UPS Honors New Jersey Drivers for 25 Years of Safe Driving

Compiled by John Joseph Parker, Contributing Editor

UPS REPORTS THAT 58 ELITE drivers from New Jersey are among 1,436 newly inducted worldwide into the Circle of Honor, an honorary organization for UPS drivers who have achieved 25 or more years of accident-free driving.

New Jersey boasts 321 Circle of Honor drivers with a combined 9,253 years of accident-free driving. George Lodovico of Vineland is the state’s sen­ior-most safe driver, with 48 years of accident-free driving under his belt. There are 3,977 total full-time UPS drivers in New Jersey.

“My thanks go to all of them for their dedication and focus and for the countless lives they’ve saved,” says Scott Bremerman, president, UPS East Region. “Their attention to detail has kept them safe and has helped improve public safety.”

Globally, the most seasoned UPS Circle of Honor driver is Thomas Camp of Livonia, Michigan, with 56 years of driving without an accident. Ronald McKnight of the Bronx, New York, is next in line with 50 years of safe driving. One hundred and twenty-six others have logged at least 40 years without an accident.

UPS’s 125,000 small package drivers worldwide are among the safest on the roads, logging close to 4 billion miles a year and delivering 5.2 billion pack­ages annually. Collectively, these drivers have achieved more than 298,957 years of safe driving throughout their careers. That’s enough time behind the wheel to drive non-stop from Miami to San Diego—68 million times. And they’ve done it while helping to deliver 3 per­cent of the world’s GDP—20 million packages a day.

Founded in 1907, UPS has a rich history of safety and training. The company issued its first driver hand-book in 1917 and began recognizing safe drivers in 1923. In 1928, UPS recognized its first five-year safe driver, Ray McCue, with UPS founder Jim Casey presenting him a gold and platinum watch. UPS formally estab­lished its safe driving honor program in 1928.

Celebrating Jersey City’s Renaissance and Honoring Key Leaders and Impact Makers

By Miles Z. Epstein, Editor, COMMERCE Magazine

THE SKYLINE HAS MORE BRIGHT lights that illuminate the night, and reflections along the water­front paint a picture of progress, a Jersey City renaissance. The light is symbolic of a brighter future for the city, which is seeing growth and innovation and a greater sense of community.

To honor this success story, the Jersey City Leadership Awards—presented by the NJCU Foundation—will celebrate the city’s most valued thought leaders on Thursday, June 6, 2019, at Liberty House in Jersey City, beginning at 6:00 p.m.

Rooted in the fundamental premise that bettering the quality of life for those who live, work, play and study in Jersey City is a noble pursuit, the Jersey City Leadership Awards were conceived to honor, promote, and encourage exempla­ry efforts by individuals and organizations who have made and continue to make exemplary contributions to Jersey City.

“We are thrilled to celebrate our outstanding honorees for their vision, achievements and continuing commit­ment to advance their areas of expertise on behalf of Jersey City,” says New Jersey City University President Sue Henderson. “The four recipients of the Jersey City Leadership Awards demonstrate the true spirit of professional and personal lead­ership to our community.”

The following four individuals repre­sent the pinnacle of excellence in the areas of the arts, service, innovation and community building as a lifelong legacy.

Arts Award—Art House Productions Executive Director Meredith Burns con­tinues to focus and engage educational communities across Jersey City by provid­ing summer programs and outreach to many charter and public schools. Art House Productions sprung from the desire to connect a devastated communi­ty through art and dialogue after 9/11. Since then, the non-profit organization has established itself as a pioneer of artistic and cultural programming in Hudson County, continuing to engage, inspire, entertain and educate diverse communities through theatre, dance, comedy and the visual arts.

Service Award—Born and raised in Jersey City, Hon. Frank J. Guarini is distinguished by a lifetime of service as a member of Congress, veteran and philanthropist. He is on many boards of charitable, educational and cultural organizations, and his strong belief in the power of education has led to the foundation of centers and institutes at Dartmouth College, New York University School of Law, St. Peter’s University, New Jersey City University and John Cabot University in Rome, Italy. Guarini contin­ues his commitment to Jersey City through his involvement with the Hudson County Chamber of Commerce and through major area real estate development projects.

