NUAIR pilots Northeast UAS test-site

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SYRACUSE — Headlines around the world: “UN report calls for independent investigation of drone attacks”; “UN report reconstructs civilian death toll from drone strikes”; “Obama’s itchy trigger finger on drone”; “U.S. targets its citizens for drone attack.” Drones, technically known as unmanned aerial vehicles (UAV), have earned a reputation for military action. The first UAV […]

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Drones, technically known as unmanned aerial vehicles (UAV), have earned a reputation for military action. The first UAV was used by the Austrians, who, in the mid-1800s, released bomb-laden balloons to attack the Venetians. The U.S. military didn’t ramp up UAV development until 1960, when Francis Gary Powers and his U-2 were shot down over Soviet territory. Within days of the international incident, America launched the “Red Wagon” program to conduct surveillance with unmanned aircraft. Today, the UAV military market is huge: UAV Market Research estimates that the Department of Defense (DoD) will spend $86.5 billion over the next five years.

It’s not surprising that the public equates UAVs with the military and unsavory activities, ranging from assassination to invasion of privacy. In December of last year, however, America heard a different slant on UAVs when Jeff Bezos, the president of Amazon, introduced a “60 Minutes” TV audience to Amazon Prime Air. His company contemplates delivering packages under five pounds with a fleet of sky robots. The idea is to deliver the package to your doorstep faster than your Chinese take-out order.

While Bezos’ idea raises more questions than it answers, America suddenly saw a use for drones other than the military one. In early March, rumors began swirling that Facebook is in negotiations to buy Titan, a drone manufacturer, for a reported $60 million. Mark Zuckerberg, the founder and CEO of Facebook, says he wants to bring the Web to the world by connecting the 5 billion people who have no online connection today. At last, the public is coming to understand that UAVs have a variety of applications other than military.

The shift in public awareness couldn’t be better timed. Enter NUAIR, which stands for the Northeast UAS Airspace Integration Research Alliance, Inc. (UAS is an acronym for unmanned aircraft systems.) NUAIR is a 501(c)(4) nonprofit corporation comprised of more than 40 public and private entities and academic institutions cooperating to operate the new FAA-designated UAS test site in New York and Massachusetts, one of only six in the country. The organization’s mission is to help make skies safe for routine UAS operation in commercial space. The goal is to establish the Northeast as a national leader in UAS research, development, testing, evaluation, and business development. The UAS testing infrastructure includes the 174th Air National Guard Attack Wing in Syracuse, the Wheeler-Sack Army Airfield at Ft. Drum near Watertown, the Air Force Research Lab facility at Stockbridge in Oneida County, the Massachusetts Military Reservation at Cape Cod, Griffiss Air Force Base in Rome, and Plattsburgh Air Force Base.

“We expect to begin integrating unmanned aircraft into the FAA commercial system by the end of 2015,” says Robert A. Knauff, CEO of the NUAIR Alliance and a retired two-star, Air Force general. “Of the six sites chosen, NUAIR is focusing on ‘sense-and-avoid’ technology [to ensure no air or ground collisions]. The challenge is the complexity of the system as a whole. On the one hand, a drone on a pre-defined mission is predictable, but a UAV that integrates a system of logic with commands from ground-based personnel and systems is more difficult to predict. These UAVs will be sharing the same airspace as manned flights in our national air space, a project that can’t be implemented overnight.” Currently, the U.S. air space is home to 85,000 daily flights.

NUAIR has five employees: Knauff; Anthony B. Basile, director of operations; Dr. Raymond Young, CTO; Lawrence H. Brinker, Esq., executive director and general counsel; and Andrea Bianchi, program manager. The corporation is currently sustained by contributions and loans from its members while it seeks economic-development grants. The projected 2014 budget is $600,000. NUAIR’s major revenue stream will be generated by renting the test site, which is expected to initiate testing this spring. The fee structure is not yet established … Several companies have already reserved time.

“The opportunities for commercial and civil applications [of UAVs] are practically unlimited,” asserts Knauff. “Initially, 80 percent of the growth will come in agricultural uses and another 10 percent in public safety. But think of the needs in environmental monitoring, cargo delivery, disaster response, accident investigations, mapping for planning and zoning, pipeline and infrastructure monitoring, and cellular communications, just to name a few. As for the economic impact of the UAS industry, NUAIR’s test site alone should generate more than $145 million in New York state over the next three years and produce more than $10 million in tax revenue. The industry impact on the state is projected to be another $443 million and 2,276 industrial jobs.”

Data from the Association for Unmanned Vehicle Systems International (AUVSI) projects that the UAS industry will create 70,000 new U.S. jobs by 2017 and more than 100,000 by 2025. The total U.S. economic impact will reach $82 billion by 2025. Regionally, according to data from Hickey & Associates, LLC, the Syracuse, Binghamton, and Utica–Rome Metropolitan Statistical Areas should produce $388 million and 733 jobs by 2023. Tax revenue over the same period should generate another $46.8 million. New York is projected to be ninth in the nation in terms of economic impact and job growth from UAS integration. The Global UAV Market research reports project that the military, commercial, and civil UAV market worldwide will generate nearly $115 billion annually within a decade. The U.S. DoD procurement will expand at a compounded average growth rate of 12 percent. The U.S. and Israel will garner most of this revenue.

