January - Construction News

Transcription

Covering the Industry’s News
P.O. Box 791290
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(210) 308-5800  P.O. Box 791290 San Antonio TX 78279  11931 Warfield San Antonio TX 78216  JAN 2011  Vol. 9  No. 1
Restoring stone
Going the distance
L-R: Jacqueline Tabbah and her father Rawi Tabbah
Jim Meinholz at the construction demolition landfill
P
resident Rawi Tabbah established
International Stoneworks Inc. in
Houston in 1982.
“In the beginning, we were mostly in
the equipment business related to the
stone industry,” Tabbah said. “Within five
years, we became a full restoration business of natural stones such as marble,
granite, terrazzo, slate, limestone and
flagstone.
“I think to stay in business for 28
years, it take flexibility and to realize
when you have a door that is closed in
front of you, you have two choices - you
can break down the door or find a window. We try to find the window!”
Tabbah’s daughter Jacqueline
joined International Stoneworks in Oct.
2009. She is the public relations manager
and handles the marketing at the company.
“I am very glad my daughter works
with me today,” he said. “It is very nice
because it gives me a sense of continuity.
If one day I have to retire, Jacqueline has
a choice, she can continue here or she
can do what ever she wants to do.”
At Christmas time, the company has
an annual event at the office. All the employees and their families are invited to
attend.
“It is a big celebration, even in lean
years,” Tabbah said. “We never stop having the Christmas party together.
continued on Page 14
L
one Star Recycling & Disposal Facility has a construction demolition
landfill at the South Sam Houston
Parkway West location. The company
opened after Hurricane Ike in Sept. 2008.
Site manager Jim Meinholz says the
company is the newest construction demolition landfill in the metro area.
“We built the facility with site access,
compliance and long term operations in
mind,” Meinholz said. “When a demolition business knocks a building down,
they crush up the materials and bring it
out here in dump trucks.
“In addition, when remodelers tear
out the insides of a building or an office,
they bring the materials to the landfill.
Roofing contractors will drop off shingles.”
Before Meinholz became a site manager at the company, he worked in the
solid waste business for 23 years and also
spent time in the trucking and the heavy
hauling business.
“This opportunity opened up and I
gravitated back towards it,” he said. “We
are slowly growing nowadays. A positive
happening recently is we have began diverting all of our wood waste to create
mulch.”
Meinholz says the company will offer
meals to the drivers twice a month on Fridays. He cooks a deep fried turkey for
employees around the holidays. “I have
refined the cheeseburger and potato salad lunches too,” he said.
Lunch time
T
LG Interests Inc. completed its
eighth Lupe Tortilla Restaurant in
mid-November. The restaurant is located on West Grand Parkway South in
Katy, TX.
Owner Gerald Lusk was the project
manager and the superintendent was
Glenn Lusk. VanHorn Reed + Associates was the architect and the structural
engineer was CJG Engineers.
According to Gerald Lusk, the 6,832sf
new restaurant construction project took
five months to complete. He says the approximate project cost was $1.2 million.
“The design and construction was
meant to mirror the original Lupe Tortilla
which was an old home that was added
on to and converted into a restaurant,”
Lusk said. “This made for great design
and construction details for this new
space.
“We used similar siding that was
used on the original Lupe Tortilla. In the
dining area, we built a faux kitchen, sink
and cabinets. You really feel like you are
in the kitchen of the old home.”
Lusk says CMU block was used at the
kitchen and conventional wood framing
was used for the rest of the building.
“A large porch wraps around three
sides of the restaurant,” he said. “There is
also a “sandbox area” with fire pits and
outdoor seating. Folks can enjoy everything on the outside of the restaurant as
well as on the inside.”
Lusk says TLG interests had a great
working relationship with both the owner, Holt, Holt & Hoback and the architect.
“We have been working with VanHorn Reed + Associates as long as we
Lupe Tortilla in Katy, TX
Page 2
Houston Construction News • Jan 2011
Floor it
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Toby Woodward runs six or seven crews every day.
T
wenty-five years is how long owner
Toby Woodward, Aladdin Floors,
has been in the flooring business.
“My great grandfather, my grandfather and my father were in the business,”
he said. “My grandfather, used to sew the
carpet together with hook needles.
“My dad has a flooring company in
McAllen, TX. I ran his store for years. I
don’t know everything about flooring,
but I learn something new every single
day.”
Woodward says his very first job was
installing carpet and tile at a residential
project.
“I started my business with $50 and a
box of business cards,” he said. “At first I
only did installations. I pulled together
the best installers I could in the Houston
area. I ran five different crews a day.
“The installers grew up with me over
the past ten years knowing what I expect
and customers expect. They are all still
with me today. Now, we run six or seven
crews every day.”
Woodward’s wife, Estella, handles
sales and helps him with the scheduling
and installations.
“Our daughter-in-law, Alex Palomarez, office manager, does the bookkeeping and answers the phones,” he
said.
Woodward says he raced in several
motocross events while he was growing
up.
“Back in 1984, I won the Houston Astrodome Motocross event,” he said.
“Nowadays, Estella and I like to play golf.
“In addition, we attend Lakewood
Church. I am a prayer partner and I also
do all the water baptizing for Pastor Joel
Osteen. We will baptize 20 to 40 people
every Saturday night.”
Aladdin Floors sells and installs tile,
wood, laminate and carpet. The company
works on both commercial and residential
projects. –ab
Page 3
Submitted to Construction News
Festive fete
Ready to paint
F
olks from The Trevino Group met at
the Saltgrass Steak House in Houston for an annual Christmas dinner
Dec. 3.
“We had a great time at the party,”
said Rosa Sanchez, human resources administrator. “Employees and their spouses attended the event. Kristi Evans was
the grand prize winner of a weekend getaway.”
Founded in 1976, The Trevino Group
specializes in the construction and construction management of healthcare, commercial, government and education facilities. –ab
L-R: Kristi Evans, Gilbert De La Cruz, and
David Trevino, The Trevino Group
Hoar Construction employees recently helped restore a home as part of
Rebuilding Together Houston. The company is a general contractor. –ab
Cheers for the holidays
H
ouston area women contractors and friends enjoyed an afternoon of holiday
shopping and great company at a Holiday Market Luncheon Dec. 9. Held at
the Houston City Club, activities included an annual awards presentation and vendor basket raffles. A portion of all proceeds benefited the Girl Scouts San Jacinto
Council. The Women Contractors Association (WCA) held the event. –ab
L-R: Joey and Melinda Valles,
The Trevino Group
L-R: Phil Broom, The Trevino Group
and his wife
Construction News ON LOCATION
Carpets galore
2010 Supplier of the Year: Robin Benson and
Dodie Howard, DBS Promotions
Office manager Francisca Lopez works at Missouri City, TX-based
J & B Carpets during the day and takes classes at Houston Community
College in the evenings. –ab
Houston
CONSTRUCTION NEWS
Houston Editor — Abby BeMent — [email protected] — 713-599-1774
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2010 Contractor of the Year:
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Dallas/Fort. Worth
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Page 4
ed a house, bought a car and other necessities, I had $40 left.
William H. Plant
President / Founder
Building Products Plus
and
American Pole & Timber
I
magine what it would be like to come to
the U.S. for the first time, alone and at the
age of 16. This is a story about an immigrant born and raised in Jamaica W.I. who
not only conquered culture shock, but also
became the president/founder of two very
successful businesses.
What brought you to the U.S.?
I came to the U.S. to complete my
business degree at Marquette University
in Milwaukee, WI. It was quite a culture
shock as I knew very little about the U.S.
For example, in most countries, different
denominations of paper money are different colors, whereas in the U.S. all bills
are the same color. I once paid $10 for a
Hershey bar, having thought it was a dollar bill. This was in New York, so the guy
heard my accent and kept the change!
Besides adjusting to the very cold climate, there were a few communication
problems with my heavy Jamaican accent. My college roommate couldn’t understand when I told him my name was
William. So I changed my accent and my
name became Bill Plant. He got it.
Under the British system, you take
what is called your Senior Cambridge
Exam, equivalent to taking a similar test
after high school at the age of 16. I went
to college before turning 17, so I was behind everyone else and had some catching up to do.
What did you do after you graduated
college?
After four years of college, I returned
to Jamaica. I stayed there for 10 years,
worked, got married and started a family.
I realized that the future in Jamaica
was marginal at best - politics getting
worse, socialism, and the deterioration of
services.
My children, at ages 3 and 5, couldn’t
get school books and I wanted them to
have the same opportunities I had and
get a good education.
It made sense to go back to the U.S.
So I got my green card and moved the
family - my wife (Patricia), two kids and a
poodle.
How did you choose Houston and how
did the move go?
Back then when you get your green
card, you have to enter the U.S. and get
signed in. I spent three days in the Miami
library researching where I wanted to be.
I wanted a reasonable amount of warmth,
and an area near water - I race sailboats.