Innovation Award—As Executive Vice President, Health Care Transformation, Joseph F. Scott, leads strategic planning and implementation, business develop­ment, innovation and population health for RWJBarnabas Health. Under his lead­ership, Jersey City Medical Center has received more than 35 awards and desig­nations for quality services, diversity, patient safety and community outreach. He also volunteers his time and has assumed several leadership positions with community organizations. The governor appointed him to the Board of Trustees for New Jersey City University. Scott is Chairman of the Board of America’s Essential Hospitals and is past Chairman of the America’s Essential Hospitals Policy Committee.

Legacy Award—Glenn D. Cunningham (2001-2004) is being honored posthu­mously for his drive to improve Jersey City as its 43rd mayor. He was the first African American U.S. Marshal for New Jersey and in 2001, he became the first African American to be elected Mayor of Jersey City. His passion for education led to the creation of The Sandra and Glenn D. Cunningham Foundation, which was founded to positively impact the growth and advancement of stu­dents in Jersey City and Bayonne. The Foundation provides financial assistance and one-on-one mentor relationships with positive roles models.

Since its inception in 1927, New Jersey City University has been an integral part of the Jersey City community, celebrating its deep ties to the city and its interest in ensuring the city continues to thrive and grow.

“NJCU is honored to present this spe­cial event celebrating those whose work has positively transformed our communi­ty,” says New Jersey City University President Sue Henderson.

Addressing Soil Issues in New Jersey During Commercial Redevelopment

By Michael Novak, LSRP, Atlantic Environmental Solutions, Inc.

REGARDLESS OF THE redevelopment project, too much—or not enough—fill at a property is among the costly issues facing commercial real estate developers today. Moreover, the testing of site soils by developers and site work contractors can cause a prop¬erty not previously within the domain of the New Jersey Department of Environmental Protection (NJDEP) Site Remediation Program (SRP) to suddenly be subject to the program’s rules and requirements.

Real estate buyers, developers and contractors often are surprised to learn that site soils that were not an “area of concern” in a Preliminary Assessment or “recognized environmental condition” in a Phase I Assessment—along with soils that tested “nonhazardous” for dis¬posal purposes—will end up being “not clean enough” to remain at a property or be imported from an offsite source within budget.

Owners and developers also may dis¬cover that a Deed Notice or expensive offsite disposal is required and that other environmental rules could be triggered, such as annual reporting and monitoring requirements by the owner and annual permit fees paid to the state.

The 2009 Site Remediation Reform Act (SRRA) shifted responsibility for initi¬ating and completing most remediation projects from the NJDEP to private sector Licensed Site Remediation Professionals (LSRPs). Expert LSRP servic¬es are critical to saving developers time and money by characterizing soils and fill material in accordance with applica¬ble regulations and allowing for the reuse of site soils rather than disposing them offsite. This provides developers with a cost-effective method to address these “cut and fill” issues.

The NJDEP has specific testing proto¬col to follow if a developer wants to confirm that existing onsite fill material is not contaminated. The testing param¬eters are comprehensive, and sampling is required on a per-acre basis.

Separately, the NJDEP recently publish-ed guidance and regulations regarding the importation of fill material onto properties regulated by the SRP. The Fill Material Guidance for SRP Sites pro¬vides guidelines on the use of fill materi¬al with the goal of reducing the volume of soil disposed at landfills by allowing certain fill materials to be reused smartly.

Alternative fill (defined as fill that con¬tains contaminants above the most strin¬gent soil remediation standards) being imported to a property must be sampled at a higher frequency than when charac¬terizing onsite existing materials. This affects anyone who supplies fill to donor sources or receives fill at SRP sites, as well as site investigators, including LSRPs.

A specific number of samples need to be collected relative to the volume of soil being imported. The number of samples and type of analyses are different than those typically used to characterize soils for disposal purposes. With adequate testing results, an LSRP will certify the permissible importation of alternative fill to restore the pre-remediation grade/topography and elevation. Excess alternative fill also can be imported after receiving NJDEP pre-approval.

The NJDEP recently changed permis¬sions of unpermitted emplacement of alternative fill below the 100-year flood elevation. For this reason, developers and their consultants should consider involving an LSRP in “cut and fill” plans early on in a project.

Utilizing the knowledge and expertise of LSRPs, the NJDEP is returning countless contaminated sites to benefi¬cial use, providing assurance to property owners that the work meets complex rules and regulations and is protective of human health and the environment.