“This industry is poised to explode,” opines Knauff. “It’s like the Wild West … There are over 4,000 platforms in use with off-the-shelf products. This region is well positioned to benefit from the expected growth because of the infrastructure of engineering industries already advanced in sensor and radar development, academic institutions doing research in areas such as nanotechnology and imaging plus training and certifying the work force in civilian and commercial UAS operations, and military and [underused] former-military installations to support testing. Our region has the potential to become the UAS Center of Excellence. The only thing holding back the industry now is domestic policy and regulations surrounding UAS integration into the National Airspace System.” U.S. Sen. Charles Schumer echoes Knauff’s vision by hoping to call Upstate the “Silicon Valley of drones.”

Saab Sensis Corp., a founding member of the NUAIR Alliance and a major supplier of airport-safety systems located in the Town of DeWitt, concurs that the industry is poised to expand. “This [UAV] industry is ready to go,” says Kenneth Kaminski, the company president and CEO. “We are seeing all kinds of innovation … It’s still too early to talk about investment and expansion [at Saab Sensis] until the policies and regulations are in place … The direction of the industry certainly bodes well for Central New York with its talent pool of engineers and academic institutions … UAVs will catalyze [substantial] change; they will be transformative. This company is well positioned to build on our experience in airborne and ground safety, and we plan to utilize the new test site once it’s operational.”

While the public is finally awakening to the commercial and civil potential for UAVs, these unmanned vehicles are still stigmatized by many as drones. “Vigils” and even intrusions at Hancock Field Air Force Base in Syracuse seek the total suppression of drones for assassination. The ACLU is a national leader in voicing concern about privacy and the “inevitable” intrusion by gaggles of circling UAVs able to clearly detect a human image from 20,000 feet. Syracuse became the fifth city in America to pass a resolution banning drones from municipal airspace. While the city Common Council’s resolution is merely symbolic, the idea is to push NUAIR and the FAA into addressing privacy concerns, even though they are not within their jurisdiction.

“NUAIR is the point of the spear,” muses Knauff. “While we are not specifically charged with creating policy guidelines for privacy, we recognize that we need to operate with the public’s approval. The FAA is currently seeking guidance in this area … The AUVSI has posted guidelines on its website.”

Knauff is a 1975 graduate of the U.S. Air Force Academy. His 33-year, Air Force career included both flying and command assignments, sprinkled with combat duty. He commanded the 174th Fighter Wing at Hancock Field between 1996 and 2003, before becoming chief of staff and then commander of the New York Air National Guard. Knauff resides with his wife in Cazenovia.

Knauff has no doubt that unmanned flight is not only here to stay but also that it’s a transformative, beneficial technology. His vision of the cockpit of the future is encapsulated in the story of the pilot and the dog. In short, if the pilot touches anything in the cockpit, the dog bites him.

Contact Poltenson at npoltenson@cnybj.com

Cuomo pushes property-tax plan in DeWitt

Health Care, Subscriber Only

DeWITT — New York Gov. Andrew Cuomo on March 25 outlined his proposal to cut property taxes during a visit to the DeWitt Community Room. Cuomo also encouraged local governments to reduce their costs during his presentation in the facility at 148 Sanders Creek Parkway near Carrier Circle. Cuomo’s appeared in DeWitt as talks on

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DeWITT — New York Gov. Andrew Cuomo on March 25 outlined his proposal to cut property taxes during a visit to the DeWitt Community Room.

Cuomo also encouraged local governments to reduce their costs during his presentation in the facility at 148 Sanders Creek Parkway near Carrier Circle.

Cuomo’s appeared in DeWitt as talks on the state-budget proposal continue in Albany. The next spending plan is due April 1.

“We’re literally down to the final moments,” Cuomo said during his comments.

As of press time, Cuomo and state lawmakers had not reached final agreement on a budget plan.

Onondaga County Executive Joanie Mahoney, DeWitt town supervisor Edward Michalenko, Onondaga County Legislator Daniel Liedka, and Chris Haywood, a property owner from the town of Manlius, joined Cuomo for his presentation.

“I believe the issue we’re talking about today is the most important issue that is in the budget,” Cuomo said.

Cuomo’s plan would freeze property taxes for two years in communities where the local government also takes steps to consolidate and share services, and would provide relief based on an individual homeowner’s ability to pay.

About 207,000 Central New York homeowners could benefit during the second year of Cuomo’s freeze proposal, with total savings of as much as $44 million and an average benefit of $215, according to Cuomo’s office.

Under the circuit-breaker proposal, about 129,000 households will qualify for an average real-property, personal income-tax credit of $375, totaling $48 million in savings to Central New York residents, the office added.

The “burden” of increased property taxes year after year has “started to take its toll,” Haywood said during his remarks.

And having “little to no control” over his property-tax bill is what he called the “most frustrating part.”

“This year, I will pay about $8,500 in property taxes. For me, that means I pay [about] 11 percent of my annual salary in property taxes. That on top of what we pay to various local government and administrative districts that have sprouted up around our community,” Haywood said.

Haywood sees the property-tax proposal as “great news.”

“The hundreds of dollars in savings that we would receive under this plan could be put toward the cost of continued education for my family,” he added.

Haywood, a father of four, has one child attending college.

Cuomo’s office also released a statement on March 26 indicating more than 260 local elected officials across New York support his plan.

Upstate New York has 13 of the nation’s 15 highest taxed counties by percentage of home value, Cuomo said in his remarks during the DeWitt event.

