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THE MAGAZINE OF THE MASTER BUILDERS’ ASSOCIATION OF WESTERN PENNSYLVANIA MAY/JUNE 2014

Does a land bank help?

The economiccase for diversity

First quarter data

DEMOGRAPHICS:SHIFTING YOUNGER

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3BreakingGround May/June 2014

CONTENTS2014

07 REGIONALMARKETUPDATE

11 NATIONALMARKETUPDATE

15 WHAT’S ITCOST?

16 FEATUREPittsburgh’sShif t ingDemographics

28 PROJECTPROFILESt. UrsulaCathol icChurch

39 FIRMPROFILEMarsaMasonry

43 LEGALPERSPECTIVESuccessionplanning101

47 MBE/WBEEmilyKrobothAssociates

49 TRENDTOWATCHTheworkforceshortage is realandapproaching.

52 BESTPRACTICETheprosandconsof landbanking.

55 INDUSTRY&COMMUNITYNEWS

58 AWARDS&CONTRACTS

62 FACES&NEWPLACES

64 CLOSINGOUTDiversi tymakeseconomicsense.

Cover Photo: St. Ursula Catholic Church. Breanna Kristian Photography

PUBLISHERTallTimberGroup

www.talltimbergroup.com

EDITORJeffBurd

[email protected]

PRODUCTIONCarsonPublishing,Inc.

KevinJ.Gordon

ART DIRECTOR/GRAPHIC DESIGNCarsonPublishing,Inc.JaimeeD.Greenawalt

CONTRIBUTING EDITORSAnnaBurd

CONTRIBUTING PHOTOGRAPHYCarsonPublishing,Inc.

VisitPITTSBURGHBreannaKristianPhotography

ADVERTISING DIRECTORKarenKukish

[email protected]

MORE INFORMATION:

BreakingGroundispublishedbyTallTimberGroupfortheMasterBuilders’AssociationofWestern

Pennsylvania,412-922-3912orwww.mbawpa.org

ArchivecopiesofBreakingGroundcanbeviewed

atwww.mbawpa.org

Nopartofthismagazinemaybereproducedwithoutwrittenpermission

bythePublisher.Allrightsreserved.

Thisinformationiscarefullygatheredandcompiledinsuchamannerastoensuremaximumaccuracy.Wecannot,anddonot,guaranteeeitherthecorrectnessof

allinformationfurnishednorthecompleteabsenceoferrorsandomissions.Hence,

responsibilityforsameneithercanbe,noris,assumed.

Keepupwithregionalconstructionandrealestateeventsat

www.buildingpittsburgh.com

I imaginethereareafewreadersoutthereyawninginadvanceaboutthiseditionofBreakingGroundand its focus on demographics. I, frankly, havebeenwaitingforthechancetoexamineandwriteaboutthechangingdemographicsoftheregion

forsometime.Itmaysoundlikeaboringsubjectbutit’satimelyoneforPittsburgh.

Inthe2010U.S.Census,therewasaremarkablefindingabout Pittsburgh: the population in the seven-countymetropolitanareahadincreased.Thatreversedatrendof16years,datingbacktothelastincreasein1993.Censusestimatessincethenshowthatthispopulationhasgrownagain twice since, totaling about 5,000 new residents.That’spositivenews–howeverslighttheincrease.

Theconceptofpopulationgrowthisonethatisnewtoourregionagain.KevinAcklin,thechiefofstaffforMayorPeduto,recentlymadethepointthattheiradministrationhastheenviabletaskofmanaginggrowthagaininsteadofdecline.That’sahappierthoughtbutmanaginggrowthisinfactataskandit’sworthcontemplatingthatforafewmoments.

IfPittsburghisindeedgrowinginpopulationandgettingyounger,therewillbeproblemsattendanttothatchange.For commuters heading west in the morning it alreadymust seem like all 5,000 people who have moved toPittsburghsince2010aretryingtogettotheairportatthe same time. Our transportation systems have beenput to the testby thefiscal stressofourgovernments.Addingmorepeople to themixeverydaywill increasethe problem. But beyond road conditions and trafficit’s incumbent upon us to think about growth and itsconsequences.

A friend of mine, Tim Inglis, is CEO of the ColcomFoundation, which has population control as its maincause. I imagineTim isashappyasanyoneelseabouttheimprovingprospectsforPittsburghbutheinvariablyremindsusthatgrowthmaynotbeasloftyagoalaswethink.HispointisthatmanyofthethingswesayweloveaboutPittsburgh–affordablehousing,convenientaccessto amenities, green space, etc. – will disappear or bethreatenedbypopulationgrowth.There’snochancethata growing Pittsburgh will consume its environment butmorepeoplelivingherewillmakelifelessconvenient.

Ofcourseat thesametime, localbusinessesaredoingbetter. There are natural resources here that can beextractedtoprovideenergysolutionsaroundtheglobe.

Prosperityisincreasingandit’simpossibletorootagainstthat.

Theinterestingconundrumthatresults fromthecurrentprosperityisthattherearelotsofjobs–morethan23,000infact–thataren’tbeingfilledquicklybecausewedon’thaveenoughofthekindsofpeoplebeingsought.That’snot just a Pittsburgh problem. It’s also not a problemleaders here thought would be a Pittsburgh problemtoomanyyearsago.Thereareatleastseveralsolutionsto theproblemofmore jobs thanqualifiedpeoplebutthemost simple andefficientone is formorequalifiedpeopletomovehere.AndthereisampleevidencethatthemigrationofsuchqualifiedpeopleiswhatisbehindthegrowthinyoungerresidentsinPittsburgh.

One of the things that political and civic leaders oftenblatheronaboutinsituationswherethereisinconvenientgrowth is controlling growth. I’m not sure who cameup with that phrase but it’s an oxymoron in practicalterms. In most human endeavors, growth is a functionofeverybodyjumpingonthebandwagon.Stockprices.Carsales.Facebook.Growthtendstohappenatitsownrate.Ifsignificantpopulationgrowthhappens,I’mcertainyou’llhearsomeoneinauthoritytalkingaboutsustainingbutcontrollinggrowth.Pleasedon’texpectthattowork.

LotsofinterestingthingshavehappenedinPittsburghasaresultofthegrowthorchangeincomplexionthathasoccurredduringthe lastfiveyearshere.Wehavereallycoolrestaurants.Investorsaretryingtofindwaystospendmoney here. These are good things. If it continues toexpand,thePittsburgheconomywillbringusallkindsofothernewthings.Pittsburghwillnotlookthesameorfeelthesameorsoundthesame.The“same”iscomfortingtoushumans,soweshouldprepareforthediscomfortofthingschanging.

Thirty years ago, we lost a lot of same-ness too. Sincesteel’s decline, there are dozens of towns around theregion that have never been the same. Growth willprobablybeinconvenient,butitsurebeatsdecline.

5

Publisher’s Note

BreakingGround May/June 2014

JeffBurd

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REGIONAL MARKET UPDATE

AsAprilwounddown,another roundof favorabledataonthePittsburgheconomyrolledthroughthemedia.FormostintheconstructionindustryinWesternPA,theim-provedeconomicdataprovidedsolaceaboutthefutureandquestionsaboutwhymoreprojectsweren’ton thestreets.

From January 1 through March 31, nonresidential con-struction for the seven-county metropolitan market to-taled$491.2million,anincreaseof2.5percentoverthesameperiodin2013.BiddingandcontractingfromlateFebruary through March was improved, as evidencedbytheroughly$400millionuptickinstartsinApril.Thisimprovement proved temporary, however, as most bidboardswentblankasAprilworeon.WesternPAitseemsissittingonsignificantpent-updemand.Whatismissingatthemomentisatrigger.

Hereisaquickrecapoftheeconomicreviews:

• April’s Beige Book report from the Federal ReserveBankofClevelandfoundthatweeklywagesforPittsburghworkers increased 13 percent between June 2009 andtheendof2013,morethandoublethegainthroughoutthe restof the stateand farmore than the1.5percentincrease nationally. Pittsburgh’s unemployment rate de-creasedfrom7.3percentto6.3percentlastyear,follow-ingthenationaltrend.

•TheU.S.BureauofLaborStatistics’reportedthatPitts-burgh’s unemployment rate dropped again, registering5.7percentinFebruary,whilePennsylvania’sDepartmentofLabor&IndustryreportedPittsburgh’sunemploymentratewas5.8percent.Pittsburgh’sunemploymentwasthelowest since thefinancial crisis inNovember2008.Theunemploymentlevelforthestatewas6.2percent.

• The Federal Reserve also reported that metropolitangrossdomesticproduct–thevalueofthegoodsmadeinPittsburgh–hasgrownfasterthanotherareasoftheUnitedStates.The general economic activity suggests that improve-ment in the unemployment rate should continue, evenifmoreslowly,during2014andacceleratein2015.Theimprovedhiringforecastassumessomerenewedhigheractivityinthenaturalgasindustry,althoughconcernsdo

lingeraboutthecommitmentofthebiggestcompaniestotheMarcellusandUticaplay.

Gas prices remained slightly elevated in late April at$4.70/MBtu.Gas traded ina rangebetween$4.30and$4.75 throughout the winter, failing to top the psycho-logical$5markeveninanunusuallycoldwinter.Thishaspromptedobserversof the shaleplays to forecast con-servativegrowthintheMarcellusandUticabutthepes-simismseemsmisplaced.Producersmayhaverampedupshalegasproductioninanticipationthatgaspriceswouldreboundquicklybacktotheelevatedlevelsseenin2008,but the boom in drilling that occurred from 2010-2012coincidedwithadeclineinpricestoroughly$2.50/MBtu.Moreover, the price for the liquid components of thewetMarcellusandUticagasremainedstable.Youcouldevenmaketheargumentthatthenaturalgasprocessedforheatingwasthebyproduct,insteadoftheotherwayaround.

Drilling expansion has slowed by some 80 percent butthatdecline seems tohave stabilized.What remainsasadragonexplorationseemstobethatthebigproduc-ers–whowilldominatethegasplayfromthispointinthecycleforward–arestrugglingwithprofitgrowthinoilandgasglobally.DecisionsbyRoyalDutchShellandChev-rontotrimcapitalexpenditureshavemadeheadlinesonWallStreetandcausedarippleofconcerninWesternPA.Chevron’sdecision toput itsAppalachianheadquartersprojectonholdhasonlyheightened that concern.Thegrowthofapplicationsfornaturalgasasafuelforelectric-itygenerationandforliquidnaturalgaswillcontinuetocreatemarketsforgreaterproductiontofulfill.Producerslookat theenergymarketswith longviews,particularlywhencomparedtothehorizonofWallStreet,andWest-ernPennsylvaniabusinesseswillhavetoadjusttheirho-rizonaccordingly.

For2014,thatmeansthatcontinuedexpansionofmid-stream activities will occur in the less-developed coun-ties like Butler and Beaver, even as well counts remainstagnant.Selectedfacilitieslikecompressorstationswillcontinue to see incremental expansion in WashingtonandGreenecounties.Theburgeoningpipelinenetworkconstructionwillgrow.

Activityfrombusinessesintheserviceandsupplychainforthenaturalgasindustryisnotseeingsuchaslowdown.Supportbusinessesarenaturallygoingtobereactivetotheexpansionoftheindustriestheyserveandmanycom-paniesservingthegasbusinessarestillestablishingtheirpresence in Western PA. Owners of Southpointe prop-ertiesreportcontinuedexpansionandrelocationof lawfirms,accountantsandotherrelatedtenantsattheofficepark.NewconstructionforwellserviceandengineeringcompanieslikeWaukeshaPearce,GardnerDenverNashandMarkWestareplannedorunderway.

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Muchoftheconstructionofthesesupplychainbusinesses isdrivenby developers, which are takinga larger-than-normalshareof thenonresidential construction mar-ketin2014.Withcommercialrealestate financing moving quicklyfrom loosening to aggressiveagainin2014,theimprovedfun-damentals are pushing projectsto construction. Of the ten proj-ects over $20 million which bidorstartedconstructioninthefirstquarter,fourwerecommercialde-velopments.

CBREreportedinitsfirstquarterofficemarketreviewthatdemandforClassAofficespaceremainsveryhigh,eventhoughtheClassAvacancyrateincreasedfrom5.2per-centto5.4percentsinceyearend.AccordingtoCBRE,“the Downtown Fringe, East End, Oakland, ParkwayNorth,ParkwayWest,andSouthsubmarketsallrecordedvacancy rates below 4 percent. Only two submarkets,CranberryandParkwayEast,haveClassAvacancyratesover6percent.TheEastEndsubmarkethadthelowestClassAvacancyrateforthethirdconsecutivequarterat1.9percent.”

Newmark Grubb Knight Frank’s first quarter industrialmarket report showed a slight increase in vacancy ratefrom7.8to7.9percentsincethefourthquarterof2013.Rentsalsofellfourcentsto$5.10/squarefoot,althoughthedeclineislikelylessaboutrisingvacancythanaboutthequalityoftheinventory.NGKFmakesthepointthatvirtuallyallClassAspaceisoccupiedandthatmostoftheavailablespaceisoflowerqualityandlesserrentalrate.

The report also raises concerns that absent significantnewconstruction – anda fewdevelopers are consider-ingspecindustrialspaceatthemoment–thelackofin-dustrialinventorypresentsariskoflostopportunitiestoattractemployersand jobs.The lackof industrialspacecouldbecomeadragoneconomicgrowthintheregionassoonasthisyear.

Publicconstructionremainsthebiggestdragonthenon-residentialmarket.Whiletheten largestprojectsbidorstartedinthefirstquarterincludefourpublicprojects,thelackofoverallactivityinpublicconstruction–especiallyin theeducationand infrastructuresegments–persists.Marketconditionsremainhypercompetitive.Contractorswhoservethepublicmarkethavelittlebacklogbuiltandareaggressivelybiddingtheprojectsthatcomeout.Eachof the fourprojectsover$20millionthatbid inquarteronesawlowbidsthatwerewellbelowbudget.

Ontheresidentialsideoftheindustry,unusuallycoldwin-terweatherseemstohavechilledbothnewconstructionandhome salesduring thefirstquarter. ThePittsburgh

HomebuildingReporttallied409single-familydetachedhomespermittedduring thefirst threemonthsof2014comparedto466during2013,a12.2percentdrop.Per-mitsforsingle-familyattachedandmulti-familyunitswereoff17.1percentinthefirstquarter,with228unitsstartedcomparedto275in2013.Multi-familystartswerelimited,withonly74unitspermitted.Thetotalnewhousingmar-ketwasoff14percentyear-over-yearforthefirstquarter.

Thecoldweathercoulddolittletocoolofftheapartmentmarket.NewYork-basedRealEstateInformationServices(REIS) reportedonApril22 that theapartmentvacancyratehad fallen inPittsburgh to threepercent, althoughlocalrealestatesourcesshowtherateasslightlyhigher.Rentsinthemetropolitanmarketcontinuetoclimb,top-ping$900permonth.

Someofthemorethan4,000unitsthathavegoneunderconstructionsincethethirdquarterof2012arecomingonlineinthefirsttwoquartersof2014,whichshouldgivedevelopers thefirst indicationsofhowquicklyunitsarebeingabsorbed.RealestateconsultantandappraisalfirmIntegra Realty Resources estimates that roughly 1,800unitswillbecomeavailable in2014,the largestnumberinmorethantenyears.Thus far,demandstill seemstooutrunsupply.At theBakeryLivingApartments, forex-ample, developer Todd Reidbord says that pre-leasinghasreachedthe25percentlevelwellbeforeoccupancycanbegin.

Apartments, hotels and office projects will continue totrendhigherthanthehistoricalnorms,whilepubliccon-struction,highereducationandhospitalprojectswilllag.

ActivitycontinuestobuildattheHorseheadMonacasiteasthedemolitionandpre-preparationworkgetsunder-way.Approximately50workersarenowonsiteclearingthewayforwhatcouldbecomethefirstethanecrackerandchemicalprocessingfacilitiesintheMarcellusforma-tion. With the deadline for its final option extensionroughly45daysaway,adecisionisimminent.Withdoz-ensof localCongressional representativesandagover-norupforre-election,don’tbesurprisediftheannounce-mentiskickeddowntheroadafewmoremonths. BG

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NATIONAL MARKET UPDATE

Thecomingofspringbroughtthefirstevidencethatthethaw in theweathermayhave thawed theconstructionmarketaswell.Afterdroppingoff significantly in Janu-aryandFebruary,constructionactivityinMarchshowedstrong rebounds in both residential and nonresidentialconstructioncategories.