I also wanted some construction activity - my background. I considered Miami, Fort Lauderdale, Mobile, AL. and
San Diego. All these had restrictions in
growth so I picked Atlanta or Houston more expansion and growth capabilities.
Then I decided that Atlanta had less flexibility than Houston. Patricia also loved
horses. So I chose Houston because of
the sailing, construction activity, the
warmer weather and horses.
Regarding the move to Houston, we
got there with $7,200 and didn’t know a
soul. By the time I set up the family, rent-
How did you get from there to where
you are today?
Houston has been very good to me. I
got a job with a construction company,
then later, a better job with a wood pressure treating plant. After working there
for many years, I worked my way up to
become manager, and subsequently
bought shares and became half owner.
We survived the recession and problems
of the ‘80s, 18 percent interest rates, etc.,
then sold the business in ‘91.
I stayed with that business for a couple of years, then started Building Products Plus (BPP) in ‘93 as well as American
Pole & Timber (APT) with my brother-inlaw Dorian. The two companies work
well together.
BPP is dedicated to the philosophy
that no one ever really wanted to buy a
piece of wood. What they really wanted
was the solution to their construction
needs - that a piece of wood, or anything
else, could provide. I was determined,
therefore, to sell the information and the
product across the lines of the normal
distribution channels on a project-byproject basis. I would reduce the logistical movement of the information and the
product to effectively reduce the cost.
I started with a rented room, one
borrowed forklift, one ancient tilt bed
truck and a telephone line. I would get a
lead on a project, find the contractor or
owner, prepare the quote, load my truck,
deliver to the site, and repeat the process.
Sales for the first month was $18,000 - I
was elated.
Within three months, the company
was making a profit. I developed an “elevator speech” to anyone who would listen - “If you need wood, any kind - you
need us, every time.”
My first break came in Dec. ‘93 when
an acquaintance was having a sizable
home built and told his architect, “I don’t
want any of the wood to rot.” The architect replied, “I’m not sure how to do that,
but I’ve heard of someone who does
know.” My elevator speech had taken
root.
BPP is a material supplier and and information/consulting company. Products include vinly bulkhead materials,
treated timber, poles, pilings and posts,
structural timber trusses, vinly coated
wood and green building materials. For
example, an architect might call if he isn’t
sure what the exact specs are and/or to
find out if 40-ft logs are available.
APT is a different business model; it
is the “driver” of the two businesses. It is
a manufacturer and a national supplier of
treated poles, pilings, timbers and industrial and commercial structural wood
products. APT might get a call from a
project site superintendant stating that
40 poles are needed for lighting. He
does not want to chit-chat, he just wants
to get a cost-effective price and have the
materials now!
Was your wife or other family involved
in the business?
My brother-in-law, Dorian Benn, and
I are partners and have worked together
for 18 years. He is a graduate of S.F.A.
University, Nacogdoches, TX, and is a natural leader.
My Jamaican-born
wife Patricia was
an integral part of
the business. She
wasn’t a risktaker and didn’t
like to borrow
money, so she
always questioned
why we would
ever sell to someone
who might not pay.
She kept me and Dorian (her brother) on
our toes, and that was good.
Thanksgiving 2010, L-R: Colleen (daughter-in-law), Will (son), Kevin (son), Warren Von
Eschanbach (son-in-law), and Rachael (daughter) - William H. Plant, center
Patricia died in 2008 at the age of 55
from cancer. The photo of her was taken
in 2005. She was one-of-a-kind. We are
fortunate to have the support of family
and friends.
Tell me about the rest of your family.
I have one daughter and two sons.
Rachael (39) has her masters degree in
speech pathology from U.T. She married
Warren Von Eschenbach who is the son
of the previous head of FDA under
George W. Bush.
My son, Will, is 36 and has a business
degree in IT from Marquette University.
He is purchasing manager for Anixter
Corp., Chicago.
My youngest son, Kevin, is 28 and a
senior at U.T. in biomedical engineering.
He is single and pursuing a career in design of medical instruments.
Grand dad needs some practice, you think!
William Plant with grandson.
How did you get involved in sailboat
and sailboat racing?
My father started me sailing at the
age of five and I loved it. I competed in
the 1968 Olympics in Mexico. Since then,
I’ve competed in long distance races, e.g.,
from Newport RI to Bermuda, from Florida to Montigo Bay Jamaica (600 miles)
and from Chicago to Mackinac Island
(400 miles).
The Picante on a Rum Punch Cruise in
Galveston Bay
Patricia and I sailed across the Atlantic, from Greenport, Long Island, to the
Azores. I began long distance sailing in
the ‘70s and am still doing it.
On weekends and on special occa-
sions, I take friends and customers on the
“Rum Punch Cruise” in the Galveston Bay.
My sailboat, “The Picante” carries 10-12
people. I call it the Rum Punch Cruise because I serve a secret recipe of rum punch.
Over my lifetime, I have sailed over
14,000 miles in the ocean. The latest race
was the Harvest Moon Race, from Galveston to Port Aransas (175 miles). We won
first in our class.
What is it like to be out in the ocean for
long periods of time?
You have to deal with the cold, the
wet and the bad weather. For instance,
The Harvest Moon race takes about 30
hours in a fast boat and about 48 hours in
a slow boat. Sometimes you get seasick.
It helps to have a short selective memory
so you forget the tough times and look
forward to the next trip!
Does your sailing relate to your business?
Boating keeps me in contact with the
marina and shoreline activities because
BPP and APT supply marine structures.
Some of my work includes the Kemah Boardwalk, the Flagship and other
projects after hurricane damage.
Others projects include the ambiance of Joes Crabshack restaurants looks like the beach with the poles and
other marine items, and the new
Seabrook Sailing Club building, which
was rebuilt after Hurricane Ike.
We are one of very few companies in
the nation that supply (1) Polyshield, a
vinly/plastic coating for wood pilings to
prevent rotting and being attacked by
marine organisms; (2) Gun barrel piling,
which is a structural uniform diameter
solid wood piling. Most marine pilings
are wood columns out of tree trunks and
are tapered. To make a gun barrel piling,
we came up with a way to take a 40-ft
tree and make it into a solid uniform core
up to 20 inches in diameter. This has tremendous applications in the Houston/
Galvenston areas because it is twice as
strong as the square piling.
William, is wha yu a du [now]?
Editor Note: This is a Jamaican phrase
meaning “What are you doing [now] - I
added the [now]. Under the English dialect,
the Jamaican descendants of slaves were
not taught proper grammar.
I plan to continue sailing, spending
time with my family and grandkids, and
starting a couple more businesses.
I’ve had two major challenges in my
life, one being the loss of Patricia in 2008.
The other being diagnosed with Parkinson’s Disease eight years ago. Overall,
however, I am doing well and the quality
of life hasn’t changed that much.
Editor Note: I thank you for this interview and hope to take a “Rum Punch
Cruise” on the Picante when I’m in Houston.
–rd
No problem mon!
Page 5
Difficult economic times
highlight importance of
look-back method
Currently not offering
medical benefits?
Elizabeth Bunk, CPA, CFP
Weaver
Houston, TX
ith all of the financial concerns currently facing emW
ployers in the construction industry, a new program partly funded by the State of Texas may be a sav-
T
he look-back method of tax reporting applies to construction companies that use
the percentage-of-completion method (PCM) when accounting for long-term
projects. After the completion of a long-term contract, the contractor “looks back” at
the profit reported for previous tax years and compares those estimates to the actual
profit.
If a contractor underestimated the
profit on a job, he owes interest on the
revenue that should have been reported
in an earlier period. However, if past profit estimates were overstated, the contractor is due an interest refund on prior taxes paid.
Determining the Applicability of the
Look Back Method
The look-back method applies to
contracts that were entered into after
February 28, 1986 that straddle two or
more tax years, and in which the PCM
was used.
Qualifying home construction projects are exempt from PCM, as are contracts projected to be completed within
two years by a “small contractor,” whose
average annual gross receipts for the
three years prior to the contract year are
$10 million or less. Contracts are also exempt if:
• The contract is completed in two years,
and;
• The gross contract price does not exceed the lesser of $1 million or one percent of the contractor’s average annual
gross receipts for the previous three tax
years.
IRS Form 8697 is used to determine
the interest due or to be refunded on the
look-back calculation. If interest is due,
Form 8697 is included in the taxpayer’s
federal income tax return, and the interest is paid as additional income tax. On
the flip side, if the taxpayer is receiving a
refund of interest, Form 8697 is filed separately by the taxpayer to receive the refund. Failure to comply with the lookback requirement can result in an assessment of interest and penalties.
A taxpayer required to use the PCM
may elect to exclude contracts in which
less than 10 percent of the estimated total contract costs have been incurred.
Once that 10 percent election is made, it
applies to all contracts entered into that
year, as well as all subsequent years.
Unless change orders meet the criteria of a separate contract, they will not be
considered separately under the lookback method. Change orders which are
not considered separate contracts, incentive fees and claims should be taken into
income as part of the contract price under the PCM. Therefore, the actual contract price and costs attributable to the
change order must be considered when
allocating contract income to all contract
tax years.
