Dig Techniques Outlined for New Tunnel

New Jersey Transit’s proposed Trans-Hudson Express Tunnel project to build a new passenger rail crossing beneath the Hudson River is moving ahead with the narrowing of both digging options and potential construction management teams.

The $7.2 billion project is expected to double commuter rail capacity between New Jersey and Midtown Manhattan upon its completion in 2016. The agency plans to select a construction manager this month from two short-listed joint ventures, the first of which is URS of New York and Hatch Mott MacDonald of Millburn, N.J., and the other consisting of New York-based Tishman Construction, Parsons of Pasadena, Calif., and the New York office of London-based Arup.

Though construction would likely start more than two years from now, New Jersey Transit wants close design and construction management coordination, said Richard Sarles, assistant executive director of capital planning and programs for the agency, who recently described the project’s progress at a meeting of the Greater New York Chapter of the Women’s Transportation Seminar.

Sarles said the design team of three New York firms, Parsons Brinckerhoff, STV, and DMJM Harris/AECOM, has identified three tunnel-digging methods that the proposed 4.5-mi. alignment is likely to require because of a variety of geological conditions. The team – which was awarded an $87 million engineering contract last summer – has not yet pinpointed the extent and location of the three methods, which include tunnel boring for harder bedrock, the pressure balance method for softer soils, and cut-and-cover for shallow depths close to shores.

The team is also considering the New Austrian digging method, which uses geological stress to stabilize the tunnel. It is expected to report back at the end of the year or in early 2008.

The project so far has a $1 billion commitment from the Port Authority of New York and New Jersey and $500 million from the New Jersey Transportation Trust Fund. The Port Authority has pledged an additional $1 billion, and Sarles said the project’s federal funding prospects are bright based on the results of recent meetings with the new U.S. Secretary of Transportation Mary Peters.

“I can say that [the THE Tunnel] was well received and they’re enthusiastic about helping us move forward on this,” Sarles said.

The station component of the project will add six to eight new station tracks with platforms 95 to 130 ft. below 34th Street between 6th and 7th avenues, with some tracks extending to 8th Avenue. The platforms will connect to Pennsylvania Station to the south and to local subway stations, as well as to the proposed $900 million Moynihan Station two blocks to the south. The project is expected to generate 6,000 construction jobs.

Plan to Expand Queens Museum

Design work is continuing on a project to expand and renovate the Queens Museum of Art in Flushing Meadows, an effort that will double the institution’s existing space.

The $37 million project, designed by Grimshaw Architects of London and Ammann and Whitney of New York, will give the museum full use of the 105,000-sq.-ft., city-owned building that the institution has shared with a public ice rink in the facility’s southern half. The plan calls for rebuilding and restoring two façades; creation of a new winter garden and galleries; and building a Queens Library system branch focused on art and media. To accommodate the plan, New York City is building a new ice rink set to open later this year.

The design phase is expected to run through the spring. Construction would start later this year, with the museum set to reopen in late 2009 or early 2010.

A transparent curtain wall on the east façade will mark the entrance to a new, double-height lobby, which will offer views of a new glass bridge linking the museum’s north and south spaces on the mezzanine level. The west façade will be a glass wall facing the Grand Central Parkway showing displays of information about the museum that change as viewers move closer and farther away.

The fully sky-lit winter garden will feature translucent glass on a framework suspended from the museum’s roof trusses. The seven galleries will be organized around the garden pavilion, using the courtyard for natural light.

In addition to the glass bridge, the design also calls for a new grand staircase and glass elevator. The project will also add classroom, administrative, and exhibit storage spaces.

The original building was designed by Aymar Embury II for the 1939 World’s Fair, and was transformed into an ice rink and theater leading up to the 1964 World’s Fair. The museum opened in the northern half in 1972.

Hartford Starts $1.6 Billion Sewer System Overhaul

Voters in and around Hartford, Conn., approved an $800 million bond measure in November that has paved the way for a $1.6 billion program to upgrade sewer plants, lines, and other systems in the region.

More than 70 percent of voters in Hartford and seven surrounding towns – Bloomfield, East Hartford, Newington, Rocky Hill, West Hartford, Wethersfield, and Windsor – endorsed a proposal for the Metropolitan District Commission sewerage authority, a state-chartered institution, to issue the $800 million in bonds for the projects. The authority expects to seek up to another $800 million through state and federal grants for future work if the first phase doesn’t address ongoing sewer problems.

The capital program, dubbed the “Clean Water Project,” responds to a consent degree that the authority signed over the summer with the U.S. Environmental Protection Agency and the state’s Department of Environmental Protection. The decree requires the authority to address sewer overflow problems, particularly during heavy rainfalls, and to reduce the levels of nitrogen in effluent that flows to the Long Island Sound.

Among the projects that the bonds will fund are: $250 million for expansion of an existing wastewater treatment plant and for the installation of nitrogen-removal equipment; the installation and construction of separate sewer lines for sanitary waste and rainwater in parts of the region that currently only have a single pipeline and limited capacity; and improvements to areas that experience flooding or other sewer problems.

