Legislature(2021 - 2022)SENATE FINANCE 532
02/23/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Deferred Maintenance | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
February 23, 2021
9:02 a.m.
9:02:28 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Bert Stedman, Co-Chair
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman
Senator Click Bishop, Co-Chair
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Chad Hutchison, University of
Alaska, Juneau.
PRESENT VIA TELECONFERENCE
Mark Davis, Department of Transportation and Public
Facilities, Anchorage; Christopher McConnell, University of
Alaska Anchorage, Anchorage; Cameron Wohlford, University
of Alaska Fairbanks, Fairbanks; Nathan Leigh, University of
Alaska Southeast, Juneau.
SUMMARY
^DEFERRED MAINTENANCE
9:04:37 AM
Co-Chair Stedman wished Mr. Steininger a happy birthday.
9:04:50 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
(OMB), OFFICE OF THE GOVERNOR, discussed the PowerPoint
presentation, "State of Alaska, Office of Management and
Budget; FY2022 Deferred Maintenance Update; February 23,
2021" (copy on file).
Mr. Steininger looked at slide 2, "Deferred Maintenance:
Overview":
Deferred maintenance is maintenance or repair projects
that have been delayed or postponed due to lack of
funds within an entity's normal operating budget
cycle.
State of Alaska property portfolio:
?2,400+ facilities (includes University)
?20 million square feet of space
?14 State Agencies
?Type varies by Agency
Mr. Steininger pointed to slide 3, "Deferred Maintenance:
Funding Recommendations and Targets":
There is no one definitive rule on the level of
preventive maintenance necessary to avoid deferred
maintenance, but a 2012 National Research Council
publication references a range of 2-4 percent of
replacement cost value
FY2020 replacement cost value (excluding University):
$7,676,805,791
2 percent = $153.5 million
4 percent = $307.1 million
9:09:02 AM
Mr. Steininger addressed slide 4, "Deferred Maintenance:
Backlog $597,404.3 (excluding University's $1.4 billion)."
He shared that the Department of Transportation and Public
Facilities (DOT) had the vast majority of the deferred
maintenance backlog, because DOT had the majority of the
state facilities, outside of the University. He shared that
DOT had a little over $250,000 in deferred maintenance
backlog. He remarked that the Department of Administration
(DOA) also had the next largest share of the backlog,
because DOA managed the state office buildings. He stated
that there were other facility-heavy departments, such as
the Department of Natural Resources (DNR), which had many
remote facilities requiring maintenance.
9:10:33 AM
AT EASE
9:10:41 AM
RECONVENED
9:10:47 AM
Co-Chair Stedman noted that the committee members had the
referenced spreadsheet in their folders.
Senator von Imhof wondered whether the Department of
Corrections (DOC) included the Palmer Correctional Center.
Mr. Steininger replied that the facility was not yet open.
He pointed out that the list did not include many major
maintenance at the facility, because most of that work was
accommodated through the reopening of the facility. He
explained that specific capital designations may not be
considered deferred maintenance, but the list might include
some maintenance items.
Senator Wilson wondered whether the administration looked
at a methodology of combining deferred maintenance into one
category.
Mr. Steininger replied in the affirmative. He furthered
that it was an ongoing challenge.
Mr. Steininger looked at slide 5, "Deferred Maintenance:
Governor's Proposed Budget." He noted that in FY 21 there
were not any appropriations for deferred maintenance, so
any deferred maintenance utilized in that year's budget was
used from leftover funds from other deferred maintenance
appropriation.
9:15:27 AM
Co-Chair Stedman looked at the "fast track supplemental",
which had effective dates before July. He wondered whether
there was a need for the projects to be in the "fast track
supplemental" or whether it was a budgetary decision.
Mr. Steininger replied that there was an actual need and
benefit for some of the projects to have an earlier
effective date.
Co-Chair Stedman felt that there would need to be a balance
of the need for the funds versus the budgetary clarity.
Senator von Imhof queried the source of money for the
Alaska Capital Income Fund.
Mr. Steininger replied that the fund was primarily funded
by deposits from the Permanent Fund from the State vs.
