STATE BOARD OF DIRECTORS MEETING HIGHLIGHTS MONTEREY PLAZA HOTEL, MONTEREY MAY 12, 2011

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1 STATE BOARD OF DIRECTORS MEETING HIGHLIGHTS MONTEREY PLAZA HOTEL, MONTEREY MAY 12, 2011 AGC of California held its second State Board of Directors meeting of the year on May 12, 2011 at the Monterey Plaza Hotel in Monterey California. President Gerry DiIoli, Herzog Contracting Corp., welcomed Past Presidents and guests. During the self-introductions State Board of Directors reported on the request to identify the last time they asked a company to be a member of AGC. President s Report: President DiIoli gave a report on the Executive Committee meeting held the day prior. Each Officer had shared their experience attending both the National Convention and Western Chapters Meeting. The Executive Committee reviewed the modified AGC Mission Statement which was brought forward and approved for State Board discussion and vote. A preliminary agenda and schedule for July s Strategic Planning Session was provided, and it was noted that a survey of the leadership and staff would be conducted to further develop agenda items and discussion focus. President DiIoli reported that the Executive Committee accepted the 2010 Audit Committee Report and Audited Financials, which were brought forward and approved by State Board Directors. There was discussion held over the Staff Defined Benefit Pension Plan which was frozen several years ago and continues to have an unfunded liability. From this discussion, the Committee requested that a task force be created to review all possible options in order to retire the plan. The Executive Committee reviewed the membership report, prompting discussion of the possible need to simplify the AGC dues structure. An update on the latest Strategic Scorecard accomplishments, and areas of concern were discussed, along with acknowledgment that the Construction Leadership Council (CLC) is now functioning on a true statewide basis. Legislative Committee Chair Wayne Lindholm, Hensel Phelps Construction Co., updated the Committee on major legislative bills affecting the construction industry, and reported that the Legislative Committee plans to hold its second meeting in June. Finally, an update on the Marketing Task Force and Events Committee were provided. Sr. Vice President John Nunan reviewed with the Committee new marketing efforts that AGC had put together, including new AGC advertisements, and the AGC Facebook launch. AGC of America: President Gerry DiIoli presented Ken Simonson, Chief Economist for AGC of America, who attended the meeting via Skype. Ken spoke about the outlook for construction, construction materials and where jobs are coming back. He reported that the economy is going reasonably well, and that there have been 15 months of private sector job increases. Loans for investors continue to be tight and state and local spending is still down. Mr. Simonson reported that the Federal Government has put in a lot of money for construction. The sources of these funds have included the stimulus, to which he stated that stimulus funded projects are now