Work on some “sewer line separation” projects has already begun and the first phase is expected to run through 2013. A spokesman for the authority said that it expects to concentrate this year on design, though new construction contracts are likely to be let before 2008. Camp Dresser McKee of Cambridge, Mass., has an ongoing design consulting role, while contractors such as Paganelli Construction of Suffield, Conn., and Trumbull Construction of Ansonia, Conn., are working on current projects.

Ground Broken on $400 Million Bridge in New Jersey

Construction started last fall on a $400 million replacement bridge between Ocean City and Somers Point in New Jersey, a project overseen by the New Jersey Department of Transportation.

The new Route 52 Causeway Bridge will replace two fixed and two moveable bridges. The new structure will consist of two high fixed spans over Ship Cannon and Beach Thorofare, linked by a touch down on Rainbow Island. Ocean City is 20 mi. south of Atlantic City.

The new 3-mi.-long bridge will feature two 12-ft.-wide lanes in each direction, 8-ft. shoulders, and a concrete median divider. The larger project also entails construction of a visitor’s center and several fishing piers. The transportation agency tapped George Harms Construction of Farmingdale, N.J., as construction manager.

The department was able to shave $90 million off the cost of the first phase, which encompasses replacement of 1.2 mi. of a 73-year-old interior bridge from Elbow Island to Garrett’s Island. The savings will come from elimination of 3,200 ft. of the bridge’s structure through a realignment and removal of a traffic circle, as well as from modified dredging, environmental mitigation, and simplification of the fishing piers.

The construction schedule calls for completing the northbound bridge on a new alignment east of the existing causeway by summer 2008. That will allow the team to take traffic off the old causeway and demolish it in order to make room for the new southbound roadway. The southbound lanes would open in fall 2009.

Groundbreaking on Javits First Phase

Demolition tasks began late last year to pave the way for the first phase of the $1.68 billion Jacob K. Javits Convention Center expansion and renovation project in Manhattan.

The project team started demolition of two buildings totaling 500,000 sq. ft. on the north side of the existing convention center. Once completed in 2010, the first phase will increase the exhibition area by 45 percent to 1.1 million sq. ft. through the addition of 340,000 sq. ft. of new space, including 65,000 sq. ft. of ballrooms.

 Richard Rogers Partnership of London is the lead architect on the expansion project, along with A. Epstein Architects of Chicago and New York-based FXFowle Architects. New York’s Tishman Construction is the owner’s representative on behalf of an affiliate of the Empire State Development Corporation.

In addition to the expansion, the team will design a multilevel truck security screening, marshalling, and loading facility on 12th Avenue.

The city and state are each contributing $350 million toward the first phase’s budget, while another $645 million is expected from the sale of bonds backed by a $1.50 per-key surcharge on hotel rooms in the city. The balance of funding would come from proceeds of sales of other city-controlled parcels in the district.

The state and city also have issued a request for proposals for development of a 1,000-room hotel to be located on 11th Avenue between 35th and 36th streets that would have 50,000 sq. ft. of meeting room space and connect directly to the convention center under the avenue. Work is also slated to begin this year on a $2 billion extension of New York City Transit’s 7 subway line from the current terminus at Times Square to the Javits complex at 34th Street and 11th Avenue.

Brooklyn Navy Yard Expansion Breaks Ground

Construction of the first facility in a seven-building expansion program to attract businesses and jobs to the Brooklyn Navy Yard on Perry Avenue began last fall. The former naval base, which the city acquired in 1966, is home to more than 230 manufacturing and industrial companies employing 4,000 permanent workers in 4 million sq. ft. of existing space.

The $106 million first phase of the expansion will create an additional 401,900 sq. ft. of industrial space in the seven new buildings. Work began with construction of a $20 million, 89,000-sq.-ft. facility that will house multiple businesses and will strive for silver-level Leadership in Energy and Environmental Design certification.

A second phase currently in design under a separate budget would create up to 1.5 million sq. ft. of industrial space on the navy yard’s eastern side. Once complete, the two-phase expansion program will have added 1.9 million sq. ft. to the site, increasing its capacity by almost 50 percent.

The city has invested $70 million in new infrastructure for the 300-acre industrial park in recent years and has budgeted for another $140 million in infrastructure improvements over the next three years.

The expansion, orchestrated by the Brooklyn Navy Yard Development Corporation with TDX Construction of Manhattan as construction manager, will also add a new 60,000-sq.-ft. supermarket serving the community nearby. The first phase will include demolition or downsizing of several structures already on the site.

Under a city law, TDX will award more than 30 percent of contracts under $1 million to minority-owned firms and has set a goal of hiring at least 25 percent of its construction forces from the neighboring communities.

Tax Law Changes Require Additional Planning Strategies

Be prepared to implement changes to get the best tax advantages.

by Jed P. Dallek

There’s nothing more fulfilling than nurturing a business to success. But success doesn’t come overnight, and it’s never simple. You must be in tune not only with the technological, economic, and marketplace changes, but also with the nuances of tax law changes. Here are just a few planning strategies you should consider utilizing in 2007.

