The problem with waiting

Deferred maintenance on public buildings in Alaska – state, university and school districts – is rising and headed toward the $2 billion mark.

Former Gov. Sean Parnell made a dent in the problem with a $500 million catch-up program spread over five years but that ended when Parnell left office. Shortly after the price of oil, and state revenues, took a dive.

Given the state revenue outlook there’s little prospect for larger state capital budgets in the near future but Gov. Bill Walker wants to take an $800 million bite out of total that would be funded by a temporary three-year state employment tax the governor has proposed. Prospects for that being approved by legislators seem dim in an election year.

There’s also discussion in the Legislature of a state general obligation bond package. Part of that might be devoted to catching up on maintenance.

State budget officials told the Senate Finance Committee in Juneau that thin state capital budgets, a consequence of the collapse in oil revenues, are now taking a toll on public infrastructure.

The maintenance backlog tipped up $60 million between fiscal years 2017 and 2018, and is now estimated at $1.87 billion, Adam Bryan, capital budget coordinator in the Office of Management and Budget, told the senate committee.

The state maintains 2,200 facilities statewide among 14 separate agencies including the University of Alaska and the court system, Bryan said. This encompasses 19 million square feet of space. Eight million square feet of that is managed by the university with its classrooms, laboratories, dormitories and other facilities.

The combined replacement value of the state-managed infrastructure is estimated at $8.6 billion, Bryan said.

State officials also hope a new, consolidated maintenance program initiated by the state Dept. of Transportation and Public Facilities will at least slow the increase, at least for state-owned buildings.

The agency will coordinate work on buildings for several state agencies beginning this year, Mark Davis, DOTPF’s facilities director, told the Senate committee.

About about half of the $1.87 billion total is in buildings in the University of Alaska system. The university is spending about $50 million a year to at least keep ahead of the problem, UA spokeswoman Robbie Graham said. Much of the university’s deferred maintenance is at University of Alaska Fairbanks, the UA system’s oldest campus.

At UAF’s Bartlett Hall, where students are housed, the sewage system is suffering periodic failures and five of six residential apartment complexes at UAF need new roofs, UAF spokeswoman Marmian Grimes said.

In Seward, where UAF’s research vessel Sikuliaq is based, the dock used by the vessel is near the end of its useful life and has weight restrictions. Any heavy loading must be done at the nearby Alaska Railroad dock.

The National Science Foundation, which funds the university’s operations for the research vessel, takes a dim view of this. “The NSF grant to operate the Sikuliaq is a competitive one and we need to have facilities that are appropriate for operating a world-class research vessel,” Grimes said.

The Sikuliaq is owned by the federal government and operated by the university under contract.

One happy exception to the statewide problem is at the university’s Mat-Su campus, mainly because many of its buildings are newer. “Unlike many campuses we have no urgent deferred maintenance problem,” Mat-Su campus director Talis Colberg said.

“We have six major buildings built over a four decade period they all appear as though they were built at the same time. Our facilities director has kept basic things on a rotating and continuous upkeep. Roofs, boilers, carpets, and painting are all routinely done,” Colberg said.

Of the $1.87 billion total maintenance backlog $1.66 billion is in state-funded agencies including the university and courts, and another $205.6 million is with school districts, Bryan said.

School district deferred maintenance is likely an underestimate because the total of the major maintenance project list filed by the districts every year with the Dept. of Education and Early Development, Bryan said.

It’s probable that there are many more, smaller school maintenance projects not on the education department list, he told the Senate committee.Of the $205.6 million school district total, however, $142.9 million is a state obligation.

Meanwhile, a pilot program to centralize and coordinate maintenance on 28 state buildings in Juneau has been successful in more efficiently keeping up maintenance, to keep the backlog from growing, and will be expanded statewide this year.

DOTPF has formed a new Centralized Facilities Services group that took on management of 28) building in Juneau previously maintained by separate agencies.

The state deferred maintenance backlog accumulated gradually over many years, and began in the late 1990s in a period of sharp oil price and revenue declines, which decimated state capital budgets. When oil revenues turned up the Legislature devoted capital spending to new projects rather than catching up on the deferred backlog, so the problem did not go away despite efforts by governors like Parnell and Walker to get at the problem.

OMB’s presentation, however, also sparked a discussion in the Senate committee over a phased divestiture of state buildings that are unused or underused. “We’re being asked to impose a tax on Alaskans (Walker’s employment tax) to pay deferred maintenance on buildings we may not need,” Sen. Natasha von Imhof said.

Sen. Gary Stevens, R-Kodiak, recalled that when a new fish and game building was built in Kodiak the old building was retained, with its upkeep costs. Sen. Peter Micciche, R-Kenai, said it can be politically tough to sell off public buildings. He learned that when he was mayor at the City of Kenai. Still, it can be done, Micciche said.

Von Imhof asked if unneeded facilities are sold off, would the maintenance backlog drop? She also asked whether the state could sell buildings and lease them back, and whether savings would result. “Lease or buy analyses are common in the private sector. Are you doing this?” von Imhof asked Bryan.

Micciche said he has been asking for years for a state building divestiture plan but has yet to see one. Sen. Click Bishop noted problems in selling older buildings, like contamination. Micciche said his Environmental Covenants Act bill, Senate Bill 64, now in the state House, would provide a way for property buyers to deal with environmental liability.

Bryan said one agency that is busy with a divestiture program is the Dept. of Military and Veterans Affairs, with its Army National Guard armory buildings. DM&VA has transferred eight armories so far, mostly to local communities or nonprofits, and is working on the divestiture of 57 more. The agency will retain 19 armories when the divestiture is complete.