“Why are the property taxes so high? Because we spend a lot and because we have a lot of government,” he added.

New York has 10,500 local governments statewide, Cuomo said. That means 10,500 offices with light switches resulting in a costly “bureaucracy” of local offices, he added.

Onondaga County has 941 local governments, according to a slide graphic that accompanied the governor’s remarks.

“Each one is a bureaucracy unto itself,” Cuomo said.

He added that New York needs to get the cost of local government “under control” to curb property taxes in order to “get this state’s economy running the way we need to.”

Contact Reinhardt at ereinhardt@cnybj.com

Masonic Care Community: 121 years of charity

Health Care, Nonprofits, Subscriber Only

UTICA — The Masonic fraternity, the oldest and largest fraternal organization in the world, focuses on community service and charitable work as its principal activities. In the United States, Masonic organizations spend more than $2 million every day on charitable services. In the Mohawk Valley, the Masons established the Masonic Home in May 1893, fulfilling

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In the Mohawk Valley, the Masons established the Masonic Home in May 1893, fulfilling a dream first expressed in the ante-bellum period. The founders of the Masonic Home chose a site on Bleecker Street in Utica, which now comprises 400 acres. The New York State Masonic Community wanted to build a home to care for the indigent Mason, his wife, widow, and orphan. They chose Utica, because it was in the center of the state.

The Masonic Care Community of New York is owned by the Trustees of the Masonic Hall and Asylum Fund, a New York corporation established in1864. In April of this year, the Trustees will celebrate 150 years of service.

“The first structure erected in 1893 housed everything and everyone, providing the basic needs of food, shelter, clothing, and education,” says Kathy Contino-Turner, director of communications and marketing at the Masonic Care Community. “As the need grew, so grew the structures on campus. The Booth Memorial Children’s Building was first in 1898, followed by the Knights Templar in 1916 for girls, and a two-story brick structure for young children in 1923 … The Scottish Rite building … originally housed the older boys in 1924 and Wiley Hall in 1928 was constructed as the boys’ dormitory.”

What started as a haven for a few has morphed today into a complex that houses more than 500 elders. “In the 1970s, the trustees made a decision to focus on care for the elderly and to open our community to both Masons and non-Masons,” notes Robert J. Raffle, the executive director of Masonic Care Community. “We changed the corporate name in 1992 from the Masonic Home to the Masonic Care Community of New York. If you tour our campus, you will find independent living in Acacia Village; senior care, which includes long-term care, adult residential care, and home care; short-term rehabilitation; and child care. Our skilled-nursing facility houses 320 beds, of which 10 percent is dedicated to short-term rehabilitation therapy … Acacia Village has 135 apartments … Our child-care center caters to children from the age of six weeks to 5 years and is open both to staff and to the community.”

Masonic Care Community is a major contributor to the local economy, with an operating budget of $50 million and 900 employees. In addition to the campus in Utica, which encompasses more than a million square feet, the Trustees own property in Woodgate and Tappan New York and in New York City. According to the Trustees of the Masonic Hall and Asylum Fund’s 2011 990-form, the corporation has net assets in excess of $250 million.

The Masonic Care Community is the original charity of the New York State Masonic Fraternity, and its operation continues to see challenges. According to Raffle, “Today, 70 percent of our reimbursements come through Medicare and Medicaid. New York State has signaled that it can’t sustain the growing cost of Medicaid, and the federal government continues to put pressure on Medicare reimbursements. Coupling the declining reimbursements with the fact that the Oneida County community is aging rapidly puts added pressure on us to adapt.

“We continue to be challenged to do more with less,” notes Raffle,” which is largely due to the continued strain on our state and federal reimbursement structure. We have become more creative and adaptive in our approach to problems and have reached out to our community partners to form new relationships. We need to be able to adapt, and the only way to do that successfully is to anticipate the trends and changes [in our industry]. We can never sacrifice quality, so we need to be one step ahead. That’s why the executive team is always looking three to five years into the future to plan our course. One example of looking ahead was the decision to enter the home-care field in 2004 by buying a local home-care agency. Our executive team focuses on developing strategic initiatives to take full advantage of opportunities to expand and strengthen our Masonic Care Community.”

Raffle attributes Masonic Care’s growth over the years to its employees. “In our industry, there is a lot of turnover each year,” states Raffle. “We work hard to identify employees committed to quality and who care about their work. We have a complex interview process, but the result is a passionate … [workforce] that’s dedicated to caring for our residents. As a result, we have a much lower turnover rate than the average and a strong recognition of our quality and family culture.”

Raffle was born in Ilion and graduated from SUNYIT in 1996 with a degree in health-services administration. He worked in Tennessee, Georgia, and North Carolina garnering experience with a for-profit, health-care group. Raffle returned to the Mohawk Valley in 2002 where he was the administrator at a nursing home in Rome. The Ilion native joined the Masonic Care Community in 2004 as the assistant executive director and assumed the duties of the executive director in 2012. He lives in Ilion with his wife Amy and three children.

