Dnr 10-Year Capital Asset Need

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Dnr 10-Year Capital Asset Need This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp DNR 10-YEAR CAPITAL ASSET NEED: TAKING CARE OF WHAT WE HAVE January 2019 Minnesota Department of Natural Resources Management Resources, Operations Services Division 500 Lafayette Road St. Paul, MN 55155 Kent Lokkesmoe 651-259-5701 [email protected] www.mndnr.gov As requested by Minnesota Statute 3.197: This report cost approximately $9,900 to prepare, including staff time, printing and mailing expenses. TABLE OF CONTENTS KEY MESSAGE 4 GOAL 4 OVERVIEW 4 WHERE THE DNR IS TODAY 6 WHAT THE DNR IS ACCOMPLISHING 7 TOTAL COST OF OWNERSHIP 8 ASSET LIFE CYCLE 8 ASSET LIFE CYCLE DEFINITIONS 9 BUILDINGS AND SITE INFRASTRUCTURE 10 BUILDING COMPONENTS 12 SITE INFRASTRUCTURE 13 WATER AND SEWER SYSTEMS 14 ROADS, TRAILS AND BRIDGES 15 PUBLIC WATER ACCESSES (PWA) 16 LAKE SUPERIOR SMALL CRAFT HARBORS, MARINAS, AND PROTECTED ACCESSES 17 CAMPSITES, GROUP CAMPS, RECREATION AREAS, AND DAY-USE AREAS 18 HATCHERIES AND NURSERIES 19 WATER CONTROL STRUCTURES (WCS) 20 MONITORING WELLS 21 APPENDIX A: DATA SOURCES 22 APPENDIX B: DAM SAFETY PROGRAM 23 APPENDIX C: TEN YEAR CAPITAL ASSET PLAN—DATA AS OF DECEMBER 12, 2018 24 3 KEY MESSAGE The Department of Natural Resources (DNR) requires $169,000,000 annually over the next 10 years from all funds in order to maintain and renew the capital assets under its custodial control The condition of capital assets will continue to decline and maintenance costs will increase each year this amount is not invested GOAL Restore and maintain all capital assets as “average” or better condition within 10 years OVERVIEW DNR’s three-pronged mission to conserve and manage natural resources, to provide recreational opportunities, and to provide for commercial use of natural resources depends upon a wide range of facilities and infrastructure There are obvious facilities, like campgrounds at state parks and boat ramps at popular fishing lakes There is also less obvious infrastructure, like monitoring wells, which provide basic information on ground water Minnesotans rely on the DNR buildings and infrastructure to support the quality of life they expect This is the third iteration of the DNR 10-Year Capital Asset Plan since 2015 DNR capital assets consist of any structure, with a useful life of at least 10 years, built on DNR administered land A wide range of capital assets are addressed in this report, including buildings, roads, trails, bridges, water and sewer systems, fish hatcheries and water control structures This document presents the capital asset need, which would support the DNR’s mission of providing recreation and economic opportunities, and would bring all DNR capital assets up to “average” or better condition within 10 years The intent is for all capital assets to be safe, functional, accessible, support employee productivity, and model the way for environmental sustainability and energy use 2018 DNR Capital Asset Facts Current Replacement Value $3,043,871,862 Deferred Maintenance $445,794,798 4 Photo 1: Jay Cooke State Park—deteriorated roof on Oldenberg Sanitation building. Photo 2: Windom Co-located renovated Area Office. Photo 3: Windom Co-located Area Photo 4: Windom Co-located Office Photo 5: Windom Co-located Area Office exterior back of building before exterior water damage. Office exterior back of building after reconstruction. reconstruction. 5 WHERE THE DNR IS TODAY The Current Replacement Value (CRV) of DNR capital maintenance than has been available in prior years assets is over $3 Billion with a deferred maintenance However, the need for investment continues to grow backlog of $446 million Historically, funding has not A detailed list of capital asset types, with CRV; percentages been adequate to manage and maintain DNR capital for Preventative Maintenance, Renewal and Replacement; assets The deferred maintenance backlog has continued Deferred Maintenance activities; and asset life cycles is to grow and compound provided in Appendix C The priorities for funding are to As described in previous reports, it is not feasible to address health and safety, building integrity, Americans complete the entire deferred maintenance backlog with Disabilities Act compliance, code violations, improving at one time A realistic strategy is to address the total work conditions, environmental sustainability, and deferred maintenance over 10 years This deferred improving public access to DNR lands and facilities maintenance catch-up would be $45,000,000 annually Not maintaining facilities in a timely manner results in Combined with the annual needs for Preventative higher maintenance costs due to accelerated deterioration Maintenance and Renewal and