Amerada Hess settlement.
Senator von Imhof wondered whether the Alaska Capital
Income Fund was a sweepable fund.
Mr. Steininger replied in the affirmative.
Senator von Imhof wondered whether there would be a "hole"
in the budget of $56 million, should those funds not be
swept.
Mr. Steininger replied in the affirmative.
Co-Chair Stedman queried the total "hole" that would be
created in the budget, should there be no reverse sweep.
Mr. Steininger replied that he did not recall the number,
but agreed to provide that information.
Co-Chair Stedman recalled that it was approximately $140
million.
9:20:40 AM
Senator Wilson queried the current balance of the Alaska
Capital Income Fund, and the level of sustainable draw for
the account.
Mr. Steininger replied that, generally, there was not much
of a balance in the Capital Income Fund. He explained that
over recent years, the full balance was used for
appropriation.
Co-Chair Stedman remarked that the fund was created as a
holding account to use the funds for the capital budget.
9:23:19 AM
MARK DAVIS, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, ANCHORAGE (via teleconference), discussed slide
6, "Deferred Maintenance: Statewide Approach":
Deferred Maintenance moving forward into FY2022
Collaborating with OMB and the State Facilities
Council
Prioritizing deferred maintenance projects across
all executive branch agencies
Facilities Council deferred maintenance workshops
anticipated February through May, with goal of
submitting Statewide prioritized list to OMB May
2021
Projects to be prioritized based on combination
of significant factors including facility
importance, building system, and urgency to
create a *Project Index Value (PIV).
Mr. Davis highlighted slide 7, "Deferred Maintenance:
Transition to Enterprise System":
Where we are going
The State's Enterprise Computerized Maintenance
Management System (CMMS) currently in use
AssetWorksAiM
Includes modules for managing assets, housing,
and prioritizing statewide facilities deficiency
and renewal needs
Further training on the system this year to
transition toward using it for deficiencies and
deferred maintenance project needs
Mr. Davis discussed slide 8, "Property Disposal Directive:
Status":
?February 12, 2019 Property Disposal Directive
Directed Executive Branch to investigate options
available for reducing the State's assets by
identifying properties that could be divested
?A multi-departmental workgroup was formed, inclusive
of State Facility Council members and project managers
from the DOT/PF Division of Facilities Services
Property Disposal Report with 'Consider'
Candidates submitted late 2019 and updated 2020
?Next Steps:
OMB discussions with individual Departments on
the Consider candidates, any further cost benefit
analyses, and approvals of selected Consider
candidates
Resource and implement the disposal of the
approved properties
Senator von Imhof wondered whether some space had been
added to the potential disposal list because COVID had
turned to telework, so there may not be a requirement for
all the facilities.
Mr. Davis replied that there had not been a revisiting of
the list for the disposal initiative.
Co-Chair Stedman surmised that the list that was submitted
the year prior was the current list.
Mr. Davis replied in the affirmative.
Co-Chair Stedman asked that the list be resubmitted to the
committee.
Mr. Davis agreed to provide that information.
Co-Chair Stedman remarked that the list may be examined in
the subcommittee process.
9:29:30 AM
CHAD HUTCHISON, UNIVERSITY OF ALASKA, JUNEAU, pointed to
slide 9, "UA's Facilities Overview":
?Facilities across the University of Alaska are
extensive and a unique subset of public facilities
?397 facilities totaling over 8 million square
feet, valued at over $4 billion, and average age
35-years old
?Facility type varies from residential housing,
general offices and classrooms to complex
laboratories
?Deferred Maintenance, Renewal, and Repurposing
?Backlog over $1.3 billion
?FY22 funding request $50 million
Sold 10 facilities (38,000 gross-square feet)
Demolished 13 aged facilities (28,000 gross-
square feet)
?Emergency repairs are becoming more common place as
major components and systems surpass their normal
life-span.
?Resources are going toward reactive rather than
preventative maintenance, increasing the risk of
higher costs in the future and reducing UA's
resiliency.
