- and middle-income countries over the last year, compared to 24 million men. Given that women were already less likely to be in the workforce, this represents a serious threat to the economic status of huge numbers of women. On a global scale, it’s thought that the pandemic will push a further 47 million women and girls into extreme poverty by 2021.

Despite the clear evidence that women are disproportionately suffering economically from the effects of the pandemic, the vast majority of measures that have been enacted by policymakers do little to address the increased burden on women.

However, there are some notable exceptions: increases in monthly child allowance payments in places like Argentina, expanding paid parental-leave programs in Italy and Belgium, and compensating parents affected by closures, as in Germany and South Korea.

Perhaps the biggest step would be simply recognizing the value of the unpaid domestic and caring work done by women, pandemic or not. The 16 billion hours spent on unpaid caring every day would represent nearly 10% of the world’s entire economic output if it was paid at a fair rate. Women were grossly undervalued before the pandemic — now the situation is getting even worse.

 

Alex Thornton is senior writer, Formative Content for the World Economic Forum.

Opinion

Opinion

By Brooke Thomson

Associated Industries of Massachusetts (AIM) has worked tirelessly with elected officials on both the state and federal levels to moderate a potentially disastrous 60% increase in unemployment insurance rates next year and to keep the Unemployment Insurance Trust Fund on sound financial footing.

Last month, Gov. Charlie Baker took a major step toward addressing that issue by filing timely legislation to ensure a two-year schedule freeze and provide the ability to bond the remaining trust-fund deficit and allow it to be rebuilt over time.

Meanwhile, AIM continues to support efforts by the Massachusetts Congressional delegation to persuade Congress to provide additional resources for the state’s Unemployment Insurance Trust Fund. The $900 billion economic stimulus bill recently approved in the U.S. Congress does not provide money for state UI systems, though it does revive the Paycheck Protection Program with $284 billion to cover a second round of PPP grants to especially hard-hit businesses.

Massachusetts businesses now need elected officials to stabilize the state’s unemployment-insurance system by freezing the statutory rate and allowing Massachusetts to authorize bonding.

A day before Baker filed his rate-freeze bill, AIM provided a statement to the entire Massachusetts Legislature calling for a freeze on employer UI tax-rate schedules to shield Massachusetts employers from the upcoming rate spike, which is tied by statute to the overall condition of state UI Trust Fund.

Given the unforeseen economic shutdowns brought on by the COVID-19 pandemic beginning in March, the Massachusetts Department of Unemployment Assistance projects that the fund, primarily financed by direct and reimbursing employer contributions, will be in the red by $5 billion at the end of 2022 and remain insolvent by about $3 billion as far out as 2024.

These initial numbers, left unchecked, would trigger an increase from the current 2020 employer tax rate of Schedule E, or $539 per employee, to Schedule G, about $866 per employee, reflecting an almost 60% increase.

Baker’s bill would freeze the employer tax rate at Schedule E for the next two years, slowing annual employer contribution growth to $635 in 2021 and $665 in 2022.

AIM thanks Gov. Baker for filing this legislation, and we appreciate the speedy action that the House and Senate have taken throughout this pandemic with legislation to stabilize the unemployment-insurance system for employers and employees.

We urge the House and Senate to take urgent action on this proposed legislation to freeze rates and fund the system through bonding, which will ensure that all claims are paid to individuals, that the trust fund is stabilized with a low-interest loan, and the Commonwealth is able to avoid a statutorily triggered unemployment-insurance tax-rate hike in first months of 2021.

 

Brooke Thomson is executive vice president for Government Affairs at Associated Industries of Massachusetts.

Special Coverage

By Timothy F. Murphy

Employers have a key role to play in ensuring the successful rollout of COVID-19 vaccines and that people are safe at work. Many employers may wish to adopt vaccine mandates, especially if their employees work in close contact with others. But before doing so, employers need to consider a number of things.

Can Employers Require Vaccinations?

Yes. Non-union employers can unilaterally require employee vaccinations because employment relationships are ‘at will,’ and they have a legal duty to provide a safe and healthy workplace. Many employers already require workers to get inoculated against certain infectious diseases.

Can Employees Object to Vaccine Mandates?

Yes. Anti-discrimination laws provide disabled and religious employees with legal protections from vaccine mandates. Employers that require employees to receive the COVID-19 vaccine must meet certain requirements under those laws.

A worker with a covered disability may seek an exemption from a vaccine mandate. For instance, medical advice to avoid a vaccine due to an employee’s underlying health condition may legally justify a vaccine refusal. In such situations, the employer must explore whether an exemption is a reasonable accommodation given the disability and job duties — so long as it isn’t an undue burden for the employer. Accommodations — like telework or working in isolation from co-workers — that would allow the unvaccinated employee to perform essential job functions would likely not be an undue burden.

According to recent guidance from the Equal Employment Opportunity Commission, sincerely held religious beliefs may also justify a vaccine refusal. An employer must provide a reasonable accommodation “for the religious belief, practice, or observance” that prevents the worker from receiving the vaccine, unless that accommodation poses more than a “de minimis” cost or burden. Employers may seek verification of such beliefs only if they have an objective reason for doing so.

Government Vaccine Mandates Appear Unlikely for Now

A general state vaccine mandate does not appear to be in the cards anytime soon. On the federal level, President-elect Biden has signaled that he is not considering a vaccine mandate at this time. It also appears unlikely that the federal agency charged with workplace safety, the Occupational Safety and Health Administration (OSHA), would require employers to mandate a COVID-19 vaccine. In the past, OSHA has permitted employers to require employees to receive the flu vaccine.

Public-health Experts Warn Against Mandates for Now

Even if employers can legally mandate COVID-19 vaccinations, U.S. Surgeon General Jerome Adams recommends against it. “Right now, we are not recommending that anyone mandate a vaccine,” Adams said in a recent interview with Yahoo Finance, noting that Pfizer’s vaccine hasn’t been fully approved yet. According to Saad Omer, a vaccinologist and infectious-disease epidemiologist at Yale University, “mandates shouldn’t be the frontline policy option.”

Avoid the Backlash

A vaccine mandate could trigger employee-morale issues. Vaccine hesitancy is a concern across the country. One study revealed that more than one-third of Americans would refuse a COVID-19 vaccine if offered one. However, other data suggests that Americans’ willingness to take a COVID-19 vaccine has risen as data on the vaccines’ efficacy have emerged. Many people have said they are more comfortable waiting a few months to get the vaccine. Employers need to be sensitive to employee concerns if vaccination is mandated as soon as it becomes publicly available.