“Our residents and staff live charity every day,” avers Raffle. “Our seniors in the Health Pavilion participate in numerous activities and raise thousands of dollars. To name a few: residents of Acacia Village hold an annual “Souper Bowl” to raise funds for the Child Care Center. The Resident Council holds bake sales, garage sales, and basket raffles throughout the year. The Masonic Care Community will hold its second annual fundraiser — ‘The Mighty Run’ — on the campus in September … The campus itself plays host to a number of local, nonprofit organizations. In 2013, various charities utilized our campus to hold fundraisers that generated more than $500,000. That’s a pretty impressive record … We live charity every day.”

Contact Poltenson at npoltenson@tmvbj.com

Harris Beach launches collegiate-sports practice group

Insurance & Financial Services, Law, Accounting & Taxes, Small Business, Sports, Entertainment & Tourism, Subscriber Only

Harris Beach PLLC, a Rochester–based law firm with an office in Syracuse, has introduced a national collegiate-sports practice group. The USA collegiate-sports practice group provides a range of legal services related to the compliance and operational issues of running a college-athletics program. The nine attorneys involved have worked on these matters previously, says Brian Mahoney,

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Harris Beach PLLC, a Rochester–based law firm with an office in Syracuse, has introduced a national collegiate-sports practice group.

The USA collegiate-sports practice group provides a range of legal services related to the compliance and operational issues of running a college-athletics program.

The nine attorneys involved have worked on these matters previously, says Brian Mahoney, a partner in Harris Beach’s Buffalo office, who leads the USA collegiate-sports practice group.

“We just decided to … formalize our collective experience with this practice group and that has come about … this month,” Mahoney says.

Mahoney practices in the government compliance and investigations team and the commercial-litigation practice group.

He also handles National Collegiate Athletic Association (NCAA) matters including compliance and student-athlete eligibility issues.

Two attorneys in the Syracuse office, David Martin and Donald Martin, who are brothers, are also part of Harris Beach’s new collegiate-sports practice group.

The firm can also call upon other attorneys in the local office or other Harris Beach offices for matters that fall into this legal area, if need be, Mahoney says.

The practice group is composed of attorneys from several disciplines to address issues related to NCAA regulations, Title IX compliance, student-athlete eligibility, club sports, coach-player conduct, sponsorships and contractual arrangements, staffing and personnel, risk management and liability issues, drug testing, hazing and other topics.

Title IX of the Education Amendments of 1972 is a federal statute that was created to prohibit sex discrimination in education programs that receive federal-financial assistance, according to the website of the NCAA. Nearly every educational institution is a recipient of federal funds and is required to comply with Title IX, the website says.

Besides Harris Beach attorneys, the practice group also includes Bridget Niland, an attorney with “extensive experience working at the NCAA,” according to Mahoney.

She worked at the NCAA office in Indianapolis for a number of years, handling compliance and other issues, he says.

Niland, who is also a professor at Daemen College in Buffalo, still works on matters pertaining to the NCAA and serves as a consultant on Division I membership issues for Harris Beach on this practice group, Mahoney says.

Harris Beach has also started a USA collegiate-sports blog on its website as a forum to discuss issues affecting colleges and universities, athletic directors, coaches, administrators, and trustees, the firm said.

Founded in 1856 and headquartered in Pittsford, near Rochester, Harris Beach has more than 200 lawyers in offices that include Syracuse, Albany, Buffalo, Ithaca, New York City, Saratoga Springs, Uniondale, and White Plains, along with New Haven, Conn. and Newark, N.J.

Syracuse–based Bond, Schoeneck & King, PLLC is another area law firm that has a collegiate-sports practice group. On its web site, Bond says its practice group represents colleges and universities in NCAA rules compliance, eligibility, and infractions matters.

Contact Reinhardt at ereinhardt@cnybj.com

Valpak targets Syracuse as a franchise market in 2014

Small Business, Subscriber Only, Technology

Valpak, a Largo, Fla.–based company that specializes in direct mailing of local print and digital coupons to consumers, recently announced it is targeting the Syracuse area as one of 18 areas to add franchise territories this year. Valpak is the doing-business-as name (or dba) of Valpak Direct Marketing Systems, Inc., according to its website. The

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Valpak is the doing-business-as name (or dba) of Valpak Direct Marketing Systems, Inc., according to its website.

The company said the other areas it’s targeting include Miami, Fla., San Diego, Calif., New Orleans, La., and Corpus Christi, Texas.

The Syracuse–area territory will include four counties — Onondaga, Oswego, Cayuga, and Madison, says Greg Courchane, Valpak’s new director of franchise sales

“The potential is for about 220,000 households. The opportunity would probably start with 30[,000] or 40,000 and then grow,” Courchane says.

For the size of the franchise market, Valpak is seeking one person to hold the territorial sales rights and wants to award the franchise this year.

“We’re hoping as soon as we can find a candidate that’s interested in doing this type of a business,” Courchane says.

Valpak’s primary product is a blue-colored envelope full of offers from local and national merchants that is mailed to households in a given franchise market. The products could include everything from pizza to automotive accessories to home improvement, he says.

“The franchise owner would be working with small and medium [-sized] businesses in the greater Syracuse area soliciting their advertising dollars,” Courchane says.

Valpak sells advertising for both print and digital media.

At the start, the franchise owner will work as a sales representative for Valpak, while the parent company helps with printing and mailing the envelopes, according to Courchane.

Initially, the individual will work from his or her home to avoid the expense of maintaining an office, he says.

Ideal candidates for Valpak-franchise ownership should have the desire to work within a franchise system, develop relationships with local businesses, and have a comfort level with selling new, digital technologies, Courchane says. Franchisees should also possess a minimum liquidity of $75,000, and a minimum net worth of $150,000, he adds.