?Fiscal Responsibility
?Leasing space to third parties and exploring
public-private partnership opportunities
?Exploring and implementing energy efficiencies
Senator von Imhof remarked that the federal government may
provide subsidies for upgrading to energy efficient
buildings. She wondered if that would be a part of the
utilization.
Mr. Hutchison replied that the funds would be used if the
subsidies became available.
Senator von Imhof stressed that the Elmer Road extension
was a prime piece of real estate. She felt that it would be
a significant positive impact.
Mr. Hutchison was not in a position to remark on that
issue, and agreed to provide a more detailed response.
Senator von Imhof wanted to evaluate the future potential
of the university, as land was getting "squeezed" in
Anchorage.
Mr. Hutchison agreed.
Senator Olson wondered whether there would be an issue of
competing with the private sector with public money.
Mr. Hutchison replied that there was an evaluation of what
could benefit all Alaskans.
9:36:04 AM
CHRISTOPHER MCCONNELL, UNIVERSITY OF ALASKA ANCHORAGE,
ANCHORAGE (via teleconference), looked at slide 10, "UA
Anchorage Deferred Maintenance Projects":
Building Interior and Systems Renewal $6.45M
?Energy Service Company (ESCO) investment: Eugene
Short Hall, Wendy Williamson Auditorium,
Professional Studies Building, and Social
Sciences Building ($2.96M in G.O. Bond bill)
?UAA/APU Consortium Library: core mechanical
upgrades
?Rasmuson Hall: elevator and infrastructure
upgrades to improve reliability
Building Envelope and Roof Systems Renewal $2.35M
?Lucy Cuddy and campus spine roofs; repair and
replace roofs, doors, windows, vapor barriers,
siding, weatherization, and insulation
Campus Security and Safety $1.9M
?Access Control and Keyway Software/Hardware
Installation
?Review, design, and implement security measures
for buildings, classrooms, and other facilities
Regulatory Compliance, Safety Improvements, and Code
Upgrades $2.1M
?Electrical Safety, Exit Signage, and ADA
Improvements
Community Campus Regulatory Compliance $3M
?Kodiak, Kenai, Homer, Mat-Su and Valdez
Electrical, Exit Signage, and ADA Improvements.
Campus Exterior Infrastructure and Signage Renewal
$0.5M
?Repair and upgrade storm sewer drains and
improve water supply systems
Senator von Imhof wondered whether Coronavirus Aid, Relief,
and Economic Security (CARES) Act money could be used for
the HVAC system.
Mr. McConnell replied that the department was actively
exploring that option.
Co-Chair Stedman asked that a more specific answer be
provided to the committee.
Mr. Hutchison agreed to provide that information.
9:40:15 AM
CAMERON WOHLFORD, UNIVERSITY OF ALASKA FAIRBANKS, FAIRBANKS
(via teleconference), looked at slide 11, "UA Fairbanks
Deferred Maintenance Projects":
Building Interior and Systems Renewal $20.1M ($18.7 in
G.O. Bond bill)
?Renewal and modernization of largest residence
halls due to failing plumbing systems
Campus Infrastructure and Exterior Renewal $4.4M
?Existing sanitary sewer line is severely
degraded wood-stave pipe
?Centralized chilled water utilities to reduce
energy consumption
Safety and Regulatory Compliance $1.9M
?30 fire alarm panels have reached end of life;
maintaining alarm systems required for building
occupancy
?Interior doors and hardware will be replaced to
improve campus security and install a new keying
system
Rural and Community Campus Renewal $2.2M
?Rural Campus fire alarm panels have reached end
of life; maintaining alarm systems required for
building occupancy
?Kuskokwim Campus Vocational Ed Center electrical
system replacement to meet code and programmatic
challenges
Building Envelope and Roof Systems Renewal $1.6M
?UAF has a multi-year plan to replace exterior
door locks to reduce maintenance and increase
building security
?Window and roof replacements for end-of-life and
to reduce energy consumption
Community and Technical College Renewal $300k
?CTC University Park renewal of the original
restroom facilities that serve growing programs
in workforce development
9:45:04 AM
Senator von Imhof noted a challenge that UAF was heated by
coal.
Mr. Wohlford agreed.