Housing starts rose 2.8 percent (seasonallyadjusted) in March from February but weredown3.9percentcomparedwithMarch2013levels, the Census Bureau reported on April16.Startsinthefirstquarterof2014declined2.4percentcomparedtothesameperiodin2013.Theimpactoftheseverewinterweatherislikelystillreflectedinthatdata.Thegovern-ment’sdataonbuildingpermits,which isanindicatorof futurestarts, rose6.7 in thefirstquarter. The increase in permits was heavilyinfluenced by multi-family, which was up 22percent. Growth in single-family construc-tion remains sluggish due to higher interestrates,increasedlendingregulationsandpoorweather.

The Census Bureau reported on May 1 thatconstructionputinplacetotaled$943billioninMarch,0.2percentabovetherevisedFeb-ruarytotal.SpendinginMarchwas8.4percenthigher than a year earlier. Spending for privateresidentialconstructionincreased0.5percent inMarch,reachingthehighestratesinceNovember2008.Public construction spending declined 0.6 percent forthemonthand0.8percentyear-over-year,sinkingtoitslowestmarksinceNovember2006. Increasedspendinginheavyandhighwayprojectswasmorethanoffsetbythedeclineineducationalprojects.Privatenonresidentialspending increased 0.2 percent for the month and 8.6percentover12months.Investmentinpowerandcom-munications projects increased significantly year-over-yearandtheimprovingjobmarkethelpeddriveincreasesinofficeconstruction.

According to Newmark Grubb Knight Frank’s (NGKF)firstquarterreportontheU.S.officemarket,absorptionofspaceacceleratedto11.2millionsquarefeet.Thatisabovethequarterlyaverageof10.3millionsquare feetsince2011.NGKFalsoreportedthevacancyrateat14.7percent,down20basispointsover thequarterand70bps over the year. This was the lowest level since thefourthquarterof2008.Theaveragerentwas$26.60,a4.1percentincreaseoverthepreviousyear.

Not surprisingly, the improved fundamentals triggeredmorenewconstruction.Thequarterendedwithnearly64

millionsquarefeetunderconstruction,thehighestlevelofactivitysincethefirstquarterof2009.

Data from the industrial market was equally strong.NGKFreportedthevacancyratefellto7.7percentinthefirstquarter,thelowestlevelinsevenyears.Netabsorp-tionwas43.3millionsquarefeetand42outof50topU.S.metropolitanmarketsshowedpositiveabsorption.Aswouldbeexpected,theaveragerentrose5.1percentyear-over-year,reaching$5.49/squarefoot.

ReedConstructionDatareportedonApril17thatnonres-identialconstructionstartsinthefirstquarterof2014fell2.9percentcomparedwiththesameperiodin2013.Ac-cordingtoitsowndatacollectedduringthefirstquarter,nonresidentialbuildingstartsfell12percent, influencedheavilybyasteepdeclineof24percent incommercialstarts.Institutionalstartsclimbed7.2percent.Heavyen-gineeringstartsjumped16percent.

DuringReed’sApril17webinaronthefirstquarter’sout-look, Bernard Markstein, Reed’s chief U. S. economist,wasbullishontheconstructionmarketforthecoming18-24months.Marksteinseesmoreupsidetotheresidentialmarketandgrowthreturningtothecommercialsegment.

“Ithinkweneed350,000unitsperyeartoaccommodate[demand for] multi-family. We’re almost there now butthere’sstillroomforgrowth,”hesays.“Iseesevenper-centgrowthinnonresidentialin2014andninepercentin2015.”Reed’sforecastforthetotalspendinginthenexttwoyears,however, remainswellbelow the2007-2008peak,mirroringthespendingtotalsfrom2005and2006veryclosely.

The AIA’s survey of architectural practices showed a continuation of the break-even pattern that has been in place for six months.

12 www.mbawpa.org

Construction consulting and research firm, FMI, wasequallybullishinitsrecentupdateonthemarket.Amongthehighlightsof its forecast,FMIpredictedan increaseofsevenpercent for thecommercialsegment,fiveper-cent for manufacturing construction (with an eight per-cent increase in 2015) and a seven percent increase intransportation spending. The latter seems particularlyoptimistic in that the forecast anticipates approval ofPresidentObama’sproposed$73.61billionintranspor-tationspendinginthe2015budget.Eveninamid-termelectionyear,it isareachtosuggestthatCongresswillbreakitspatternofnon-supportforasustainablehighwaybill.FMI’sforecastalsoexpressesoptimismabouteduca-

tionalandhealthcareconstruction,twosegmentsofthemarketthatareshow-inglittlestrengthinfundingorsupport.

Theothernationalconstructionreport-ing company, McGraw-Hill Construc-tion (MHC) reported on April 22 thattotalconstructionstartsrosesevenper-cent in March over February but haddeclinedtwopercentinthefirstquartercomparedto thefirstquarterof2013.Hereagain,weatherwasgivenmuchoftheblameandalookatthe12-monthmovingtotalsshowsthatthe12monthsendingMarch31,2014experiencedasix percent increase compared to the12monthsendingMarch31,2013.

Within the major categories, nonresi-dentialbuilding inMarch jumped24per-centtoanannualrateof$176.3billion,al-thoughasignificantshareofthatincrease

wasattributabletotwolargemanufacturingplantstotal-ing$1.2billion.Commercialprojectspendingroseonepercent,asofficeandhotelconstructionjumped17and19 percent respectively while warehouse and retail de-clined. MHC showed a significant spike in institutionalconstruction, but most of the 30 percent increase wasdue to the start of an $820 million Kaiser PermanentehospitalinSanDiegoandtwocourthouseprojectstotal-ing$422millioninLosAngelesandSt.Louis.

ResidentialbuildinginMarchfellback2percenttoanan-nualrateof$208.6billion.Thedeclinewasduemostlytoaninepercentretreatinthemulti-familysegment.Multi-family remains strong despite the pause, with March’slower volume still 17 percent higher than the averagemonthly volume for 2013. Robert Murray, MHC’s vicepresidentandeconomist,notedaboutthesingle-familymarket, “The soft pattern for single family housing hasprobablybeentheresultoftoughweatherconditionsinrecentmonths,soit’sexpectedthatconstructionwillpickupduringthesecondquarter,giventightinventoriesofnewhomesforsaleandwhatarestilllowmortgagerates.At the same time, the limits of the single family hous-ing recovery are becoming more apparent, includingconstraineddemandastheresultofstrictbank lendingstandardsandthepreferencebysomesegmentsofthemillennialgenerationforapartmentsinurbanlocations.”

Twoothereconomistswhopresented their forecastsatReed’sApril17webinarwereDr.KermitBakerofAmeri-canInstituteofArchitectsandDr.KennethSimonsonoftheAssociatedGeneralContractorsofAmerica.

Simonsonechoedtheforecastofgrowthfornonresiden-tial construction, at least in the private sector, and forthemulti-familymarket.Hisforecastisforatenpercentincrease in total spending,withanequal rise inprivate

Forecast by Reed Construction Data shows construction spending just reaching the 2005 levels in 2014.

“The soft pattern for single family housing has probably been the result of tough weather conditions in recent months, so it’s expected that construction will pick up during the second quarter ...

13

nonresidential and a 14 percent increase in totalresidentialspendingoffsetbyaslightdeclineinin-stitutionalconstruction.

The continued decline in government spendingis one of three headwinds Simonson sees facingnonresidential construction. He also expressedconcern about the steep decline in demand forspacefor retailprojects,especiallymalls,evenasconsumerdemand increases;andSimonson feelsthereboundinofficeconstructionwillbeconstrict-edby the trend towardsemployers shrinking theamountofofficespaceperemployee.

AIA’s Kermit Baker offered a similar forecast onthe construction economy, pointing to the 6.4percent increase in total nonresidential construc-tionthroughFebruaryandtherobust14.8percentincrease in commercial/industrial projects. Whileoptimistic, Baker characterized the recovery innonresidentialconstructionas“stillintheearlyin-nings”andpointedtorecentweaknessintheAIA’sArchitecturalBillingIndex(ABI)asaconcernforthecomingyear.

TheIndexhadbeensolidlyabovethebreak-evenbenchmarkof50forabout18monthspriortothefourthquarterof2013–13consecutivemonthsatonepoint–beforefallingjustbelow50duringNo-vemberandDecember.WhiletheABIreboundedabove 50 again after the first of the year, it hasbeen sluggish, falling below 50 again in March.ThispromptedBaker’sconcern,especiallysincearecentAIAwhitepaper foundthat theABIwasaveryreliablepredictoroffutureconstructionactiv-ity.TheresearchfoundinDesigning the Construc-tion Futureshowedthat“TherelationshipbetweentheABIandnonresidentialbuildingspendingsig-nificantly improved in recent years, with the cor-relation rising from 0.82 over the 1995-2003 pe-riodto0.90inrecentyears….TheleadoftheABIover construction activity [averaged] 14 monthsbetween1995and2003,theleadshortenedto11monthsduringthe2004to2007upturn,andthenincreasedto12monthssince2008.”

BakerfeltthatsomeoftheweaknessexpressedbymembersintheABIwasduetothewinterweather.He also said, “Some of it is still financing; we’rehearing from architects that financing of nonresi-dential projects is still difficult. And some of [theweakness] I think isstill froma lackofconfidenceintheeconomy.”

WhileBaker’sexplanationsofpotentialreasonsforwhyarchitecturalbillingshaveremainedflatarera-tionalanddefensible,theoutlookbeingpredictedbytheABIisforthegrowthinnonresidentialcon-structiontogrindtoahaltattheendof2014. BG

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WHAT’S IT COST?When the Bureau of Labor Statistics (BLS) reported itsdataonMarchinflationApril10,acoupleoftrendswereapparent. First was that the unusually cold winter haddampened demand for materials that are used heavilyin new home construction; and second, the continuedexpansioninnon-residentialconstructionwaslockinginincreasesthatarewellabovetheoverallinflationrate.

Since January 2014, the BLS began incorporating anewpriceanalysis index,producerprice index (PPI) forfinal demand, that measures price change for goods,services, and construction products sold for personalconsumption, for capital investment, for export, and to

government.Themeasurementoffinaldemandpricingismeanttoprovideaclearerpictureofinflationtodifferingendusersaftervalueisadded.ThePPIforfinaldemandcoversnotonlythepriorheadlinePPIforfinishedgoods(about 34 percent of total final demand), but also finaldemand services (64 percent of the total) and finaldemandconstruction(2percentofthetotal).

ThePPIforfinaldemandincreased0.7percentinMarchand1.4percentover12months.Consumerpriceinflation(CPI) fell to0.4percent inMarchand1.1percentyear-over-year.Theincreaseininputsforconstruction,thecostofallmaterialsusedinconstructionplusitemsconsumedbycontractors,wasnearlyidenticaltoCPIat0.5percentand1.1percent.Bycomparison,thePPIforfinaldemandconstructionwasflatinMarchandrose3.2percentover

the 12 month period, more thandoublethefinaldemandinflationforallgoodsandservices.

Inflation for construction is beingdriven by the improving demandfor nonresidential buildings,which is allowingcontractors andthe supply chain to add pricingbeyond the rate of inflation. TheoverallPPI fornewnonresidentialbuilding construction was alsounchangedforthemonthbutrose3.5 percent compared to March2013. Within the nonresidentialcategory, year-over-year increasesin the component buildingtypes were 2.7 percent for newwarehouses; 2.9 percent foroffices; 3.8 percent for medicalbuildings;4.0percentforindustrialbuildings and 4.1 percent foreducationalconstruction.

According to the analysis of theBLS by the Associated GeneralContractors, “major constructionmaterials with notable one- or12-month price swings includedgypsum products, for which thePPIslipped0.9percent inMarch,butclimbed9.5percentyear-over-year; insulation materials, 3.7percent and 7.5 percent,respectively;lumberandplywood,1.4percentand4.7percent;dieselfuel,-1.1percentand-1.0percent;aluminum mill shapes, -.0.1percent and -2.3 percent; andcopperandbrassmillshapes,-2.6percentand-7.1percent.” BG

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The Demographic Shift:Pittsburgh Gets Younger

BreakingGround May/June 2014 17

F e a t u r e S t o r y

T hestatisticwasquotedsooftenthatmostpeopleneverthoughtto

checkifitwasactuallythetruth.“AlleghenyCountyhastheoldestpopulationofanycountyintheUnitedStatesexceptDadeCounty”(unlessthequoteusedPalmCounty).Whiletherateofonepersoninfiveovertheageof60wasoneofthehighestformajorcities,Pittsburgh’sdemograph-icswerethesameasotherNorthernorMidwesterncitiesthatexperiencedindustrialdeclines–BuffaloorClevelandforexample–andAlleghenyCountywasn’tasoldasanum-berofretirementMecca’s.

Thatmaybeputtingtoofineapointontheissue.Pittsburghwasn’tWestPalmorScottsdaleandthecityhadarealproblemwithinsufficientopportunitiestoattractpeopleintheirearlytopeakworkingyears.Theshutdownofthesteelindustryanditssupplychainresultedinhundredsofthousandsleavingtheareatofindbetteremploy-mentopportunities.Leaderswhowererealistic–thelateMayorRichardCaliguiricomestomind–predictedthatitwouldtakeagenerationofefforttorecoverfromtheout-migration.Thatforecastturnedouttobecorrect.

Ageneration has now passed and the goodnews is that themost recent censusandup-dates show that the median age of the resi-dentsofPittsburghandmuchoftheregionisdeclining. It shouldn’t be a surprise that theeconomy of the region has recovered at the

sametime,providingjobsthatyoungpeoplepreviouslyhadtolookelsewheretofind.

Pittsburgh isgetting younger.The city is alsoon the radarofthosewholookforplacesthatareontheleadingedgeofthings.Pittsburghissuddenly“cool”inthesamewaythatPortlandorAustinisconsideredcool.Theeffortsofmanypoliticaladmin-istrations and civic leaders have paid off in the 21st Century,as emerging technology companies and re-emerging naturalresources industriesarecreatingdemand forworkerswith theskillsthatwell-educatedandtrainedyoungerpeoplepossess.

Pittsburgh is getting younger. What does that mean for theeconomy?Whatdoesitmeanforconstruction?

Proving Out the Census

Pittsburgh’s loss of young workers and families didn’t requirea report from the Census Bureau to prove. A drive through

the towns in theMonValleyorBeaverValleyprovidedall theevidenceanyonewouldneed.Becausetherecoveryofthere-gionaleconomytookadifferentshapethantheeconomythatexistedinWesternPApriorto1980,youcouldn’tgototownslikeCharleroiorBeaverFallsandseeofficesandstoresfillingbackup.

Aspopulationhasreturned,peoplehavemovedtowheretheirjobs are located or from where they can conveniently get totheir jobs.The recent resurgenceofurban living inPittsburghisconcurrentwithanationaltrendtowardslivingincities;how-ever,thattrendhasbeenabettedherebythefactthatthejobcreating engines – universities, hospitals, financial institutions–arelocatedintheCentralBusinessDistrictandinOakland.Ifyoulookattheprevioushousingtrends–whichweresuburban–youseethepatternofproximitytojobs.ThehousingboomintheNorthHillsinthe1980’sand1990’sfollowedtheopeningofI-279.ThegrowthinthewesternsuburbsfollowedtheboominsuburbanofficegrowthandtheheydayofUSAirattheairport.

Between1995and2005,morethan45,000housingunitswerebuilt in the six-county metropolitan area (Armstrong Countywasn’tincludedintheMSAforallthattime).It’spossiblethatthedeclineinpopulationmayhaveabatedbythattimeandtheCensusBureau’sestimateshadn’taccountedforthatyet,butatminimum thegrowth innewhomesdemonstrated the shift inpopulationfromthecitytothesuburbs.

Regardlessofthedegreeofdeclineandreboundinpopulationthatoccurredoverthepastfewdecades, it’sevidentnowthat

thefaceoftheregionlooksdifferent.ThereisnocomparisonbetweenwhatplaceslikeMarket Square, East Liberty or Lawrencev-ille look like today versus just a few yearsago. The anecdotal evidence we see withoureyestellsusthattherearemorepeople,youngerpeopleandpeoplewithmoredis-posableincomeoutandaboutthanbefore.Thedatabacksupthatobservation.

Accordingtothe2012Censusupdate,themedianageofU.S.residentswentupagainbytwo-tenthsofapointto37.4yearssince2010.Likewise,themedianageofPennsyl-vaniansrosefrom40.1to40.5yearsolddur-ingthattime.Compareto1980,themedianageswentup7.4and8.4yearsrespectivelyinthecountryandstate.

In Pittsburgh, conversely, the median agedeclined from 2010 to 2012, falling two-tenths to33yearsold.ThemedianageofAllegheny County residents fell from 41.3to 41 years old. Like with the state andU. S. demographics, the median age for

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The increase in population in Pittsburgh has come from the reversal of the outmigration trend. Source: Bureau of Census. Chart courtesy Allegheny Conference.