Engaging LSRP services from the onset of a project—even on non- recorded SRP sites—makes the program an even more efficient and cost-effec¬tive tool for redevelopment in the Garden State.

The Restaurant Data Revolution: How Data Science is Transforming Restaurant Management

In recent years, the explosion of available data on customer preferences has resulted in a paradigm shift in restaurant operations. Restaurateurs are benefitting from an ability to using actionable, data-driven information to profitably engage customers—both on and offsite—and guide their most important strategic and operational decisions.

“Critical data is being gathered from point-of-sale (POS) technologies like sophisticated customer relationship management (CRM) systems and ordering kiosks and from crowdsourcing sites and social media interactions”, notes Cindy McLoughlin, CohnReznick’s Consumer, Hospitality, and Manufacturing Practice Managing Partner. “This data is providing restaurants with unprecedented insight into wait staff efficiency, inventory management, and table turnover”. Research shows that the data is not merely a way to boost business, it is crucial to survival.

In fact, the effective use of data is fast becoming “table stakes” in the industry as customer expectations have been set high by savvy technology companies like Uber, Netflix, and Amazon. These business models lead customers to demand instant gratification and, if desired, sound off about their experiences on social media. Customer posts on platforms like Twitter and Instagram, their reviews on crowd-sourced review forums like Yelp, and their use of reservation and ordering apps like SevenRooms and Grubhub, provide the input for restaurants’ data analysis initiatives.

The algorithms being run on this data are not simple and go well beyond identifying broad themes. Today’s analytics provide detailed information on specific customers. An individual might choose a restaurant based on social media reviews, make reservations via OpenTable, and then post a comment on Facebook or a review on Yelp after the dining event. This information is captured and analyzed by data-savvy restaurateurs to drive their marketing outreach to specific individuals or aggregated to understand trends.

Customer engagement
Acquiring new clients can be difficult and expensive. So, the most successful guest engagement strategies often focus on retaining customers and broadening existing relationships. McLoughlin notes, “Credit card data might reveal that a customer uses a restaurant for a business lunch every week, but never comes in for dinner or a family outing. Reminding that favorably predisposed customer that the restaurant also welcomes families – and then providing the customer with some form of benefit like a “valued client” discount for birthdays or anniversaries—could be an effective way to boost the lifetime value of that relationship”.

Data gathered by third-party reservation apps can be an invaluable tool for restaurateurs in tailoring their client engagement strategies, or the restaurant experience itself. Although OpenTable is now an industry standard, there are many other reservation platforms that provide restaurants with powerful data on the consumer.

New data-focused technologies are making restaurants more efficient, and helping them do well despite the headwinds.
Cindy McLoughlin Managing Partner, Consumer, Hospitality, and Manufacturing Practice
New offerings are emerging from third-party smartphone apps that arrange bookings and other restaurant services. “Understanding the individual is the key to success,” McLoughlin says. “All effective engagement strategies require that businesses acknowledge their customers’ desire to be treated as individuals. Data that helps tailor a customer’s experience, like the data analytics that SevenRooms provides, can be a boon in this regard.”

Gone are the days of the anonymous “blast” email campaigns, which typically had only a one-in-five open rate. Using data analytics, restaurateurs can now segment customers into appropriate cohorts and target people based on how they used the product.

Bottom line benefits
The benefits of effective guest engagement strategies can be quantified, and their impact on a restaurant’s bottom line are significant. Studies have shown that social media ratings closely correlate with business success. Poor ratings or management that is unresponsive to social media often foreshadow failure.

A 2016 study by Michael Luca at Harvard Business School found that a one-star increase in Yelp ratings leads to a 5 to 9 percent increase in revenue in independent restaurants. Per Luca, this suggests that online consumer reviews substitute for more traditional forms of reputation. A speaker at CohnReznick’s 2018 New York Restaurant Technology Summit advised that asking for social media feedback increases the customers’ tendency to return by approximately 7%, while responding to that feedback increases return rates by approximately 14%.

These benefits can be secured without breaking the bank. Data-driven customer engagement strategies are cost effective relative to traditional advertising-based marketing approaches. Social media provides a wide marketing platform without the giant advertising budget needed for television or print advertising.