Valpak also waives start-up fees for returning military veterans, and making it easier for them to go into business for themselves.

Valpak’s offering is part of “Operation Enduring Opportunity,” a program developed by the International Franchise Association with the goal to hire and recruit 75,000 veterans as franchise business owners by 2014.

Interested candidates can visit the company’s website, www.valpakfranchising.com

Valpak closed out 2013 with the signing of 13 franchise agreements, which increased household circulation by two million additional homes, the company said.

Those markets included San Francisco; Coastal Carolina; Florida’s Atlantic Coast; Lake Charles, La., Eastern Suffolk County, N.Y.; Kent & Sussex County, Del.; Grand Rapids, Mich., and Rockford, Ill.

Markets, including those in New York, Louisiana and Delaware, are new territories for Valpak and residents in these areas will receive the company’s blue envelope for the very first time, the company said.

About the company
Specializing in cooperative direct mail, Valpak mails more than 20 billion coupons to over 40 million demographically targeted households per month in more than 100 markets in 45 states and four Canadian provinces, according to a Valpak news release.

In addition to its blue envelope, the brand offers its business customers a portfolio of digital-advertising products including smartphone apps, which are also integrated into the Samsung Wallet, iOS Passbook, Google wallet and Windows phone wallet, along with and online coupons to reach consumers at home and elsewhere.

Launched in Clearwater, Fla. in 1968, Valpak operates a 470,000-square-foot manufacturing center in St. Petersburg, Fla., enabling the company to mail material to more than 500 million homes in North America, the firm said.

Cox Target Media, Inc. owns and operates Valpak with nearly 170 franchises across the U.S. and Canada that delivers coupons to nearly 40 million households each month, according to the website of Cox Target Media.

Annually, Valpak will distribute some 20 billion offers inserted in more than 500 million envelopes, the website says.

Cox Target Media is a subsidiary of Atlanta–based Cox Media Group, which is owned by Cox Enterprises, Inc., one of the largest media companies in the U.S. with holdings in newspaper, television, radio, cable and Internet/interactive industries.

Contact Reinhardt at ereinhardt@cnybj.com

Bonadio plots further growth as it moves up Top 100 list

Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

SYRACUSE — The Bonadio Group, upstate New York’s largest independent CPA firm, recently ranked as the 50th largest tax and accounting firm in Accounting Today’s Top 100 Firms list. Bonadio, which ranked at number 55 in 2012, is the highest-ranking firm from upstate New York on the list, which recognizes the top revenue-producing firms from

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SYRACUSE — The Bonadio Group, upstate New York’s largest independent CPA firm, recently ranked as the 50th largest tax and accounting firm in Accounting Today’s Top 100 Firms list.

Bonadio, which ranked at number 55 in 2012, is the highest-ranking firm from upstate New York on the list, which recognizes the top revenue-producing firms from among the nation’s 45,000 CPA firms. Accounting Today is a bi-weekly magazine for the accounting industry.

“We’re very proud to be on the Top 100 list coming from the markets we come from,” says Thomas Bonadio, CEO and managing partner. The Bonadio Group, headquartered in Rochester, does not have a significant presence in major markets like New York City, he says. Rather the firm is the big fish in a small pond, with offices in numerous mid-size markets across New York including a 10,000-square-foot office at 115 Solar St., Syracuse, where the firm has between 45 and 50 employees.

Accounting fees are traditionally lower in the markets Bonadio is located in, he says, which makes the company’s revenue achievement even more significant. On top of that, the markets are not ones that have seen a great deal of economic growth, he adds.

The Bonadio Group, on the other hand, has produced revenue growth. The firm’s projected revenue of $66.29 million for fiscal year 2014, which ends April 30, is well ahead of the revenue goal of $60 million it set in its last three-year strategic plan, which runs through next year.

Thomas Bonadio says he expects revenue in the $75 million to $80 million range for the coming fiscal year as it will include the three mergers Bonadio closed on this fiscal year. The firm is also generating internal growth.

“We’re not growing just through mergers,” he notes. “We’re up about 8 percent organically.” That growth comes from winning over new clients as well as doing additional work with existing clients, he notes.

The potential is out there for even more growth, Bonadio says, and he has his eye on two markets for the coming year. The Central New York/Syracuse area, as well as Manhattan, is on his radar for future growth.

“We won’t be happy until we’re the number one firm in Syracuse,” Bonadio says. The firm has a goal of reaching 100 employees at each of its offices, he says. That size gives the firm enough staff to find and focus on areas of expertise as well as provide the best level of service to clients.

One area of expertise the Syracuse office has honed is providing internal audit services to banks and credit unions. “That practice has been growing great guns,” Bonadio says, setting the Syracuse office apart as almost a sole provider of that service in New York. “No one else has the expertise.”

Mergers
While he declined to discuss any specific plans regarding mergers, Bonadio says the firm is in some stage of talks with potential merger in every market where Bonadio has an office. It would be surprising if the firm didn’t have news of a merger in the Syracuse area in the coming year, he says.