Allegheny County increased significantlysince1980,matchingthe7.4yearsthattheaverageAmericanaged.ThemedianageinPittsburgh,however,wasvirtuallythesame.After climbing from 32.8 years in 1980 to35.5in2000,themedianageinPittsburghreturned again a dozen years later. Giventhedirectionofthetrend,it’slikelythatthe2014 update will find Pittsburgh residentsareyoungernowthan30yearsago.

What is remarkable about the shift is thatPittsburgh’strendiscountertothenationalandglobaltrend.

When you look at the data from year-to-year,it’sapparentthattherehavenotbeenbig moves in either direction. The largestincrease in any year since1990was9,054(or0.4percent)andthelargestdeclinewas14,634(or0.6percent).Examiningthecomponentsofthepop-ulation trend gives a bit more clarity, especially into how theregion’sageisdeclining.

Throughouttheperiod,theoneconstanthasbeenthatthenat-uralorderofchangehasbeenremarkablyconsistent.“Deathsstilloutnumberbirths,”notesJimFutrell,vicepresidentofmar-ketresearchandanalysisfortheAlleghenyConference.Thatdif-ferenceaveraged3,286moredeathsoverthepastdozenyears,witheveryyearhavingbetween2,500and4,000moredeaths,except2003.Netforeignimmigrationwasevenmoreconsistentthanthedeathrate,averaging2,243duringthepast12years.Whathaschangedistheflowofdomesticmovement.

Until 2009, net outmigration occurred every year, averaging6,500 more people leaving than moving to Pittsburgh. From2009to2012,over2,200morepeoplemovedtoPittsburghthanleftitandthemakeupofthosecomingwasdecidedlyyounger.

Inadditiontogettingyounger,Pittsburghisalsogettingsmart-er,oratleastbettereducated.WhiletheeducationalattainmentofPittsburghersofallagesisroughlythesameasthatoftherestof thecountry–wehaveslightlymorehighschoolgradsandfewerdropouts–theeducationalattainmentof25-34yearoldsis significantlyhigher.Theshareof residentswithabachelor’sdegreeismorethanfivepointshigherthantheU.S.average;and the share of Pittsburghers with graduate degrees is 13.6percentversustheU.S.averageof9.3percent.Moreover,thechangeinpopulationofthoseinPittsburghwhohavegraduatedegreesandarebetween25and34yearsold is50.8percentsince2000.

PNCeconomistKurtRankinseesthebusinessenvironmentasakeytothelatterstatistic.“Pittsburghhashadtheuniversitybasethat normally attracts younger workers. That hasn’t changed

over theyears,”Rankinexplains.“Thestart-upand techbase–Googleandothertechnologycompanies–hasgrownandal-lowedthoseyoungerpeopletostayandwork.”

Coming and Staying for the Jobs

DuringthedecadesofreconstructingandrebrandingwhatPitts-burghwas,muchwasdonetomakethelifestyleoftheregionmore attractive. The cleanup of the rivers and air quality – aresult of dedicated individuals and a lack of manufacturing –

The median age of Allegheny County and City of Pittsburgh residents is falling in contrast to the larger trends. Source: Bureau

of Census. Chart courtesy Allegheny Conference.

In Pittsburgh, conversely, the median age declined from

2010 to 2012, falling two-tenths to 33 years old. The

median age of Allegheny County residents fell from

41.3 to 41 years old.

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improvedthequalityof life. InvestmentintheCulturalDistrictcreatedadestination inDowntownandwasat thebeginningof awaveof lifestyleamenity additions thatputPittsburgh ina leaguewithotherattractivecities.All these incremental im-provementshelpedwiththeattractionandretentionofyounger

workersbutintheend,thetippingpointwasthegrowthofjobsthatrequiredtheskillsthat25-to-35yearoldspossessed.

AsRankinpointsout,themagnethasbeentechnology.Wheth-er from the transfer of university research into commerce orthroughtheapplicationofnewtechnologytoexistingeconomicdrivers likehealthcare, ithasbeen technologyat theheartofthenewPittsburgheconomy.BecausetheepicenterofthetecheconomywasOakland’suniversities,theCityofPittsburghhasbenefittedmostfromthisjobgrowth.

WithNewUrbanismbecomingadominant trend revivingcityliving, theemergenceofa job-creatingengine in theheartofPittsburghisnotonlyattractingtalenttotheregion,butalsotothecityitself.

BruceKatz,BrookingsInstitutevicepresidentoftheMetropoli-tanPolicyProgram,spokeofthisconvergencewhenhevisitedCarnegie Mellon University in late March. Katz believes thatthere is a shift underway throughout the country that stemsfromthewaybusiness fosters innovation.Whereascompaniesprimarily did innovation in suburban research and develop-ment settings – like the Research Triangle Park near Raleigh-Durham,NC–industryleadersnowlooktoopencollaborationthatthrivesonproximityofitsemployeesandsupplychain.The

Source: Bureau of Census. Chart courtesy Allegheny Conference.

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density of an urban setting better serves the 24/7 innovationculturethatexistsatthebestcompaniestoday.

Katzaddressedthisphenomenon in remarkstoMayorPedutoduringhisvisit.“You’retakingofficeatatimewhencitiesarebe-ingrevaluedbythemarketplaceandbythemillennialsandbyabroadsegmentofsociety,”saidKatz.“Thesearebigdisruptivetrendsinacountrythatbasicallyperfectedsprawlandperfecteddispersion.”

ThechangesinworkplacedynamicsofwhichKatzspeaksplayintotheregionalstrengthsofSouthwesternPA.Thecostofliv-ing in Pittsburgh is relatively low, especially when comparedtothemarketsfromwhichcompaniesintheregionarerecruit-

ing. Cities that attracted tech companies in the 1990’s – PaloAlto, San Francisco, Boston – are much more expensive thanPittsburghto live.Today’sworkplacedoesn’t requireproximityforworkersorevencompaniestotakeadvantageofsynergieswiththeirindustryandcustomers.AttheriskofbelaboringtheGoogleexample,thecompany’slocationinPittsburghwasrec-ognitionofthetalentavailableatCarnegieMellonandthemoreaffordable lifestyleofthecity. Inhalfadecade,PittsburghhasbecomeGoogle’sthirdlargestemploymentcenter.

Ofcourse,theotherindustrydrivingemploymentinWesternPAisnaturalgasexplorationandprocessing.Whilenotspecificallyattractive toyoungerworkersalone, thenatureof thework islikeconstruction’sandthereforedrawsyoungerworkers.Asthe

With New Urbanism becoming a dominant trend reviving city living, the emergence of a job-creating engine in the

heart of Pittsburgh is not only attracting talent to the region, but also to the city itself.

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When it comes to Mechanical Contracting Services,

gasindustryrampsup,theneedformoreengineersandtechni-cianshasgrown,againattractinggraduateandyoungprofes-sionalsfromaroundthecountry.

Theneed for technicaleducationandskillshasgrownamongemployers faster than the educational system has respondedwith training. As an indicator of this trend, some 23,000 jobsremainunfilledinthe14-countyregion,accordingtothePitts-burghRegionalAlliance’s(PRA)trackingofopenings.Some57percentof those jobsare inhigh techcompaniesor ITwithinother industries.Thoseareopportunitiesthatmoreoftenthannotarefilledbyyoungerpeople.Inothercities,thosearealsothekindsofjobsthatattractskilledforeignimmigrants.

DewittPeart,presidentofthePRAandtheGreaterPittsburghChamberofCommerce,believesthehottestjobsarewhatwillcontinuetoattractyoungpeopletotheregionbuthealsosaysthatdomesticin-migrationwon’tbeenough.

“ThefactthatthereareunfilledjobsisnotuniquetoPittsburgh.WeworkcloselywithothercitieswebenchmarklikeMilwaukeeorClevelandandtheyhavethesameproblem,”Peartsays.“Ev-eryoneseesthesameanswerandthat’sforeignimmigration.Weneedtohaveafederalpolicythatallowsformorehigher-skilledworkerstoimmigratetothiscountry.Inpartthat’saconcern.In

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Photo courtesy Bar Marco

Twenty years ago, the concern about Pittsburgh was that there weren’t enough jobs to get young people to stay here after college. Today, job creation has begun to outstrip the demographics.

partitneedstobeawakeupcallforoureducationalinstitutions.Alotofthesejobsdon’trequirecollegeeducations.We’vejusthadamismatchbetweenwhatweneedandwhatwe’vebeeneducatingourworkforcetodo.”

Twenty years ago, the concern about Pittsburgh was that thereweren’tenoughjobstogetyoungpeopletostayhereaftercol-lege.Today,jobcreationhasbeguntooutstripthedemographics.

Playing Out the Trend

Whatdoes“gettingyounger”meanforthefutureoftheWesternPAeconomyand demand for construction? Beforeexaminingthatquestion,it’simportantto remember that while the medianageisdeclininginthecenterofthere-gion’spopulation,therearestilllotsofpeoplegettingolderinplace.

“There are three main demographicwavescomingthrough.Thefirst istheBabyBoomers,which is somuchbig-gerthananypreviousgroup,”explainsDr.ShelbyStewman,professorofsoci-ology and demographics at CarnegieMellonUniversity.StewmannotesthattheBoomers’size,wealthandlifestyleexpectations have affected everythingin American culture over the past 50years. Nearly 76 million Americanswerebornduring theBabyBoombe-tween1946and1964.Thatagecohortstillmakesuponequarterof thetotalpopulation and their actions and ex-pectationshaveenormousinfluenceontheeconomy.

As Boomers begin to retire in greaternumbers over the next decade or so,therewillbetwomajorimpactsontheeconomy as a result. One is that thehealthcare-related costs associatedwithaginganddyingwill riseand thesize and expectations of the Boomerswill put enormous pressure on thosesystems. The second impact will bethelossofworkersfromtheretirementof the biggest generation. Since theBabyBoomwasfollowedbyadecadeoflowerbirthrates,thiswaveofretire-mentswillbefollowedbyacohortthatalready representsahole in thework-force.Thesizeofthatholeisestimatedtobe140,000workers.

The latter impact is significant forPittsburghbecause it is theagegroupthatwouldtakeuptheplaceoftheBabyBoomersthatmovedawayduringthe1980’sinthewakeofthesteelin-dustry’scollapse.Bythemiddleofthenextdecade,Pittsburghshouldofferplentyofemploymentopportunity.

AgingBabyBoomerswillneedaccesstomorehealthcarefacili-ties–assuming there isameans topay for thataccess–andcouldcreateopportunitiesformoremedicalresearch.Youcan


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followthearcofBoomers’livesbytracingtheadvancesinhealthcareanddrugtechnologytomeetthedemandsof thatgeneration forprolongedandenhancedactivityintomiddleandlateryears.Intermsofbricksandmortar,anelderlyBabyBoomgenerationwill increasedemandforno-maintenancehousing,assistedlivingfacilitiesandthefacilitiesthataredesignedfortheendofthecontin-uumofcare.Astheywinddowntheacquisitivestageoftheirlives,Boomerswillalsoimpactretailandhospitalitybusinessbyspendinglessoftheirdiscretionaryfundsinthosepursuits.

At the same time, the fact that Boomers have also ac-cumulatedmuchmorewealththanothergenerationswillcreateopportunitiesfordeveloperswhocanbuildhigherendexperiencesforalloftheBoomers’needs.Themar-ketforluxuryelderlyfacilitiesandexperienceswillexistinwaysthatdidn’tbefore.

Thethirdwaveofthedemographicseaisanotherlargeone,theEchoBoomorthechildrenoftheBabyBoom-ers. There is ample early evidence that this cohort willbehavedifferentlyasadultsthantheirparentsdid.

“The Echo Boom is coming into its 20’s. That key cohort will also be coming into its household formation years,” notes Stewman. “Echo Boomers will be hitting their primary productivity age shortly and we should see increases in the birth rate again.

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RankinandStewmanseethelifestylechoicesoftheEchoBoom-ersdifferently and layout twodifferentpossible scenarios forthatgeneration’smaturation.

“The Echo Boom is coming into its 20’s. That key cohort willalsobecomingintoitshouseholdformationyears,”notesStew-man.“EchoBoomerswillbehitting theirprimaryproductivityageshortlyandweshouldseeincreasesinthebirthrateagain.Thesuburbshavestabilizedandgrowththereshouldcontinue.Thathingesonthe25-35yearoldagecohort.”

“Ithinktheimpactwillbeintheformofmulti-familyasopposedtosingle-familyhomes.Thatseemstobethetrendthatisde-velopingaroundthecountryforyoungerpeople,”saysRankin.Referring back to the changes in workplace and expectation,Rankin sees thegrowthof thatagegroupasachallengeandopportunityforPittsburghdevelopers.“Onereasonisalackofurbanliving.Connectivityisthekeytowherepeopleareliving.ThiswillcausePittsburghdeveloperstoexpandlivingintheur-bancoreandthat’shappening.”

Bothofthesescenariosrepresentgrowthopportunitiesbuttheinfrastructuretosupportgrowthforanothersurgeinresidentialdevelopmentvariessignificantlyfromurbantosuburban.Withinthecityandthefirstringofsuburbs,thereisasurplusoflandandbuildingstocktoredevelopforresidentialpurposes.Much

ofthevacantlandliesadjacenttoriverfrontproperty.Pittsburghandthemunicipalitiesthatareadjacenttothecityremainpro-active in attracting residential development. Many of thosecommunities are magnets for government redevelopment as-sistance.It’snotdifficulttoseeprojectsdevelopinginTheStrip,McKeesRocks,MillvaleorBraddock.It’smoredifficulttoenvi-siondemandatthispoint,butassumingeconomicgrowthandcontinueddemandforurbanliving,theinventoryofpropertyisavailable.

On the other hand, suburban development is facing severalhurdles. Tight financing mostly eliminated new developmentbetween2008and2013.Demandforlotsisveryhighnowandthecostoflandisrisingmorethanthenorm.Demandforlandfromgasdrillersiscreatingcompetitionforresidentialdevelop-mentand isdrivingpriceshigher.Thetraditionalsingle-familyresidential development is becoming costly, pushing the newconstructionpricehigher.Fortheforeseeablefuture,mostnewconstruction under $300,000 will be confined to townhouses.That’sadeparturefromthenorminPittsburgh.

ShelbyStewmanpredictsanotherchangethatwillbeadepar-tureforthisregion.“Ithinkpeopleintheregionaregoingtobeinforasurprisewhenthebirthratesriseagain,”hesays.“WehavehadadelayinthechildbearingperiodbutwhenyoulookattheEchoBoomers,they’reoutthere.”


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Stewman predicts that Echo Boomers may push back havingchildren forawhilebut that thenumberseventuallycatchuptothetrend.Hepointsoutthatthebirthratehasbeenstableatbetween1.7and1.9childrenperfamilyforalmost40years.Duringthe20thCentury,thehighpointforbirthratewas1957,when 3.8 children per family were born; and the trough oc-curred in1976whentheratewas1.74childrenper family.By1980,theratewas1.8andin2007itwas1.9.Whenthesecondlargestgenerationborninthiscountrypassesthroughitschildbearingyearsoverthenexttwodecades,Stewmanpredictsan-otherriseinnewborns,evenwithastablebirthrate.

Babiesbornsincetheendoftherecessionwillbeleavinghighschoolin2030.WhatwilltheeconomiclandscapeofPittsburghlooklikeforthem?

There seems tobe somebig trendsemerging from the shift-ingdemographics.By2030,thelastoftheBabyBoomerswillhavehitthetraditionalretirementage.ManyofthepeoplethatwouldbefillinginbehindtheBoomerslefttownwiththesteelindustry;soakindofreverseDiasporawillbeneededortherewillbeincreasedopportunitiesforworkersintheir30’sand40’stohavemoreresponsibility.Ifthereemergenceofmanufactur-ingoccursaspredicted,Pittsburghwillbeacitywithlotsofjobsacrossabroadspectrumofindustries,mostofwhichwillrelyonasteadystreamofyounger,well-trainedworkers.

While most of the country will be struggling with economicstagnationthatcouldresultfromhavingnearlyaquarterofthepopulationretiredanddependentuponconsumingsavingsorgovernment-backedsupport, theeconomyofWesternPAhasthepotential tobeexpandingandsearchingforyoungerandsmarterworkers.

“Therearejobsopentobefilledandyou’regoingtohavetogotoayoungerworkforcetofillthosepositions.Ithinkwe’reinthemidstofthatkindofconversiontotheoverallworkforce,”pre-dictsPeart.“Babyboomers–andIcountmyselfamongthem–havemaybetenmoreyearstoworkandIthinkoverthecourseoftenyearsthiscityisgoingtochangedramaticallyinitsage.”