Privacy risks
Data science advantages in the restaurant business do come with a degree of risk. Data privacy laws and social norms are evolving fast, often in response to large and widely publicized problems such as Facebook’s role in the 2016 Presidential election. Restaurants that collect and analyze customer data must become compliant with data privacy rules to avoid fines, reputational damage, and other problems. This involves putting in place data privacy technical controls and processes, where appropriate, according to the recent CohnReznick white paper on the subject.

However, when weighing the cost of compliance with privacy rules and norms against the bottom-line competitive advantages of sensible data analysis strategies, it’s clear that the benefits will far outweigh the risks over time. That means that restaurateurs who lag in adopting data gathering and analysis tools will be at a measurable disadvantage to the data pioneers who will be reaping bigger profits from a deeper understanding of their customers and their own operations.

McLoughlin sums it up this way. “The restaurant industry is currently challenged on a lot of fronts including labor, regulatory, and operational issues. These new data-focused technologies are making restaurants more efficient, and helping them do well despite the headwinds.”

IRS Issues New Opportunity Zone Guidance and Proposed Regulations

On April 17, 2019, the IRS released highly anticipated additional guidance and proposed regulations concerning investments made under the Opportunity Zone program created under the Tax Cuts and Jobs Act of 2017. The 169-page publication supplements and clarifies many aspects of the initial set of proposed regulations released by the IRS in October 2018 by providing, among other things, significant guidance for investments in qualified opportunity zone businesses (QOZBs) and additional clarity as to how to commence, operate and wind down qualified opportunity funds (QOFs). 

Under the Opportunity Zone program, Congress sought to encourage growth and investment in certain designated low income communities – Opportunity Zones – by providing Federal income tax benefits to qualified taxpayers who invest new capital (i.e., capital gains) into QOFs.  This, in turn, helps fund development/redevelopment projects and/or the development of new businesses therein.

The following represents a summary of some key takeaways of the newly proposed regulations:

Real Estate Developments

  • Unimproved Land – The requirement that the “original use” of tangible property in an Opportunity Zone commence with a QOF will not apply to land, whether improved or not improved. Accordingly, land itself need to be substantially improved; however, the land must be used in connection with the trade or business of the QOF or QOZB.
  • Original Use – The “original use” of tangible property acquired by purchase by any person will commence on the date that the property is first placed in service in the Opportunity Zone in which depreciation or amortization of such property does or can occur. Accordingly, tangible property in an Opportunity Zone that is previously depreciated or amortized by a taxpayer other than a QOF or QOZB would not satisfy the original use requirement.
  • Vacant Buildings – A property’s prior use may be disregarded for the purposes of the “original use” requirement if the existing building (purchased after December 31, 2017) has been vacant for 5 years or more.
  • Working Capital Safe Harbor – QOZBs may extend the 31-month working capital safe harbor if capital deployment delays are attributable to waiting for government action on completed applications that were submitted during the safe harbor period. This clarification is critical for projects located in certain states, such as New Jersey, that can have a lengthy zoning approval process.

Additionally, to help foster the development of new QOZBs in Opportunity Zones, the new regulations expand the working capital safe harbor to apply to QOZB expenditures such as payroll, inventory and occupancy costs during their start-up phases. 

  • Improvements to Leased Property – Improvements made by a lessee to leased property satisfy the “original use” requirement and are considered purchased property for the amount of the unadjusted cost basis of such improvements.
  • Residential Rental Property and Triple Net Leases – The ownership and operation (including leasing) of real property used in a trade or business can be treated as the active conduct of a trade or business; however, merely entering into a triple net lease will not be considered an active trade or business under the Opportunity Zone program.
  • Straddling Opportunity Zones – Certain developments may be located only partially within an Opportunity Zone. If the amount of real property based on square footage located within an Opportunity Zone is substantial as compared to the area of contiguous property outside the Opportunity Zone, the contiguous real property located outside of the Opportunity Zone, then all of the real property would be deemed to be located within the Opportunity Zone. 