Reduce Potential Legal Liability

Employees injured by a mandated vaccine may bring legal claims for workers’ compensation, negligence, and OSHA violations. It is difficult to predict the success of such claims. The ability to argue that government recommendations were followed would go far in defending against them. Limiting a vaccine mandate to high-risk positions or workplaces may also reduce potential legal liability and employee backlash.

Wait and See Is the Way to Go

Most Massachusetts non-healthcare employers and their employees are not going to have access to any vaccines before the spring of 2021. So most employers can wait to decide to mandate vaccines simply because there won’t be vaccines immediately available.

In the meantime, employers should be prepared to provide reliable information; reinforce other steps to protect employees and the public, like continued screening, fitness-for-duty programs, and contract tracing; implement employee incentives for voluntary vaccinations; and consider mandatory rapid testing, as those products come to market, as an alternative to mandatory vaccination.

Timothy Murphy is a partner at Skoler, Abbott & Presser, P.C., focusing his practice on labor relations, union avoidance, collective bargaining and arbitration, employment litigation, and employment counseling.

Banking and Financial Services Special Coverage

Lending a Hand

By Mark Morris

Sometimes being thrown into a challenging situation leads to … well, a good idea or two. Or at least a new way of thinking.

Back in March, when COVID-19 first hit, banks and credit unions in Massachusetts were designated essential businesses by Gov. Charlie Baker. That meant making sure everyone had access to their accounts while, at the same time, limiting in-person banking to appointments only, complete with masks, social distancing, and frequent sanitizing protocols.

“It forced us to think outside the box and to figure out the best ways to serve our members during a time of reduced access,” said Kara Herman, vice president, Retail Administration with Freedom Credit Union, adding that her team set out to first communicate all the options members had available to them to get business done without going inside a branch.

BusinessWest spoke with several local bank and credit-union professionals about the challenge of making adjustments to their businesses in the middle of a pandemic. For Kevin O’Connor, executive vice president and chief banking officer for Westfield Bank, reducing foot traffic in the lobbies back in the spring was a chance to review how to make customer interactions with the bank easier in ways that were not face-to-face.

“We published all our branch phone numbers on our website so people can easily reach their local branch,” O’Connor said. “In this way, we could blend the digital experience with the personal touch of a local branch staff member who is there to assist.”

During the summer months, mandates were relaxed, and banks and credit unions were allowed to reopen their lobbies to walk-in traffic. But this month, as COVID-19 infection rates spiked, lobby restrictions were reinstated at many institutions.

“Because we went through lobby closures back in the spring, we were able to refine the process of helping customers find different ways to accomplish what they need to do,” O’Connor said.

Mike Ostrowski

Mike Ostrowski says the pandemic has been a “disruptive innovation” that helped many customers appreciate the benefits of banking online.

For example, Westfield Bank makes video tutorials available online for those who are new to electronic banking. “We do this to encourage people to be comfortable in whatever way they interact with us.”

Michael Ostrowski, president and CEO of Arrha Credit Union, noted that, when lobby traffic was first curtailed and members would call to complete a basic transaction, his staff would take the the time to educate the caller on how to accomplish what they wanted to do electronically.

“In some ways, the pandemic was a disruptive innovation because it helped us to migrate so many people to the electronic world,” Ostrowski, said adding that online and mobile activity with Arrha has increased 30% in the last nine months.

Educating members is also the approach Craig Boivin, vice president of UMassFive College Federal Credit Union, has taken. While the aim is to reduce traffic in the branch, there’s still one in-person appointment that he encourages.

“A member of our contact center staff will set up an in-branch appointment with folks who aren’t as tech-savvy and take them through a hands-on tutorial on how to use what’s available,” he explained. “We do this so the member can avoid going to the branch in the future for simple transactions.”

Customers who regularly use online banking and mobile apps barely noticed the limited lobby access, but there are others who rely on being able to walk into a branch and do business face-to-face.

“Some of our customers need to come in every day, such as small-business people who need coin and currency to run their shops,” said Kate Megraw, chief operating officer and chief information officer for New Valley Bank and Trust. This past summer, while adhering to all safety and cleaning protocols, New Valley’s lobbies stayed busy.

Kevin O’Connor

Kevin O’Connor

“We published all our branch phone numbers on our website so people can easily reach their local branch. In this way, we could blend the digital experience with the personal touch of a local branch staff member who is there to assist.”

“As a new bank, we are in a growth mode right now, so we were trying to make it easy for customers to come in and open accounts,” she noted. With renewed limits on lobby access, she now encourages appointments as well as the drive-up location at the 16 Acres branch.

Drive-up banking has gone from a routine convenience to a vital service as customers bring more complex transactions to the drive-up window than in the past. It’s one way both bank customers and employees had to adjust to a new environment back in the spring — and may have to adjust again.

 

Striking a Balance

As branches reopened over the summer, loan activity related to the Paycheck Protection Program (PPP) ramped up as as well, Megraw said, providing another opportunity.

“The PPP allowed us to touch a lot of local businesses in Massachusetts and parts of Connecticut,” she added, noting that, through the PPP, New Valley arranged more than 500 small-business loans totaling nearly $90 million.

With branches retreating to a less-accessible time, the challenge now is to strike the right balance between giving people the time they need and keeping the line of cars in the drive-thru moving. Along with placing experienced tellers at the window, O’Connor said, other branch staff speak with people as they approach the drive-up to make sure they have their materials at the ready to make their visit more efficient.

Kate MeGraw

Kate MeGraw

“The pandemic has shown us that high-touch customer service and the ability to speak to someone over the phone or safely take a meeting still makes a big difference when a customer is trying to get something done.”

UMassFive recently converted a drive-up ATM machine at its Hadley branch to a video teller. As a complement to the two existing drive-up tellers, the video teller provides a third option that reduces long lines and still maintains the personal touch.

“It gives our members an additional way to talk to a live person without having to come into the branch or get out of their car,” Boivin said. Installed in two other branch foyers, he added, video tellers have really caught on as usage has tripled just this fall.

Herman said Freedom recently launched video chat as part of its online offerings and said it’s the next best thing to an in-person meeting. “It gives people a chance to see us and talk to us. It’s face-to-face communication even though they are not physically in front of us.”