“Thoseprimeearningyears–early-30’stomid-40’s–youcan’thave growth in that group without establishing that base ofyoungworkers.We’reestablishingthatbaseinPittsburgh,”saysRankin.“Thebigtakeawayisthattenyearsout,Pittsburghhasthepotentialforabigincomeboost.” BG

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P r o j e c t P r o f i l e

The new paint scheme and iconography by New Guild Studio transformed the sanctuary (below right, prior to renovation).

St. Ursula Catholic Church Renovation



Churches can be among the more dif-ficult projects for ar-chitects and contrac-

tors to manage. Most church projects are run by a committee and members of a church can have significant emotional at-tachments to their place of worship, emo-tions that don’t surface on a flex building or parking garage. It’s not surprising then that professionals who become proficient at dealing with churches tend to become specialists at the craft and will get repeat business. For the members of one North Hills church, Landau Building Co. has become such a company.

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St.Ursula’sCatholicChurchin Hampton Township isan older church servinga parish of about 1,500families. Early in the lastdecade the parish priest,Father Garrett Dorsey,began leading a process

ofmasterplanning todealwith several trendshe sawthat would require changes to the church’s physicalplant.

Oneoftheissueswasdemographic.Fr.Dorseywascon-cernedwiththeadvancingagesoftheparishpriestsandanticipated a future time when St. Ursula would havefewer masses as priests retired and would thereforeneedmoreseating.St.Ursulaalsositsonasteephill,withitsparkinglotacrossthestreetbelowtheentrance.Older members were having difficulty accessing thechurch’ssteepstairs.Lastly,thechurchwasdated,bothinarchitectureandinfrastructure.

“There was an effort by the parish to get everyonetogether tofindoutwhatare the things thatweneedto do to our building here,” Fr. Dorsey recalls. “Thatstartedthemasterplan.Thefirstprojectwastoimprove

accessibilitytoourschoolandchurch.Thenextwastobetherenovationoftheinteriorofthechurch.”

Church member Todd Havekotte, partner in the archi-tectural firm Intelligent Design Group (IDG), gives Fr.Dorsey credit for driving what became a multi-phase,multi-yearcapitalprogram.

“The primary driver of the whole project was FatherDorsey recognizing that the building needed to bemaintainedandhemadesurethateveryonewasawareofthat,”Havekottesays.

Improvingtheaccessibilitywasprimarilyamatterofsiteworkandtheconstructionofanewparking lotonthehilladjacenttothechurchandcreatinganewentrance.Accomplishing the rest of the project was going toinvolve more planning and fundraising. In some ways,thetimeneededtoraisefundsandplanworkedtotheadvantage of St. Ursula. Architect Havekotte thoughtinitially that the expansion was going to put the finalcost of the program at eight million dollars. Within afewyears,however,itbecameclearthattheadditionalspacewouldnotbenecessary.Theadditionalplanningtimealsoallowedforabitofbadluck.



In 2006, the Diocese of Pittsburgh put out a requestfor qualifications to contractors with the intention ofinterviewingandselectingageneralcontractortoworkwithIDGduringtheplanning.LandauBuildingCo.waschosentonegotiatewiththeparishandworkedoutanagreementthatallowedfortheprojecttodeveloplikeadesign/builddelivery.OnChristmasDay2006,however,aburstpipeintheeducationbuildingcreatedadetourtotheproject.Thechurchneededtospendmuchofthefunds that had been raised to repair the damage andusedtheopportunitytomakeotherneededrenovationstotheschool.

It was during the planning for the third phase – thechurch remodeling– that itbecameapparent that thescopeoftheprojectdidn’tneedtobeasgrandasorigi-nallyenvisioned.Thenumberofmasseshadn’tdeclined.Theexpansionof thechurchshrankandshiftedtotheadditionofawelcomingareaandportecocherebytheupperparkinglot.ToddHavekottesaysthatinputfromthecongregation–alongwithaconservativebudget–helpeddefinewhatultimatelythefinalprogrambecame.

“When we polled the people in the parish they didn’twantustopulldownwallsandchangethechurch.Theylikedtheirplacesowejustredecorated,”Havekottesays.

ForLandau,thetimeandplanningwasn’twithoutincon-venience. The duration of the preconstruction periodmeantfamiliarizingandre-familiarizingthekeystaffwiththeprojectmorethanonce;andevenLandau’sorgani-zationchangedwhiletheprojectwasincubating.

“Wehadtheprojectforsixorsevenyearspriortocon-struction. I was originally supposed to be the projectmanager,”notesSteveBishop,nowLandau’svicepresi-dentofoperations.“Weprobablydidfiveorsixconcep-tualestimatesduringthoseyearstheywerefundraising,”recallsAndrewMarsic,theeventualprojectmanager.

That Marsic became the project manager was a mat-terofmatchingskills to theproject’s requirementsbuttherewasapersonalconnectiontotheparishthatwasquite a coincidence. Marsic had been baptized at St.Ursula. “When I was very young my parents owned asmallhouseaboutablockfromthechurchrightoffKirkStreet,”hesays.

By spring 2012, the program had been defined andLandauwasabletobidoutthesubcontracts.Withintheexisting church, the plan was to renovate the church’sbasementintoanentertainmentandmulti-purposeroomforchurchgatherings.Abovethat inthesanctuary,the


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altarareawasreducedbyabouthalf.Amajorrefurbishmentoftheinteriorfinisheswouldbedone,includingrebuildingtheconfessionalbooths,replacingHVACandelectricalsys-tems and a major repainting. To the east of the church, atwo-story,2,500squarefootwelcomecenterwouldbebuiltthat allowed cars to drop off people under a canopy andconnectintothesanctuary,withstairsandelevatoraccesstothebasementspace.

It’sanunderstatementtorefertotheworkinthesanctuaryas“re-painting.”Partofthedesign/buildteamwasBraddock-basedNewGuildStudio,aliturgicalartistanddesignfirm.Itswork involvedcreatinga largemuralof iconographyonwhathadbeenadrabwoodpanelandsolidpaintbackdroptothealtar.Thewallsandarchesweresimilarlytransformed,changingwhathadbeenpaintedwhitetoapaletteofblue,gold,roseandgreen.

“Thecolorschemewastakenfromthestainedglasswindowsinwhatthearchitectcalledtheclerestory,”notedFr.Dorsey.

32 www.mbawpa.org


The welcome area and porte cochere addition (front) were the only new construction in the project.

It’s an understatement to refer to the work in the sanctuary as “re-painting.”

Amajorchallengefacingtheconstructionschedulewastheneedtokeepthechurchfunctioningfullyduringthework.Regardlessoftheworkgoingon,massesweretobeheldasnormaleachday.Seasonaleventsweregoingtoproceedasplanned.Thesanctuarywasgoingtohavetobetakenoutofcommissionfora fewmonthswhilethatworkoccurredthere,butalotofworkwasgoingtooccur inashortperiodof time.Asseemednatural forthisproject, theplangotonemoredetour justbeforeconstructionwastostart.

“WegotthegoaheadtostartworkinJulybutwhenwewentinforthefinalbuildingpermit,HamptonTownshiptold us that their code review process had been con-tracted with Codesys because their code official hadjustretired,”saysMarsic.“Wehadtogobackthroughthe process with them, which delayed the start untilSeptember.Luckily,therewasgoodweatherthatfall.”

Gettingbacktotheoriginalcriticalpathwasimportantbecause the sanctuary renovation had a fixed windowoftimethatwasdictatedbyChristianholidays.Landaudidn’thaveaccesstothesanctuaryuntilafterChristmasand the work had to be entirely completed beforeEaster. During that time, the sanctuary would be offlimits to thecongregation.The temperate fallweatherallowed for the addition to be completely “dried in”andthebasementworktogetwellunderwayaheadofChristmasmass.“ButcomeJanuary2nd,wewere rip-pingoutpews,”saysMarsic.

During the basement construction, the crews made adiscovery that had eluded members of the church fornearly a century, according to Havekotte. “We didn’tknowtherewasacreekunderneaththechurch,”hesays.Anactivespringwasdiscoveredwhencrewssaw-cuttheconcretebasementfloor.“Wehadtocreateperimeterdrainageandputinsumppumps.”



As might be expected, gutting and rebuilding an oldchurchthathadnotberenovatedinmorethan50yearsmeant finding surprises and taking a fresh look at thescopeofworkconstantly.Landauhadtocoordinatecon-structionworkwithaconsultant,NewGuildStudio,withwhichitdidnothaveacontractualrelationship.Thecir-cumstances requiredconstantcommunicationandhad

thepotentialforlotsofconfrontation.According to the church’s represen-tative, Mary Jaconski, the confronta-tionswerenonexistent.

“I’ve been on the building commit-teefor20years.ThefewprojectsI’vebeen involved with, there’s alwaysbeen a gap between what you thinkisgoingtohappenandwhatthecon-tractorthinksisgoingtohappen,”shejokes.“Thebest thingaboutLandauistheywereverytolerantofme.TherewasalwayssomethingthatIwasask-ing about and Andrew or [projectsuperintendent]WayneRabbitalwaystookthetimetoexplainitalltome.”

Marsic explains that there were alsoseveral instances where he felt that

heshouldsuggestdoingsomeworkbeyondthescopethatwouldimprovethebuildingwellbeyondthecost.Marsicsaystheitems,likerebuildingthepewsandadd-ing some strip lighting, made a big difference to thelookofthebuildingandwerewhathisownersexpected.Hesaysthebestexamplewastheterrazzoflooring.

34 www.mbawpa.org


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Therewasnothinginthescopetoupdate the terrazzoand thechurchwasn’tlookingtospendadditional money. Once thenew finishes of the sanctuarystartedcomingtogether,Marsicfelt the floors would look thatmuch more worn and dated;andheexplainedthataddress-ingthefloorslaterwouldresultin another inconvenient shutdownofthesanctuary.

“Ipushed themtodo it. I toldthem they wouldn’t regret it,”he explains. “I knew if TomLandau saw the terrazzo he’dwant to know why it wasn’tdone. If I told him that wedidn’t do it because itwasn’tinthebudgethewould have said that’snotwhoweare.That’snotthekindofworkwedo.”

This kind of sugges-tion can be a touchysituation, as ownerscan be naturally suspi-cious of the contrac-tor’s motives and viewthe suggestion as upselling. Mary JaconskisensedthatMarsicwassincerely adding valuetotheproject.

“Ihadthatsenseallthetime, that they weredoing the right thingfor the job,” she says.“Andrew was amazingabout it.Hedidn’t justsuggest we fix the ter-razzoandtellmethecost,hecheckedwithabout tendifferentplaces.Hereallydidn’twanttospendmoneyanymorethanwedid.”

Marsicsaysthatthespiritextendedtothesubcontrac-tors.“Allthesubsjokedthatyou’dthinkthiswasafivemilliondollarjobnotatwomilliondollarproject.Itwasagreatgroupofsubs,”hesays.“Whenevertherewereissuesthereweren’tproblems.Everyonejustwantedtosolve the issue.The subcontractorswereproudof theproject.Icameinonemorningandthemasonwantedtoshowmethathehadputacrossintothebrickexte-riorwithoutanyonetellinghimto.Hedidn’twantany-thingforit;hejustvolunteered.”

Subcontractorsmayhavebeenmotivatedbythenatureof the work. The project offered plenty of opportuni-tiesforalevelofcraftsmanshipthatothersdon’t.Asidefrom the painting and terrazzo, there was extensivemillworkandliturgicalfurnishings.Theprojectwasrec-ognized inFebruary2014as thewinnerof theMasterBuilders’ Association Building Excellence Awards forCraftsmanship.ToddHavekotteobservesthattheexcel-lenceoftheworkisreflectedasmuchinwhatisn’tseenaswhatis.

“Itoldthe[BuildingExcellence]jurythatthiswasaproj-ect where the craftsmanship was such that when theprojectwascompletedyoucouldn’ttellwhereanything


Landau Building Company .................................General ContractorSt. Ursula Catholic Church Parish ......................OwnerIntelligent Design Group ....................................ArchitectNew Guild Studio Inc. .......................................Liturgical ArtistsMardo Masonry .................................................Masonry ContractorPennsylvania Roofing Systems ...........................Roofing ContractorCourtman Painting Inc. .....................................Painting ContractorMassaro Industries ............................................Flooring ContractorMarble Life ......................................................Terrazzo Restoration & Polishing

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hadbeendone,”heexplains.“Theconfes-sionals are a perfect example. They werecompletely taken apart and broken carv-ingsandpiecesreplaced.Theywerecom-pletely rebuilt but it looks like they havealwaysbeenthere.”

The same can’t be said for the sanctuary.Because the sanctuary had been closedoff from the congregation throughout theprocess,there-openinghadafeelliketheunveilinginaDIYNetworkrealityshow.Thedramaticchangecaughtsomeofthemem-bers off guard but Mary Jaconski reportsthattheresponsehasbeenuniversallypos-itive.FatherDorseysaysit’sthebestpartoftheprojectforhim.

“I’mmostpleasedwith the interiorof thechurch, with the way it worked out redo-ingthefinishesforthefloorsandwalls,”hesays.“TheheartofaCatholicchurchisthearea immediately around the altar. It hasgivenusthelookofabrandnewchurch.”

“The smartest thing the architect did wasgetoutofthewayofthepeoplewhoknewwhat they were doing,” jokes Havekotte.“The project is a very good example ofwhatyoucandowithpaint. It’sessentiallya two-dimensional appliqué but it trans-formedthesanctuary.

“IgosittherewhenIhaveabaddayandIwanttorememberwhatit’slikewhenthingsworkwell.WhenI lookatthefrontofthatsanctuary,it’sjustspectacular.” BG



L A N D A U B U I L D I N G C O M P A N YR E L A T I O N S H I P S | R E P U T A T I O N | R E S U L T S

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f i r m P r o f i l e

Marsa Inc. Like many owners of smallfamily-run businesses, PaulScabilloni takes businesspersonally. He and hisfour brothers – Dan, SamJr., Matthew and Alan– are hands-on ownersof Marsa Inc., a second-generation masonrysubcontractor located inCastleShannon.Paul thinksthat’s an advantage thatdifferentiates Marsa frommanycompanies.

“One of the things we cansay that not many otherscan is thatwhen you cometoanyoneofusbrotherswecangetyouananswer,”Paulsays.“Noneofusisacollegekidthatjusthasanofficeanddoesn’tknowhistrade.Everyoneofusknowsthetradeandcansolveaprobleminthefield.”

Marsa was the second masonry contracting business thatSamScabilloniSr.owned.Duringthe1950’shisfirstcompany,ScabilloniMasonry,wasagrowingbusiness.Scabilloniworkedonabroadspectrumofprojects,butunfortunatelygotinvolvedwithaNewYork-baseddeveloperwithshadybusinesspracticesandapoorvisionoftheretailfuture.TheydevelopedtheMayfairSouthShoppersForumonRoute88inBethelPark.UnfortunatelyforScabilloni,hispartnerranoutofmoney.Andthen,SouthHillsVillageopenedupwithinashorttimeaftertheconstructionoftheMayfair,making itvirtuallyobsoleteandputtingScabilloniMasonryoutofbusiness.

SamScabilloniwentbacktothebusinessheknew.FoundedonOctober1,1967,Marsa isa combinationofSam’snamewithhiswifeMary’s.“MydadwasmorechauvinisticandwantedittohavehisnamefirstbuttherewasalreadyacompanynamelikeSamarsohereversedittoMarsa,”jokesPaulScabilloni.

Asateenager,Paulhadbegunworkingasalaborerandmasonforthefamilybusiness.“Myfatherdidn’tunderstandthechildlabor laws,”hesays.Wishingtogetmore involved inrunningthebusinessaftergraduation,Paulgotanassociate’sdegreeinstructuraldraftingfromInternationalTechnicalInstitute,workingtobuildtheEastLibertyhousinghigh-risesduringtheeveningstopayforschool.In1971hewentintothebusinessfull-time.

After a few years working together Paul pressed his father toexpand but Sam was satisfied with the size of the business,whichhadabout20employees.Ashisbrothers followedhimintoMarsa’sbusinessoverthenextdecade,Paulwasconcernedthatthebusinesswasn’tgoingtobebigenoughtosupportsixfamilies. He saw opportunities to grow coming as Pittsburghbegantopullitselfoutoftheearly1980’srecession.Finally,inthelate1980’sSamyieldedhispositionandin1991,SamandMarygiftedtheirsharestotheirsons.

Beforethesharesweretransferred,Saminsistedthatsomebodyhadtobeincharge.Paulhadbeenworkinginthebusinessthelongestandwas theeldest, sohisbecame themajority shareandhewasnamedpresident.