Leased Property

Under the Opportunity Zone program, QOZBs can own or lease tangible property for the purposes of satisfying the “substantially all” test (i.e., 70% of the QOZBs property must be “qualified opportunity zone business property”).  Under the proposed regulations:   

  • Improvements made by a lessee to leased property satisfy the “original use” requirement and are considered purchased property.
  • Leased tangible property can constitute “qualified opportunity zone business property” for the purposes of satisfying the 90% asset test and the 70% “substantially all” tests under the regulations, provided that the leased tangible property: (1) is acquired under a lease entered into after December 31, 2017; and (2) substantially all of the use of the leased tangible property occurs in an Opportunity Zone during substantially all of the period in which the QOZB leases the property.
  • Neither the “original use” test nor the “substantial improvement” test is applicable to leased tangible property because a lessee cannot be placed in service for depreciation or amortization purposes as it does not own the property and has no basis therein.
  • Tangible personal property can be leased from a “related” party, provided that (1) the lease is a “market rate lease”, (2) the QOF or QOZB does not make any prepayments under the lease that exceeds 12 months, and (3) the proposed regulations do not permit leased tangible personal property to be treated as QOZB property unless the lessee becomes the owner of tangible property that is QOZB property, and that has a value not less than the value of the leased personal property. Certain anti-abuse provisions were also provided to prevent the use of leases to circumvent the requirement to purchase real property (other than unimproved land).

QOF/QOZB Operations

  • “Substantially All” – The definition of “substantially all” throughout Section 1400Z-2 was clarified to mean:
    • 70% – For determining the amount of usage of QOZB property (including tangible leased property) within an Opportunity Zone.
    • 90% – For measuring the holding period of tangible property or partnership interest or stock in a QOZB, as qualified Opportunity Zone property.
  • Relief for Newly Contributed Assets – QOFs may apply the 90% asset test without taking into account investments received within the preceding 6 months.
  • Reinvestment of Interim Gains – QOFs are given 12 months to reinvest the capital derived from the date of sale of qualified opportunity zone stock, qualified opportunity zone partnership interests or other tangible qualified opportunity zone property.
  • QOF Investments – Must be in the form of cash or property, not services, in order to achieve the tax benefits provided under the Opportunity Zone program.

QOZB Gross Income Test

  • In order to qualify as a QOZB, at least 50% of the QOZBs total gross income must be “from the active conduct of such business” within an Opportunity Zone. The proposed regulations provide three safe harbors (of which only one needs to be satisfied) as well as a facts-and-circumstances test to determine whether a QOZB satisfies the gross income requirements.
  • At least 50% of the services performed (as measured by hours worked) for the QOZB by its employees and independent contractors must occur within the Opportunity Zone.
  • At least 50% of the services performed (as measured by the amounts paid for the services performed) for the QOZB by its employees and independent contractors must occur within the Opportunity Zone.
  • The tangible property of the QOZB and the management or operational functions performed for the QOZB that are located within an Opportunity Zone are necessary for the QOZB to generate 50% of its gross income.
  • Even if none of the aforesaid tests can be satisfied, if based on all facts and circumstances, at least 50% of the gross income of a trade or business is derived from the active conduct of a trade or business within an Opportunity Zone, the 50% gross income requirement could be satisfied.

Other Matters

  • Intangible Property – Under the Opportunity Zone program, a “substantial portion” of the intangible property of a QOZB must be used in the active conduct of a trade or business within an Opportunity Zone, which is defined as “40%” under the proposed regulations.
  • Inventory in Transit – Inventory (including raw materials) of a trade or business does not fail to be used in an Opportunity Zone solely based on the fact that it is in transit either (1) from a vendor to the QOZB’s facility in an Opportunity Zone or (2) from the QOZB’s facility located in an Opportunity Zone to customers outside of the Opportunity Zone.
  • Inclusion Events – Section 1400Z-2(b)(1) provides that the amount of gain that is deferred if a taxpayer makes an equity investment in a QOF will be included in the taxpayer’s income in the taxable year that includes the earlier of (i) the date on which the qualifying investment is sold or exchanged (i.e., an “Inclusion Event”) or (ii) December 31, 2026. Certain Inclusion Events are delineated in the newly proposed regulations, including the taxable disposition (i.e., sale) of certain QOF partnership or stock interests and transfers by gift of qualifying investments, and the distribution to a partner of a QOF partnership or property that has a value in excess of the basis of the partner’s qualifying QOF partnership interest. 

The IRS is now accepting written comments concerning the newly proposed regulations, with a public hearing scheduled for July 9, 2019.  We will continue to evaluate the newly proposed regulations and monitor their impact on new developments and new businesses within Opportunity Zones. 

If you wish to explore potential opportunity zone opportunities in New Jersey or have questions concerning the content of this Client Alert, please contact the author, Matthew J. Schiller.