Because so many people are more comfortable doing things from their home, opening accounts online has substantially increased. While this tool was lightly employed before the pandemic, O’Connor saw an opportunity to enhance it for customers who use it.

“We are supplementing the online account-opening process by having a branch person follow up with the customer to make sure they received the experience they wanted,” he said.

On the lending side of the business, Herman noted that online applications and electronic signatures have further streamlined the process of people conducting bank business from home.

Boivin reported that volume at the UMassFive contact center is up 43% for the year and has nearly doubled in the last two months as coronavirus has spiked. A number of employees moved out of their traditional retail positions to handle the increased activity in the contact center.

“Our staff has been impressive with their flexibility and willingness to work in different departments to get the job done,” he added.

Ostrowski believes his staff were as vulnerable as essential retail workers who have been on the job throughout the pandemic. “Because we appreciate their hard work,” he said, “we recently rewarded our staff with a hazard-pay bonus for all their efforts during COVID-19.”

 

The People Part

As customers increasingly use online and mobile apps for banking, all the managers we spoke with agree that in-person branches still play a vital role. Ostrowski emphasized that technology doesn’t take the place of personal service, but just enhances it.

While acknowledging that digital services are an important and growing part of banking, Megraw also believes the “people part” is still essential.

Craig Boivin

Craig Boivin

“Our staff has been impressive with their flexibility and willingness to work in different departments to get the job done.”

“The pandemic has shown us that high-touch customer service and the ability to speak to someone over the phone or safely take a meeting still makes a big difference when a customer is trying to get something done.”

Boivin hopes the changes that forced people out of the branches will result in more convenience for them and an elevated role for the branches.

“In the long run, we see branches being centers where people can sit down with someone face-to-face for those in-depth conversations about their finances, such as buying a house for the first time,” he said. “We still see a need for those interactions to continue at the branch level.”

Ostrowski predicts banking will move toward a hybrid approach that combines the latest technology innovations with an old-fashioned, hometown banking experience.

“I like the term ‘the big hug,’ meaning, even if you do all your regular business electronically, there are times when you want to come in for a mortgage, or you’re having trouble with a tax bill, and we’re there to give you that big hug of caring service when you need it.”

Herman believes the events of the last nine months have caused banks to re-evaluate the roles and responsibilities that branch staff will have in the future.

“I think the traditional job descriptions we had back in February no longer exist, and they are evolving as we speak,” she said, adding that, while people will remain an important part of branch banking, the industry has to figure out how to serve the new needs their customers will have going forward.

Business of Aging

No Time Like the Present

By Mark Morris

The senior-living industry is preparing for a “gray tsunami.”

According to the U.S. Census Bureau, nearly 10,000 Baby Boomers will turn 65 every day for the next 10 years, while the oldest Boomers will start turning 80 in 2025.

Robert Kelley, in-house counsel for Everbrook Senior Living, predicts that, once Boomers start reaching that age, the demand for senior-living communities will increase significantly. That’s one of the many reasons he’s excited about his company’s newest community, Cedarbrook Village in Ware.

From its corporate office in Southampton, Everbrook already manages three senior-living communities in Windsor Locks, Hebron, and Bozrah, Conn., and Cedarbrook is its first community in Massachusetts.

Originally planned for a July opening, various delays postponed the ribbon-cutting ceremony until Sept. 14. Kelly Russell, executive director of Cedarbrook Village, has worked in the industry for more than 20 years and has overseen plenty of community openings, but this one was different.

“For this grand opening, we made sure to have plenty of PPE on site for anyone who needed it,” Russell said. Moving people into their apartments safely during COVID-19 also required a new approach.

“We set up different times and arranged for people to use different doors, so they would not run into each other,” she said, adding that social distancing and cleaning between move-ins was all part of the extra planning and organization necessitated by the pandemic.

When families help their parents move into senior living, it’s often a stressful time, she said, and the added stress of COVID-19 has only intensified the anxiety and guilt family caregivers feel. With all the restrictions imposed by COVID-19, families now worry they won’t be able to see their loved ones.

“We reassure family members that we are taking all the necessary precautions so they can schedule visits in a safe environment and stay in touch with their loved ones,” Russell said.

For example, scheduled visits are a departure from pre-COVID times when families could drop in anytime.

Kelly Russell

Kelly Russell says senior living is an attractive option during a pandemic because the safety measures in place give families peace of mind.

“We would tell families this is their home, too. If they wanted to come spend the night with their loved ones and eat in the dining room with them, they were welcome to do all that,” Russell said.

Unfortunately, that wide-open policy is on pause — one of many ways life is different right now in the senior-living sector. But the fact that Cedarbrook opened at all during such a year is a reflection of the growing demand for such facilities, and how this multi-site company intends to continue meeting that need.

 

Safety First

Keeping an aging loved one safe at home during the pandemic can mean a great deal of work for a family. That’s why senior living is a good option, Russell said, noting that Cedarbrook has extensive COVID-19 safety measures in place which can ease the burden for families and give them peace of mind.

“We saw this location as a good fit, and the town of Ware was very accommodating to work with.”

“Even if families don’t see them as much, they know their loved ones are getting all the care they need and still being able to socialize with the residents,” she noted, adding that she also reassures families through social-media postings.

“Whether we’re using FaceTime or sending videos, I post a lot online,” she said. “This way, the families who can’t visit their loved ones often enough can see them smiling and engaged in activities with other people. It lets the family know their loved one is OK.”

Among its 119 units, Cedarbrook offers independent living, assisted living, and a memory-care center. Russell explained there are many reasons why people choose to move in.

“Folks usually move in to our independent-living apartments because they are tired of taking care of a house and a yard, or their laundry is in the basement and stairs have become too difficult, things like that,” she said, adding that independent residents can either make meals for themselves or join others in the dining room.

“Those who move into assisted living usually need some help with everyday tasks such as eating, dressing, and grooming,” she continued. Instead of sitting home alone watching TV, they can be part of a community and engage in activities and exercise programs, and socialize with other people.

Independent-living residents

Independent-living residents can either make meals for themselves or join others in the dining room.

Everbrook chose Ware as the site for Cedarbrook because the Quaboag region, encompassing Ware, Brimfield, and surrounding towns, had no senior-living facilities; the closest options were located in the Wilbraham/Ludlow area to the west and Greater Worcester to the east.

