Government Affairs

The Environmental Protection Agency's (EPA) Lead: Renovation, Repair and Painting Rule (LRRP) took effect Apr. 22. In addition to eliminating the opt-out provision, the EPA has changed the record-keeping requirements associated with its new lead paint rule, according to the National Association of the Remodeling Industry. Companies doing work covered under the Remodeling, Repair and Painting Rule must give copies of their records within 30 days of the final invoice or completion of the project to the homeowner or resident. The records to be turned over must demonstrate compliance with the training and work practices of the RRP rule - basically the checklist and the results of any testing, reported Window & Door. Full Story

Vice President Joe Biden announced the selection of 25 communities for up to $452 million in Recovery Act funding to "ramp-up" energy efficiency building retrofits. As part of a Department of Energy initiative, governments, private sector companies and non-profit organizations will work together on a variety of programs for concentrated and broad-based retrofits of neighborhoods and towns, reported Window & Door. Full Story

Four New York State trade associations representing heavy construction contractors are suing the state over Gov. David Paterson's announcement in March that the New York Dept. of Transportation would halt payments on all statewide capital construction projects not funded through federal stimulus dollars, reported New York Construction. The suit, filed on April 16 in state Supreme Court, alleges that the state has violated construction contracts with hundreds of contractors working highway and bridge jobs by requiring them to either continue working without payment or stop working altogether. According to the suit, any firms deciding to stop work could themselves be charged with breach of contract, jeopardizing their chance to bid on future state jobs. Full Story

ProBuild Company LLC, a professional building materials supplier, has reached an agreement to purchase the assets of Oso Lumber Inc., a building materials supplier based in Arlington, WA, reported BuildingOnline.com. Full Story

ASG Security has completed a deal to acquire Encompass Security of Southlake, TX, bolstering its Dallas-Fort Worth branch operations. ASG Security Senior Vice President of Sales & Marketing Bob Ryan tells Security Sales & Integration, "Encompass brings to the company an integration specialist with about 500 accounts, plus a particular expertise in creating recurring monthly revenue. Many of the accounts are mid- to high-end intrusion, access control, video surveillance and fire/life-safety installations in verticals such as commercial, education and health care." Full Story

Click here for more Industry Access news including recent new hires, merger & acquisition activity and who's offering new products.

* DHI Members may submit news releases to be considered for inclusion in DHI's IndustryWatch. Send to: jmadden@dhi.org

Business Update

A new plan released by the Associated General Contractors of America, outlines measures designed to stimulate demand for green construction projects, boost infrastructure capacity, and improve building efficiency and green construction practices. Full Story

On the heels of a more than two point gain in February, the Architecture Billings Index (ABI) was up again in March. The American Institute of Architects (AIA) reported the March ABI rating was 46.1, up from a reading of 44.8 the previous month. Though this score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), it is the highest score since August 2008. The new projects inquiry index was 58.5. Full Story

According to a survey of decision makers responsible for managing commercial buildings, planned energy efficiency investments across North America are expected to rebound in 2010. Fifty-two percent of respondents plan to make energy efficiency improvements financed with capital expenditures compared to 46% in 2009. Additionally, 60% (up form 55% in 2009) plan to make operating budget investments in energy efficiency improvements over the next 12 months, reported Environmental Design & Construction. Full Story

Modern Distribution Management looks at "The Secret to Being Grainger." Full Story

Emerging optimism prevails in the manufacturing sector that the 'Great Recession' is finally turning to recovery, according to the quarterly Manufacturers Alliance/MAPI Survey. The March 2010 composite index rose to 78% from 57% reported in the December 2009 report, representing the highest level since the June 2004 survey registered 80%, and marks the second straight quarter it has reached 50% or above, reported IndustryWeek.com. Full Story

The March Producer Price Index for Wood Doors (flush & panel, interior & exterior) was down 0.5% from 2009 and the Other Wood Doors (Incl. garage, screen, storm, etc.) PPI was down 1.8% compared to a year earlier. Compared to February, the unadjusted March PPI was down 0.2% for Wood Doors, but up 0.1% for Other Doors, according to the Bureau of Labor Statistics. The PPI for Metal Doors, Sash & Trim was down 0.9% from February and down 2.3% from 2009. The PPI for Builders Hardware was down 1.6% from 2009 and down 0.1% from a month earlier. Click here to view the full March Producer Price Index report. (PDF file - Wood Door information is on page 16, Builders Hardware and Metal Door data are on page 22)

The year-to-date value of construction starts through March 2010, excluding residential contracts, totaled $62.7 billion, 8.6% more than in the same months of 2009, according to Reed Construction Data. Individual month of March starts were 1.4% higher than February starts, reported Reed Construction Data. Full Story