Post-completion adjustments, in
which job costs are revised to reflect
amounts taken into account after contract completion, will adjust the lookback calculation. In these cases, the taxpayers may elect to defer the reapplication of the look-back for post-completion
adjustments for up to 5 years. Three exceptions apply to the rule:
• Post completion adjustments exceed
the lesser of $1 million or 10 percent of
the contract
• The taxpayer goes out of business
• The taxpayer reasonably believes the
contract is finally closed
Noncompliance Issues
In recent times, the IRS has given the
look-back compliance closer scrutiny.
Nonfiling of Form 8697 has been elevated on the IRS’ list of emerging issues and
is usually part of any audit. The Construction Industry Audit Techniques Guide, issued by the IRS in 2009, identifies many
pitfalls that taxpayers may fall into with
the look-back rules.
Nonperformance on jobs might mean
money in your pocket
During times of economic downturn,
construction contracts may not perform
as expected by the time the end of a job
is reached. During these times, it is even
more important to remember how the
look-back method works and what benefits it might offer the taxpayer. If taxes
were paid on expected profits in earlier
years, followed by the conclusion of a job
at a lower profit than anticipated, a refund may be coming your way.
Elizabeth Bunk, CPA, CFP is a partner in
Tax and Strategic Business Services and the
Tax location leader in the Houston office of
Weaver, the largest independent regional
certified public accounting firm in the
Southwest with offices throughout Texas.
She can be reached at Elizabeth.Bunk@
weaverllp.com or 713/297-6913. –dn
Britt Rusche, Corporate Benefits Advisor
IBTX Risk Services
San Antonio, TX
ing grace to many unable to afford healthcare benefits
for their employees or who had to drop coverage to
curb the costs associated with offering them. This program is hoping to cover many
insureds and their dependents throughout the state.
Thus far, contractors and subcontractors have been plagued with meeting the
carrier requirements of participation and
cost. The majority of many organizations
in our industry are made up of young men
who still decline coverage because they
“never go to the doctor or get sick”. Older
employees often decline coverage and
opt to go to public health systems which
provide treatment to the uninsured.
Also, with all of the “noise” about
healthcare reform and costs associated
with complying, Texas continues to lead
the nation in helping employers and employees obtain health coverage. For
many years, our state has been successful
in providing a high risk pool for individuals declined by private insurance companies. Now, with new legislation and funding approval, Texas will again assist in
providing affordable coverage.
In an effort to get more employer
sponsored health plans to cover individuals, Texas initiated a state run program
called Healthy Texas. This program is administered by United Healthcare and was
passed by state legislation to use a state
funded pool for reimbursement of medical claim costs incurred by its members.
The fund will reimburse the carrier for
80% of claims costs incurred between
$5,000 and $75,000.
United Healthcare estimates that by
using co-funding with both public and
private funds, the costs should be 25% to
30% less than plans offered on the commercial market. Another great feature of
this program is no medical underwriting
associated with pricing of the plans, so
employees will not have to fill out medical questionnaires.
Two plans will be offered. The first is a
$500 deductible with a $2,000 out of pocket and the other is a $1,500 deductible with
a $3,000 out of pocket. These deductibles
and out of pockets are the responsibility of
the covered employee. Once a covered
employee hits their deductible, insurance
pays 80% of the employee’s out of pocket.
Once the employee’s plan deductible and
out of pocket are met, insurance will cover
all expenses at 100%.
Under this program, for example, if I
were the employee who had to go to the
hospital for knee surgery, the cost of the
procedure might be upwards of $30,000.
I would pay my deductible (either $500
or $1,500) and 20% of the remaining
costs (up to $2,500 or $4,500 respectively). In this instance, I would spend a total
of $2,500 or $4,500 and insurance would
pay the remainder.
Other features of these plans include:
• $25 dollar physician office co-payment
• $50 dollar urgent care co-payment
• $125 dollar emergency room co-payment
• 100% coverage for a preventive care
• 80% coinsurance after meeting deductible
In network benefit only
• $10/$25/$50 three tier prescription drug
card
The qualifications an employer must
meet to be eligible for the program includes:
• Two to fifty eligible employees
• Must not have provided group insurance in the past 12 months
• At least 30% of employees must receive
wages at or below 300% of federal poverty level ($32,490 in 2010)
• 60% of eligible employees must enroll
• Employer must contribute 50% of the
cost
This is great for employers throughout Texas as it offers leniency on requirements to obtain coverage and costs less!
It also provides protection to carriers by
shifting “high claimants” to the state.
This helps relieve many underwriting
concerns for ongoing and surprise large
claimants. This, in theory, should significantly reduce a carrier’s exposure to large
financial losses.
If you currently do not provide coverage for your employees, it may be a good
time to revisit your options. Along with
affordability, all employer contributions
and the employee’s contributions to the
premiums charged are tax deductible.
Healthy Texas offers a way to affordably
invest in your employees and lower your
contributions to Uncle Sam.
With 10 years experience in the employee benefits industry, Britt Rusche specializes in plan design, implementation, risk
and financial management focused on reducing employee turnover while controlling plan costs. He can be reached at
[email protected]. –dn
Page 6
What is your
favorite food?
Indemnity agreements:
What you need to know now
Mason P. Hesto, Attorney
Coats/Rose, PC
San Antonio, TX
C
onstruction parties often try to put “broad form” or
“intermediate form” indemnity agreements in their
contracts; for example, a general contractor (“GC”) may
try to have a subcontractor (“sub”) indemnify the GC for
all or some of the GC’s own negligence. This happens up and down the construction
chain – i.e., an owner may try to put such a provision in its contract with the GC, or a
sub might do likewise with its sub-sub/ supplier - but for simplicity’s sake, we will stick
with the example of GC and sub.
Unlike other states, Texas generally
enforces these broad or intermediate
form indemnity agreements. But certain
requirements must be met in Texas. Such
indemnity provisions must meet “fair notice” requirements in that they must: 1)
be conspicuous and; 2) meet the specifications of the “express negligence doctrine.” Also, liability must “arise out of”
the subject matter of the indemnity provision, and if the GC (or owner, sub, etc.)
seeks indemnity for its sole negligence,
this must be clearly stated. Finally, state
law bars indemnification in certain instances involving designers, public projects, and projects relating to mines or oil,
gas, and water wells.
Conspicuousness: Courts say, to be
conspicuous, something must appear on
the face of the contract to attract the attention of a reasonable person. Courts
often note that indemnity provisions
should be marked at the beginning by
the title “indemnification” (or something
similar), should be in contrasting type to
the surrounding text of the contract, underlined, or in bold, or capitalized. An
indemnity provision may be considered
inconspicuous when it is not located on
the front of the first page, or one of the
beginning pages, of the contract, but instead is located on the back of a page or
one of the last pages of the contract.
Courts decide conspicuousness on a case
by case basis.
Express Negligence: The “express
negligence doctrine” simply requires
that, when a GC seeks indemnity from a
subcontractor for the consequences of
the GC’s own negligence, the indemnity
agreement “must express that intent in
specific terms.” That is, the intent of the
parties must be 1) clearly expressed; 2)
set forth within the four corners of the
contract; and 3) stated in specific terms.
In an influential Texas Supreme Court
case, the following provision was held insufficient to show the sub’s intent to cover the negligence of the GC: “subcontractor shall indemnify and hold contractor
harmless against any loss … as a result of
operations growing out of the performance of this contract and caused by the
negligence or carelessness of the subcontractor.” Note that some Texas courts
have held that the same type of “express
negligence” analysis will be applied
where a party seeks indemnity for other
claims like fraud or strict liability. Courts
generally will construe ambiguous indemnity agreements against the party
seeking indemnification (here, the GC).
If the GC seeks indemnity for a claim
resulting entirely from the GC’s sole negligence (so-called “broad-form” indemnity), the agreement must clearly express
this intent. Courts indicate that this requirement is met by provisions making
clear that indemnification is expected “regardless of whether such claims or actions
are founded in whole or in part upon the
alleged negligence of” the GC, or state
that the sub will indemnify any negligence
on the part of the GC, “whether such negligence be sole, joint or concurrent, active or
passive,” or indemnify the GC “regardless
of cause or any fault of” the GC.
Note that – as one might expect – in
those indemnity agreements where the
sub is obligated to indemnify the GC only
to the extent of the sub’s fault, and none
of the GC (“limited-form” indemnity), the
requirements of fair notice likely do not
apply. Finally, fair notice requirements
do not apply if the GC can establish that
the sub had actual notice or knowledge
of the indemnity agreement.
Scope: The wording of an indemnity
provision may cover a wide variety of
claims that “arise out of,” are “occasioned
by,” or are “due to” the work that is the
focus of the contract. However, the facts
surrounding a claim must fall within the
intended scope of the indemnification
obligation for the provision to be enforced. For example, one court held that
an injury to an employee of a well service
contractor was not an injury “arising out
of” the contractor’s performance under
the well service agreement. This was because the injury occurred after the specific well servicing work was complete
and no further work remained.