“We saw this location as a good fit, and the town of Ware was very accommodating to work with,” Kelley said, adding that the building design incorporated local influences.

“Several design details of the building are reminiscent of the South Street School that once occupied this site,” he noted, while another example is the large-screen movie room at Cedarbrook, called the Casino Theatre, inspired by the iconic movie house once located on Main Street in Ware.

Trends in senior living have changed over the years. Twenty years ago, such communities tended to attract people in their mid- to late 70s. As longevity has increased, the average move-in age these days has risen closer to the 80s and even 90s.

In the past, inquiries from families focused on services and amenities offered, as well as activities and the level of care. Since COVID-19, Russell said, the questions have changed. “Now, we’re asked, ‘do you have a generator?’ ‘how do you respond to emergencies?’ and ‘what supplies do you have on hand?’”

As a new building that has only recently opened, Russell is able to market the community as having plenty of space for socially distanced meals in two large dining rooms. “Everyone can eat together because we can space them far enough apart.”

Cedarbrook also works with a primary-care physician whom residents can access through telehealth for routine inquiries, rather than going out to a doctor’s office. Meanwhile, an exercise physiologist runs the fitness programs for residents. At one time, exercise programs and other activities filled the calendar, but the number of activities has been reduced to allow for disinfecting equipment and rooms in between sessions. Russell described it as emphasizing quality and safety over quantity.

“If you’re smart about it,” she said, “you can still offer activities and keep everyone safe.”

 

Shifting Tides

By following that same approach, Russell continues to assure families that senior-living communities such as Cedarbrook are the right choice for their loved ones during this crisis.

“We want families to feel secure in knowing that there will always be support here for their loved ones,” Russell said, adding that, while no one can guarantee COVID-19 won’t find a way to infect people, Cedarbrook has measures and equipment in place in the event of an outbreak.

“If our residents have to quarantine, they will still get the care they need and still have their meals,” she said. “We will also help residents stay in touch with their families.”

Keeping safety as the main priority, Russell believes the key is to make adjustments as things change. “I don’t really feel like there is a ‘new normal’ because every day brings new and different challenges we have to face.”

And, like everyone, she looks forward to a time when COVID-19 restrictions are a thing of the past. “We can’t wait until we can fully open the community and share with families everything we have to offer here.”

Prior to Cedarbrook’s opening, Russell had another big event on her calendar this year — she was married on Aug. 28, a date she intentionally chose before the September opening.

“The wedding was much easier to plan than opening the building,” she said with a laugh — but is happy to have accomplished both during a year no one will forget.

Banking and Financial Services

More Than Just Bitcoin

By Matthew Ogrodowicz, MSA

 

‘Blockchain’ is a term used to broadly describe the cryptographic technology that underpins several applications, the most widely known of which is Bitcoin and other similar cryptocurrencies.

Matthew Ogrodowicz

Even though it is the largest current application, a survey conducted on behalf of the American Institute of Certified Public Accountants (AICPA) in 2018 found that 48% of American adults were not familiar with Bitcoin, Ethereum, or Litecoin, three cryptocurrencies among those with the largest market capitalizations. The largest of these, Bitcoin, currently sits at a market capitalization of approximately $355 billion. If half of all adults are unfamiliar with this largest application, it is safe to assume that even fewer know about other ways the technology could be used — including for some of the region’s major industries.

Three of these largest industries in Western Mass. are healthcare, manufacturing, and higher education. In each of these industries, the secure and verifiable information network created by blockchain can provide efficiencies. This network, essentially a public ledger, consists of a series of transactions (blocks), which is distributed and replicated across a network of computers referred to as nodes. These nodes each maintain a copy of the ledger, which can only be added to by the solving of a cryptographic puzzle that is verified by other nodes in the network.

The information on the ledger is maintained by another aspect of cryptography, which is that the same data encrypted in the same way produces the same result, so if data earlier in the chain is manipulated, it will be rejected by the other nodes even though the data itself is encrypted. Thus, an immutable chain of verifiable, secure information is created, capable of supporting applications in the aforementioned fields.

Each of these industries can benefit from the blockchain’s ability to host ‘smart contracts.’ A smart contract is a digital protocol intended to facilitate, verify, or enforce the performance of a transaction. The simplest analogue is that of a vending machine — once payment is made, an item is delivered. Smart contracts would exist on the blockchain and would be triggered by a predefined condition or action agreed upon by the parties beforehand. This allows the parties to transact directly without the need for intermediaries, providing time and cost savings as well as automation and accuracy.

Combined with the security and immutability noted earlier, smart contracts should prove to be a valuable tool, though there is still work to be done in codifying and establishing legal frameworks around smart contracts. Other applications of blockchain technology are more specifically applicable to individual fields.

In the field of healthcare, blockchain’s ability to process, validate, and sanction access to data could lead to a centralized repository of electronic health records and allow patients to permit and/or revoke read-and-write privileges to certain doctors or facilities as they deem necessary. This would allow patients more control over who has access to their personal health records while providing for quick transfers and reductions in administrative delay.

In the field of manufacturing, blockchain can provide more supply-chain efficiency and transparency by codifying and tracking the routes and intermediate steps, including carriers and time of arrival and departure, without allowing for unauthorized modification of this information. In a similar fashion, blockchain can provide manufacturers assurance that the goods they have received are exactly those they have ordered and that they are without defect by allowing for tracking of individual parts or other raw materials.

Finally, in the field of higher education, blockchain could be used to improve record keeping of degrees and certifications in a manner similar to that of electronic medical records. Beyond that, intellectual property such as research, scholarly publications, media works, and presentations could be protected by the blockchain by allowing for ease of sharing them while preserving the ability to control how they are used.

And, of course, blockchain development will be a skill high in demand that will benefit from the creation of interdisciplinary programs at colleges and universities that help students understand the development of blockchain networks as well the areas of business, technology, law, and commerce that are impacted by it.

For these reasons and many more, businesses should feel an urgency to increase their knowledge of blockchain’s impact on their industries while exploring the potential dividends that could be reaped by a foray into an emerging technology.

 

Matthew Ogrodowicz, MSA is a senior associate at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.

Construction Special Coverage

Constructing a Picture

In its recently released 2021 Dodge Construction Outlook, Dodge Data & Analytics predicts that total U.S. construction starts will increase 4% in 2021, to $771 billion.