2 underway for new construction, port construction, and waste water. However, Mr. Simonson reported that California High Speed Rail funds have not yet been obligated. In construction employment there has been a three month gain. The hope is that construction is on the rise and that the decline has flattened out. A review of a 12-month market trend was conducted by Mr. Simonson on various construction including, non residential construction, hotel, and hospital construction. CEO s Report: CEO Tom Holsman reviewed the Association s financial health, strategic scorecard updates, latest marketing efforts and organizational changes. He reported on the strong financial health of the Association, and relayed that the Association is ahead of budget, impart attributed to AGC staff cutting expenses. Mr. Holsman shared that a simplified dues structure will likely need to be revisited as a response to not only member requests, but also in part to AGC of America s Future Financial Model Dues Task Force. This Task Force is looking at restructuring the way dues are paid to AGC of America. Mr. Holsman reported the Gas Tax Swap was successfully restored as a direct result of AGC involvement in enabling legislation. Mr. Holsman reported on the 3% Independent Contractors Withholding, which has the potential of placing small and medium sized companies completely out of business. This particular legislation is being tracked by National AGC and a full court press is being applied to defeat it. Mr. Holsman briefly updated the State Board on sponsored legislation and regulatory news, specifically on the Stormwater Runoff regulations effective September 2, He noted that AGC is the only statewide organization that provides certification training for SWPPP. AGC s value added revenue (NDR) while running slightly behind goals, continues to be successful through the affinity partner programs, which assist in saving money for AGC members. Mr. Holsman added that last year a consensus was reached at the Strategic Planning meeting that AGC needed to re-vamp marketing efforts. As a result of these efforts, new advertisements have been created and uploaded to AGC s website for member use, as well as an AGC Facebook page launched. Mr. Holsman reported on the organizational changes at AGC, including the promotion of Sophia Taft to Communication Manager, Darla Macomber as his new Executive Assistant, and Dave Jenkins assuming responsibilities for all statewide events. In his conclusion, Mr. Holsman took a minute to thank all the AGC staff for their dedication and hard work. Consent Agenda: The State Board of Directors approved the January meeting minutes, as well as the written District and Committee/Council reports that were provided in the meeting materials. Keynote Speaker: Steve Sandherr, CEO of AGC of America, discussed activities in Washington DC, noting that congress is consumed with big budget discussions. The current state of the country, which is burdened with a $14 trillion national debt, is having a severe and significant impact on infrastructure. Mr. Sandherr reported that AGC of America conducts seminars with the Republican caucus to remind officials of the importance of infrastructure to the nation s economy. In addition to that discussion, Mr. Sandherr noted that AGC of America is asking the federal agency to not use Project Labor Agreements on projects over $25 million. AGC of America is also working on combating the 3% withholding requirement. The details of the proposal are available on AGC of America s website. Mr. Sandherr reported that AGC of America is working on a permanent Highway Trust Fund bill.

3 New Business Membership Report: Vice President Randy Douglas, Tierra Contracting Inc., recognized board members for recruiting new members during the district challenge. The second quarter membership report reflected a gain of 21 associate members with a loss of 125. Vice President Douglas stressed the importance of increasing membership, adding that it is easier to retain a member than it is to gain a new member. A motion was made and approved by the State Directors to continue at State Board of Directors meetings that each Director share the last time they asked someone to join the AGC. The membership report was approved by the State Board as submitted. Audited 2010 Financial Statement Review: Treasurer Curt Weltz, Flatiron Construction Corp., reported on the compliance with Sarbanes-Oxley which promotes financial transparency. He was pleased to report that not only has investment income improved, but the budget has also improved from what was previously reported in January. Mr. Weltz discussed the creation of a Pension Task Force, as noted in President DiIoli s report, consisting of himself, Gerry DiIoli, John Nunan, Randy Douglas, Wayne Lindholm, Tom Holsman, Mike Navin, and tax consultants. Tom Holsman added that this task force would be empowered to do the fact finding to determine all the variables and contributing factors to retire the pension plan. State Directors approved the Pension Task Force as established. AGC Mission Statement: Sr. Vice President John Nunan, Unger Construction Company, reported on the efforts of the Mission Statement Task Force to create a Mission Statement that would embody not only what AGC provides, but exemplify AGC as a leader in the industry. State Directors approved AGC s new mission statement to read as follows: To be recognized leaders in providing business opportunities, education, training resources and advocacy for its members while advancing sound public policy to the industry. Education Foundation Update: Foundation Chair Michelle Loveall, California United Bank, announced two new Education Foundation Board Members: Jon Dunn, Department of Education, and George Hannible, SKANSKA. Ms. Loveall recognized the Chico State students in attendance, the ACE mentor programs partnership, and recapped the Fresno Construction Career Awareness Day (CCAD). Education Foundation Director Erin Volk, provided additional details on the new Education Foundation partnership with ACE, which will work on the full pipeline of workforce regeneration. The partnership will also include new joint programs such as a summer camp and AGC Student Chapter campus visits. Other Education Foundation updates included the Executive Leadership Development Program; $1.4 million in grant requests submitted so far this year, and the start of the Annual Funds Campaign, which has a goal of a $100,000 for the year. AGC of California & Social Media: Sr. Vice President John Nunan reported on the creation of the Marketing Task Force geared at creating various marketing opportunities. Mr. Nunan stressed the idea of treating everything as a potential marketing tool; an example being AGC s Annual Report. Sr. Vice President Nunan discussed communication being the key to membership; communication between members, and communication between the association and members. In an effort to extend the realm of communication, AGC has launched a company page on the social networking site Facebook. This page will enable the association to quickly