Statutory Prohibitions: Texas statutes
outright bar indemnity provisions in certain situations. One statute makes clear
that a contractor or subcontractor cannot
indemnify a designer (architect or engineer) from liability for damages for personal injury or death or property damage
caused by or resulting from the designer’s
negligence (in the rendition of professional duties, or defects in plans or specifications prepared, approved or used by
the designer). This statute also voids provisions whereby the designer indemnifies
commercial owners from liability for damage caused by or resulting from the owner’s negligence. Additionally, Texas law
bars all oil, gas, mineral, and water well
related provisions indemnifying against
loss or liability for damage solely or concurrently caused by the indemnitee (the
party seeking indemnification, in our
case, the GC), arising from death or injury
to persons or property. Finally, a state
Chicken or beef fajitas is my favorite food!
Tony Munguia, G-I-D Plumbing
Hamburgers with all the fixings is always
a good meal. About every three months
or so, I will cook hamburgers for employees at our location.
David Garcia, Empire Scaffold
I can cook some of the best spaghetti you
have ever tasted. I make my own sauce
from scratch and then I freeze it. It is my
all-time favorite food. Just add a salad
and bread and you are good to go.
Philip Lapaglia, Lapaglia Electric Inc.
It is a tie between chicken fajitas and carnitas. I am always the cook at family
gatherings or birthday parties.
Ruben Maldonado,
Christopher’s A/C & Heating
I love my wife’s traditional Mexican dishes. That is my all time favorite food! Her
passion is cooking.
Jorge Jimenez, S & J Fasteners
My cooking has a lot of Spanish and Italian influence. In the summertime, I really
like to barbecue meat on the grill. It all
depends on what I feel like eating.
Enrique L. Zanelli
Choice Trailers, Choice Equipment &
Choice Excavation and Construction
I love to cook. A couple of times a year
we will have a barbecue lunch out in the
shop. We usually grill fajitas or brisket.
These two are usually my favorite foods
to cook.
Jesse Torres, Max Access Inc.
At the moment, my all-time favorite meal
is Chinese food. I can eat rice but I like
any entrée such as beef and broccoli.
Joseph Williams,
Williams Flooring
Pizza! I like to get Little Caesars Pizza. My
very first job was actually at Little Caesars
Pizza!
James Green
G & H Air Conditioning & Heating
Barbecue is my favorite food. My family
and I like to have a backyard barbecue
when the weather is nice!
Juan Hernandez,
C & E Stone Supply
I really like Cajun food, especially jambalaya. My wife makes it at home and I
think it is excellent!
Cal Trevino, Master Craft Woodworks
Hamburgers or steaks are a good choice
for dinner.
Tom Large, Maverick Enterprises
Anything my wife cooks, is my favorite
food!
Roger Gomez, U.S. Fence
At the end of the year, I take all my employees out to dinner at Eats Mesquite
Grill on Hempstead Highway. The food is
awesome!
Daniel Frank, Cryer Plastering Co. Inc.
Chicken enchiladas! Those are always a
good choice.
Pedro Canas
Jose Gorostieta Stucco Services
Breakfast tacos.
David King, San Jacinto Glass
Electrical Christmas
governmental entity cannot enter
into a contract that indemnifies the
government from liability resulting
from the government’s negligence. Where we could be going: During the
2009 Texas Legislature, a bill was introduced (Senate Bill 555) that would have
substantially curtailed the enforceability
of broad and intermediate form indemnity agreements, in addition to the already
existing statutory prohibitions discussed
above. The Bill gained a lot of traction,
making it through the Senate and almost
through the House, but the Bill died when
it was stuck behind the controversial, unrelated voter identification bill. Nevertheless, a similar bill could make its way
through the upcoming 2011 Legislature.
Construction parties would thus be wise
to keep an eye out for significant changes
in indemnity law that might occur within
only a few months from now.
Finally, it is worth noting that a recent Houston case specifically held that
the indemnity provision in the AIA A401
(1997) contract form was not enforceable
under the “fair notice” requirements discussed above. Construction parties must
therefore be cautious when using standard industry forms in drafting indemnity (or other) agreements, to ensure their
agreements comply with Texas law.
Mason P. Hester is an attorney in the
Construction and Surety Law section of
Coats|Rose, P.C. He represents owners, design professionals, contractors, subcontractors and suppliers in a variety of construction-related disputes and transactions. –dn
Festive Houston area electrical contractors attended an annual Christmas party
at the San Luis Hotel in Galveston, TX Dec. 4. The National Electrical Contractors
Association (NECA) held the event. –ab
Holly jolly
Electrical contractors and suppliers attended an annual Christmas party and
open house on North Shepherd Drive Dec. 8. The Independent Electrical
Contractors Gulf Coast Chapter (IEC) hosted the event. –ab
Page 7
Another new product that is out on the
market today is the Minn Kota Talon. It’s
a shallow water anchor similar to the
Power Pole. Formally unveiled at ICAST
in July, the Minn Kota Talon shallow-water anchor utilizes a spike to telescope
straight-down to 6 or 8 feet deep. No hydraulic pump is needed on this electricalmechanical, cable-driven system—only
a 12-volt battery. The anodized aluminum base can be mounted straight to the
boat, or on a bracket away from trim tabs
or step ladder.
New products for
the New Year
by Capt. Steve Schultz
Sponsored by:
Trans Sport Boats, Yamaha Outboards,
Ronnie’s Marine, Minn Kota Trolling Motors, Power Pole Shallow Water Anchor,
Interstate Batteries, Pure Fishing,
Pflueger Reels, All-Star Rods,
Mirr-O-Lure, FINS Braided Line
and Columbia Sportswear.
Pictured above are a couple of the Broken-Back Corky lures that should be
one of the hottest lures for 2011.
W
great business venture has turned into a
network of people that I now call great
friends. I truly am Blessed!
I can attest that time really does fly when
you’re having fun. I am so fortunate to
have world class fishery in my backyard
and some of the greatest clients to experience it with. What started out to be a
I’m really excited to get back on the water
after the holidays and some much needed R & R with the family at the deer lease.
There are some new products out on the
market that I’ve got my hands on and I
can’t wait to put them to the test. One of
these new products is a Broken Back
Corky. Everyone knows that Paul Brown’s
line of corky lures are famous for produc-
ow! It’s hard to believe we are turning the calendar into another new
year. I hope everyone had a very Merry
Christmas and a great New Years. It
seems like just a few months ago we were
bringing in 2010.
ing trophy trout. Well now Mr. Brown has
teamed up with Capt. Bruce Baugh of
Calcasieu, LA and modified the corky fatboy by adding a jointed tail to it. The lure
is similar to a Rubberback if any of you
anglers have used one of those, measuring about 4 ½ in. long and slightly smaller
than a super spook jr. They are currently
making three colors: pearl/chartreuse,
pink hologram & black/gold/orange.
These lures are not in tackle stores yet
and are only being sold by Capt. Baugh
from his home in LA.
Features include Auto Up/Down, AutoDrive (an automated sequence that uses
up to 80 lbs. of pressure to hold bottom),
Rough Water Mode (three-stage anchoring sequence with 10-second pauses to
hold the boat in place in rough water),
and even a deployment notification
alarm at engine startup. At 33 pounds,
the anchor can easily be removed from
the boat and kept in safe storage—four
bolts hold the anchor in place. The sixfoot model (6 feet, 4 inches) is expected
to retail for $1,299; the 8-footer (8 feet, 4
inches), $1,449. Included is a two-year
comprehensive warranty on parts and labor; plus the spike has an unconditional,
lifetime warranty. For more, visit www.
minnkotamotors.com.
Feel free to call me and discuss some of
these new products on the market, or to
schedule your next bay fishing trip, give
Capt. Steve Schultz a call at 361-949-7359
or 361-813-3716, or e-mail him at [email protected]. Already
booking for the 2011 fishing season.
Good luck and Good Fishing.
So you want a real hunting partner
by Terry and Wayne Carter
O
ut in the fields with your hunting
buddy is the best – exciting, intense, relaxing, and mostly, fun.
Upland game bird hunting is never as
joyous without your pointing dog; for
many hunters, anything else is just not
hunting.
After the decision to have a dog is
made, and that it should be a Pointing
breed, there is a breed to fit just about
anyone. There is a wide variety of hunting opportunities, and terrain types; and
there is a breed that can be counted on
to satisfy your individual personality and
hunting style. A field working pointing
dog can and should also be your pet, if
that is what you want. The pointing
breeds are not your usual lap pets,
though for us, they make the best pets.
When looking at all the breeds you
would consider, most importantly choose
one that pleases your eye – what you
want to look at and interact with every
day. Some want the hard, shorthaired
type, like the English Pointer, or the larger
longer-haired Setters. For us, we choose
the smaller, lightly coated Brittany. We
look for forward run, great noses (the talented scenting abilities), nice to have a
propensity to retrieve, and are playful
and happy-hearted. The most important
factor of all is that a bird dog should have
the insatiable desire to find game.