Throughout the 1990’s, Marsa was able to take advantage oftheboominretailconstructionandnewschoolstogrowmorerapidly. The company did not work on most of the so-calledPlan B projects, but instead took advantage of more limitedcompetitioninothersegments.Atthetimetheirofficeswereinanoldhousethathadbeenconvertedintomulti-tenantoffices.Asthecompanygrew,Marsaexpandedintootherportionsoftheofficewhentenants’ leasesexpired,eventuallytakingovertheentirehouseandputtingamodularofficeintherearyard.

“Wehadatrailerintheback.ThatwasmybrotherSammy’sofficeforawhile,”Paulrecalls.“Weknewthatcouldn’tcontinue.”

Scabilloni drove through the Forest Grove section of CastleShannononhiscommuteeverydayandwasdrawntoapropertythatwaspartoftheMonroeGutmanestate.Hemadeanofferthatwasrejectedbutseveralyearslatersawa“forsale”signatthepropertyagain.This timehemadeapre-emptiveofferattheseller’saskingpriceandpurchasedthe12.5acresitealongSleepyHollowRoad.Thesitewassetupasawastedirtsitefromtheexcavationof theCastleShannon light rail stationprojecttohelplevelandterraceitfordevelopmentofmultipleparcels.

Aftersubdividingthelandintofivelotsandsellingthemtooffsetdevelopmentcosts,Marsabuiltitsownnewofficeandshopin2006.Paul’sforayintodevelopmentturnedoutbetterthanhisfather’s.Movingfroma3,000squarefootfacilitytoa7,500squarefootofficewitha5,000squarefootshopgavethecompanytheopportunitytospreadoutanddesignaspacethatmatchedtheirworkingstyle.Thepayoffwasimmediate.“Everybody’sattitudechangedrightoffthebat,”notesPaul.

Attitudes are important in a company that employs as manyfamily members as Marsa does. For many families, the odds

40 www.mbawpa.org

are long that five male siblings could function togetherwithoutabloodletting,orat leasta foodfight.PaulScabilloniacknowledgesthatfivebrotherscanhavedisagreements.

“Wehaveourmoments.We’vehadourbattlesbutI’veneverhadtopullout thecardthat Ihavethemajorityshares,”Paulobserves. “We fight about it but then come to a decisiontogether.Whywegetalongsowell is thatweallhave foundseparatethingswedo.”

Danissecretary/treasurerofthecompanyandworksasprojectmanager, especially on the jobs that are further away fromPittsburgh.Dan’snicheisoverseeingMarsa’ssafetymanagement,havingcreateda safetycommitteeandwritten thecompany’ssafetypolicy.

Matt spends half his time in the office preparing all thesubmittals. It’s his responsibility to go through the drawingscompletely, looking for discrepancies and preparing the RFI’s.Mattalsodoesprojectmanagement,usually running the jobsclosertotheoffice.

Alan is the third of the brothers to manage projects, mostlyprojects to the south, including West Virginia. His secondaryjobisdoingfinaltakeoffs.Afterasuccessfulestimate,masonrycontractorsneedanexact takeoff for thefinalorder.Alanhasdeveloped a system that tallies the exact piece count of themasonryunits,eliminatinganywastedmaterial.

Sammanages the logisticsofthe company’s three truckson the road and keeps theirfield and yard operationsorganized. He’s also the onewho fixes the day-to-dayglitches in supply chain anddelivery.

Paul’s role is that ofadministrator and leader. Heoversees the final estimateandmakesthedeals.Paulalsosaysthathe’sthebrotherthatis the company “preacher,”setting the tone for how thestaffrepresentsMarsaInc.

All fivebrothersget togetherfor lunch every Friday todeal with any issues andto keep open the lines ofcommunication. “That’s howwekeepourselvessanehere,”saysPaul.

MarsaInc.employs13peopleintheofficeandthreeintheiryard.Withtheirfieldstaff,thecompanyhas160employeesasofApril.Theirsalesin2013topped$16million.ThecompanyworksasfarnorthasErieandtoClarksburginthesouth;Marsatravels to State College and the Maryland panhandle to theeast.

The company has diversified its business over the years tohelp with the cyclicality of construction. In 2012, Marsa gotintothemasonryrestorationbusiness.Scabillonisaysthatthebusiness is still growingbutexpects it to top tenpercentofthecompany’ssalesin2014.Heexplainsthatrestorationadds


Scabilloni brothers (from left in back) Paul, Dan, Sam, Matt and Alan (front center).

“If I’m bidding a job and I say we can do it in six

weeks then you know we can do it in six weeks. Our customers know I’ve been doing this for over 40 years and my word is

what we’re going to do.


value to thebusinessevenas the sales are low. “It helpsusgetworkthatwedidn’tpursuebefore,”saysScabilloni.“WehavethatBechtHalljobatClarion[University]andrestorationisprobably$400,000of the$600,000contract.Wewouldn’thavegottenthejobwithoutthat.”

WhenPaulScabillonitalksabouthisphilosophyandhowthefamilyrunsMarsa,itbecomesevidentthattheirmanagementstyle is still as personal as when the business was mostly afamilyoperation.

“In this business, just because you say you’re Marsa and inmasonry, that doesn’t mean a thing. You’re selling yourselfeveryday,”hesays.“IfI’mbiddingajobandIsaywecandoit insixweeksthenyouknowwecando it insixweeks.OurcustomersknowI’vebeendoingthisforover40yearsandmywordiswhatwe’regoingtodo.

“Idon’tcarehowbigacompanyyouhaveorhowgoodyouare,you’regoingtohaveissues.Everyjobhasissues,”hesays.“Thekeyiswhatyoudoaboutthem,howfastyoureact.Ifyougetanemail,youreplybyemail.Ifyougetaphonecall,youreturnthephonecall.Evenifyou’regoingtodisagreewiththeperson,don’tignorethem.

“TheotherthingIpreachhere–Ishouldsayteach–isthatweneedtotellallourguysthatwhentheywalkawayfromajobon

the lastday,theyshouldbeabletowalkdowntheroadandturnaroundandsay,‘I’mproudthatIbuiltthat.’Itrytoconveythatthrougheverypartofourbusiness.Whenyouconveythatprideyougetgoodpeople.Wehavealotofgoodpeoplethathavebeenwithusalongtime.” BG


Company FaCts

Marsa Inc.1000 Castleview Road

Pittsburgh PA 15234

T: (412) 341-3400

F: (412) 341-1355

www.marsainc.com

I.U.O.E. Local 66 Headquarters111 Zeta DrivePittsburgh, PA 15238Ph (412) 968-9120

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What can Local 66 do for you?The best trained, most capable work force. Professional tradesmen andtradeswomen have received the specialty training needed to meet the complexchallenges of your project.Service you can count on. We’ll work with you to answer any questions or solveany problems at your convenience.Smart business know-how. You’ll benefit from our years of experience and aproven track record we bring to the job.Bottom-line, dollar-for-dollar value. Value is bringing the highest professional andperformance standards to your job site- from the beginning of a project to itscompletion. We at Local 66 are committed to being the premier value provider ofoperating engineers in the region.

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We Are Building

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LeavingtheLegacyYouChoose

By Roy S. Cohen and Wayne C. Buckwalter

Youhavebuilt yourbusiness from thegroundup.Youhavenurturedandgrowna legacy foryour family.Youwanttoretire.Whatwillhappentoyourbusinesswhenyou leave it? We should start with a few statistics forthoseofyouwhothinkyou’ve“gotitcovered.”

• 12% of all family businesses are con-structionrelated

• 80-90% of all construction businessesarefamily-owned

• Only 33% of family-owned businessessurviveintothesecondgeneration

• Only 20% of closely-held constructioncompaniessurvivetothenextgenera-tion

• 60%ofbusinessownersthatplantore-tireinthenextfiveyearsdonothaveasuccessionplaninplace

Succession planning is more than a simple will

Askyourselfthetoughquestions.Whatareyourretire-mentneeds?Doyouhavearealisticperspectiveofyourfinancials?Whatdoyouplantodoafterretirement?Doyouwanttomaintainyourcurrentlifestyle?

Keepinmindthatanyownermustbeindependentfromhis or her business in order to have a secure financialfuture. You will never actually retire if your economicfuture is dependent on the continued success of yourbusiness.Workablesuccessionrequiresanindependentnewownerwhoisreadytotransitionintothecompany.Intheconstructionindustry,thatmeansyouwillnolon-gerguaranteepaymentandperformancebondsforyourcompany—whichmightbegoodnews for some read-ers.Whileconsideringyourfamily’sneeds,thewishesofpossiblesuccessors,familydynamics,therepercussionstoyouremployees,yourclientsandbusinesspartners,alsoconsideryourretirementfromthebusiness.

The Gift that keeps on giving

There are many ways to transfer ownership of a busi-ness.Sellingorgiftingyourbusinesstofamilyispopu-lar,but it’susuallynot thebestchoice. It isestimatedthat70%ofconstructioncompaniesaresoldorgiftedinsomeformtotheowners’childrenoremployees,20%ofcompaniesareliquidated.Only10%aresoldtooutsidecompanies.

Ifyouareconsideringpassingyourbusinessontoyourfamily, be aware that a sale or partial sale that resultsin immediate payment automatically incurs tax liabil-ity.Proceeds fromthebusinesssaleare taxable to theowner’sestate,whichmeansyoumayowemoreintaxesthanyourestateisactuallyworth.Usuallyafamilymem-bermustacquirethefundsnecessaryforthecompany’spurchasefromanothersourceoutsidetheestate,whichcouldtaketheformofanew,andundesirable,businessloan.

Abetteralternativeisatransactionstructuredtoremovethevalueofthecompanyfromtheowner’staxablees-tateoratransactionthatreducesthecompany’staxablevaluewhileprovidingafuturestreamofincomefortheowner.Atrustisonewaytomaintaincontroloveryourcompany,whileshiftingtheassetstoanotherentity,thetrust.Youcanthenreceiveincome,paymentsfromthetrust, for a specified term. During this term you cansafelymonitoryoursuccessor’smanagementofthebusi-ness.Attheendoftheterm,theremainderofthetrustand thebusinesswillgo to thedesignated successor/familymember.Thetrustwillstillpaytaxesonthebusi-nessassets,butatamuchlowerratethanestatetaxes.

Managing the succession

Succession planning does not guarantee that the val-ueofthebusinesswillwithstandtransferofownership,which is another reason new owners should not incurnew debt. When management succession is ignored,theoutcomesarefrequentlybad.You’veprobablyheardstoriesofabusinessliquidatedata“firesale”withtheownerreceivingafractionofthevalueofthebusiness.

Thedifficultdecisionregardingwhowilltakecontrolisoften determinative of the business’ continuing value.Choosing wisely does not mean automatically placing

Legal Perspective

44 www.mbawpa.org

younger generation family members in managementroles.Family-centricsuccessioncanleaveeventhemostexperiencedand invested familymembers ill-preparedtohandlecompanyresponsibilities.Thedynamicsofafamilybusinessaremuchdifferentfromapubliclytradedcompanyandspecialcaremustbegivenwhennaminga familymember successor. The challenge is to selectone or more children to successfully run the businessbeforeownershipchangeswhileatthesametimepro-vidingsatisfyingrolesforotherfamilyandmanagementmembers.

While publicly traded companies typically have com-mitteesorstaffsolelyresponsibleforidentifyingfutureCEO’s,smallcompaniesdonothavethisluxury.Whenthere isnoclear choice in the family,oneoption is togroom one or more key employees. Another optionis to hire an outsider with industry experience and asolid reputation to manage the business. Bringing inoutsidemanagementmustbeconsideredcarefullyanddiscussedwithallimportantemployees.Youdon’twantyourbesttofeelunjustlypassedover;havingyourtopteammembersquitputsthenewcompanyatrisk.

Training your successor

Onceasuccessormanagementteamhasbeenchosen,itisimportanttocontinuetraining.Yourwealthofknowl-edgeisvitaltothecontinuedsuccessofyourbusiness.Itmaytakeasubstantialperiodoftimebeforeasucces-sor is readyforaseamlesstransition.A longtransitionperiodisalsoimportantforemployeemoraleandreten-tion.Asthesuccessorworks in thebusinessandgainsknowledge,heorshewillalsogaintherespectofotheremployees. It is difficult enough transitioning from anoriginal owner to a successor; it is even more difficult

whenyouremployeesworryabouttheabilityof futuremanagementtoeffectivelyrunthebusiness.

What’s the REAL value of your business?

Valuation must be addressed prior to an ownershipchange. In the construction industry, there are specialconsiderationsthatcouldcausethevalueofyourbusi-nesstobeminimized.Thesevariablesincludethecom-petitivebiddingprocess,aheavydependenceononlyafewcustomers,theriskynatureoftheindustrycausingwidefluctuationsinprofitability,theimportanceplacedonthepersonalrelationshipsandknowledgeofthein-dividualratherthanthecompany.Theseintangiblesarehardtovalueinanumericalsense.Asaresult,sellingownersoftenfeelthattheircompanyisnotfairlypriced.

Don’t forget about your credit

One component of your company’s value that shouldnotbeoverlookedisyourcredit. Yourreputationwithyour lenders and sureties is as crucial to the future ofyourconstructionbusinessasyourclients.Lendersandbondingcompanies rewardsuccessfulcontractorswithgreat credit and are rightly concerned when companyownershipchangeshandsforanyreason.Suretiesknowthatwhenconstructioncompanies fail,mostoften it isduetosuccessionproblems.Inanindustrywhereknowl-edge and relationships are success indicators, lendersandbondingcompaniesarewaryofownershipchanges.

As a result, many bonding companies require writtenbusinessandsuccessionplansbeforeissuingcredit;theymayalsorequiretheownertoprovideapersonalguar-anteeasaconditionofsecuringabond.Roughly,92%of business owners personally guarantee bond credit.Typically,minorityshareholders,with15%ormoreoftheownership,arealsorequiredbybondingcompaniestoprovideapersonalguaranty.Unlessyourbondingcom-panyallowsnewmanagementtoissueanewpersonalguaranty releasing you, the liability for any personallyguaranteed bond credit remains with you, even afteryouleavethebusiness.

When several parties have personal liability for bondguaranties,successionplanningcanbeevenmorechal-lenging.Newshareholdersmaybeworriedaboutsign-ingguarantees;existingshareholdersmayberequiredbythebondingagencytocontinuetheirpersonalguar-anteesuntilthesuccessormanagementisproven.Yourriskofownerliabilityandsuccessordefaultcanbemini-mized by including terms in your business successiondocuments that provide you protection through lienson thecompany’sassets. Liens,andother reservationofrights,allowyoutosetbenchmarksthatmonitorthehealthofthecompanyanditsperformanceasitchangeshands.Withtheseprecautionarysteps, if thecompanyfailsundernewmanagement,youhaverightsandcantakeactiontoprotectyourcompanyandassets.

One component of your company’s value that should

not be overlooked is your credit. Your reputation with your lenders and

sureties is as crucial to the future of your construction

business as your clients.

Strengthen your business and your future

Part of planning succession islooking at what is vital to thecontinuedsuccessofyourbusi-nessandwhatcanbechangedor improved. A financiallyand functionally strong busi-ness is in abetterposition towithstand a management andownership change. Early suc-cessionplanningreducestaxesandhelpsyouchosetherightsuccessor,lesseningthefinan-cial impacts on your businessandyourriskuponretirement.

Planningenablesyoutobuildvalue, create an enviable re-tirement, and leave memo-rable legacy for your family.Build a strong and secure fu-ture for you and your family,startnow.

Roy S. Cohen is Founder and President of Cohen Seglias Pallas Greenhall & Furman and is a member of the Construc-tion Practice Group. Roy rep-resents clients in every facet of the construction industry, in-cluding construction manag-ers, general contractors, pri-vate developers, major trade contractors, and sureties. He also acts as general counsel to more than 100 clients and counts more than 90 electrical contractors as clients. Roy can be reached at [email protected] or at 412.434.5530. Wayne C. Buckwalter is Chair of the Wealth Preservation Group. Wayne can be reached at [email protected]. You can follow the Firm on Twitter @CohenSeglias and on Facebook. BG


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MBE/WBE Company Spotlight

Emily Kroboth & Associates, IncBy Deborah Knox

Emily Kroboth is a trailblazer. Sheretired after 19 years as one of thefirst female saleswomen at GeneralElectric and is now busy with hersecondcareerontheothersideofthedesk:asthefounderofEmilyKroboth& Associates, Inc. a provider oflighting equipment, application, andinstallationsbuiltontherelationshipswith some of the largest electricaldistributorsinthePittsburghregion.