Senator von Imhof wondered whether UAF would utilize the
gas storage facility.
Mr. Wohlford replied in the affirmative.
Co-Chair Stedman asked for the cost factor dealing with
coal, and the conversion for natural gas.
Mr. Wohlford agreed to provide that information.
9:47:36 AM
NATHAN LEIGH, UNIVERSITY OF ALASKA SOUTHEAST, JUNEAU (via
teleconference), pointed to slide 12, "UA Southeast
Deferred Maintenance Projects":
Building Envelope and Roof Systems $0.7M
?Novatney roof is more than a decade past its
warranty date
?Paul building mansards are crumbling under
Ketchikan weather
?Mourant window replacement phase 3; new windows
provide greater energy efficient and are more
suitable to the current use
Safety and Regulatory Compliance $1.6M
?Welding laboratory fire alarm replacement;
manufacturer no longer supports this 20+ year old
system
?Paul Building (Ketchikan) entry reconstruction
to meet ADA requirements
?Emergency notification speakers in Mourant
Cafeteria
Exterior Infrastructure $0.7M
?Six projects consisting of repairing or
replacing asphalt parking lots, concrete
sidewalks, roads and street lighting, ADA access
ways, and covered stairways
Interior Systems $0.2M
?Elevators in Paul and Soboleff buildings are
more than 49 years old, Repair technicians say
future repairs could be impossible due to lack of
replacement parts.
?Boilers in TEC and Housing are 30+ years old and
need replacing
9:50:42 AM
Co-Chair Stedman queried the submitted amount for inclusion
in the governor's budget for the UA deferred maintenance
budget.
Mr. Hutchison replied that the committee had a sheet that
showed the overall deferred maintenance, and agreed to
provide that information.
Co-Chair Stedman wondered whether the list was available
for the committee.
Mr. Hutchison replied in the affirmative.
9:53:14 AM
AT EASE
9:56:18 AM
RECONVENED
9:57:06 AM
Co-Chair Stedman would like a general rundown of the
document titled, "University of Alaska Prioritized Capital
Projects that are General Obligation (GO) Bond Eligible"
(copy on file). He remarked that there would be a
discussion regarding the capability of using CARES Act
funds for the deferred maintenance.
Mr. Hutchison discussed the document. He remarked that
there was an outline of two scenarios. He looked at page 2,
which was titled, "University of Alaska Prioritized Capital
Projects that may not Meet All General Obligation Bond
Criteria."
Senator Wilson wondered whether the G.O. bonds were already
included in the package.
Co-Chair Stedman shared that the bond package was still
under discussion.
Mr. Hutchison clarified that the aske was in the $50
million range.
Co-Chair Stedman requested a revised priority list.
10:05:37 AM
Mr. Hutchison agreed to provide that information.
Co-Chair Stedman thought it would be helpful to all budget
discussions to have an updated list.
Senator von Imhof mused that there had been discussion of
using CARES Act monies for the university.
Mr. Hutchison agreed, and stated that there was a current
exploration of that option.
Co-Chair Stedman asked that the potential projects be
highlighted that could be funded by the CARES Act money.
Mr. Steininger stated that the remaining slides would
address that question.
Mr. Steininger addressed slide 16, "Deferred Maintenance:
State Owned Facilities."
Mr. Steininger looked at slide 17, "Deferred Maintenance:
Facility Types."
10:10:01 AM
Co-Chair Stedman surmised that the other agencies were much
larger than the university.
Mr. Steininger replied in the affirmative. He furthered the
university had a larger square footage than any individual
agency.
Mr. Steininger pointed to slide 18, "Deferred Maintenance:
Funding History."
Co-Chair Stedman wondered whether there be something
similar from 1998 to 2005.
Mr. Steininger replied that it might be difficult to access
the data, but felt that there were similar deferred
maintenance at that time.
Mr. Steininger stated that slides 19 through 24 went into
detail about the calculations to performed to examine the
factors to determine the priorities.
Co-Chair Stedman asked for information about slide 24.
Mr. Davis stated that slide 24, "Deferred Maintenance:
Statewide Approach Example" was a list of actual
projects.