Once the breed is chosen, a good
breeder found, and you have picked the
best in the litter for you, there are a few
basics for your hunting buddy to learn in
addition to the usual house manners. In
general, we watch Cesar Milan for ideas
and inspiration. All dogs must be respectful and follow the humans’ house rules.
But unlike the usual pet, your hunter
must be “in charge” of his nose to find
game. He must run out there in front of
wherever you say to go, with that important insatiable desire to find game. Here
is an opportunity to encourage the dog’s
English Pointer
Gordon Setter
Brittany
innate abilities that can only be created in
the good breeding. Your dog (of any
age) will start with both a controlled introduction to birds and also the opportunity to run in the large open fields to allow the excitement of the hunt to “trip his
trigger,” and to ensure hunting enthusiasm. You guide how the dog behaves
during the hunt, but you cannot create
that motivated forward moving search,
or the ability to scent wild game birds
from many yards away. You and your dog
really are a partnership.
Command training is done at home,
on a long rope, aptly called “yard work”.
Here, separate from the excitement and
possible distraction of the field, commands of Come and Whoa are learned
and perfected. Both of you will then be
confident of few ‘wrecks’ in the field,
from busted coveys to retrieving away
from you.
A special note of caution: Gun shyness is all man-made. It is not useful to
test a dog for gun shyness if he has never
successfully been around gunfire; in fact
that is what will create gun shyness.
Don’t bang feeding pans or visit a gun
range, only avoid it, and later introduce a
low-level firing far from the dog when he
is doing something fun with birds like
running after them in the field.
Beginning hunters can go with you
surprisingly early in the relationship. If
you have not already taken the plunge,
the search for that perfect-for-you bird
dog is another stellar activity. Good luck
at home and in the field. No matter the
breed, talent and ability, or level of training, it’s all a good day’s hunt with your
bird dog.
Wayne works for the U.S. Corps of Engineers and Terry is an independent educational sales rep. In his spare time, Wayne
enjoys training hunting dogs. Terry is his
faithful assistant. –dn
Terry and Wayne Carter
Page 8
Ken Milam’s Fishing Line
Sponsored by Tropical Marine and Honda Marine
My name is Ken Milam and, for the past 26 years, I have been guiding fishing trips for striped bass on
Lake Buchanan in the Texas Hill Country. Over the years, I’ve had the opportunity of getting to know
a good many folks in the construction trade.
I don’t like these old short days of winter!
A
bout the time I get something going,
it just gets dark on me and I have to
quit. I know winter is sort of nice after
the warmer months with their long days
that’ll let a man work himself to death. It
makes a nice break from the heat, and
I do admit enjoying a nice evening of
football. I have to say though, I am glad
for the change of seasons because I for
one tend to lose patience with extreme
seasons.
I can’t wait to see how spring fishing
will be this year. With the water level of
Lake Buchanan being 10 to 11 feet from
full, we have a lot new structure in the
upper end of the lake. In addition to all
the willow trees and weeds that grew
up when the lake was lower, (dry), we
now have second year growth of swamp
smartweed growing in the shallow water
of the upper end of the lake. Not only
is this stuff excellent habitat for fish and
invertebrates, it is also a favorite food
for ducks. We have seen quite a bit of
duck hunting this winter as more and
more people are finding out about it.
Just think what a great place this will be
for spawning fish in the spring. Warm
shallow water and lots of cover are just
what newly hatched fish need to survive
until they are large enough and fast
enough to move to open water. This
I am writing this in the fall, and you
will be reading it in the winter. When the
winter solstice occurs next week, I for one
will feel just a little better knowing that
the days will quit getting shorter and
start getting longer again. I know, we will
have a bunch of old cold weather to get
through before we get to anything that
really feels like spring, but I’ll take it.
Adventure in the High Chaparral
Half or Full Day Fishing Trips
All Bait, Tackle & Equipment
Furnished
Already we are getting good reports
of blue catfish up to 25 lbs. coming in
from up the lake. Sunny days are getting
better and better for crappie fishing, and
the white bass are beginning to ease
their way upriver for the spawning run.
No telling when the actual spawning run
will occur though because it depends on
how mild or severe a winter we end up
with. If it stays on the mild side, we might
see them spawning around first half of
February.
Best of all, stripers and hybrids are
looking good too. This year we have seen
so many fish that were just not quite big
enough to be keepers. As they grow
through winter and then start to reap
the benefit of the good shad population
we have, well, let’s just say a whole lot of
them will be coming home with us this
year!
Your catch Filleted and
Bagged for You
Furnish your TPWD Fishing
License & Refreshments,
and WE DO THE REST!
Ken Milam Guide Service
(325) 379-2051
www.striperfever.com
can’t help but benefit Lake Buchanan as
a fishery.
Charlie (Chez) Sanchez, Texas Electrical Contractors Inc., succeeded on
his quest for Los Mero Macho (the big one) on a recent hunt at El Coyote,
a small pasture in South Texas. –ab
Yep, I’m just going to finish this old
ball game on TV and take me a long
winter’s nap. I’ll be dreaming of fishing
trips to come!
The life of the
Game Warden
by TJ Greaney
F
ew job’s require that a very large percentage of the
time when you encounter your customer they will
have a loaded gun. Not many will have you sit in a mosquitoe infested swamp or in the hot midday sun monitoring your customers and their use of the product you
service. How many folks could sit in a hot bug infested
batch of timber, hungry, sweating profusely then mosey
on up to meet their customer and be cheerful and professional? A Texas Game Warden has to do all this and
more.
Game Warden’s have been called the most powerful
lawmen (and women) in the state. They investigate drug
deals, theft, murder and every other kind of crime you
can think of. Like most lawmen, they work long hours
for low pay if you do the math per hours worked. They
work hard to do a good job, they participate in all types
of outreach programs when they are not on patrol, and
swatting bugs on stake outs or serving warrants. They
are a very special breed of law enforcement.
Here are some of the things a few of the Texas Game
Wardens had to deal recently that I found amusing.
These are courtesy of Texas Parks and Wildlife and are
direct incident reports from actual calls they investigated.
Nothing accidental about it: On Nov. 12, Refugio
County Game Wardens Pinky Gonzales and Danny Kelso
received a call from a Refugio County deputy concerning a vehicle he had stopped with a white-tailed buck
deer in the back of the vehicle. The two subjects in the
Page 9
vehicle told the wardens that they had accidentally hit
the deer with their vehicle. But the wardens found a receipt showing they had purchased a box of bullets
about an hour earlier. Checking the deer, the wardens
found one shot to the head and one in the neck. Confession, confiscation, impoundment, citations, and a trip to
jail followed. Cases pending.
Then, there was that little deal last year: Morris County
Warden Michael Serbanic interviewed a suspect on Nov.
11 after a Morris County deputy stopped him and found
a gun and spotlight in the vehicle. The suspect would
not admit to road hunting but decided to tell warden
Serbanic about the 8-pointer he killed last year and
didn’t tag. After looking at the man’s old license and
finding no tags missing and getting the deer head from
his residence, citations were issued.
Unwise poaching in Wise County: On Nov. 5, Wise County Game Warden Chris Dowdy and Tarrant County Game
Warden David Vannoy were patrolling Wise County on
the eve of the rifle season opener. While investigating a
call about a possible poacher, warden Dowdy received
another call from a landowner about a deer that had just
been shot from the road. After the first call was cleared,
the wardens responded to the second call. When they
arrived, the wardens found two very upset landowners
and one dead white-tailed doe. Darkness had not yet
fallen, and the wardens figured that the poachers would
soon be back for their take. They didn’t have to wait
long before the poachers returned. As a pickup truck
crept to a stop on the county road, the driver got out
and gleefully ran through the field laughing and shouting back to his buddies, “I got it, I got it!” As the driver
attempted to return to the truck with the deer, wardens
Dowdy and Vannoy surprised the two men and one juvenile. In the truck, the wardens found a rifle, spotlight,
headlamps, and beer. Another doe poached from a
neighboring county also was found in the bed of the
truck. Multiple cases are pending.
who are wearing that badge, working the long hours
and making sure that when my kids grow up, the resource of the outdoors will in some way have been protected for their generation, amen.
I am always honored to meet a policeman, soldier or any
other public warrior or servant. However, for some reason I have always thought the Game Warden was the
coolest of the cool. Thanks to all my friends out there
TJ Greaney is writer, speaker and Founder of The Kids
Outdoor Zone Youth Outdoor Adventure Ministry. www.
kidsoutdoorzone.org – contact: tj@kidsoutdoorzone.
com.
publishing the industry’s news
Houston reflections
Photo of downtown Houston by Abby BeMent, Construction News
Do you have a favorite photo of Houston? Let us show it off in a future
issue of Construction News. Send us your digital photo with a brief
description of the location along with your name and company name to:
[email protected]
Night hunter
Texas
Style
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
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San Antonio
Austin
Dallas/Fort Worth
Houston
Page 10
P is for progressive
Displaying holiday spirit
L-R: Ray Doherty, founder, and his son Emmett Doherty, president, brightened up the
Nationwide Tools & Supplies showroom in Houston with a decorated Christmas tree. –ab
The Progressive Electrical Contractors team has fun on a Friday afternoon.
