Marc Valerio, who is also a certified public accountant, spoke to CNYBJ on June 2 and provided thoughts on several topics. The Bonadio Group — which is headquartered in Rochester and has offices in Syracuse and Utica — describes itself as the largest independent provider of accounting, tax, and consulting services in upstate New York. […]
Marc Valerio, who is also a certified public accountant, spoke to CNYBJ on June 2 and provided thoughts on several topics.
The Bonadio Group — which is headquartered in Rochester and has offices in Syracuse and Utica — describes itself as the largest independent provider of accounting, tax, and consulting services in upstate New York. Besides Rochester and Syracuse, it also has offices in Albany, Batavia, Buffalo, and East Aurora, as well as New York City; Rutland, Vermont; and Dallas.
PPP loan forgiveness
The Payment Protection Program (PPP) loans are part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The forgivable-loan program allows employers with under 500 employees to borrow the equivalent of two-and-a-half months of their 2019 payroll costs. Employers have to use the funding over an eight-week period from the time they receive the loan, and spend at least 75 percent of the money on payroll, Valerio noted.
The eight-week period becomes “tricky,” says Valerio, because if an employer furloughed workers, the company has to try to get them back and spend the loan money — even offering return bonuses and special hazard pay.
In its forgiveness rules, the U.S. Small Business Administration (SBA) saying that those extra payments to employees would count toward loan forgiveness, according to Valerio.
“So, to the extent you spend the full amount of the loan in your eight weeks and you restored any reduction in your full-time equivalent [workers], you can receive full forgiveness of your loan amount,” says Valerio, noting that full forgiveness means the loan essentially becomes a grant.
He’s also figuring that most contractors will secure loan forgiveness.
Valerio says he’s spent the majority of his time the past couple months working with clients on the PPP loans.
Recalling furloughed employees
Bringing back furloughed workers wasn’t as “significant” an issue for construction firms as it was for a lot of other businesses, says Valerio.
Most had temporary shutdowns, but many of the Bonadio firm’s contractor clients “ramped up” as they normally do during the spring months as the weather permitted.
For contractors that may have secured PPP loans and are now able to recall employees, the PPP loan program included a rule pertaining to loan-forgiveness purposes.
“If you had a reduction in your full-time [employees], you can restore those [workers] by June 30, and that reduction will be forgiven,” says Valerio.
He went on to say that under the PPP, the SBA issued a regulation saying that if the company asks the employee to return and the worker rejects the offer, the employer can receive credit toward loan forgiveness, as long as the offer is documented in writing.
Safety measures, supplying PPE
Valerio says New York State released specific guidance for contractors under phase one of its regional economic reopening on the website forward.ny.gov, and the state’s website has documentation with guidelines for the construction industry.
The guidelines include physical distancing, protective equipment, and cleaning and hygiene, and communication. It also includes a limit on the sharing of objects (tools, machinery, materials, vehicles) which Valerio sees as “mostly specific” to contractors.
“And the contractors are required, like most employers … to make sure there are adequate cleaning materials on a job site, masks, signage about the social distancing rules, and sanitizing items,” says Valerio.
If a contractor has a job site that’s 60 miles away and the firm isn’t supposed to put workers in a shared space, impacted employees may be traveling to the site on their own instead of in groups of four or two in a company truck. It’s an adjustment that may result in more travel expenses, he added.
Honoring contract terms
The separate travel to job sites and extra expenses might lead to a legal question in a project contract.
“It’s important that someone who’s really familiar with the contracts … ensures [contractors] have a full understanding of these items and works with their legal advisors to determine if there’s the ability to go back to the job owner to reimburse for some of these costs or potentially a change order,” says Valerio.
Some contracts have time constraints and liquidated damages and other requirements like involvement from minority and woman-owned business enterprises (MWBE). But, with the pandemic-induced shutdown and the impact on the labor supply and subcontractor availability, it’s made contractors do what they have to do to get jobs done in time but “potentially not abiding by all the rules.”
“So it is important that they stay focused on what those contracts say and work with their attorneys and advisors to make sure that they’re still following those, and if there’s the potential to revise contract terms, to address those ahead of time,” says Valerio.