“The whole industry is in merger mania,” Bonadio says. Figures show there are 45,000 CPA firms in the nation today, but experts estimate that figure will drop to fewer than 20,000 over the next decade through mergers, retirements, and other changes. Many small firms, with owners looking to retire, are interested in joining forces with another firm that can keep the business going, Bonadio says. In addition, it’s becoming increasingly more difficult for smaller firms to successfully compete with their larger competitors, especially as clients require more and more specialized services instead of general accounting services.

With 11 offices and nearly 500 employees, The Bonadio Group (www.bonadio.com) serves more than 17,000 clients in New York and several other states. Founded in 1978, the firm provides accounting, business advisory, payroll, and personal financial services. Offices are located in Rochester, Buffalo, Syracuse, Albany, Geneva, Perry, Utica, New York City, and Rutland, Vt.

Contact The Business Journal at news@cnybj.com

N.Y. AG settles with MVP Health Care for wrongly denying mental-health benefits

Health Care, Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

New York Attorney General Eric Schneiderman on March 20 announced a settlement with Schenectady-based MVP Health Care after an investigation uncovered “widespread” violations of mental-health parity laws. The probe found the health insurer denied mental-health benefits to “thousands” of New Yorkers, Schneiderman’s office said in a news release. Schneiderman’s office estimates that more than 3,000

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The probe found the health insurer denied mental-health benefits to “thousands” of New Yorkers, Schneiderman’s office said in a news release.

Schneiderman’s office estimates that more than 3,000 MVP members may be eligible for reimbursement for denied claims, including for residential treatment, the news release said.

The settlement requires the health insurer to reform its review process for behavioral-health claims; cover residential treatment; and charge the lower primary-care co-payment for outpatient visits to most mental health and substance-abuse treatment providers, Schneiderman’s office said.

The settlement also requires MVP to submit previously denied mental health and substance-abuse treatment claims for independent review.

That review could mean MVP will return more than $6 million to its members, according to Schneiderman’s office.

MVP Health Care did not respond to requests for comment by press time.

MVP Health Care covers more than 44,000 members in Central New York. The figure is part of more than 500,000 members in a New York service area that also includes the Albany region and the Hudson Valley, the news release stated.

State lawmakers enacted New York’s mental-health parity law, known as Timothy’s Law, in 2006. It requires that insurers provide mental-health coverage at least equal to coverage provided for other health conditions, according to Schneiderman’s office.

Schneiderman’s health-care bureau conducted an investigation that found MVP Health Care, through its behavioral-health subcontractor, Value Options, issued 40 percent more denials of coverage in behavioral-health cases than in medical cases since at least 2011.

In one case, the investigation found that MVP repeatedly denied coverage for the treatment of a young woman with a “very serious history” of substance-abuse disorder, even though her providers had prescribed inpatient rehabilitation, residential, and outpatient treatment.

As a result, the woman’s family spent a “great deal of time on a long series of appeals,” and paid more than $150,000 out of pocket for her treatment, the office said.

Ensuring that New Yorkers have adequate access to mental health and substance-abuse treatment “should be a priority” for the state, Schneiderman said in the news release.

“Insurers must comply with the law to ensure that individuals with mental-health conditions are treated no differently than those with physical ailments and that they are getting what they pay for from insurers. With this settlement, MVP Health Care commits to greatly improving treatment services available to thousands of New Yorkers,” Schneiderman said.

Under the settlement, MVP Health Care has agreed to cover residential treatment for behavioral-health conditions, including eating and substance-abuse disorders. It has also designated $1.5 million for reimbursement of members’ past residential-treatment claims that had previously not been covered.

MVP Health Care has agreed to overhaul its claims-review process by removing visit limits for almost all behavioral-health services; classifying claims correctly so that it conducts reviews “expeditiously” and it affords members full appeal rights; and by removing the requirement that members “fail” outpatient substance-abuse treatment before receiving inpatient-rehabilitation treatment, according to Schneiderman’s office.

In addition, MVP will base the number of treatment days or visits approved on members’ needs instead of arbitrary limits; co-locate medical and behavioral-health claims review staff, which will facilitate the coordination of members’ care; ensure that letters denying behavioral-health claims are “accurate and specific,” so that members can exercise their appeal rights.

Additionally, it its claims-review overhaul, MVP will continue coverage of treatment, pending the completion of internal appeals, so that treatment is not interrupted, according to Schneiderman’s office.

MVP Health Care has also agreed to provide members with an independent review of claims or requests that were denied as not medically necessary from 2011 through present, which could result in more than $6 million in reimbursement to members.

The plan will also allow members to submit claims for reimbursement for residential-treatment services since 2011, which could result in MVP providing refunds of up to $1.5 million to members.

Under the settlement, MVP Health Care will also submit to monitoring and will pay $300,000 to Schneiderman’s office as a civil penalty, the office said.

The agreement with MVP is the second that Schneiderman’s office has reached so far this year and stems from a “broader, ongoing” investigation into health-insurance companies’ compliance with mental-health parity laws.

The office on Jan. 15 announced a similar settlement with Cigna Corp. (NYSE: CI).

Contact Reinhardt at ereinhardt@cnybj.com

Centolella, colleagues launch new business-law firm

Insurance & Financial Services, Law, Accounting & Taxes, Small Business, Subscriber Only

SYRACUSE — Five attorneys, who were formally part of the Bousquet Holstein PLLC law firm in Syracuse, have formed their own firm. Centolella Lynn D’Elia & Temes LLC is now operating in a 4,000-square-foot temporary space on the 17th floor of Axa Tower I at 100 Madison St. in downtown Syracuse. The firm plans to

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SYRACUSE — Five attorneys, who were formally part of the Bousquet Holstein PLLC law firm in Syracuse, have formed their own firm.