Emily Kroboth & Associates, Inc.sells products such as ballasts,power supplies, transformers,switches,wiring,lighting,motorsandtemperaturecontrols.Theyrepresent3M, Wiremold (cable management products), GeneralElectric,Hubbell,Sylvania,PhillipsandLeviton,amongmanyotherstocompaniesandgovernmentalagenciesin the region, as well as residential, commercial andindustrialconstructioncontractors.Shedidn’tbeginhercareerasatechnicalperson.Earlyon, Ms. Kroboth worked as a secretary for US Steeland later for General Electric, where she was workingsupportingthesalesforcein1980.Shewasencouragedto take a qualifying test to pursue a sales position.After passing, Ms. Kroboth found that she would facehurdles to entering and succeeding in a previously allmaledivision.Sheworkedherwaythroughtoughsalesterritories,eventuallybuildinga successful sales careerthatspanned19years.

AtherretirementpartyfromGeneralElectricin1999,oneofthesalesmanagersapproachedMs.Krobothandsaid,“Wehaveapropositionforyou–aworkproposition.”Heaskedifshewouldbeinterestedinsettingupasmallfirm to act as a broker/distributor to the industry as aCertified Woman Owned Business. They trusted herexpertise,soshetransitionedfromsalestopurchasing.

Sheincorporatedherbusiness,completedregistrationswith governmental agencies, set up the electronic

systems and completed her Woman-Owned Business and DisadvantagedBusiness Certifications (WBE andDBE),usinghersavingstosustainherduring theprocess. And then,whenthe company was set up,“no orderscame. No bids, no nothing,” sheexplained.Krobothcontinuedtocallon her industry contacts, but it tookuntil February 2000 to receive herfirstorder.“ItwasaquotefromFerryElectric,” she recalled. Her companygrew slowly. Now established, thecompanyisaspecialized,personalizedoperation.

Mostof thework is straightforward.Sheputs togetherelectrical component packages with all appurtenancesto the architect’s or engineer’s specification. It’s herfamiliarity with the distributors that from her point ofviewhasstreamlinedtheprocess.“Theyknowmeandthecontractors,”sheadded.“I’vebeenfortunateandhavebeenprotectedbythedistributors.”

Shehashadpotentialclientsquestionthevalueofherservice.Inthisfast-pacedworldwiththeInternetofferingsomuch information, there isapurchasingmodel thatbypassesbrokers.Ms.Krobothchallengesthatnotion:Her30yearsofrelationshipswithherproductsandthemanufacturersallowshertorespondmoreeffectively.“Iftherearefailuresorproblemswithqualityordelays,I’mtheonewhoputsmyfingeronwheretheproblemis,”

It’s her familiarity with the distributors that from her point of view has

streamlined the process.

she said.That knowledgeandaccountabilityhas valueto her clients. She also frequently researches itemsand works with manufacturers to help architects andengineers search for specialty items. Once a specialtyitem is identified, shewill sometimescontractwith themanufacturer and become a sales representative forthem, allowing the client to buy directly from her fora good price. She can also guide her clients throughinstallationchallengesandtroubleshootingproblemsinthefield,andsheoffered,“Ourfeesarelow,anddependonthetypeandsizeofprojects–theirmarkupsareverylow,varyingfromhalftothreeorfourpercent.”Sometimes she gets caught in the middle. Recently,she had a corporate customer purchasing equipment

for the business, and that customer’s husband was ageneralcontractorforadifferentcompany.Thegeneralcontractor, while intending to be helpful, interferedwith the process, which was frustrating and requireddiplomacyonherpart.

Kroboth’s role is defined differently depending on theclient.She’soccasionallymanufacturer’srepresentative.The Commonwealth of Pennsylvania classifies her as adistributor and Kroboth & Associates is considered abrokerbythePittsburghBoardofPublicEducationandAlleghenyCounty.Shedoesmaintainamini-warehouseonherpropertyforitemsthatarefrequentlyordered,orforitemsbeingreturnedforrepair.

“I am providing a service, and stayingactive with industry groups keeps meintheloop,learningnewproductsandtechniques,” she explained. Krobothhas been active with the ElectricLeague of Western Pennsylvania, wasthe president for two terms, and hasservedon theBoard. Now she servesas a resident judge for their annualprojects competition. The event hasgrown exponentially. “In the earlyyears,projectpresenterswouldpresenttheir projects and the judging groupwould vote; a simple process. Now,it’sverycompetitivewithprojectsinthecommercial, education and residentialsectors,” she said. In addition, she isactivewiththeIlluminatingEngineeringSociety.

EmilyKrobothenjoysthevarietyofherworkandtheclients.Shesaid,“Whetherit’salightbulboragenerator,orstageequipment,wefindit.” BG

Company FaCts

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The Workforce Challenge Approaches

A demographic storm of Baby Boomers aging andmismatched educational requirements is creating aproblem that seemedunlikely just a fewyearsago–ashortageofskilledworkers.WiththeAmericaneconomyshifting again towards more manufacturing and theenergysectorexpanding,thisworkforcegapisbecomingmorepronounced.

Attherootoftheshortageissomebasicdemographicmath.ThepeoplebornduringtheBabyBoomfrom1946to1964havebeguntoreachtheagethatmanyAmericansretire.BoomerswerethelargestagecohorteverbornintheU.S.andtheprogressionoftheirliveshasdriventheeconomyforfourdecades.Itfollowslogicallythatifthelargestgenerationretiresatthenormalratethatothershave,therewillbeaholetofillintheworkforce.Theso-called Great Recession was thought to have thrown amonkeywrenchintotheretirementplansofmanypeoplebut as of 2011, it’s been clear that Boomers have notbeenimpactedsignificantly.

HowbigistheimpactoftheBoomerretirementwave?From2011until2029,roughly10,000peoplewillturn65everyday.That’s26percentoftheU.S.population.

Almost as important as the aging Boomers is thechange in attitude about education and vocationaltraining that has taken place over the past 40 years.College education was once seen as a privilege and apathforalimitednumberofstudents.Forthepasttwogenerations,collegehasbeenseenastheextensionofahighschooleducationandtheattainmentofacollegedegree was seen as a path to a better life. Far fewerhigh school graduates followed skill training in a tradeasacareerpath.AndbecauseAmericalostmuchofitsmanufacturingbaseduringthe1970’sand1980’s,thosetradeskillswerelessneeded.

Asaresult,thereisasignificantdropoffinthenumberofcraftworkersintheU.S.undertheageof45.Thisisastrueforconstructionasotherindustries.

Skill training isone importantsolutiontotheworkforcegap. A 2010 study of the skills that will be needed in2020estimatedthat65percentof the jobswill require

anassociate’sdegreeorspecializedtraining.Thestudyalsoestimated thatonly32percentof thehigh schoolgraduatesof2014willbeheadedforthatkindoftrainingoreducation.

According to the Bureau of Labor Statistics in its2012 Current Population Survey, the median age of aconstruction worker was 44.5 years, with 50.9 percentof the workers over the age of 50. By those measuresconstructionisnottheoldestprofession(postalworkerstop the list and architects/engineers come in at 45.4yearsand51percentrespectively).Butthecareerspanof constructionworkers is somewhat shorter thanmostprofessions. Construction is physically demanding andthe average retirement age is 61. The wave of BabyBoomer retirement in construction began almost adecadeago.

While the Great Recession slowed some of theconstruction worker retirement, the massive job lossalsochasedmanyfromtheindustry.Astheeconomyhasrecoveredandconstructionisreturningtopre-recessionlevels, that exodus is exaggerating the shortfall. TheConstruction Labor Resource Council estimates thattheindustrywillneedtoadd185,000peopleeachyearfor the next decade to meet the demand. In the faceof growing construction volume, the industry is alsofacing competition for its skilled workers from outsideconstruction.

One of the waves that will challenge the skilledconstruction workforce is the rapid expansion of thenaturalgasindustry.Aninventoryofthetypesofskilledworkers that the gas and petrochemicals companiesneed most sounds like a construction payroll: welders,pipefitters, riggers, electricians, operators are amongthe most precious of positions. Already on the locallevel,mechanicalandelectricalcontractorshavefeltthepinchfromtheiremployeesbeingattractedtoindustrialinsteadofcommercialprojects.Theindustrialworkpaysmoreandtheprojectstendtolastlongeratonelocation.

Thegas industry is still in its formativestagesherebutas a national play the numbers of needed workers arestaggering. Chevron CEO Peter Cella told investorsthat his company expected to hire 2,800 employees– mostly with field technician skills – to support theirgrowthingas.IntheBakkenShaleplayinNorthDakota,industryexpertssaythereareroughly20,000jobstofill.Thatnumberpales incomparison to thecraftsworkers


50 www.mbawpa.org50 www.mbawpa.org

neededtocompletetheconstructionofthe$100billionincapitalprojectsplannedfortheGulfCoastandotherU.S.locations, includingpotentiallyMonaca,PA.Estimatesoftheworkforceneededtosupportconstructionbeginningin2015areroughly90,000workers.

RoyalDutchShell’sestimates inadvanceof thedecisionto proceed with the Monaca ethane cracker andpetrochemicalplantsare for10,000workersat thepeakofconstruction.

Accesstoskilledconstructionlaborwascitedasasignificantconcernby74percentofthegeneralcontractormembersoftheAssociatedGeneralContractorsofAmerica(AGC),accordingtoasurveyof700firmsinthethirdquarterof2013.SteveSandherr,CEOoftheAGC,reportedthatthemostdifficultsearchesforcontractorsinvolvedcarpenters,equipment operators and laborers. The survey foundthat 53 percent of the contractors had difficulty findingexperiencedprofessionalstaff.

One of the reasons for the shortage is the deep andextended recession, particularly in housing construction.Manyconstructionworkersdecidedtoleavetheindustryduring the downturn, and either retrained to pursue adifferentcareerorturnedtoindustries–likeenergy–forwhich their construction skills translated well. PerhapsbecauserecessionwaslesssevereinWesternPA,however,thereislittleevidenceofanexodusfromconstructionbylocalcraftworkers.

Local labor officials have been paying attention to thedemographic challenges of the retiring Baby Boomersand the drought of 30-something workers for sometime, investing heavily in training facilities and boostingrecruiting efforts. But their problem is that addingapprentices for future work is limited by the amount ofwork that is available at the time. On-the-job training isoneof theappeals for theunions,but therehave tobejobs first and the extended slowdown hasn’t providedenoughopportunitytoexpandthefutureworkforcemuch.

“Thetradesarecomfortablenowwiththeworkforceandtheworkload.Withthenumberofapplicationstheunionsaregetting–evenwiththeretirements–theyaren’ttooconcerned about looking for more applicants,” explainsJasonFincke,executivedirectorfortheBuildersGuildofWestern PA. “They take the demographics into accountbuttherecruitingisbasedmoreontheworkinhand.”

Jack Ramage, executive director of the Master Builders’AssociationsaystheMBA’scontractorsarenotexperiencingaproblemwithlaborsupply.

“We’reawareoftheAGC’sconcernsabouttheavailableskilledworkforcenationwide,”hesays.“Butourmembersaremoreconcernedabouta lackofwork thana lackofworkersrightnow.”

Fincke says that the Guild ranks recruitment high on itslistofpriorities–henotedthathehasattendedabout35careereventssincethefirstoftheyear–butthefloodofapplicantsallowsthelocalstoadvertiseonalimitedbasis.Forexample,theOperatingEngineersLocal66receivedroughly1,000applicationsduringatwo-weekadforabout75positions.Whiletheresponseratesaren’tashighforalltrades,mostofthelocalsareabletosatisfytheirneedsbyadvertisingforshortdurations.

On the heavy and highway side of the business, localcontractors have begun an initiative to be prepared inthe event the predictions of a shortage come true. TheConstructors Association of Western PA (CAWP) haspartneredwithaCarnegieMellonspinofftocreatevirtualworkplaces for training. The company, called EtceteraEdutainment,hasdeliveredtrainingsimulationstoalargeworkforceacrossvariousindustries.

“WhatwecameupwithisFutureRoadBuilders:AVirtualHighway Construction Pre-Apprenticeship Program,which is a computer-based experience that provides anintroduction to highway construction careers,” explainsRichBarcaskey,executivedirectorofCAWP.“Thepurposeoftheprogramistoprovideexposuretowhatitisliketoworkinthehighwayconstructionindustryandencourageinterestedpartiestoapplytothevariousunionheavyandhighway apprenticeship programs located in WesternPennsylvania. Using a virtual gaming platform, theprogram enables participants to learn about a career inhighwayconstructionbyinteractingwithaphase-by-phaseprogressionofavirtualconstructionproject,representativeofanactualhighwayconstructionproject.”

With the significant advancement in training facilitiesduring the past few years, it seems possible that theconstructionindustrywillbeabletorisetothechallengeofsupplyingthelaborneededforamorerobustjobmarket.Assumingthatthedownstreamindustriesdodevelopoverthecomingdecadeasthegasindustryhaspredicted,thelarger skilled workforce will have an outlet for training.Amongtheeconomicbenefitsofastrongmanufacturingsector is the steady demand for construction formaintenance,repairandupgradingplants.

Forthosewhoexperiencedsomeorallofthefalloutfromthesteelindustry’sdecline,itprobablyseemsunfathomablethat Pittsburgh could experience a shortage of skilledworkers. It’s obvious from the unemployment level thatmany industries still have fewer jobs than there areapplicants. Like the situation inmanyU. S.markets, thesolutiontotheimbalanceishavingworkerswiththerightskills.Overthenextthreetofiveyears,thatproblemcaneitherbesolvedbyashiftinPittsburgh’sexistingworkforceorby immigrationofskilledworkersfromotherstatesorabroad. Regardless of the solution, it’s a challenge thatneedstobemettomaintaintheeconomicprogressofthepasttenyears. BG


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The Case For and Against Land Banking

Pittsburgh’s City Council voted on April 14 to moveforwardaproposaltocreateamunicipallandbankintheCity,passinga compromisemeasure thatwonover theopposition of two of the land bank’s opponents, RickyBurgessandDanLavelle.

A land bank is a public authority created to hold,manage and develop tax-foreclosed property. Landbanks act as a legal and financial mechanism to returnvacant,abandonedandtax-foreclosedpropertybacktoproductive use. When properly managed, land bankscancreateanincentiveforprojectstolocateinolderorblightedneighborhoods.Whilelandbankingcanhappenanywherethattherearelargenumbersoftax-delinquentproperties, the cities where land banks are being usedmost effectively are the older industrial cities of theNortheastandMidwest.

ThatdescriptionfitsPittsburgh.TheCityDepartmentofPlanninghasestimatedthattheCityowns7,300parcelsthatwereacquiredbecauseofunpaidtaxes.Mostofthoseparcels are either vacant or have dilapidated structureslocated on the property. Those parcels cost the Citymoneyformowingorsnowremoval.Justasimportantisthefactthatthosevacantorunproductivepropertiesaresourcesofcrimeandfurtherdecayinneighborhoodsthatarestrugglingeconomically.

“ThisLandBankwillbecomeanimportantandpowerfultoolinoureffortstoempowerresidentstotakebackcontrolof theirneighborhoods fromslumlordsandspeculators,to foster home ownership and wealth-building in ourstrugglingcommunities,andtobringnewinvestmentintoareasofthecitythathavebeenleftbehind,”MayorBillPedutosaidinapreparedstatement.“Buttoday’svoteisjustthefirststep.Weneedall residents involvedinthisfightagainstblighttostayinvolvedaswemoveintothenext phase of developing the policies and proceduresthat will guide the work of the Pittsburgh CommunityLandBankfordecadestocome.”

Former Mayor Tom Murphy, now senior resident fellowattheUrbanLandInstitute,explainsthatlandbankingis

avaluabletoolforrevitalizationofblightedcommunitiesbutalsoremindsthattherearelimitstotheeffectivenessofthetool.

“Alandbankishelpfulinneighborhoodswithvacantorabandonedpropertybecausetheauthoritycanbegintoput landtogethertoattractsignificantactivity,”Murphysays. “Our view is that you need three things togetherin one place: Money to get infrastructure to attractdevelopment;landcontrol–andIthinkalandbankwillhelp;thethirdisdeal-makingcapacity.That’snotgoingtocomefromalandbank.”

Murphyrecalls thatthechallengeforthecityduringhisadministrationswas lesstheavailabilityof landthatwastax delinquent or blighted but rather the demand todoanythingwiththeland.Duringthe1990’stheCityofPittsburghdidpursuetreasurer’ssalesofmanydelinquentproperties and utilized the Urban RedevelopmentAuthority as the de facto land bank and assembler ofparcels.Untilrecentyears,however,therewaslittlewillonthepartofprivatedeveloperstopursueprojectswheremuchofthedelinquentpropertywasconcentrated,suchastheNorthSide,HomewoodandtheHillDistrict.

Themain concernsexpressedby theopponentsof thelandbanklegislationincludedtheCouncilrepresentativesofthoseneighborhoods.BothBurgessandLavellewereconcernedthatenablingalandbankauthoritycouldleadtodevelopmentthatleftthecommunityoutoftheprocess.Toaddressthoseconcerns, thebill’ssponsors,DeborahGrossandCoreyO’Connor,amendedthe legislation toincludemeasuresassuringadequaterepresentationfromcitizensandneighborhoodleaderstoavoidundesirabledevelopment.