4 update members on events, changes within the organization, and other pertinent information. A walk through of the different pages and functions of the AGC of California Facebook page was demonstrated. Members were encouraged to follow AGC on Facebook by visiting Division Reports: Detailed highlights from the Division meetings are attached. Legislative Update: Legislative Committee Chair Wayne Lindholm, Hensel Phelps Construction Co., introduced David Ackerman, DGA Associates, who reported on the challenging news of the Independent Contractors Withholding Proposal. Mr. Ackerman reported that the Governor would be issuing his May budget revise and AGC hopes that it will be good news for the state and that there will be $2.5 to $3 billion in revenue coming in from tax extensions. Additionally, bond sales have been a concern in state budget negotiations. Dave reported that AGC was at the forefront of supporting bonds ($42 billion in construction money) several years back. This year bond sales have so far been canceled and the State Treasurer could propose cancelling fall bond sales as well. In addition, a re-enactment of the Gas Tax Swap was vital in dedicating bond fees to transportation programs. Mr. Ackerman noted that if there are no bond sales Caltrans will be forced to shut down all projects currently under construction. PAC Committee Chair Mark Thurman discussed the purpose of the AGC 120 club, and its efforts to raise money for the Political Action Committee. He stated that fundraising is down about 13% commiserate of volume dues. In good news however, AGC has made contact with about half of the 29 incoming freshman legislators and are continuing to work on educating them on issues affecting the construction industry. In conclusion Mark encouraged local districts to hold grassroots events in an effort to raise additional money. CIFAC Awareness: Past President Steve Blois, gave a brief history on the Construction Industry Force Account Council (CIFAC), which was founded by Dave McCosker of Independent Construction Company. While CIFAC s original focus was on Northern California, they are now beefing up efforts in Southern California as well. CIFAC s mission is to monitor and investigate local and state government agencies for potential violations. Mr. Blois discussed CIFAC s recent accomplishments, such as $5.7 billion total value of projects investigated, a quarter of which resulted in new construction jobs. Steve concluded that contractors can help the cause by reporting violations to CIFAC and letting their staff investigate. CIFAC is about getting more jobs for contractors. Announcements & Future Meetings: President DiIoli thanked all those in attendance and announced that the next State Board of Directors meeting will be held in conjunction with the Fall Conference, October th, at the Hyatt Grand Champions in Indian Wells, CA.

5 JOINT ENGINEERING DIVISION BOARD OF DIRECTORS MEETING HIGHLIGHTS MAY 11, 2011 The Joint Engineering Division Meeting was led by Division Chair Jim Troup, Monterey Mechanical. He called the meeting to order, led the Pledge of Allegiance, and asked for self introductions. Every Day Counts: Matt Schmitz, Special Assistant to the Division Administrator at the Federal Highway Administration (FHWA) provided an overview of the Every Day Counts (EDC) initiative, which is to do things more quickly with the resources on hand. For more information on this initiative, please visit Legislative Update: Dave Ackerman, DGA Associates commented on Mr. Schmitz presentation stating that there is a bill going through the Legislature that AGC is supporting and will allow Caltrans to continue to do the pilot project it has with FHWA. It will allow Caltrans to do both the federal environmental review and the state CEQA (California Environmental Quality Act) review simultaneously. The bill has passed the Transportation Committee and is ready to be voted on by the Assembly. Mr. Ackerman provided a legislative update on transportation funding and California budget. The State Treasurer sold enough Prop 1B bonds last fall to carry existing Caltrans projects through the end of this year fully funded. Unfunded Liability and FASB Update: Tom Holsman; Sean O Donoghue; and Rocky Miller, Cox Castle, provided an update of the plan funding liability and discussed what is happening with the unions around the state. Project Showcase: An overview of the Oakland Touchdown SFOBB was provided by Chris Smith, MCM Construction; Amar Bata, Caltrans; and Hazzaa El-Mahmoud, Caltrans. Mr. Smith discussed the benefits of partnering. PowerPoint Presentations: The presentations used by speakers can be viewed by visiting the AGC of California Web site and click on the Joint Engineering Division Highlights link: Next Meeting: The next Joint Engineering Division Meeting will be held at the Fall Conference in Palm Desert, California on October 26 28, Adjournment: Jim Troup adjourned the meeting and invited AGC members to attend the Fall Conference scheduled October 26-28, 2011, in Indian Wells. Any questions relative to the Joint Engineering Division should be directed to Sam Hassoun.