Centolella Lynn D’Elia & Temes LLC is now operating in a 4,000-square-foot temporary space on the 17th floor of Axa Tower I at 100 Madison St. in downtown Syracuse.

The firm plans to move into a permanent 4,000-square-foot space in the building’s 19th floor in early May.

The firm’s office opened for business on March 3.

The attorneys involved include Jason Centolella, who is the firm’s managing member. In addition, the attorneys include Kathleen Centolella, who is Jason’s wife; Tim Lynn, Anthony D’Elia, and David Temes.

All five attorneys are considered members of the LLC, but Centolella declined to disclose what percentage of the firm each attorney owns.

Jason Centolella spoke with The Central New York Business Journalon March 21.

Centolella describes all the LLC’s members as good friends, about the same age, and “very entrepreneurial.”

“Each one of us has always had the desire to try and go out on their own and start their own law firm, we decided now is the right time,” Centolella says.

The firm’s practice areas include general business or corporate law, health care, commercial real estate and litigation, financial restructuring, mergers and acquisitions, taxation, and economic-development incentives.

Centolella calls the Centolella Lynn D’Elia & Temes firm a “boutique” business-law firm. “We’re going to focus on business issues,” he says.

The firm’s clients include hospitals, medical practices, manufacturers, and businesses.

Besides the attorneys, the firm also employs two full-time legal assistants. As for any additional employees in the year ahead, the firm is taking a “wait and see approach,” says Centolella.

Some law firms are a “one stop shop,” with several attorneys and practice groups. But Centolella Lynn D’Elia & Temes isn’t organized that way.

“If we don’t do [handle a certain legal area], we will … work with the client to find the best person to handle that specific issue outside of the firm,” Centolella says.

Centolella practices in health-care law and general business, which includes mergers and acquisitions, general contracting, joint ventures, he says.

D’Elia focuses on commercial real-estate matters. David Temes is a creditors’ rights, bankruptcy, and commercial litigator, Centolella adds.

Tim Lynn is a business attorney, tax attorney, while Kathleen Centolella practices in the areas of tax, general business, and employee benefits.

The firm will provide clients access to its attorneys during evening hours, early morning, and weekends, according to Centolella.

“It’s become a 24-hour business. Issues come up at all hours of the day and clients want immediate response. That’s one of our principals. Always be responsive to the client,” he says.

The firm’s members have watched downtown Syracuse “transform” over the past five years, noting young entrepreneurs in technology that are taking chances and starting companies, Centolella says.

“We wanted to take that chance,” he added.

After discussing the possibility in the early weeks of this year, the five members informed Bousquet Holstein of their plans in late February and their previous employer “couldn’t have been more supportive,” Centolella says.

“We share mutual clients. We talk almost daily. We will continue to work like that. We will send work back and forth,” he adds.

Michael Durkin of CBD Brokerage in Syracuse helped Centolella find the new firm’s operating space in Axa Tower I.

“It’s open space. It’s kind of a shell,” he says.

CBD Construction is building it out into conference rooms, offices for the attorneys, a break room, file room.

Centolella declined to provide specific figures but indicated the firm has “projected revenue goals.”

“I feel confident that we can … meet those goals,” he says.

Contact Reinhardt at ereinhardt@cnybj.com

CPA addresses issues entrepreneurs face as startup business owners

Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

SYRACUSE — A partner at Dannible & McKee, LLP on Jan. 31 spoke at the Syracuse Tech Garden, addressing entrepreneurs on issues they are facing in the startup phase of their businesses. Michael Reilly spoke on topics that included accounting impact in their choice of operating entity and the tax implication of knowing how to

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SYRACUSE — A partner at Dannible & McKee, LLP on Jan. 31 spoke at the Syracuse Tech Garden, addressing entrepreneurs on issues they are facing in the startup phase of their businesses.

Michael Reilly spoke on topics that included accounting impact in their choice of operating entity and the tax implication of knowing how to classify their workers as either employees or independent contractors.

Attorneys from the Wladis Law Firm, P.C. joined Reilly for the presentation.

Reilly also spoke with The Central New York Business Journal in a follow-up conversation on March 21.

Choice of entity
Reilly addressed the accounting advantages and disadvantages of four types of business entities, including a sole proprietorship, a partnership, a corporation (either a C corporation, or an S corporation,) or a limited-liability company.

If someone starts a business as the sole owner, he/she can choose to form a sole proprietorship, and the accounting is “relatively easy,” Reilly says.

The owner can use the cash-basis method of accounting, depending on the business.

“All the information gets reported on their personal return, using a form Schedule C,” Reilly says.

However, the problem with a sole proprietorship, he notes, is the owner faces the potential for liability issues because the individual isn’t protected from the business because they are one and the same.

“For example, if the business got sued, you as the owner would also be involved in that lawsuit,” Reilly says.

He describes a partnership as an entity that is similar to a [sole] proprietorship, except that it has two or more owners.

The owners are required to file a separate partnership return, Form 1065, making it a “little bit more complicated,” and the liability issue remains, Reilly says.

If the partnership faces a lawsuit, each of the partners would be liable, he adds

Entrepreneurs concerned about liability could consider forming a corporation, according to Reilly.