“The COVID-19 pandemic and recession has had a profound impact on the U.S. economy, leading to a deep dropoff in construction starts in the first half of 2020,” said Richard Branch, chief economist for Dodge Data & Analytics. “While the recovery is underway, the road to full recovery will be long and fraught with potential potholes. After losing an estimated 14% in 2020 to $738 billion, total construction starts will regain just 4% in 2021.”

Furthermore, he added, “uncertainty surrounding the next wave of COVID-19 infections in the fall and winter and delayed fiscal stimulus will lead to a slow and jagged recovery in 2021. Business and consumer confidence will improve over the year as further stimulus comes in early 2021 and a vaccine is approved and becomes more widely distributed, but construction markets have been deeply scarred and will take considerable time to fully recover.”

He noted that the dollar value of starts for residential buildings is expected to increase 5% in 2021, non-residential buildings will gain 3%, and non-building construction will improve 7%. “Only the residential sector, however, will exceed its 2019 level of starts thanks to historically low mortgage rates that boost single-family housing.”

The pattern of construction starts for more specific segments is as follows:

• The dollar value of single-family housing starts will be up 7% in 2021, and the number of units will grow 6% to 928,000. Historically low mortgage rates and a preference for less-dense living during the pandemic are clearly overpowering short-term labor-market and economic concerns.

• Multi-family construction, however, will pay the price for the single-family gain. The large overhang of high-end construction in large metro areas combined with declining rents will lead to a further pullback in 2021. Dollar value will drop 1%, while the number of units started falls 2% to 484,000.

• The dollar value of commercial-building starts will increase 5% in 2021. Warehouse construction will be the clear winner as e-commerce giants continue to build out their logistics infrastructure. Office starts will also increase due to rising demand for data centers (included in the office category), as well as renovations to existing space. Retail and hotel activity will languish.

• In 2021, institutional construction starts will increase by a tepid 1% as growing state and local budget deficits impact public-building construction. Education construction is expected to see further declines in 2021, while healthcare starts are predicted to rise as hospitals seek to improve in-patient bed counts.

• The dollar value of manufacturing plant construction will remain flat in 2021. Declining petrochemical construction and weak domestic and global activity will dampen starts, while a small handful of expected project groundbreakings will level out the year.

• Public-works construction starts will see little improvement as 2021 begins due to continued uncertainty surrounding additional federal aid for state and local areas. Additionally, the unfinished appropriations process for fiscal year 2021, which began Oct. 1, raises doubt about the sector’s ability to post a strong gain in 2021. Public-works construction starts will be flat over the year.

• Electric utilities and gas plants will gain 35% in 2021, led by expected groundbreakings for several large natural-gas export facilities and an increasing number of wind farms.

 

Community Spotlight

Community Spotlight

By Mark Morris

the new Ludlow Senior Center

Depending on how the pandemic progresses, the new Ludlow Senior Center could begin hosting some indoor programs by February.

 

Despite the unprecedented challenge of COVID-19, the town of Ludlow keeps building and improving.

As coronavirus rates continue to rise across Massachusetts, Manuel Silva, chairman of the Ludlow Board of Selectmen, said officials in town are closely monitoring the number of cases there.

A long-time selectman who served an earlier term as chairman, Silva said the pandemic has brought more challenges than a typical year. Like most places, Ludlow Town Hall is closed to the general public except by appointment. Silva said some town functions, such as the town clerk and tax collector’s offices, are conducting limited public business from the rear of the building, where they can offer service through a window. “It almost looks like an ice-cream stand,” he said with a laugh.

While Ludlow Mills features several ongoing projects (more on that later), Silva wanted to talk to BusinessWest about a few prominent municipal projects that are nearing completion.

For example, construction on Harris Brook Elementary School is progressing, with a good chance that students will begin attending next fall. Harris Brook is being built to replace Chapin and Veterans Park elementary schools, with the new school located on what used to be playing fields for the adjacent Chapin School.

It’s possible the old buildings may be repurposed and given a second life, Silva said. “We are looking at doing a study on both Chapin and Veterans Park to see what other use the town might have for them.”

He and other town officials are scheduled to tour Harris Brook and inspect the progress that’s been made on it. Once the new school is complete, Ludlow will receive reimbursement from the state for nearly half the cost of the $60 million project.

Another project nearing completion involves road improvements to Center Street, a main artery in Ludlow. Because the street is also part of Route 21, a state highway, the Commonwealth paid for most of the $5.6 million in improvements.

Harris Brook Elementary School

Construction continues on Harris Brook Elementary School, which will replace both Chapin and Veterans Park elementary schools.

Perhaps no one in Ludlow is more enthusiastically looking forward to opening the new Ludlow Senior Center than Jodi Zepke. As director of the Council on Aging, she and her staff plan to move out of the basement of the former high school on Chestnut Street and into the new building on State Street. While staff will be taking occupancy of the new building in mid-December, the Senior Center will remain closed to the public because of COVID-19 concerns, a situation that Zepke said poses both pros and cons.

“We’re excited to get into the building. It will give the staff an opportunity to get comfortable in their new surroundings before we have seniors come back,” she said. “At the same time, we know how excited everyone is to visit the new building as soon as they can.”

In what she called a “perfect world” scenario, the Senior Center could begin hosting some of Council on Aging programs indoors at the new facility in February. Throughout the warmer months, the council’s popular exercise and social programs were held outdoors at the park adjacent to the current senior center. As the weather became colder at the end of October, the outdoor programs wrapped up for the season.

“Without innovative thinking from Westmass and the developers we work with, these mill buildings could have been vacant and falling apart.”

“The outdoor programming was a great opportunity for people to see each other, get out of the house, and do some exercising,” Zepke said, noting that said groups took part in yoga, tai chi, and discussion groups, all socially distanced. Several of the exercise programs are available on local cable-access TV. While the broadcasts can help keep people active, she recognizes that people still need the socialization such programs provide for seniors in town.

“The most important thing is to remain connected to people, otherwise the social isolation is terrible,” she said. “We’re pushing for at least some indoor programming because we’re already seeing the mental-health effects of staying home all the time.”

Before COVID-19, the Senior Center hosted a popular daily lunch program. When coronavirus hit and it was no longer possible to bring people to the center, Zepke said her staff switched gears overnight and converted the daily lunch to a thrice-weekly grab-and-go meal where people drive up and receive a box lunch from center staff who are dressed in appropriate PPE. Zepke calls it one of the best things her organization has done since the pandemic hit.