Replacement, the and increased proportion of work being completed on an total annual need is $169,000,000 The 2017 and 2018 emergency basis Catching up with deferred maintenance bonding bills provided $45 million in Natural Resources and continuing adequate funding for maintenance Asset Preservation funds, funds for the Betterment needs will result in better service to the public and of Buildings, and appropriations for specific Parks and lower future obligations by reducing costlier renewal Trails projects These capital infusions have provided and replacement activities DNR with more resources to address deferred Figure 1: Total DNR Costs CURRENT DEFERRED ANNUAL ANNUAL ANNUAL DEFERRED ANNUAL REPLACEMENT MAINTENANCE PREVENTATIVE RENEWAL AND MAINTENANCE TOTAL VALUE (CRV) MAINTENANCE REPLACEMENT CATCH-UP (2018 - 2027) $3,043,871,862 $445,794,798 $12,887,707 $111,006,082 $44,579,480 $168,691,742 Figure 2: Actual Trending Data for the last 2 years. Future prediction of Preventative Maintenance, Renewal and Replacement, and Deferred Maintenance Catch-up if fully funded annually over the next 10 years. 500,000,000 Deferred 450,000,000 Maintenance Catch-up 400,000,000 350,000,000 Renewal and 300,000,000 Replacement 250,000,000 Preventative 200,000,000 Maintenance 150,000,000 Total Deferred 100,000,000 Maintenance 50,000,000 Projected 0 Deferred FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Maintenance This graph shows projected deferred maintenance declining to zero in ten years and the annual investments needed to achieve the projected trend. 6 WHAT THE DNR IS ACCOMPLISHING Minnesota Statute 84 946 established the Natural Resources Asset Preservation (NRAP) program to address the diverse capital assets managed by the DNR This includes; buildings, water and sewer systems, roads, trails, bridges, culverts, water control structures, public water accesses, campgrounds, and other miscellaneous assets Recent NRAP bonding appropriations: 2014 $10,000,000 2017 $15,000,000 Even with 2018 $30,000,000 recent bonding appropriations, Deferred Examples of 2017 and 2018 NRAP (Natural Resources Asset Preservation) funding utilization includes: Maintenance • Design of new Itasca State Park wastewater system—$500,000 increased • Windom Co-located Area Office repairs due to water intrusion—$3,000,000 by $75 million • Forestry roads and bridges—$1,190,000 this year, • Thief Lake Wildlife management area dam reconstruction—$750,000 or about • Sakatah State Trail rehabilitation—$1,200,000 20% annually. • Jay Cooke State Park waterline replacement and sanitation building—$2,000,000 • Addressing unacceptable and poor building components (roofs, windows, etc )— $5,000,000 • Wildlife Roads and Bridges—$935,000 • Blue Mounds State Park, connect to rural water—$650,000 • Split Rock Creek State Park septic system replacement—$120,000 • Badoura Tree Nursery reroofing—$250,000 • Itasca State Park, Douglas Lodge membrane roof replacement—$160,000 Many NRAP projects are multi-year efforts that involve phased completion including pre-design, design and construction In addition to NRAP funding, DNR invests $4 9 million through the Facilities Management Account (FMA) annually The FMA is established in Minnesota Statue 84 0857 to provide for buildings and infrastructure management Divisions are assessed FMA fees based on the space they occupy The funds are used for internal technical assistance, smaller projects and non-bondable projects These projects include basic building repairs such as window replacement, interior finishes, floor coverings, furnace and water heater replacements, projects to meet accessibility or health and safety standards Operation of facilities is the responsibility of the custodial divisions FMA funds are also used for urgent, unexpected and unplanned repairs 7 TOTAL COST OF OWNERSHIP ASSET LIFE CYCLE Total Cost of Ownership (TCO) is industry standard The asset life cycle can be divided into four main terminology that reflects the full life cycle costs of an phases: develop, operate, maintain, and when renewal asset, including acquiring, operating, maintaining, and and replacement is no longer feasible—divest The divesting a capital asset While the general elements majority of DNR capital assets are in the operation are consistent, the specific life cycle activities differ and maintenance phases among types of assets Generally, life cycle management Most of an asset’s life cycle cost (80%) stems from uses best practice methods to achieve the following operations and maintenance, not acquisition and objectives: construction or divestment, as operations and • Ensure asset availability and adequacy where and maintenance expenses occur year in and year out when needed Attentive design and initial
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