He explained that one of the differences between a C corporation (a regular corporation) and an S corporation is that a C corporation pays its own taxes on all the income it earns.

“And then when those earnings are distributed, the shareholder would pay taxes on them again,” Reilly adds.

For example, if a person bought stock in Microsoft, the firm pays its own taxes and then the shareholder gets a dividend. The shareholder pays taxes on the earnings again in a regular C corporation. In an S corporation, however, all the earnings effectively flow through the owners, so the owners pay taxes on the earnings.

“So it’s a one-time tax,” Reilly says.

Forming an S corporation is similar to a partnership in terms of taxation, he says. In a partnership, the partners are taxed on all the earnings, and same process applies to an S corporation.

The difference between an S Corporation and a partnership are the limited-liability issues, Reilly says.

“If the corporation got sued … that entity would be sued but the individual shareholders would not be sued unless they were personally negligent … Therefore it gives [an entrepreneur] liability protection,” he adds.

And that’s the primary reason why an entrepreneur would choose to form a corporation, so whether you’re a C corporation or an S corporation, you’ve got limited liability.

The fourth possible type of entity is a limited-liability company (LLC), which is “kind of a hybrid,” he says.

“It’s really a partnership that’s got limited liability like a corporation,” he adds.

If a partnership faces a lawsuit, the individual partners are also liable. A lawsuit against an LLC can target its assets but not the individual members, which makes it similar to an S corporation.

Entrepreneurs like the partnership format, but they don’t like the liabilities involved, so that is why some choose the LLC option. LLCs provide corporate protection, but entrepreneurs are taxed in the same way as a partnership, Reilly says.

Employee or independent contractor
Reilly also discussed what qualifies a worker or service provider as an independent contractor rather than an employee, and the tax implications involved.

Business owners can use a 20-factor test that’s part of the IRS ruling 87-41, Reilly says.

The factors involve an employer’s control over the individual, he says.

If the owner controls when the person arrives for work, what tools the person uses to complete the job, and the space the person needs to execute the work, then that individual is under the company’s control.

“Then the IRS can come back and say … they’re an employee, not an independent contractor,” Reilly says.

The IRS could then reclassify that worker as an employee, if the owner was choosing, just arbitrarily, to treat the person as an independent contractor to avoid the payroll taxes, he adds.

At the same time, if that worker operates another business or works for someone else and the entrepreneur just needs a job completed, then the independent-contractor qualification will likely apply.

“We’re not going to control, direct, or supervise you. You just take care of it. In that case then, they’re going to be more in the nature of an independent contractor,” Reilly says.

Contact Reinhardt at ereinhardt@cnybj.com

What is a taxpayer to do?

Business Mentors, Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

Mark Twain said, “What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin“ and Barry Goldwater reflected, “The income tax created more criminals than any other single act of government.“ Einstein and Churchill had their own lowly views on the topic. While we may chuckle and agree with

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Perhaps more so than ever, the many facets of the U.S. tax system are a tough pill to swallow. For decades taxpayers have been grousing about the Alternative Minimum Tax (AMT). And while AMT remains an important consideration for understanding your income-tax liability, there is now a longer list of things to keep in mind.

Let’s take inventory of the current state of affairs — the regular tax along with new tax brackets, the alternative minimum tax, and the net investment-income tax. Each holds a myriad of details. Read on for a primer on what each may mean to you.

The regular tax now has seven brackets ranging from 10 percent to a maximum of 39.6 percent. Essentially, this means both a higher maximum rate as well as numerous increments to consider. Many taxpayers in the lowest brackets are living at roughly the poverty level. Other taxpayers are impacted by both tax bracket as well as personal exemption phase out and limitations on itemized deductions. The impact will be felt by individuals with adjusted gross income as low as $150,000 for married taxpayers filing separately. Those filing single will see the effect at $250,000 and the threshold is $300,000 for those married filing jointly.

AMT consideration begins at modest income levels and includes various phase-outs, add backs and limitations as well as interplay with maximum capital-gains rates in certain situations. Suffice to say, complications abound when it comes to AMT.

As for capital-gains rates, there are three to consider (ranging from 0 percent to 20 percent) plus special rates for depreciation recapture and gain on collectibles.

The highly publicized net investment-income tax is a boot in the pants not just for individuals with net investment income, but for taxpayers with modified adjusted gross income in excess of $250,000 for married taxpayers filing jointly ($125,000 if filing separate) and $200,000 for other taxpayers. Many individuals are surprised when they see the impact of the tax even though they have little or no gross investment income. On the positive side of the equation is the allowability of certain deductions from gross investment income including investment interest expense and certain investment-related fees.

While it is important to understand how your current tax liability is being calculated, a forward-looking perspective is critical in terms of timing of income and deductions. Did you know, for example, that a ROTH distribution does not increase either net investment income or modified adjusted gross income but distributions from traditional IRAs do increase modified adjusted gross income? Clearly, as you work to maximize what you keep after taxes, future tax brackets are extremely important as is the type of income.

All this consideration requires a bit of diligent homework. What is a taxpayer to do? Consult with your CPA to get a clear picture of how all the details apply to your tax situation now, and into the future.

Gail Kinsella is a partner in the accounting firm of Testone, Marshall & Discenza, LLP in Syracuse. Contact Kinsella at gkinsella@tmdcpas.com

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