Howeffectivethatvoicewillberemainstobeseen.Theunderlyingpurposeofthelandbankistomoreefficientlyinventory parcels that are available, giving prospectivedevelopers a single source. In the end, the goals ofthe City will be met best when the land bank sells thepropertiesforthepurposeofredevelopment.Thatmeansthe dynamic tension will be on the side of enablingtransactions,notonassuringneighborhoodconsent. It’stheroleoftherealestatedeveloperorpropertyownertoassessthebestuseoflandbasedonthedemandsofthemarketplace,notthedesiresoftheneighbors.


Pittsburgh’s landbank legislationcreatedaprocessthatgivesneighborhoodgroupsseveralchancestoweighinonanyproposedactions,althoughthelegislationcouldstillallowanoverlypoliticizedauthoritytoignorethem.

Cheryl Hall-Russell, the executive director of the HillHouse Association and Economic Development Corp.,ismostconcernedaboutthepotentiallossofhomesforresidentswhohavetitleissuesandseesthelandbankasapotentialproblem-solver.

“Good land bank legislation can be helpful in dealingwithentangledproperties,” shesays. In theHillDistrictitisn’tuncommontofindhomesthathavebeenpasseddownfromonegenerationtoanotherwithoutthepropertransfer of deed. Hall-Russell says that she’s aware ofresidentswhopaytheirtaxbilleveryyearbutcan’taffordto clean up the title. Her observation of land banks inother cities showed that the authority could verify thelegal ownership of propertiesand keep them from beingunfairlyaddedtotheavailableinventory.

“On balance I’m in favor of alandbank.Landbankinghasalotofbenefits,”shecontinues.“It’s often difficult to amassproperties in a timely mannerwhen there’s a project thatneedstheland.”

Studyingtheuseoflandbankselsewhererevealsamixedbagofresults.Themodel for landbanking success seems to beMichigan’s 2004 legislation.That law has allowed land banks to be established inblighted areas like Flint and greater Detroit, with thebanking of thousands of parcels in both residentialand commercial areas. A number of mixed-use andneighborhoodredevelopmentprojectscanpointtothelandbankasreasonforsuccess.

But theMichigan legislationwas state lawandallowedaccess to resources well beyond those available to theCity of Pittsburgh. Moreover, the Michigan legislaturealso passed related supporting legislation that allowedquiet title processes to clear any previous title claims;a Brownfield redevelopment act that gave land bankauthoritiestheopportunitytodeclareindustrialpropertyas blighted; and several property tax-related acts thateither deferred taxes or reduced them for owners thatredevelopedlandbankedproperties.Thelatteractsasanincentivebutalso robs themunicipalityof therevenuesthatlandbanksaresupposedtogenerate.

Inothercities,landbankshavefacedstrugglesbecauseof insufficient capital to acquire, improve or maintain

property. Land banks usually require the assistanceof a community development entity to take on therole of improving property for sale. They also becomeadministrative burdens as the land bank grows. Afterinitial funding support accompanying the legislation isexhausted, landbanksrelyontherevenuesfromsellingpropertyfordevelopmenttocreatecashflowandworkingcapital.ThathasproventobeachallengeincitieswithasdivergentfortunesasAtlantaandCleveland.

InPittsburgh,thelandbankauthoritywillneedtoestablishboundariesthatavoidredundancywiththeURAandthevarious CDC’s that exist in the communities. OperatingwithinacitythatisstillinfinancialdistressandunderAct47conservancy,thePittsburghlandbankauthoritywillbechallengedfromthestartwithcapitalization.

On the plus side, the dynamics of the housing market– which represents the vast majority of the distressed

property inventory – areworking in favor of the City.Pittsburgh as a municipalityhas seen the highestnumber of new residentialunits under construction foralmost a decade and theleading residential trend isNewUrbanism.Employmentgrowthisbeingdrivenpartlyby industries or businessesthatarelocatedintheurbancenter of the region, anattraction for more urbanhousing. At the same time,suburban developmentis becoming more costly.The market conditions are

alignedifthenewlandbankauthoritycanfinddemandfromdevelopers.

Landbanksarenotasubstituteforgoodmasterplanning,however, and what the Council has proposed will workbest if the subsequent development conforms to themasterplansthathavebeendeveloped.

The communities where urban redevelopment isexperiencingreneweddemandfromresidentialbuilders–Garfield,theHillDistrict,Homewood–areallhometolargenumbersoftax-delinquentorabandonedproperties.Convertingtax-delinquentandunproductiveparcelsintotax-productivepropertyisonepieceofthesolutiontotheCityofPittsburgh’sfinancialwoes.UnlikeinTomMurphy’sdaysasmayor, the timeseems tobe ripe formatchingproperties todemand.As inall thingspolitical, successwillcomefromexecutionratherthanintentions. BG

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COMMUNITY NEWS& INDUSTRY

Roughly 150 representatives from60 MBE/WBE businesses met withMBAcontractors,economicdevelop-ment and government agencies attheannual“MeettheMBA”programheld at the Hill House AssociationKaufmannCenteronApril24.

Meet the MBA Draws Minority Businesses

(From left) Mandy Croft of Lytle Drug Testing Services, with Lisa Pass and Diane Scalzi from Lytle

EAP Partners.

JoAnne Mandros and Rodney James from Tarax Service

Systems (left) with Mascaro’s Kathy Agostino.

56 www.mbawpa.org

The MBA’s Jack Ramage (left) with IKM’s Joel Bernard and Jen Bee, AIA Pittsburgh board president.

Landau’s Steve Bishop (left) with Jay Black from Seubert and Dustin Giffin of Giffin Interior & Fixture.

(From left) Matt Pauvlinch and Paul Martin from McCrossin with the MBA’s Jon O’Brien and Pentrust’s Tyler Noland at the NAIOP breakfast featuring Gov. Corbett.

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Ira Ritter of I. D. Ritter Painting with Floyd Titus of J. Feltric Metals (right).

Ray Volpatt Jr. (left) with Babst Calland’s Matt Jameson at the AIA/MBA Joint Committee educational session on the legal issues of the year.

Gensler’s Lisa Adkins (left) with Stacey Watson Weniger from Huntington Bank and Mascaro’s Nate Phillips at the NAIOP’s “Evening with Kevin Acklin.”

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&&WARDS

ONTRACTSConnectedHealthawardedacontracttoA.Mar-tini&Co.tobegeneralcontractor for itsnew$7.5million,43,000squarefootofficeat11620PerryHighway inWexford.Theprojectwasde-signedbyWTWArchitects.

A.Martini&Co.wasselectedasconstructionmanagerforthefirstphaseofthe$20millionof-fice forCrownCommunications inSouthpointe.The project involves renovation of the formerMylanheadquarters, extensive landscapingandconstructionofaconnectorbetweenthatandtheexistingCrownoffices.ThedesignteamisKlavonDesignlandscapearchitectsandAstorino.

BakerHughesawardedadesign/buildcontracttoA.Martini&Co.fortheexpansionofitsfacili-tiesinClarksburg,WV.

TheSewickleyCarStoreselectedA.Martini&Co.ascontractorfortheexpansionofitsPorschedealership.Theproject involvesa3,000 squarefoot addition and renovations to the existingshowroomandshop.

GroveCityCollegeawardedacontract toLan-dauBuildingCo.fortherenovationofitsMaryAndersonPewWestHalldormitory.

LandauBuildingCo.isthecontractorforanewdealershipforSouthHillsHondaonWashingtonRoadinMcMurray,PetersTownship.DeanHessisthearchitectforthenew41,000squarefoot,$8millionfacility.

Yarborough Development & Constructionwas the successful bidder on the general con-structioncontractof the$1.7millioncapital im-provements program at Ringgold High School.ThearchitectisHHSDRArchitects&Engineers.

PJDickInc.wasawardedacontractfortheten-antimprovementsforWillisofPennsylvania,afit-outof22,500squarefeetofthe10thfloorofOnePPGPlace.Thearchitectisvocon.

CarnegieMellonUniversityselectedPJDickInc.asconstructionmanager for itsnew$80millionTepperSchoolofBusiness.Constructionissched-uledfor2015.

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The Department of General Services awardedMosites Construction the contract for gen-eralconstructionontheUniversityofPittsburgh’sClapp-Langley-Crawford Complex renovation.Stantecisthearchitectforthe$25.7millionproj-ect.

FMSConstructionwasthesuccessfulcontrac-tor on Duquesne University’s $800,000 renova-tionofthethirdandfifthfloorsofRockwellHall.Stantecisthearchitectfortheproject,whichwillbedoneafterthespringsemesterends.

University of Pittsburgh awarded a contract toFMS Construction for $1.2 million in renova-tionstotheSchoolofGeneralStudiesinPosvarHall.ThearchitectisStradaArchitectureLLC.

The Andy Warhol Museum selected JendocoConstruction as contractor for renovations tothe Warhol Café. The project was designed byDesmone&AssociatesArchitects.

F.J.BusseCo.wasawardedthecontractforthe$2.5million renovation to theWinchesterThur-stonLowerSchool/MiddleSchool.ThearchitectisMacLachlanCornelius&FiloniArchitects.

ForestCityEnterprisesselectedF.J.BusseCo.as contractor for the expansion of WESCO atCommerceCourt inStationSquare.Theprojectinvolvesrenovationto12,600squarefeetonthefifthfloor.Design3Architectureisthearchitect.

F.J.BusseCo.isthecontractorfortheMillen-niumDanceStudio,anadaptive reuseof5,700squarefeetat2504EastCarsonStreet.Pfaffmann&Associatesisthearchitect.

NelloConstructionCo.isthesuccessfulbidderonthegeneralconstructioncontractfortheCar-michaels Junior/Senior High School Addition inCarmichaels,GreenCounty.HayesDesignGroupisthearchitectforthe$13.9millionproject,whichincludesanew146,000squarefootbuilding.

WestAlleghenySchoolDistrictawardedGurtnerConstructionCo.Inc.a$6.46millioncontractforthegeneralconstructionportionofthe$12.8millionWilsonElementarySchool.Theprojectin-volvesan8,000squarefootadditionandrenova-tionsto91,300squarefeet.HayesDesignGroupisthearchitect.

Facility Support Services was the successfulbidderonthe$4millionLawrenceHallclassroomand auditorium renovation at the University ofPittsburgh.ThearchitectisMacLachlanCornelius&FiloniArchitects.

RyconConstructionwill serveasPREIT’scon-structionmanageronanew50,000sq.ft.Dick’sSportingGoodsStoreatValleyViewMall inLa-Crosse,WI.This$6millionprojectisscheduledforcompletionmid-fallandwasdesignedbyCre-ateArchitecture.

Gennaro J. DiBello, [email protected]

Eugene M. DeFrank, CPA, [email protected]

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PREITselectedRyconConstructiontobuildanewDick’sSportingGoodsStoreatFrancisScottKeyMall inFrederick,MD. Ryconwill serveasconstructionmanagerandcompletethis50,000sq.ft.store,designedbyCreateArchitecture,latefall.

A renovationofDuquesneUniversitySt.Anne’srestrooms is scheduled to start inMay. RyconConstructionwillcompletethis$750,000proj-ect,designedbyStantecbymid-summer.

RyconConstruction’sSpecialProjectsGroupiscurrentlyrenovatinga7,000sq.ft.officespaceatOnePPGPlace.Thisproject,designedbyIKMArchitects,isscheduledforcompletionmid-May.

Mascaro Construction is the successful con-tractorfortherenovationofBuilding770fortheWestVirginiaRegionalTechnologyParkinSouthCharleston.AlphaAssociates is thearchitectonthe$16.8millionproject.

Carlow University selected Massaro Corpora-tionasconstructionmanagerforits$11.8millionexpansionprojectatFifthAvenueandRobinsonStreetinOakland.MacLachlanCornelius&Filoniaretheproject’sarchitect.

MassaroDesignBuild,LLPandPerfidoWeis-kopf Wagstaff Goettel were named the designbuilder forthe4,000squarefootaddition/reno-vation project to the Delta Tau Delta FraternityHouseatAlleghenyCollege.Inadditiontoreno-vatingtheexistinghome,theprojectincludes11newbedroomsandacommunalbathroom/show-erfacility.Theprojectwillbegininthespringof2015andwillbemove-inreadyinthefallof2015.

MassaroDesignBuild,LLPwasawardedtheUPMCSouthTowerRelocationproject.Ninedif-ferentdepartmentswillberelocatedintoUPMCPresbyterian and Montefiore hospitals, some ofwhichincludethePharmacyResidencyProgram,PulmonaryDepartment,CollaborativeCareMan-agement,ParkingandSecurity,andEnvironmen-talServicesDepartment.The32,000squarefootprojectwillbegininthesummerof2014andwillbecompletebyyear’send.

MassaroDesignBuild,LLPwasawardedthethird phase of a multi-phase interior renovationproject at GE Transportation in Erie, Pa. Mas-sarowasthegeneralcontractorforthefirsttwophasesin2012and2013andwillnowrenovatethethirdfloorofBuilding14.The32,000squarefootrenovationincludesnewoffices,conferenceroomsandworkstationseating.TheprojectwillbecompleteinJulyof2014.

MassaroDesignBuild,LLPwasawardedthe3,400 square foot renovation program to theKeller Locker Rooms in the Towers Building atDuquesne University. The project will be com-pleteintimefortheacademicschoolyearinthefallof2014.

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Massaro Design Build, LLP was selected tobe the design-builder of (4) 2,500 square footpatio homes located on the campus of UPMCSherwood Oaks, a senior living facility. The pa-tiohomesaredesignedtomimicexistingpatiohomesonthecampusandareamixof(3)3-bed-roomunitsand(1)2-bedroomunit.

MassaroCMS,LLCwasnamedOwner’sRep.of the new Brownsville Area School District El-ementaryComplex.Thenewconstructionprojectwilladd79,000squarefeettotheexistinghighschool campus. Construction will commence inthefallof2014.L.R.Kimball-aCDICompany-isthearchitectofrecord.

Massaro CMS, LLC was named the AgencyConstruction Manager by Penn State Universityfor the renovationof theMaterialResearchLablocatedon themain campus inUniversityPark,PA.The$20million,77,000squarefootscience/labrenovationencompassesacompleteMEPre-placementinadditiontointeriorfinishes.

MassaroCMS,LLCistheAgencyConstructionManager for the Environmental Charter School– Upper School renovation. The 6,600 squarefootprojectincludestherenovationoftheUpperSchool’skitchenandbathrooms.Constructionwillcontinuethroughoutthesummerandtheschoolwillbe ready for academic classes in the fall of2014.RothschildDoynoCollaborative is thear-chitect.

Willis of North America Inc. recently selectedPJDickInc.toperforma19,285squarefootfit-outof itsspaceonthe10thfloorofPPGPlace.PJ Dick was selected to be the CM at Riskfor the five-story, 117-unit Hot Metal Flatsluxury apartment building in Pittsburgh.TheForestHillsSchoolDistricthiredPJDicktobe the CM Agency representative for the con-struction of a new 192,000 square foot, three-storyfacilitytobelocatedintheexistingLocustRoadelementary/secondarycampusonasitebe-tweentheexistinghighschool,fieldhouseandelementaryschoolbuildings.ThenewfacilitywillhousetheForestHillsMiddleandHighschools.

DuquesneUniversityhasselectedJamesCon-structiontorenovatetheOrganicChemistryLablocatedinthecollege’sMellonHallbuilding.

dck worldwide was selected by repeat client,HCW,tobuildTheMetatFashionCenter,a$27million,303-unitapartmentcomplexinChandler,Arizona.AJunegroundbreakingisexpected.OmniHotelshasawardeddckworldwidecon-tracts for renovation projects in three locations:AmeliaIsland,Florida;NewYork,NewYork;andProvidence,RhodeIsland.

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Clark Hill Thorp Reed’s Construction attorneys combine a deep understanding of the customs and practices of the construction industry with a commitment to customer service. We represent general contractors, subcontractors, vendors, developers, and owners.

Our lawyers have been involved in most of the signature infrastructure projects throughout the Pittsburgh region.

Whether we are assisting with initial contract preparation and negotiation, finalizing a deal or, if necessary, litigating a claim, Clark Hill Thorp Reed provides experienced and cost-effective legal services to help you accomplish your business objectives.

A Legal Team That’s Built To Suit

62 www.mbawpa.org

LandauBuildingCompany, a general contracting firm basedinPennsylvania,announcedthatDougBrennemanhasjoinedthe company’s Wexford area office as a project engineer.Brenneman’s responsibilities will include scheduling, submit-tals,logs,jobmeetings,correspondence,expeditingmaterials,changeordersandpurchaseorders.