Plans for a "science city" in Montgomery County, MDare nearing approval by the County Council, a move that officials hope will lead to the creation of a $10 billion center for research and development, reported the Washington Post. Officials from Johns Hopkins University, among the key players in the development, and business and political leaders are backing the plan, which they say could create a scientific research center that would rival North Carolina's Research Triangle or Palo Alto, CA. County officials predict that the number of jobs in the area west of Interstate 270 could triple to at least 60,000, many of them high-paying. The development also will include retail and housing. Full Story

The $3.4 billion consolidation of Homeland Security's agencies in one campus is slated to create 16,000 direct construction jobs involving at least 100 contractors over the next six years, reported the Washington Post. Eventually, 14,000 DHS workers will come and go every weekday in addition to 2,000 daily visitors to the Homeland Security campus. Full Story

In U.S. markets, the privately financed construction initiatives (PFI) process has been used for large infrastructure projects and some government buildings, but it is now starting to become adaptable in other areas, including health care. The model creates a consortium of private developers, investors, builders and other service providers to finance, design, construct and operate the building through long-term contracts in partnership with a client. The consortium delivers comprehensive services through a long-term operations agreement, usually 20 to 30 years, reported the Puget Sound Business Journal. Full Story

The value of building permits in Canada edged down 0.5% in February but was 56.7% higher than in February 2009, when it was at its lowest level during the economic slowdown, reported Statistics Canada. Full Story Meanwhile, investment in non-residential building construction in Canada totaled $10.3 billion in the first quarter, down 0.7% from the previous quarter and 5.7% below the first quarter of 2009. Lower investments in commercial and industrial building construction explained both the first quarter decline and the downward trend that began in early 2009. On the other hand, the institutional component has continued to increase, pursuing an upward trend that began in the first quarter of 2008. Full Story

The recently passed health care reform legislation will be a good thing for property owners and investors in many parts of the U.S., according to the international property group Grosvenor Americas. The reform will spark increased demand for medical office space and educational facilities to train medical personnel, according to the group. The Sunbelt, particularly Texas and southern California, is expected to experience the greatest growth in demand for health care services and space, reported Facilitiesnet.com. Full Story

About one-third of dealers and integrators who participated in SDM's 2010 Forecast Study believe the access control market this year will fall within the "excellent" to "very good" range. A greater percentage of respondents than one year ago anticipate experiencing a "fair or poor" market. Full Story

S Corporation Shareholders May Face Tax Increase

Last week, Congress began looking at reclassifying some of the income received by principal S Corporation shareholders from their business as wages.

An S Corporation is a corporation that does not pay an entity-level tax such as the corporate income tax.  Instead, the profits (or loss) are passed on to the shareholders, who must account for them separately on their individual income tax returns.  This occurs even if the S Corporation retains its earnings, rather than distributing them to shareholders.

There is a belief that S Corporation shareholders avoid characterizing the income as "wages" since that would require the payment of employment taxes (or self-employment tax) on the amounts in addition to the income taxes.

In 2002, the Treasury Inspector General for Tax Administration (TIGTA) reported that the Internal Revenue Service (IRS) needed more effective means of identifying taxpayers who are not properly reporting Subchapter S Corporation officer compensation.  The report looked at the incentive to underpay salaries and wages in order to avoid paying FICA and Medicare taxes.

The report also asserts that the current system of taxing S Corporations presents a significant loophole that allows single-shareholders to avoid certain taxes.  As an example, TIGTA demonstrated that in 2000, the owners of 36,000 single-shareholder corporations received no salaries from their corporations, even though the operating profits exceeded $100,000, resulting in unpaid employment taxes of $13.2 billion.  As a result, the report concluded that the IRS, by not attending to this issue, leaves a significant amount of tax revenue uncollected.

The underlying debate is how shareholders of an S Corporation should determine what portion of their income should be characterized as wages and what portion should be characterized as profit.  Historically, the IRS and the courts have struggled with how to determine "reasonable compensation" for owner-employees. 

The changes suggested by TIGTA and JCT essentially take out any guesswork in determining reasonable compensation by assuming that all of the income should be considered wages, reduced by certain excluded items.  By applying payroll taxes to all income, the government would levy a substantial tax increase on many small and family-owned businesses.

DHI's Jerry Heppes sits on the board of the Small Business Legislative Council. If you'd like more information on these or other issues affecting small businesses, feel free to contact him at jheppes@dhi.org.

This material is protected under copyright law and contains confidential information.  It is for the sole personal, informational use of DHI members. It cannot be distributed, reprinted, referenced as a source for attribution, or otherwise made public.