Evaluate business structure: Businesses may operate under a variety of structures, ranging from sole proprietorship to C Corporation. Income taxation and owner liability are the main factors that differentiate one from another. Many new businesses lean toward the flow-though taxation of a sole proprietorship, partnership, Limited Liability Company or S Corporation. The C Corporation has lost some of its luster because the maximum federal tax rates are equal to the tax rates for individuals.

Defer income and accelerate deductions: In potentially high-income years, consider deferring some income to later years. A simple example of a deduction that you can accelerate or defer is your state tax deduction for a cash-basis taxpayer. If you make an estimated state tax payment before December 31, you can deduct it in that year. Otherwise, you can wait until the due date of the return and it will be deductible the following year. However, you must watch out for the alternative minimum tax.

Expense when you can: Generally, equipment with a useful life well beyond the taxable year must be capitalized. An exception is the Section 179 expensing election. It allows a current deduction for assets that otherwise would be subject to normal deduction rules. The maximum Section 179 deduction for 2006 is $108,000, and it will be indexed for inflation from 2007 through 2009. With the current rules in place, and the deduction set to decrease in 2009, it may be appropriate to schedule major capital asset purchases in the next few years when the greatest tax benefits may be available.

Maximize depreciation with a cost segregation study: If you have recently purchased or built a building, or are remodeling existing space, make sure you maximize your depreciation deductions. Although real property generally must be depreciated over 27.5 or 39 years using the straight-line method, certain parts of the “building” can qualify for a shorter depreciable life. Certain methods that you can utilize may be able to dramatically increase your current deductions.

Take other depreciation rules into account: Careful planning during the year can help you maximize depreciation deductions in the year of purchase. You generally will want to use the Modified Accelerated Cost Recovery System, also known as MACRS, instead of the straight-line method, in order to get a larger deduction in the early years of an asset’s life.

Claim all business losses: Generally, a net operating loss may be carried back two years to obtain a current tax refund, which can provide a cash infusion in times of loss. Any loss not absorbed in the prior two-year period is then carried forward for up to 20 years. If you prefer, you may choose to waive the carryback and carry the entire loss forward, which may be beneficial if your marginal tax rate in the carryback years is unusually low, or if the alternative minimum tax in prior years makes the carryback less beneficial.

Write off bad debts: Bad business debts are treated as ordinary losses. They can be deducted when they become either partially or wholly worthless. For individuals and certain other entities, the IRS may consider loans made to closely held corporations as non-business related and, if not repaid, reclassify them as non-business bad debts (wholly worthless), which are treated as short-term capital losses.

Manage your inventory for tax savings: You must calculate the dollar amount of inventory you have on hand at year’s end. If your ending inventory value is low and the cost of merchandise sold is higher, your taxable income will be lower. The inventory method you choose can significantly affect your taxable income.

Maximize tax credits: Tax credits reduce your business’s tax liability dollar-for-dollar. Credits that may be available include Empowerment Zone, Research, Work Opportunity, and Welfare-to-Work.

Follow the rules for nonqualified deferred compensation: Nonqualified deferred compensation arrangements are promises to pay executives and key employees sometime in the future for services currently performed. The plans are often geared to the individual and are based on his or her performance or on the company’s performance. Under the Pension Protection Act of 2006, employers with underfunded or terminated single-employer pension plans cannot fund nonqualified deferred compensation plans.

Look into qualified deferred compensation plans: To attract and retain the best employees and manage your tax liability, qualified deferred compensation plans can be useful. They include pension, profit-sharing, and 401(k) plans, as well as Savings Incentive Match Plans for Employees, known as SIMPLEs, Simplified Employee Pensions, 403(b)s, and 457s. You can enjoy a tax deduction for your contributions to employees’ accounts under the plan, and they offer tax-deferred savings benefits for employees.

Provide fringe benefits: Fringe benefits are a crucial part of any compensation package. Some fringe benefits aren’t included in employee income. With these benefits, both the employer and the employee come out ahead: The employer receives a deduction, but the value of the benefit is tax free to the employee. Plus, the business usually avoids payroll taxes on these amounts. Examples of benefits treated in this manner include group-term life insurance up to $50,000, health insurance, and employee discounts. Other types of fringe benefit offerings – subject to various rules and limitations – range from Flexible Spending Accounts to athletic facilities or on-site day care.

Develop a comprehensive succession plan: All business owners should create a strategy to sell their companies or pass them on to their children or other family members. Insurance, maximizing valuation discounts, developing a buy-sell agreement, and determining whether an employee stock ownership plan, known as an ESOP, could work for you are all important factors in developing a successful succession plan.

No matter what challenges come your way in 2007, putting in place creative tax and business strategies can help you maximize your potential deduction and make your business more successful.

Jed Dallek is a certified public accountant and tax partner at Grassi & Co., CPAs of Lake Success, N.Y., and focuses on the construction and real estate industries. His e-mail address is jdallek@grassicpas.com.

Click here for more Newswatch >>