DonBramerwashiredbyMassaroCorporationasfieldsuper-intendent.Donbringswithhim19yearsofconstructionexperi-encewithavarietyof industry focussuchasschools,health-care, factories, office buildings, airport renovations, and uni-versityprojects.

PJDickrecentlyhiredTaraNolandasaprojectengineer.Taraisanarchitectwithfiveyearsofprofessionalarchitecturalde-sign experience with a focus on construction administration.PJDickrecentlyhiredChrisThomasasagraphicdesigner inPJDick’smarketinggroup.Chrishas12yearsofexperienceinvisualcommunicationdesign,whichhewillapplytoproposaldevelopmentandcorporatebranding.

dckworldwidewelcomedBobHook,CPA,JD,CGMA,tothecompanyintheroleofseniorvicepresidentoffinance.Basedindck’sPittsburghoffice,Mr.Hookisresponsibleforallaccount-ingandfinancefunctionsthroughoutthecompany. Heisanexperiencedfinancialprofessionalwhosebackgroundincludes28yearsofexperience,15ofwhichhavebeenwithWesting-houseElectricCompanyinvariousprogressivepositions.MostrecentlyheservedascontrolleroftheWestinghouseNuclearServicesDivision.

MaielloBrungo&MaielloispleasedtoannouncethattheMid-westIntermediateUnitIVhasappointedthelawfirmassolici-tor.TheMidwestIUIVprovideseducationalandadministrativeleadership,programsandservicesto27schooldistrictsinBut-ler,LawrenceandMercercounties.

RickDeschamps,VicePresidentofEngineeringatNicholsonConstruction,wasnamedasthe2014recipientoftheAmericanSocietyofCivilEngineering’sWallaceHaywardBakerAward.TheWallaceHaywardBakerAwardwasestablishedin2000bytheGeo-InstituteinrecognitionofthecreativeandinnovativecontributionsofWallaceHaywardBakerinthefieldofgroundmodification.

DavidBrennemanhasjoinedA.Martini&Co.asestimator. BG

dck worldwide is beginning a $26 millionapartmentprojectinPhoenix,Arizona.TheEl-evationonCentralprojectincludes266apart-mentunitsthatwrapasix-storyprecastparkinggarage.

Volpatt Construction was selected as thecontractor for the $1.2 million William PittUnionthirdfloorrenovationattheUniversityofPittsburgh.TheprojectarchitectisWTWArchi-tects.

Carnegie Mellon University awarded a$665,900 contract to Volpatt ConstructionforrenovationstoDr.Guo’s lab.ThearchitectisIKMArchitects.

MositesConstructionwasthesuccessfulbid-deronthe$3.3millionterrazzoflooringprojectfor theAlleghenyCountyAirportAuthorityatPittsburghInternationalAirport.

Landau Building Company is renovatingthe corridors at Allegheny General HospitalSnyder Pavilion. The three-month construc-tion project involves approximately 10,000squarefeetofcorridorsthatareincontinuousoperation. Work includes the replacement ofterrazzo,ceiling,lightning,wallrail,andmiscel-laneousfinishes.

Landau Building Company has begun a52,000 square foot ground-up constructionproject United Hospital Center at the currenthospitalinBridgeport,WestVirginia.Theproj-ect isasingle-storyofficebuildingspace thatmatches the existing hospital design. Con-structioncommencedonMarch10,2014andisexpectedtofinishinJanuary2015.

LandauBuildingCompanyisdoingtheten-antfit-outof theshellspaceonthe2ndfloorof Allegheny Health Network’s Isabella Streetlocation.The9,800squarefootfacilitywillbebothacallcenterandofficespace.Workistobecompletein4weeks.ThearchitectisDLA+Architecture.

Landau Building Company recently relo-catedtheexistingBereavementRoomintotheE.R. waiting room at Heritage Valley Beaver,whichallowedspaceforanewCTscannerfortheEmergencyDepartment.Anewmanage-mentofficewasalsocreatednext to thenewBereavementRoom.PaulSlowik&Associatesisthearchitect.

AIMConstructionwasselectedascontractorfor the University of Pittsburgh’s $3.5 millionScaife Hall seventh floor laboratory. LouviereStratton&Yokelisthearchitect. BG

MBAMembership


MBA OFFICERS

M. Dean MositesPresidentMosites Construction Company

Steven M. MassaroVice PresidentMassaro Corporation

Anthony F. MartiniTreasurerA. Martini & Company, Inc.

Jack W. RamageSecretary/Executive DirectorMaster Builders’ Association

BOARD OF DIRECTORS

Joseph E. Burchick Burchick Construction Company, Inc.

John C. BusseF.J. Busse Company, Inc.

Todd A. DominickRycon Construction, Inc.

Domenic P. DozziJendoco Construction Corp.

James T. Frantz TEDCO Construction Corp.

Thomas A. Landau Immediate Past PresidentLandau Building Company

Michael R. MascaroMascaro Construction Company, L.P.

Michael G. NehnevajsaMICA PresidentEasley & Rivers Inc.

Clifford R. RowePJ Dick Incorporated

Raymond A. Volpatt, Jr. P.E.Volpatt Construction Corp.

REGULAR MEMBERS

AIM Construction, Inc. Allegheny Construction Group, Inc.Michael Baker, Jr., Inc. Construction Services GroupA. Betler Construction, Inc.L.S. Brinker CompanyBurchick Construction Company, Inc.Facility Support Services, LLC F. J. Busse Company, Inc.dck worldwide LLC Dick Building CompanyPJ Dick Incorporated Joseph B. Fay Company

FMS Construction CompanyGurtner Construction Co., Inc.James Construction Jendoco Construction Corp. John Deklewa & Sons Johnstown Construction Services, LLC Landau Building CompanyA. Martini & Company, Inc.Mascaro Construction Company, L.P.Massaro CorporationMcCrossinMosites Construction CompanyNello Construction CompanyRJS Construction Consulting, LLCRycon Construction, Inc.Spartan Construction Services, Inc. STEVENSTEDCO Construction Corp.Uhl Construction Co., Inc.Joseph Vaccarello Jr. Inc.Volpatt Construction Corp.Yarborough Development Inc.

ASSOCIATE MEMBERS

ABMECH, Inc.Advantage Steel & Construction, LLCA. Folino Construction, Inc. A. J. Vater & Company, Inc. All Purpose Cleaning Service, Inc.Alliance Drywall Interiors Inc.Amthor Steel, Inc.Brayman Construction Corporation Bristol Environmental, Inc.Century Steel Erectors Co., LP Clista Electric, Inc.Cost CompanyCuddy Roofing Company, Inc. D-M Products Dagostino Electronic Services, Inc.Douglass Pile Company, Inc.Easley & Rivers, Inc.Ferry Electric CompanyWilliam A. Fischer Carpet Co.Flooring Contractors of PittsburghFRANCOFuellgraf Electric CompanyGaven IndustriesGiffin Interior & Fixture, Inc.Richard Goettle, Inc.Guinto Schirack Engineering, LLC Gunning Inc.Hanlon Electric CompanyHarris Masonry, Inc.Hoff Enterprises, Inc.Howard Concrete Pumping, Inc.Independence Excavating, Inc.J. J. Morris & Sons, Inc. Kalkreuth Roofing & Sheet Metal, Inc.Keystone Electrical Systems, Inc.Kirby Electric, Inc. L&E Concrete Pumping Inc.L&ET Company, Inc.Lighthouse Electric Co., Inc.Luca Construction & DesignMarsa, Inc.Massaro Industries, Inc.Master Woodcraft Corp.Matcon Diamond, Inc. Maxim Crane Works, LP McKamish, Inc.McKinney Drilling CompanyMele & Mele & Sons, Inc.

Menard, Inc.Minnotte Contracting Corp.Moretrench American Corp.Nicholson Construction Co.Noralco CorporationT.D. Patrinos Painting & Contracting CompanyParamount Flooring Associates, Inc.Pevarnik Bros., Inc.Phoenix Roofing, Inc.Precision Environmental Co.RAM Acoustical Corp.Redstone Acoustical & Flooring Company, Inc.Ruthrauff/Sauer, LLC.Sargent Electric Co. Scalise Industries CorporationSchnabel Foundation Co.Songer Steel Services Specified Systems, Inc.Spectrum Environmental, Inc.SSM Industries, Inc. Swank Associated Companies, Inc.Wellington Power Corp. Winjen Corp.Wyatt, Incorporated

AFFILIATE MEMBERS

All Covered IT Solutions All Crane Rental of PA Allegra PittsburghAmerican Contractors Equipment Co.American Contractors Insurance GroupAmeriServ Trust & Financial Services Co.AON Risk Services of PA Inc.ARC Document SolutionsBabst | CallandBDO Blumling & Gusky, L.L.P.Bronder & Company, P.C.Bunting Graphics, Inc.Burns & Scalo Real Estate ServicesCadnetics Carbis Walker, LLP Case | Sabatini Chartwell Investment PartnersChubb Group of Insurance CompaniesCipriani & Werner, P.C. Civil & Environmental Consultants, Inc.Cleveland Brothers Equipment Co., Inc.CNAClark Hill Thorp Reed Cohen & Grigsby, PC Cohen, Seglias, Pallas, Greenhall & FurmanComputer Fellows, Inc.Construction Insurance Consultants, Inc.Culligan of SewickleyDickie McCamey & Chilcote PCDingess, Foster, Luciana, Davidson & Chleboski, LLP Eckert Seamans Cherin & MellottECS Mid Atlantic LLCEdwards APQM First National Bank of Pennsylvania GAI Consultants, Inc. The Gateway Engineers, Inc.Halen Hardy, LLC The HDH Group, Inc. Helbling & Associates, Inc.Henderson Brothers, Inc.Highway Equipment Co.

Hill Barth & King, LLCHuntington Insurance, Inc.Huth Technologies, LLCKFMR Katz Ferraro McMurtry PC Langan Engineering & Environmental Services Leech Tishman Fuscaldo & Lampl, LLC Liberty Insurance AgencyLiberty Mutual SuretyLouis Plung & Co. LLP Lytle EAP Partners m/designMaiello, Brungo & MaielloMarsh, Inc.Meyer, Unkovic & Scott, LLPMobile Medical CorporationMorgan Stanley Wealth Management ParenteBeardPedersen & Pedersen, Inc. Pepper Hamilton, LLPPieper O’Brien Herr ArchitectsPietragallo Gordon Alfano Bosick & Raspanti, LLPPicadio Sneath Miller & Norton, P.C. Pittsburgh Mobile Concrete, Inc.Port of Pittsburgh CommissionPrecision Laser & Instrument, Inc.PSIR. A. Smith National, Inc. Reed Smith LLPThe Rhodes Group R.J Bridges Corp.Henry Rossi & CompanySaul Ewing, LLP Schnader, Harrison, Segal & Lewis LLPSchneider Downs & Co., Inc.Seubert & Associates, Inc.Sherrard, German & Kelly, P.C. SITECH Allegheny Steel Built CorporationSteptoe & Johnson PLLC Syntheon, Inc.Travelers Bond & Financial ProductsTucker Arensberg, P.C.UPMC Work Partners VEKA, Inc. Wells Fargo Insurance Services of PA, Inc.Westfield InsuranceWillis of PA, Inc.Zurich NA Construction

ClosingOut

“Ethnicdiversity”hasdevelopedintoaratherprovocativephraseinthebusi-nessworld.Forsomereason,wehavebeguntoviewitasatolerationthatisforceduponusratherthananembraceofprosperityandchange.Itseemsthatourperceptionoftheeconomicandculturalvaluebroughtbytheminoritypopulationhasreachedanadir,andinPittsburgh,thisisalegitimateshort-comingthatmustbeimmediatelyad-dressed.

Someshockingstatisticswillhelpputthingsinperspective:ofthetop40larg-estU.S.cities,Pittsburghcomeslastintotalminoritypopulation,minoritypopulationgrowth,andforeign-bornresidents.AsmuchasPittsburghhasbeenrecentlytoutedasanup-and-com-ingcityor“thebestplacetolive,”itcanneverreachitsfullpotentialwithoutavariedpopulation.Astrongeconomycomesfromadiverseeconomycom-prisedofindividualsequippedwithdifferenteducationalbackgrounds,lifeexperiences,andcultures.Thefactis,ithasbeenoveracenturysinceourcity’sgreatestentrepreneurialefforts,suchasHeinzandU.S.Steel,wereestablishedtosupportthelocaleconomy–andco-incidentallyenough,foundersHenryJ.HeinzandAndrewCarnegiecamefromimmigrantfamilies.

Firstly,andmostimportantly,wemustrecognizeandappreciatetheentrepre-neurialstrengthoftheminoritypopula-tion.ForeignimmigrantsaremuchmorelikelythanAmericannativestostartabusinessand,thus,employmorework-ers,soitisawonderthatwearenotdoingallwecantoattractthemhere.Moreover,28%ofphysicians,31%ofcomputerprogrammers,and47%ofmedicalscientistsinAmericaareim-migrants.Unfortunately,thisisnottheskillsetmanyofuswouldassociatewiththeimmigrantpopulation.Therearecountlessindividualswithbrilliantmindswhocomeheretoattendourgreatuniversitiesortofindwork,butPitts-

burghisunabletoretainmanyofthem.Perhapstheyfeelunwelcomeinaplaceofhomogeneityorfindthatothercitieshavemoretooffer–notnecessarilyinmonetarywealth,butinculturalwealth.It’sanunderratedbuthighlysignificantelementthateverybuddingmetropolisshouldrecognize.ForAmerica’snobleclaimtobea“meltingpot”towith-stand,citieslikeoursneedtoadoptitonanindividualbasisandpracticeitwithpride.Supporttheunderdogsandprovethattheirworthasworkersandcitizensisjustasgreatasourown.

Coupledwiththispotentialgrowthinanethnicallydiversepopulationwouldbeanoverallhigherdemandforlivingspace.Minoritiesmakeupasizeableportionofthehomerentalmarket,atabout45%in2010,andthatnumberisexpectedtoincrease;muchofthisdi-rectlyreflectstheinfluxofimmigrants,asabouthalfofallimmigrantsintheU.S.arerenters.Therewillbeagreatneedforconstructingapartmentcomplexes,cityhousing,placesofworshipsuchaschurchesandmosques,andwhateverelsemayfacilitatethemtomeetothersandstayconnected.Inaccommodatingthem,Pittsburghwillbenefiteconomi-

callyinthehousingandconstructionmarketsaswellasculturally.

Additionally,therewillbeacallfornewmarketsofgoodsthatwereneverpro-ducedbefore,butwillbeproducednowtoreconcilepeople’sneeds.Personallyspeaking,mywifeandIstruggledwhenwemovedtoPittsburgh25yearsagobecausetherewerenoAsiangrocerystoresorrestaurantswithina30-mileradiusofourhome.Howwerewesup-posedtosurvivewithoutourspecialtychaiteasandsamosas?Thankfully,thoughextremelygradually,wehaveseentheemergenceofmoreandmoresuchshopsovertheyears,sowedon’tneedtodriveforanhourtopickupouressentialgroceriesanymore.Ifthisweretocontinueandthecityfurtherdiversified,itwouldeventuallycreatethecyclicaladaptationthatPittsburghneeds.Thisculturalrichnesswilldrawinevenmorepeople,whetherasresidentsortourists,andmakeourcitytrulywell-rounded.

Asbusinessowners,employers,andentrepreneurs,wemustreachouttominoritiesandencouragediversityofpeopleanddiversityofminds.Itisnotonlyourpatrioticduty,buttoourben-efittodoso.Innovationissparkedbycreativity,andthatcreativityisfuller,richer,andmorevaluablewhenthinkersofvariedculturesandexperiencescometogetherandworktowardsasingulargoal.Whetherthatisideatinganewwarehouseconstructionplan,determin-ingacost-efficientwaytoimportandexportbuildingmaterials,orcontribut-ingtoanumberofotherconcepts,theendsolutionisgreaterbecauseofthediversethinkingthatwasputintoit.

Razi Imam is founder and CEO of 113 Industries, a consultancy that helps companies innovate new products using the principles of open innovation. 113 Industries also led the African American Entrepreneurship study for the Pitts-burgh Regional Alliance.

Fuller, Richer, Diverse Pittsburgh

By Razi Imam

Razi Imam

Burchick Construction is a performance-driven provider of quality construction and construction management services. Our dynamic approach to management made the difference to UPMC when it renovated Operating Rooms 10-12.Call us today.

One Call. One Source. Complete Satisfaction.Burchick Construction Company, Inc. • 500 Lowries Run Road • Pittsburgh, Pennsylvania 15237Telephone: 412.369.9700 • Fax: 412.369.9991 • www.burchick.com

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