Ludlow at a glance

Year Incorporated: 1774
Population: 21,103
Area: 28.2 square miles
County: Hampden
Residential Tax Rate: $20.62
Commercial Tax Rate: $20.62
Median Household Income: $53,244
Median Family Income: $67,797
Type of government: Town Council, Representative Town Meeting
Largest Employers: Hampden County House of Correction; Encompass Rehabilitation Hospital; Massachusetts Air National Guard; Kleeberg Sheet Metal Inc.
*Latest information available

“It’s an opportunity for us to see people and take a few minutes to chat with them,” she said. “It’s the highlight of my day.”

 

Milling About

One of the brightest spots in Ludlow’s economic development for the last several years has been the redevelopment of a series of old mills located on the banks of the Chicopee River. The Westmass Area Development Corp. owns the mills and works closely with the town to bring new vitality to the entire area. Town Planner Doug Stefancik said the partnership between Ludlow and Westmass is a win-win.

“Without innovative thinking from Westmass and the developers we work with, these mill buildings could have been vacant and falling apart,” he said. “Instead, they are developing state-of-the-art projects that enhance the whole State Street corridor.”

Notable tenants in the mill project include businesses such as Encompass Health Rehabilitation Hospital of Western Massachusetts and Iron Duke Brewing, but Stefancik also pointed to a successful housing development known as Residences at Mill 10, which added 75 units of senior housing to Ludlow when it opened in 2017.

Looking forward, plans are in the works to develop the clock tower, also known as Mill Building 8. WinnDevelopment, builder of Residences at Mill 10, has proposed a plan for 95 units of senior housing in the building, with 48,000 square feet on the first floor dedicated to retail space. Stefancik said the project is in the early stages, and the next steps include site-plan approval and a public hearing.

“We’re fortunate that WinnDevelopment is coming back to work on Mill Building 8 because their work is first-rate,” he said. “They completed Residences at Mill 10 three years ago, and since its opening, it has been wildly successful.”

As more residents move to the area, Stefancik said the Ludlow Riverwalk, located behind the mill complex, is growing in popularity. “It’s becoming a walkable neighborhood area, and we like to see that.”

Earlier this year, a key infrastructure component in the redevelopment of the mills was approved. The Riverside Drive project is a proposed roadway that replaces an old access road in the mill complex. The project is currently out for bid, with construction expected to start next year on 4,130 feet of roadway that runs through the mill complex from East Street to First Avenue. When complete, Riverside Drive will improve access to all areas of Ludlow Mills.

The revitalization of the mills has become a major asset for the town of Ludlow.

“It’s been one of the areas where we’ve seen massive growth for economic development and housing opportunities,” Stefancik said, adding that potential exists for even more growth in the years ahead — something that’s true not only for the mill complex, but for the town itself.

Coronavirus Features

Looking Up

Could better times be around the corner? A growing number of executives across the U.S. think so.

In the just-released 2021 National Business Trends Survey from the Employer Associations of America (EAA), 44% of company executives see an improving economic outlook in 2021. This annual survey shares information on what executives nationally are doing to address the changing business climate. Survey responses also reflect the impact COVID-19 has had on this year’s business trends.

When executives were asked if the overall U.S. economy in the next 12 months will “improve, stay the same, or decline,” the largest segment of respondents (44%) think it will improve, as opposed to last year, with only 12% expecting the economy to improve — and that was before the pandemic had come into view. This year, 33% think it will stay the same, as opposed to 52% last year. Only 24% think it will decline, compared to 36% a year ago.

“COVID certainly has had a significant impact, and perhaps many are feeling that the economy can only get better moving forward into 2021,” said Thoran Towler, who chairs the EAA board of directors. “In fact, fueling that optimism, 57% of executives project slight to significant increases in sales and revenue. American businesses are showing their resilience and readiness to tackle today’s challenges and come out stronger than ever before.”

An additional 11 questions were added to this year’s survey regarding COVID-19’s impact on business, addressing employee safety, stay-at-home measures and social distancing, remote work, online interviews and training, hazard pay and bonuses, and candidates who are unwilling to work in the office or out in the field.

When asked how concerned respondents are regarding COVID-19 and its impact on business continuity (specifically the supply chain, financial implications, and temporary shutdowns), 52% indicated they are “extremely to moderately concerned.” In the Northeast, 43% of the region’s executives expect the pandemic to negatively impact business and capital spending either moderately or significantly.

However, companies are already starting to pivot from a focus on pandemic measures to investing in the future. As the charts the two charts demonstrate, respondents expect to put less effort into COVID-specific activities in 2021 than they did in 2020, and more effort into investing in technology, equipment, and other efforts to grow their business.

“The pandemic has forced companies to be agile and innovative during these uncertain times,” said Mark Adams, director of Compliance at the Employers Assoc. of the NorthEast. “While expenditures are being scrutinized now more than ever before, the need to invest strategically nonetheless remains important as businesses seek to position themselves to rebound in 2021 and make up for lost ground.”

Similar to last year’s survey responses, the top three serious challenges for business executives include talent acquisition, talent retention, and the ability to pay competitive wages. The ability to pay for benefit costs and the cost of regulatory compliance rounded out the top five.

Also noteworthy for 2021, 64% of the survey respondents are planning to award wage and salary increases, while 29% plan to award variable pay bonuses next year.

The EAA is a national nonprofit association that provides this annual survey to business executives. The 2021 survey included 1,484 participating organizations throughout the U.S., an increase of nearly 400 over last year’s survey.

Construction

It’s All in the Details

 

The pandemic has upended many activities; however, contractors are continuing to work to modernize homes across the country.

Professional remodelers are taking on extra safety precautions to help meet the needs of homeowners during the pandemic. If you’re interested in remodeling your home, consider the following advice from the Home Builders & Remodelers Assoc. of Massachusetts to help put your mind at ease, so you can comfortably start your next home-remodeling project.

 

Find a Remodeler That Prioritizes Safety

If you’re ready to start your remodeling project, you’ll want to work with a professional committed to keeping you and your family safe during a remodel. The best place to start is by utilizing a directory of professional remodelers. The National Association of Home Builders has a directory of professional remodelers dedicated to the highest professional and safety standards during the pandemic.