10:15:53 AM
Senator Wielechowski wondered when the methodology was
adopted by the state, and whether it was standard in other
industries or states.
Mr. Davis replied that the methodology was adopted in early
2020.
Co-Chair Stedman queried the previous methodology.
Mr. Davis replied that, previously, the prioritization
across the state were fractionalized so there was no
consistent methodology.
Senator Wilson wondered whether the mission alignment index
was more of a subjective system.
Mr. Davis responded that there was always some subjective
issues, but felt that the new system helped with cohesion
across departments.
Senator Wilson wondered how there was some certainty that
the departments aligned their priorities.
Mr. Davis agreed, and stated that there would be
discussions about mission alignment and values.
Mr. Steininger discussed slide 25, "Property Disposal
Directive: Methodology":
?Methodology involved departments categorizing their
facilities into 'Consider' or 'Non-Consider'
categories
Consider: These buildings were identified by
departments as candidates for divesting.
Candidate buildings may be appropriate for
demolition, space consolidation, or selling.
Non-Consider: Identified by departments as non-
candidates. Departments were asked to provide
justifications for each non-consider building.
Co-Chair Stedman requested an updated list.
10:24:04 AM
Mr. Steininger looked at slide 26, "Property Disposal
Directive: The Divestment Process":
?Executive Branch follows an established process for
divesting buildings through the Departments of
Administration and land through Department of Natural
Resources with exception of:
Buildings on airport land under DOT and PF
authority (AS 02.15.060.070)
Buildings acquired by DOT and PF from the
acquisition of land for highway projects (AS
19.05.070)
Education buildings (AS14.07.030)
DNR buildings which improve state lands (AS
38.05.035)
Federally funded buildings, in which each federal
agency has its own rules and may require federal
funds to be refunded. For example, DMVA federal
use or funded armories, in which DMVA is
following federal guidelines in their current
facilities divestment program.
or those facilities with little value or
unlikeliness to sell, other factors for consideration
include suspension of all maintenance and repair
costs, liability associated with vacant structures and
demolition costs.
10:25:02 AM
Co-Chair Stedman requested the status of the Governor's
Mansion and the Wickersham House.
Mr. Steininger agreed to provide that information.
Mr. Steininger pointed to slide 27, "Deferred Maintenance:
Known Disposed Assets":
?Department of Health and Social Services Ketchikan
Youth Center Returned to the City
?Department of Health and Social Services Nome Youth
Facility in-progress
?Department of Fish and Game Birch Lake Land Parcel
?Department of Natural Resources Sold Facility
Associated with the Agriculture Revolving Loan Fund
?Department of Military and Veterans Affairs Divested
15 Army National Guard Facilities with 50 Others
Planned or In Progress
?Department of Transportation and Public Facilities
Sold Two Facilities from KulisAnchorage
?University of Alaska Reduced Space through Property
Sales, Elimination of Leases, and Demolition
Senator von Imhof requested the list by year. She wondered
whether there were any buildings that were currently on the
market.
Mr. Steininger agreed to provide that information.
Co-Chair Stedman shared the following day's agenda. He
stated that there would be a video presentation.
ADJOURNMENT
10:29:11 AM
The meeting was adjourned at 10:29 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 022321 SFIN Deferred Maintenance Overview 2021.02.23.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 022321 UA Deferred Maintenance Priority List.pdf |
SFIN 2/23/2021 9:00:00 AM |
UA Deferred Maintenance |
| 022321 FY2021 Deferred Maintenance Backlog 1.29.2021.xlsx |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 022321 Statewide DM Backlog Excel page 1.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 022321 Q and A Follow Up from UA - FINAL.pdf |
SFIN 2/23/2021 9:00:00 AM |
University of Alaska |
| 022321 Attachment 1 - Property Disposal Directive Report.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 2-23-2021 SFIN DM Hearing Response Letter.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 022321 Attachment 3 - DMVA Divestiture Update.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |
| 022321 Attachment 2 - UA Space Reductions.pdf |
SFIN 2/23/2021 9:00:00 AM |
Deferred Maintenance |