6 BUILDING DIVISION BOARD OF DIRECTORS MEETING HIGHLIGHTS MAY 11, 2011 The Building Division Meeting was led by Chairman Dave Higgins, of Harbison-Mahony- Builders, Inc., who called the meeting to order. Office of Statewide Health Planning and Development: Paul Coleman, Deputy Director centered the discussion on the following topics: Plan Review and Construction Values, Currently Under Construction, FDD Realignment, Seismic Compliance, Compliance to Date, SB 499, Potentially Non-Compliant Hospitals, SB 90, Energy / Green Buildings, Special Seismic Certification Preapproval, and New 2010 Code Cycles. AGC of California Legislative Update: Dave Ackerman, DGA Associates, updated the Building Division with discussions of the following pieces of Legislation: AB 780 (Charles Calderon) Sales Tax on Fixed Price Contracts would require public agencies to reimburse contractors who entered into fixed price contracts prior to enactment of an increase in the state sales tax. Status: Passed Assembly Revenue and Taxation Committee next hearing will be in Assembly Appropriations Committee. AB 474 (Evans) would prohibit the use of type 1 indemnity clause in construction contracts. (Oppose) Status: AGC of strongly opposed to SB 474 which is co-sponsored by several subcontractor organizations. The bill was set for its first committee hearing on May 10, 2011 in the Senate Judiciary Committee, but the sponsors were meeting with the author to decide if the legislation will still be pursued this year or if SB 474 will be made a two year bill. If this decision is made, discussions will continue with the subcontractor groups but with less intensity than if a bill was moving in the legislative process. SB 475 (Wright) would clarify the procedures for local agencies to enter into public / private partnership projects (P3) and allow the P3 agreements to be for a term of up to 50 years. (Support) Status: AGC is supporting and testified in favor of SB 475. The bill has passed its first policy committee hearing and was approved by the full Senate on May 9 by a vote of SB 600 (Rubio) would require school districts to use one of two options to prequalify contractors. (Support) Status: Passed Senate Education Committee and is pending the next hearing in the Senate Appropriations Committee

7 AB 1354 (Huber), sponsored by the American Subcontractors Association, originally proposed to eliminate retention on public works projects, and has been amended to suggest an alternative to AGC s sponsored payment bond legislation. (Oppose) Status: AGC opposed AB AB 1354 has been amended several times and the bill was dropped last week by the sponsor. QSD / QDP Qualified SWPPP Developer : John Hakel, AGC of California, gave a brief overview of AGC of California s training opportunities and dates to attend seminars regarding Qualified SWPPP Developer / Qualified SWPPP Practitioner. AGC National Update: Chairman Dave Higgins, Harbison-Mahony-Higgins Builders, Inc. discussed with the division members the continuous cross-pollination that the AGC of America and this chapter have regarding educational programs. Discussions centered on BIM and the levels of educational opportunities. Dave Higgins also talked about the numerous building educational committees many chapter members are active in. Best Value Procurements, AB 385 AB 908 and stressing QBS is a great idea. Dave Higgins currently sits on the National Project Delivery Forum Steering Committee who also advocates for the use of QBS. Also, discussed was the need to continue to offer these National courses in California. Next Meeting: The next Building Division Meeting will be held during the Fall Conference in Indian Wells, CA, October 26 28, Any questions relative to the Building Division should be directed to John Hakel.