 

Ask About Safety Precautions

After you’ve narrowed down your list of potential professional remodelers, ask questions related to safety. A qualified remodeler will be forthright and answer any questions you may have about personal protective equipment, social distancing while in your home, and other concerns about sanitation or other potential hazards.

 

Establish an Online Communication Channel

When you’re working with a professional remodeler, you’ll have to discuss details about your project, from evaluating your design ideas to agreeing to the scope of work. Talk to your remodeler about what areas of the planning process can be discussed online instead of meeting in person. Some remodelers may even request a virtual tour of your home through a video call. Photos, design ideas, measurements, and estimates can also be shared electronically. If you must meet with your contractor in person, practice social distancing and wear a face covering.

 

Discuss Your Living Arrangements

If you’re working from home or if you have kids who are distance learning, tell your contractor. A professional will provide guidance on how to minimize significant disruptions, including those related to plumbing or electrical work. If you have small children, most professionals will be willing to remove tools at the end of each work day or place them out of reach as an extra safety precaution. A contractor can also erect temporary walls to minimize dust in your primary living areas.

 

Communicate Clearly

The most important thing to remember if you’re moving forward with a remodeling project during the pandemic is to keep an open line of communication with your contractor via videoconference or phone — and be flexible. Your remodeler may take extra time to ensure extensive cleaning while undergoing your project. Due to the nature of the pandemic, other unexpected delays may occur. A dose of extra patience may be required during this time, but a professional remodeler will remain committed to safety without jeopardizing quality workmanship.

 

Opinion

Opinion

By John Regan

Joe Biden, set to become the 46th president of the U.S., will take office at a singular moment in the history of a nation struggling to confront the convergence of a pandemic, an economic crisis, and social upheaval.

It’s also a singular moment for Massachusetts employers. The change of administrations in Washington will have enormous consequences for employers on everything from federal stimulus to the tenor of labor relations.

Record numbers of voters cast ballots either in person, by absentee ballot, or through the mail in an election conducted amid a second surge of COVID-19 cases around the country. It was an election marked by stark polarization on the issues, a backlash against globalization, the growing influence of technology, and cultural and social struggles.

The new administration and Congress will set the nation’s economic agenda for the next two to four years. Biden’s ability to implement his economic plans will ultimately be determined by two runoff elections in Georgia that will determine which party controls the U.S. Senate.

The issues for employers will range from taxes to business regulation. The most immediate concern for Massachusetts companies and for the Commonwealth itself is the prospect that a Biden administration could break the logjam over a new economic-recovery package as a follow-up to the CARES Act passed in March. Such a package could reopen the door to the popular Paycheck Protection Program for employers and provide financial support to the state as it seeks to close a project budget shortfall of $3 billion to $6 billion.

Biden’s ability to implement his economic plans will ultimately be determined by two runoff elections in Georgia that will determine which party controls the U.S. Senate.

It is also anticipated that the new administration will initiate a more aggressive federal approach to moderating the COVID-19 pandemic than that taken by the Trump administration. Federal regulations such as a mask mandate and broad health protocols will affect Massachusetts companies that do business in multiple states.

President-elect Biden has proposed raising taxes on corporations and imposing a corporate minimum book tax. He would also increase taxes on individuals with income above $400,000, including raising individual income, capital gains, and payroll taxes.

Most observers expect regulation of business to become more aggressive in areas such as occupational safety, union activity, and environmental compliance. The development of wind energy, including proposed projects just south of Martha’s Vineyard, is likely to accelerate after several years of slowdowns.

U.S. financial markets are likely to be affected. The stock market generally produces below-average returns during the first two years of a presidency and strong returns during in the second two years as investors gain confidence in the predictability and certainty of an administration.

The nation’s approach to international trade, which was marked by aggressive imposition of tariffs by the Trump administration, may also change under a Biden administration. While the president-elect has refrained from releasing any detailed policy proposals on trade, he has emphasized the importance of training the U.S. workforce for a competitive global environment, a renewed commitment to reducing trade barriers, and a coordinated approach to negotiations with China that utilizes U.S. allies and international institutions.

AIM members should be assured that the association remains committed to representing your best interests whatever direction the political winds might shift. v

 

John Regan is president and CEO of Associated Industries of Massachusetts.

Construction Special Coverage

Safety First

By Mark Morris

Carl Mercieri says the pandemic protocols have been challenging, but they’ve kept his company’s job sites totally free of COVID-19.

Call it a time of constant adjustments.

Since COVID-19 hit, area contractors have continued to work after adopting a number of state-mandated safety protocols to prevent the spread of coronavirus. Construction managers have adjusted to the extra requirements to get the job done, but it has come with a learning curve.

After working with safety consultants, Kevin Perrier, president of Five Star Group, said his company established a COVID-19 compliance plan and implemented it across all its job sites.

“It’s been helpful because it covers everything — daily sign-in sheets, temperature checks, self-reporting procedures, sanitation of the job site, and social distancing.”

Even with a solid plan, Perrier admits the additional protocols make it more challenging to bring projects to completion on time.

“We try to maintain social distancing as much as possible, and that delays our production. The reason for the slowdown is that we can’t cram as many workers onto the sites as we have in the past.”

Tim Pelletier, president of Raymond R. Houle Construction, said it’s a common occurrence on a job site for a large number of people to work in close proximity to each other.

“There’s a point where you have lots of moving parts, where different trades are working together in order to meet a completion schedule,” he said. “Because of coronavirus mandates, we can no longer have large numbers of people in one spot.”

In the beginning, adopting the safety mandates proved cumbersome as Pelletier would allow only one trade at a time to work on a site. After a few adjustments, more crews were able to be on site and still follow the guidelines.

“It’s a challenge to stay on schedule, but at least we’re now able to bring more than one trade in at a time and assign them work in different areas, so they’re not on top of each other,” he noted.

Wearing a mask all day has also been met with grudging acceptance; Pelletier said crews typically look forward to the moment they can remove them. “In the 90-degree weather, wearing a mask is definitely a health concern, as well as a comfort concern, but they are required, so we wear them.”

In the early days of the pandemic, shortages of personal protective equipment (PPE) also affected construction projects, as each site needed certain quantities for workers, as well as extra devices such as thermometers and wash stations.