Fire Door Classes Completed in Las Vegas
Over 150 individuals representing hotels and casino, the insurance and risk management industry, and building and fire officials from Clark County attended two sessions over two days to learn how to perform basic fire door inspections and what steps they can take now to begin to implement an inspection program.

Clark County (Las Vegas) officials have already been out inspecting rated openings using the steps in NFPA 80. Through their county office, building code officials have access to a five page document that clearly outlines the important aspects of examining a fire rated opening.

Foundation Announces New Delivery Method for Fire Door Training Program
As mentioned in the last edition of IndustryWatch, individuals approved by the Foundation will now be able to lead the efforts to bring fire door training to local fire, building code and healthcare officials, facility engineers and other interested parties.

The training the Foundation has been doing on a national level can now be done in greater numbers by qualified individuals-at the local level. The Foundation Board of Trustees approved this new delivery method in mid April and final details are being worked out. Please look for further information over the next several weeks or email/call Bill Johnson (Phone: 703.766.7039 or bjohnson@dhi.org) for more information about qualifications for instructors and pricing of the course material.

Please Consider 48 Cents a Week to Help the Foundation's Work to Continue
In these challenging economic times for the door and hardware industry, please consider contributing 48 cents a week to help the Foundation continue its work. A contribution of $25 a year averages out to about 48 cents a week.

The majority of what the Foundation does is funded by the generous support of DHI member companies and individuals like you – apart from the yearly fees and dues that are paid to DHI. The Foundation operates under its own budget without any type of membership dues since we are considered a charitable organization.

If every DHI member were able to pledge $25 above and beyond their normal DHI dues, the Foundation will be able to continue the good work it has started.

You can visit the Foundation’s website to:
Donate online by clicking here.
Donate using email (or snail mail) by clicking here.
or call Bill Johnson directly at 703.766.7039 to have him answer any questions or to make a verbal pledge commitment.

Thank you for your consideration of support and for your commitment to the Foundation.

Call for Nominations: DHI 2010 ACHIEVEMENT AWARDS
Founder ● Fellow ● Distinguished Consultant ● Award of Merit ● Mary Roth

Our industry and organization has progressed over the years due to the work and efforts of many selfless professionals. We need to honor their contributions publicly. Receiving recognition by DHI is a wonderful way to acknowledge their contributions to the industry and we offer a variety of awards that can accomplish this goal.

Take a moment to consider nominating deserving persons in any or all of the listed categories. Nominations can be for services at the national level, local and state levels, and/or at the chapter level. Many of the nomination categories require substantial information and further written support. Deadline for nominations is May 31, 2010!

Go to www.dhi.org to download a nomination form or contact Cathy Jones at 703/766-7012 or by email at CJones@dhi.org for specific details and with any questions.

Are YOU Prepared to Take Advantage of the Revenue Opportunities Derived from the Annual Inspections of Fire Doors/Doors of Egress when NFPA 80 (2007) and NFPA 101 (2009) Standards/Code Requirements are Adopted in YOUR State?

Become a Certified Fire Door Inspector...Fire and Egress Door Assembly Inspection (DAI 600)
"DAI 600 West" The ONLY DAI 600 Session Offered on the West Coast in 2010!

Class held June 26-29, 2010 • Chaparral Suites • Scottsdale, AZ
To register, go to www.dhi.org or call DHI member Services at 703/222-2010

Learn more about the FDAI program and WHY certification as a fire door inspector is a smart business and career decision by clicking here.

DHI's INTERACTIVE MEMBERSHIP DIRECTORY...New & Improved for 2010!

The all-new Interactive Membership Directory for 2010 provides contact information about all DHI members; National and Chapter Leadership, distributors, manufacturers and sales agencies.

● Hotlinks to all websites and/or email address.
● Perform multiple searches and easily print results.
● Print all or any portion of the book.
● Save entire document as a PDF to your desktop OR external drive for use as an easy, portable, 'on-the-go' reference!
● Monthly web updates will keep the Directory current! Updates will include new members, as well as company and individual changes.
● Scrolling 'News Ticker'--Highlights DHI';s Dedicated Advertisers...Keeping You In-the-Know about New Products and Services!
● ZOOM in and out at the 'Click of your Mouse' or using easy controls at the bottom of the image screen

NEED CHANGES to PROFILE INFORMATION?

Let us know if your member profile information needs to be updated at: 703/222.2010 -OR- contact us with changes by email at: Membership@dhi.org

You can also update your information online.
To make profile changes, log in to www.dhi.org as follows:
USER NAME: Your DHI membership no.
PASSWORD: Your last name (all lowercase, no spaces, or punctuation).