H
usband and wife team Anthony
and Shannon Hepburn operate
Houston-based Progressive Electrical Contractors. The company is approaching its 25th anniversary.
In the very beginning, Hepburn says
he and his wife worked out of their home
and later expanded to their current location.
“Shannon owns the business,” Hepburn said. “I work in the field as a field
coordinator and project manager. I drive
around to all the jobsites. I also handle
customer relations.
“I think the best part about what I do
today is meeting people and turning the
lights on at a project for the very first
time.”
Kiran Dayaram, project coordinator,
makes sure all the projects get completed on time. Miguel Lopez, head electri-
cian, has been with the company since
1989.
“Three years ago, we had 40 employees and nowadays we are down to 16,”
Hepburn said. “For an annual company
event, we used to take our employees to
Las Vegas.
“We have also taken employees to a
water park in Houston called Splashtown
during the summer time. It was an all day
trip. In addition, we all like to go deepsea fishing when we get the chance.
“There is a basketball goal at our office and sometimes the guys will shoot
hoops after work.”
Hepburn says his wife has a Yorkie/
Pomeranian named Jordan that comes to
the office every day.
Progressive Electrical Contractors is a
commercial and residential electrical contractor. –ab
Whole spectrum
L-R: Troy Fisher, project manager, Bob Bourett, superintendent and Russell Petrucciani,
president at Spectrum Construction Services Inc. smile for Houston Construction News. –ab
Page 11
Construction Forecast
Policymakers press gas pedal
again, and that may mean
good news for Texas
Anirban Basu, Chief Economist
Associated Builders and Contractors
Arlington, VA
C
oming into the summer of 2010, the nation’s economic prospects remained decidedly dim. Many of
the factors inducing the U.S. economy to expand appeared to be temporary, while forces suppressing economic expansion were associated with a greater degree of permanence. Among the
temporary factors were the rapid rebuilding of inventories in response to their slashing during the worst of economic times in early 2009; the federal stimulus program;
housing tax credits and the satisfaction of a certain degree of pent-up consumer demand.
In contrast, more permanent, negative factors included underperforming
commercial real estate; weakened community banks; large state and local government fiscal shortfalls; excess consumer leverage; massive federal budget deficits; large trade gaps; excess housing
supply; slow household formation; the
specter of additional European debt crises and tight credit. The thinking several
months ago was that without additional
support from Washington, the forces of
economic strength were set to succumb
to the forces of economic weakness in
2011, elevating the risk of another recession.
To be sure, the risk of recession remains somewhat elevated. But thanks to
both congressional and Federal Reserve
policymakers, the twelve-month outlook
has become considerably rosier. For example, in August, the federal government made more funds available to the
states to finance education ($10 billion)
and Medicaid ($16 billion) expenditures.
A month later, the U.S. Congress passed
the Small Business Jobs Act, a $30 billion
infusion into community banks to spur
small business lending.
But these actions paled in comparison to what Federal Reserve Chairman
Ben Bernanke had up his massive sleeve.
The chairman recently announced the intention to purchase another $900 billion
in Treasuries – $600 billion in new purchases and $300 billion to repurchase
maturing positions.
Among the most interesting aspects
of ongoing monetary policy is that it is
engineered with the national economy in
mind and cannot fully consider regional
variations. For example, expansionary
monetary policy is hardly needed to support states like North and South Dakota,
which as of this writing boasts the nation’s lowest unemployment rates at 3.7
percent and 4.4 percent, respectively.
The same goes for Texas, which continues to boast an unemployment rate of
roughly 8 percent, well below the national unemployment rate of nearly 10 percent. A number of Texas communities
are approaching full employment, including Midland at 5.1 percent, Amarillo
at 5.4 percent, Lubbock holding at 5.9
percent and College Station coming in at
5.9 percent. The big four metropolitan
areas, Houston, Dallas, San Antonio and
Austin, all boast unemployment of 8.2
percent or less. Texas managed to add
nearly 173,000 jobs between October
2009 and October 2010, which represented nearly a fifth of all jobs added nationally. In contrast, Arizona, California, Florida, Michigan and Nevada need all the
support they can get.
However, the bigger issue revolves
around the future trajectory of interest
rates. In the minds of many economists,
Chairman Bernanke and the Federal Reserve are gambling with the sustainability of the recovery by leveraging their balance sheet even more dramatically.
Their thinking is that by insuring
against deflation, the Federal Reserve is
sowing the seeds of inflation, and at
some point in the not-too-distant future,
monetary accommodation will have to
be reigned in faster than the Federal Reserve would prefer, and more rapidly
than the broader economy can handle.
Because policymakers have placed
so many of their eggs in the 2011 basket,
the year is poised to be a good one for
the U.S. economy. Economic and employment growth is likely to be better than it
has been for several years, but there are
also some serious drawbacks to the policymaking.
As of this writing, interest rates are
beginning to surge and the federal package will add roughly another $900 billion
to the national debt. Moreover, the extension of the tax cuts runs out after two
years and one wonders whether the
economy will be strong enough to deal
with a combination of higher taxes and
interest rates two years from now.
It may be that the current recovery
that began in June of 2009 may not be as
lengthy as the recovery that began in
March of 2001 and ended in December of
2007. The expansion cycles of the 1980s
and 1990s were far more durable, but
looking back at those times, there were
generally far fewer economic imbalances
jeopardizing economic prospects then
compared to today. But for now, most
Texas contractors can take comfort in improving economic prospects in 2011 and
beyond.
Anirban Basu is chief economist for Associated Builders and Contractors (ABC).
ABC is a national trade association with 77
chapters representing 25,000 construction
and construction-related firms with two
million employees. –dn
The Associated General Contractors
of America estimated when the American Recovery and Reinvestment Act (the
“stimulus bill”) passed two years ago that
it contained 61 separate programs with
funds for construction. Some programs,
such as the General Services Administration’s renovation of federal office buildings and courthouses or the Environmental Protection Agency’s contracts for water and wastewater treatment upgrades,
have obligated all of their stimulus funds
and will experience a sharp drop in new
contracts in 2011. But other categories,
such as “smart grid” electrical system improvements and broadband access for
underserved areas, should benefit more
contractors in 2011, both in Texas and nationally.
Private nonresidential construction
appears poised to turn positive in stages.
Already, many hospitals have broken
ground on new projects or announced
fundraising campaigns. Warehouse and
hotel construction, two of the hardest-hit
categories in 2010, should turn around
soon. But there is so much vacant office
and retail space, especially “shadow
space” in businesses that have laid off
employees but stayed in the same offices, that spending in these segments is
likely to be limited to remodeling to accommodate new tenants.
Texas has been a leader in power
construction, including wind and transmission work as well as traditional coaland gas-fired plants, and these projects
should do well in 2011. Transportation facilities, such as truck terminals, rail and
port improvements, will also be helpful.
On the downside, there are unlikely to be
any manufacturing projects on the scale
of the refinery, auto and cement construction of the last decade.
Contractors will have renewed worries about materials costs, a non-issue for
the past year and a half. Recently, copper
futures broke the records set in mid-2008
and diesel prices climbed back to levels
last seen late that summer. Steel, aluminum and plastics prices have also moved
up, though not so sharply. While runaway
price increases are unlikely, there may be
simultaneous spikes in several materials.
On the other hand, prices should remain
tame for concrete, asphalt, gypsum wallboard and lumber.
Thus, there will be changes in the activity level of nearly every construction
segment. In short, 2011 won’t be heaven
but nor will it be the hell many contractors have been through.
As chief economist for AGC, Ken Simonson provides insight into what is happening to the economy and what it implies
for construction and construction related
industries. He is sought out by local and national media for his expertise. –dn
Texas construction in 2011:
Year of the turnaround
Kenneth D. Simonson, Chief Economist
Associated General Contractors of America
Arlington, VA
T
exas has long been out of step with the national construction industry. That was not a good thing in the
middle of the last decade, when homebuilding and
nonresidential construction were a year behind the rest
of the country in adding jobs. In contrast, Texas added or held onto construction jobs
in 2006 through 2008 while the industry was shedding workers at an accelerating
pace. By late 2009, however, construction in Texas was shrinking at the same stomachwrenching 17 percent annual rate as in the nation as a whole. Will Texas lead or trail
the pack in 2011?