At the beginning of the pandemic, Marois Construction was overpaying for — and overbuying — things like thermometers because they didn’t know how many they would need, said Carl Mercieri, vice president and project manager. On one occasion, he recalled, the project owner stepped in and provided enough hand-washing stations for the entire construction site.

“That worked out well,” he said. “Everyone did what they had to do, and we got through it together.”

 

Pandemic Problems

Implementing safety protocols didn’t always go smoothly early in the pandemic. Mercieri noted a school building project where as many as 30 workers stood in line each morning for a temperature screening and sign-in before they could start their workday.

“Our biggest concern was the loss of labor caused by all the downtime in the beginning,” he said. “It’s hard to put a number on it, and you can never really recoup that cost.”

Building material costs also increased with the onset of the pandemic. Perrier’s construction portfolio includes retail buildings, which require substantial quantities of lumber. So far this year, lumber wholesalers are reporting price increases of 300%, and, to make matters worse, they won’t hold those inflated prices for more than 48 hours.

Kevin Perrier

Kevin Perrier

“We try to maintain social distancing as much as possible, and that delays our production. The reason for the slowdown is that we can’t cram as many workers onto the sites as we have in the past.”

“The volatility of lumber prices makes it difficult to bid on a large, wood-framed project that we wouldn’t be framing until next summer,” he said. “It’s a big problem because you really have no idea where the pricing is going to be.”

Availability of building materials has also been an issue this year. Perrier said light fixtures and flooring materials are two items he’s had trouble procuring for the last several months, while Pelletier said doors and hardware have been in short supply. Rahkonen said finding certain parts for heavy equipment, such as excavators, has been difficult as well.

“We had a couple projects that needed vinyl fencing, and we just couldn’t get it because it just wasn’t out there,” Mercieri said. “We’ve since finished those jobs, but we were delayed by four to six weeks in getting the fencing.”

Much of the supply deficits are caused by overseas factories that experienced shutdowns early in the pandemic. These manufacturing delays from months ago are still being felt now as contractors need these supplies. “We just can’t meet the same deadlines because we can’t get our hands on the materials,” Pelletier said.

From the delays caused by socially distanced workers to not having materials when they’re needed, Pelletier said it’s difficult to take on fast-track jobs that need to hit a deadline. Mercieri echoed that point when discussing his company’s many jobs at hospitals.

“If you are renovating an operating room, for example, the hospital will need it back on line by a certain date, no matter what.”

Mercieri also mentioned a recent instance where he was offered a project that involved complicated construction and needed to be built on a tight schedule.

“When COVID hit, we were up front with the owners and advised them that, with the tight schedule and all the uncertainties of COVID causing delays, they might want to consider some alternate plans,” he told BusinessWest. “They rejected our suggestion and wanted to move forward at 100%, but ultimately they scrapped the project.”

Another concern early on was lost time due to COVID-19 infections. However, Mercieri said none of his workers have tested positive. The closest call was an exposed plumber who was not on site, but had worked with the plumber on Mercieri’s job site. Contact tracing revealed these two had not worked together in the previous six weeks. Perrier said a few of his employees and subcontractors on projects in Eastern Mass. weren’t so lucky and contracted coronavirus.

“We shut down the site for two or three weeks while contact tracing was completed,” he said, adding that the employees recovered, and everyone who had been affected tested negative. “Sites were sanitized, and then back to work.”

Tim Pelletier

Tim Pelletier

“It’s a challenge to stay on schedule, but at least we’re now able to bring more than one trade in at a time and assign them work in different areas, so they’re not on top of each other.”

John Rahkonen, owner of Northern Constructions Service, said four of his employees came down with minor cases of COVID-19, with one showing no symptoms at all. He was quick to point out that no one contracted the virus from the job site.

“Even though most of our crews work outside, we encourage people to stay in their own bubbles,” Rahkonen said. “If you stay within your bubble, you’ll be in pretty good shape.”

 

Widespread Impact

The economic impact of COVID-19 on a national level is often reflected at the local level, especially for construction companies. In the travel sector, Standard and Poor’s recently projected a 70% decline in airline-passenger traffic for 2020. The core business of Perrier’s company involves aviation construction, ranging from airline and rental-car facilities to restaurants and retail stores located at Logan International, Bradley International, and other airports.

“We had a considerable amount of work that, within a period of two weeks, was flat-out cancelled for the airlines,” he said. “A great deal of the other work was either temporarily postponed or put on an indefinite hold.” One large airline client told Perrier that its facility’s goal was to reach a “zero spend by November first.”

Two to three months into the pandemic, Mercieri began getting word of projects being canceled. His company had already bought materials to start construction for one of those projects.

“When they first shut us down, they told us it was temporary,” he said. “Then, six weeks later, they wrote us a letter to say they had canceled the project.”

Two natural-gas compression stations that Rahkonen’s company had planned to build in Pennsylvania this year have been put off until next year. While those still look viable for 2021, they represent $20 million less in projects for Northern Construction this year.

Perrier predicts the long-term impact of aviation construction will be felt by many for years to come. That’s why his company has diversified into other industries besides aviation.

Houle Construction

Houle Construction continues to take on work in the medical field, including this recent project at a local hospital.

“We are doing a decent amount of work in the cannabis industry. It’s booming right now, so that’s helped us out,” he said. One project nearing completion is Dreamer, a cannabis dispensary in Southampton scheduled to open in 2021.

The holiday season tends to be a time when activity begins to slow down in construction and many jobs approach their completion. It’s also a time for active bidding on projects for next year. Mercieri struck a positive tone and suggested a possible rebound in construction activity for 2021.

“Back in March, a lot of projects were delayed, and now they are getting put back on the table and going out for bid,” he said, adding that some of the projects getting approved involve bringing public buildings into compliance with COVID-19 mandates.

When Pelletier surveys the landscape, he senses both uncertainty and hopefulness.

“Clients have had projects on the docket to get done but were skittish for the last seven months, and with a rise in case count, there is still some uncertainty,” he said. “On the plus side, interest rates are extremely low, so borrowing the money for a project is less expensive now.”

Pelletier and the other managers we spoke with have all taken a one-day-at-a-time approach because they understand that coronavirus levels, and the government regulations aimed at lowering them, will most likely change again — and they will simply make the necessary adjustments.

“Because we’re wearing masks all day, everyone has a sore on their nose and a generally irritated demeanor,” Pelletier said. “But we’re navigating through it.”