Based on the most recent employ- own driver. In Texas, military construction
ment data, the answer is “lead.” Construc- associated with the base realignment
tion employment rose by 2 percent in process and the expansion of Fort Bliss
Texas from November 2009 to November has been a major source of work. These
2010 while dropping by the same per- projects are supposed to wrap up in 2011.
centage in the U.S. Texas was #1 in terms In their wake, however, will be an influx of
of jobs added over the past 12 months, additional military and civilian personnel
with 13,400, and one of only 13 states, who will add to demand for housing—
plus the District of Columbia, that had an especially rental properties, retail and
consumer services.
increase of any size.
However, all of the growth occurred Another category that will have ups
outside of the state’s four biggest metro and downs is highway construction. Texareas, each of which lost modest num- as was second only to California in the
bers of construction jobs. In Houston- amount of federal stimulus money for
Sugar Land-Baytown, the drop amount- highways, with $2.2 billion, which the
ed to 2 percent; in San Antonio, 0.7 per- state spread among 527 projects. All of
cent. In Dallas-Fort Worth-Arlington and the funds were obligated by mid-SepAustin-Round Rock-San Marcos, where tember; that has kept many highway conconstruction data is combined with min- tractors from going under in 2010. Howing and logging to prevent disclosure of ever, as of December 13, 54 percent of the
information about industries with few money had been paid out in the state
employers, the declines totaled just 0.2 (and 63 percent nationally). Most of the
percent and 0.5 percent, respectively.
remainder will be spent by mid-year. Af
“Construction” really comprises a va- ter that, funding for highway construcriety of separate industries, each with its tion is likely to taper off sharply.
Page 12
Construction Forecast
Construction lending going
back to fundamentals
A conversation with
Bob Barnes, President and CEO
IBC Bank
Austin, TX
B
ob Barnes is an established leader in
the Texas banking industry with more
than 30 years experience. As president
and CEO of IBC Bank-Austin, Barnes oversees the bank’s activities throughout the
Austin region. He also serves as president
of IBC First Equity, IBC’s mortgage division, which specializes in home equity
lending and second lien mortgages.
The pendulum in construction and
development lending is swinging back
toward traditional underwriting, according to Barnes. Commercial and land development is now trending away from
the local, thinly capitalized developers in
favor of the larger, institutional developers with solid track records. The same
trend is happening with homebuilders.
In other words, credit will be available
only to the credit worthy.
What is the outlook for construction
financing in 2011?
“Before the recession, many lenders
provided credit based upon historically
high loan-to-value ratios that made them
more like equity partners than lenders.
That has fundamentally changed. Be it
commercial or residential construction,
traditional upfront cash equity injections
by the borrower are now the norm with
any commercial loan facility.
“In today’s world, real estate investors can no longer be optionees, they
have to actually own the property. When
you put 10 percent down, you’re an optionee. When you put 35 percent down,
then you own the project.
“That’s causing a shift in the marketplace, both commercial and residential,
toward large, institutional players who
have the capital to meet those requirements.”
What is the mood in the marketplace?
“Lender’s have little appetite for
speculation; speculative construction,
speculative investing. I don’t see that
changing anytime soon.
“Personal guarantees of debt are
again the norm. Let’s say you have the 35
percent equity contribution that is required for you to go build your shopping
center. You, personally, are also going to
have to guarantee that loan I’m making.
It’s not the old, ‘I’ll put up the equity but
I’m not going to guarantee the loan. If it
doesn’t work, the lender just takes back
the property.’
“Today, personal guarantees are required. In the past many lenders allowed
them to be negotiable, but no more.
“Where the market once supported
low down payments and no personal
guarantees, now we’re in a place where
you have to make a significant down payment and a personal guarantee. Over
time this will have a very stabilizing effect
on the marketplace because it will cause
borrowers to only sponsor well-founded,
quality developments with very high
prospects for success, ridding the marketplace of poor-quality fringe developments.”
What are you looking for in borrowers?
“Inexperienced developers without
a historical record of success and start-up
homebuilders are very difficult to finance. We’re looking for developers and
builders that are currently profitable and
well-capitalized with experienced, successful management. Specifically for
home builders, they have to execute very
well in every phase of their business or
the market will be very unforgiving. It’s
the same for commercial building. You
can’t just build something and say, ‘Well,
here’s my cost, just add in my profit and
that’s the sales price or corresponding
lease rate.’ Those days are over.
“Marginal locations are out, overly
optimistic sales prices or lease rates are
out, land development deals going over
so many years that they could end up in
different economic cycles are out. Again,
it’s fundamentals, common sense and
equity.
“These changes are running headon with developer and builder equity return expectations. There are still many
more equity funds looking for a return
than there are quality projects and investments available. I definitely see investment returns trending down in the
coming years.”
How have your products changed?
“Our products haven’t changed a bit.
We have always been fundamental underwriters and have continued to lend
throughout the recession.
“Although the market as a whole deviated far from historical norms, the fundamentals of lending and borrowing
money are now reverting back to the
mean. Many lenders are now trying to
find themselves as they pick up the pieces and evaluate if, or how, they move forward with real estate lending. This phase
of the recovery will go on for some time.
“For Texas a gradual recovery based
on sound fundamentals is where the
market is headed. Texas is clearly recognized as the strongest state economically
in the country and Central Texas is the
healthiest metro market in the state.”
IBC–Austin is a member of International
Bancshares Corporation (NASDAQ: IBOC),
a $12.1 billion multi-bank financial holding
company headquartered in Laredo, Texas,
with 279 facilities and 440 ATMs serving 107
communities in Oklahoma and Texas.
NEXT MONTH
February 2011
Support Your Industry’s Feature Issue
Construction Safety
2011
Schedule
Jan: Construction Forecast
Feb: Construction Safety
Mar: Construction Education
Call for Ad Space
Reservations
Apr:Women in Construction
May:Concrete Industry
Jun: HVAC & Plumbing
•
•
•
•
San Antonio
Austin
Dallas/Ft. Worth
Houston
July:Electrical Industry
Aug:Service Providers
Sep: Green Building Trends
(210) 308-5800
Oct: Specialty Contractors
Nov:Architecture & Engineering
Dec: Construction Equipment
Page 13
Salute to America
G
lazing contractors traveled to
the Houston National Cemetery to lay wreaths at 11am Dec. 11.
Several members of the Houston Area Glass Association (HAGA)
such as Dynamic Glass, Associated
Insurance Advisors, Spring Glass
& Mirror and JC Glass attended the
Wreaths Across America program.
–ab
Photo: L-R: Curtis Murphy,
Vic Huvelle, Denise Lewis with
daughter Mackenzie,
Richard McCormack
and Craig Mooty
Houston National Cemetery
Round-Up
Andrea Goodwin,
CPSM, has joined
Fugro Consultants,
Inc. as Houston
business development manager. She
brings business development and client
relationship
management expertise, in addition to
marketing, communication and strategic
planning skills to the position.
Hanson Pipe & Precast
recently
named Dustin Kruger as sales manager for the Gulf Coast
area in Texas. Based
in the Houston facility, he is responsible
for managing the
sales and technical
resource teams for
the Gulf Coast region, which extends to
the Louisiana and Mexico borders.
Marissa Benziger,
AIA, LEED AP, has recently joined The
Trevino Group Inc. project
management team. Benziger has more than
10 years of construction
project
management experience. She will
manage projects
assigned to the Houston corporate office.
Food for thought
Round-Up
Submissions
This is a monthly section for brief
company announcements of new or
recently promoted personnel, free of
charge, as space allows.
––––––––––––––––––––––––––––––
Email (w/digital photo, if available)
by the 15th of any month, for the
next month’s issue
(published 1st of each month).
Email info to appropriate city issue,
with “Round-Up” in the subject line:
––––––––––––––––––––––––––––––
Houston
[email protected]
L-R: Angel Cubaruvias and Tony Munguia, G-I-D Plumbing, spend their lunch
hour visiting friends at D & E Plumbing on Sept. 17. In their free time, they like
to go fishing at Matagorda Bay and Freeport, TX. –ab
Page 14
continued from Page 1 —Restoring stone
“Everyone cooks and brings in a dish
to share. This year, Jacqueline brought a
corn casserole and a turkey to the party.”
Tabbah says his hobbies are listening
to music and traveling with his wife.
“Whenever we get a little time off,
my wife and I like to explore places that
we have never been to before,” he said.
“We recently went to the Middle East and
spent time in Alexandria, Egypt, which is
where I was born.
“It was a historic trip. We went to see
the Pyramids, saw the ancient buildings
in Turkey and visited a place called Petra
in Jordan. We saw some very nice stone!
It was extremely impressive to see all the
stones in their natural environment.”
In late January, Tabbah says he is
looking forward to attending and giving
a presentation at the Care, Maintenance
and Restoration Forum at the 2011 SURFACES and StonExpo/Marmomacc Americas Education Program at the Mandalay
Bay Convention Center in Las Vegas, NV.
International Stoneworks is a natural
stone restoration business. –ab
continued from Page 1 —Going the distance
According to Meinholz, his hobbies
are playing racquetball for exercise and
he likes to go fishing in Galveston and at
local lakes when he gets the chance.
“One of our employees G.G. Garcia
is pool shark likes to compete in pool
tournaments in Houston,” he said. “Driver Hugo Zuniga is a singer in a band and
plays at local venues on the weekends
and after work.”
In the future, Meinholz says his plans
are to continue to help grow the business
and become more green. “I’d like to expand the recycling operations,” he said.
Lone Star Recycling & Disposal accepts
construction and demolition waste from
contractors. –ab
Content submitted by Associations to Construction News
ABC
Associated Builders & Contractors
Jan. 6: Lee College Registration, 5pm,
Lee College ATC & Library, 200 Lee Dr. in
Baytown, TX
Jan. 6: Construction Site Safety Technician Class, 6pm-10pm, ABC office
Jan. 12: Inaugural Dinner 2011, 6pm9pm, The Houstonian, 111 North Post Oak
Jan. 28: January Member Breakfast
For more information call 713-523-6222
ACCA
Air Conditioning Contractors of Amer.
Jan. 8: 8 Hour Continuing Education,
8am-5pm
Jan. 29: 8 Hour Continuing Education,
8am-5pm
AGC
Associated General Contractors
A demolition company drops off materials
continued from Page 1 — Lunch time
have been in business,” he
said. “We have also worked
with the owner for many
years. Stan Holt, Holt, Holt
& Hobock, was very hands
on and involved in the project. He added his own personal touches throughout
the project.”
Lusk founded TLG Interests in Jul. 1997. The
company provides general
contracting services and
specializes in restaurant
construction.
“Over the years, we
have built night clubs, restaurants, assisted-living centers, catering
kitchens, large office buildings, custom
homes and more,” he said. “We have
Association Calendar
Jan. 11-14: OSHA/OEC 511 Standards for
General Industry, 8am-5pm
Jan. 12-14: OSHA/OEC 3110 Fall Protection, 8am-5pm
Jan. 12: First Aid-CPR-AED, 2:30pm7:30pm
Jan. 25-27: OSHA/OEC 2264 Permit Required Confined Space, 8am-5pm
Jan. 25-28: OSHA/OEC 510 Standards for
the Construction Industry, 8am-5pm
AIA
American Institute of Architects
Outside seating
completed over 100 restaurants and still
counting! In addition, we have now become a fully integrated design-build
firm.” –ab
The inside dining area
Jan. 1: Buffalo Bayou Walking Tour,
10am, Market Square Park, 301 Milam St.
Jan. 3: Architecture Center and AIA
Houston open for the New Year, 9am
Jan. 15: Montrose Walking Tour, 10am,
The Menil Collection Bookstore, 1520 Sul
Ross
Jan. 20: Authors in Architecture: Pamphlet 30, 6pm
Jan. 22: Museum District Walking Tour,
10am, MFAH Sculpture Garden, 5101
Montrose Blvd.
ASA
American Subcontractors Association
Jan. 5: Membership Committee Meeting, 11:30am, MEMCO, 1500 N. Post Oak
Jan. 11: Understanding and Managing
the Risks of Green Projects, 11am
Jan. 12: Board of Directors Meeting,
9am, Marek Brothers Systems
Jan. 12: Government Advocacy Committee Meeting, 10:30am, Marek Brothers Systems
Jan. 20: BPI Session, 11am
Jan. 20:
General Lunch Meeting,
11:30am, Annual Economic Update
Jan. 25: Safety Committee Meeting,
10am, T.A.S. Commercial Concrete, 19319
Oil Center Blvd.
Jan. 28: Excellence in Construction
Awards Gala, 6:30pm, Houston Junior
League
Jan. 31: TCA PAC Reception, 6pm, Austin, TX
FPA
Foundation Performance Assn.
Jan. 12: Inclinometer Short Course,
Speaker: Jon Pecha, Durham Geo Slope
Indicator, The HESS Club
HAGA
Houston Area Glass Association
Jan. 13: HAGA Quarterly Dinner Meeting, 6:30pm Social (Cash Bar)
7pm, Dinner with Presentation, Crowne
Plaza Northwest, Northwest Freeway at
Pinemont. Topic: “Integrate Online Social
Media Into your Current Marketing Mix”,
Price: $30/Member, $45/Non-Member,
Reservations required
IEC
Independent Electrical Contractors
Jan. 10: Electrical License Renewal Class,
6pm-10pm, 601 N. Shepherd, Contractor
Members $35/Non-Members $40
Jan 11, 18, 25: State Masters Exam Prep,
6pm-9pm, Contactor Members $294/
Non-Members $353
Jan. 12, 19, 26: State Residential Appliance Installer & State Maintenance Exam
Prep, 6pm-9pm, Contactor Members
$220/Non-Members $300
Jan. 12, 19, 26: Motor Controls Class –
PLCs, 6pm-9pm, Contractor Members
Jan. 13, 20, 27: State Journeyman Exam
Prep, 6pm-9pm, Contractor Members
Jan. 13, 20, 27: Motor Controls Level 1
Class, 6pm-9pm, Contractor Members
9am-1pm, 601 N. Shepherd, Contractor
8am-noon, 601 N. Shepherd, Contractor
NAWIC
Nat’l Assn. of Women in Construction
Jan. 10: General Meeting, 5:30pm, Briar
Club, 2603 Timmons Lane. Cost: $35.
Reservations required. Guests welcome
Jan. 15: NAWIC Social and Fundraiser,
7pm,
Houston
Aeros
Hockey
Cost: $35.00. Email [email protected] for tickets
X128 or www.nawic-houston.com
PHCC
Plumbing-Heating-Cooling Contractors
Jan. 14: Dinner Meeting and Casino
Night, The HESS Club
TSPE
Texas Society of Professional Engineers
Jan. 20: TSPE Board Meeting
Jan. 22: Future City Competition
For more information www.tspehouston.
org
USGBC
U.S. Green Building Council
Jan. 15: Chapter Leader Retreat, 8am, 8
Greenway Plaza Crescent Conference
Room
Jan. 19: Board Meeting, 11:30am
Jan. 28: Counting on Quality of Place
Symposium, 8am, George R. Brown Convention Center
Want Reprints?
Full Color, Press Quality Digital Reprints available on
any item in Construction News – $42 includes tax
Perfect for framing in the office, a promo
item, for the website or as a gift.
Digital Press Quality PDF is emailed to you. Print as many
as you like. Can also be printed by any graphics
service provider, on any paper selection, size, or finish.
To request a reprint . . .
• Email to: [email protected]
• Indicate you would like to purchase a reprint, and a credit card form will be
emailed for you to complete and return.
If you have any questions, contact the SA home office at (210) 308-5800
Page 15
Job Sights
Lead man Angel Esbedo says Sonny Steel Erectors Inc. is doing the steel erection at the
Randall’s, Wells Fargo and King Hua Chinese Restaurant remodeling project in Uptown.
Tribble & Stephens Construction Ltd. is the GC. –ab
Joe Stepanski, Coastline Construction, builds new cabinets
at the Dairy Queen near Beltway 8. –ab
L-R: Devin Flato and Doug Lowe, Halff Associates Inc., do the preliminary surveying for
Texas Department of Transportation (TxDOT) on Westheimer Road. –ab
Teo Resendis, Houston’s Waterproofing & Sheet Metal Specialists LLC, installs a new roof at
the Iberia Bank project on Kirby Dr. Lincoln Builders Inc. is the GC. –ab
Page 16
Sweet success
S
pectators visited Market Square Park Dec. 11 where
19 teams of local architecture firms, design professionals, students and enthusiasts competed in the
2nd Annual Gingerbread Build-Off.
Eight awards were handed out acknowledging the
most unique and creative gingerbread structures completed.
Winning and select gingerbread structures were
displayed at the Architecture Center Houston (ArCH).
American Institute of Architects (AIA) held the event.–ab
Grande Prix de Show:
Le Corbusier’s Villa Savoye, Kirksey + Canopy
Photos by Cesar Carrillo Photography
Tallest Standing Structure: San Jacinto Monument,
Courtney Harper & Associates
Most Creative Interpretation of Materials:
Alice in Wonderland, PDR2, (No photo available)
Best Traditionally Themed: Breadzilla Attacks Gingerville,
Culture Pilot
1st Runner-Up: Sandcastle, A&E The Graphics Complex
2nd Runner-Up: Partridge in a Pear Tree of Gingerbread Men,
PageSoutherlandPage
Fore!
Best Architectural Icon:
Chartres Cathedral,
English and Associates Architects
Best Non-Traditionally Themed:
CCTV Tower & TVCC Tower On Fire, PDR
Extra Papers?
The Reliable Automatic Sprinkler
Co. team was the first place winner
at the recent Texas Fire Sprinkler
Contractors Association (TxFSCA)
21st Annual Charity Golf Classic
held at Trophy Club Country Club.
–ab
Visit our Website at:
Select “Rack Locations”
for a complete list rack locations
If you would like a personal
subscription
($35 per year, per city)
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January - Construction News

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