HomeMy WebLinkAboutMINUTES - 05152012 - C.71RECOMMENDATION(S):
RECEIVE Civil Grand Jury Report No. 1203, entitled "Deferred Maintenance, How Much Longer Can It Be
Deferred?" (attached), and FORWARD to the County Administrator for response.
FISCAL IMPACT:
None.
BACKGROUND:
On April 23, 2012, the 2011/12 Civil Grand Jury filed the above referenced attached report. Per standard procedures,
this action alerts the Board of Supervisors that the report has been received and directs appropriate staff to review the
report, provide the Board of Supervisors with an appropriate response, and forward that response to the Superior
Court within 90 days.
CONSEQUENCE OF NEGATIVE ACTION:
No immediate consequence.
CHILDREN'S IMPACT STATEMENT:
None.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 05/15/2012 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V
Supervisor
ABSENT:Gayle B. Uilkema, District II
Supervisor
Contact: Lisa Driscoll, County Finance
Director (925) 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on the
minutes of the Board of Supervisors on the date shown.
ATTESTED: May 15, 2012
David Twa, County Administrator and Clerk of the Board of Supervisors
By: Carrie Del Bonta, Deputy
cc: Julia Bueren, Public Works Director
C.71
To:Board of Supervisors
From:David Twa, County Administrator
Date:May 15, 2012
Contra
Costa
County
Subject:Civil Grand Jury Report No. 1203, "Deferred Maintenance, How Much Longer Can It Be Deferred?"
ATTACHMENTS
Grand Jury Report No. 1203
A REPORT BY
THE 2011-2012 CONTRA COSTA COUNTY GRAND JURY
725 Court Street
Martinez, California 94553
Report 1203
DEFERRED MAINTENANCE
How Much Longer Can It Be Deferred?
APPROVED BY THE GRAND JURY:
Date: VMd I 49, -3
a
ACCEPTED FOR FILING:
Date: /f, 281%
/
GRAND JURY FOREPERSON
LAE?TNER
GE OF THE SUPERIOR COURT
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 1
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
Contact: Lloyd Bell
Foreperson
925-957-5638
Contra Costa County Grand Jury Report 1203
DEFERRED MAINTENANCE
How Much Longer Can it Be Deferred?
TO: Contra Costa County Board of Supervisors
SUMMARY
Contra Costa County (County) is currently confronted by a large and growing backlog of work
needed to properly maintain the condition of its buildings and facilities. This backlog is called
deferred maintenance. This work should be completed to ensure the continued safe and efficient
utilization of these assets.
The County has faced several years of significant financial challenge. The national recession,
reduced growth in local property taxes, and the state’s ongoing budget deficit have diminished
available resources. At the same time, the County has experienced greater demand by residents
for County services, including employment, healthcare and social services. As a result, the
County Board of Supervisors (Board) has been required to make difficult decisions regarding
which services and programs to fund, and in what amount, and which to defer until economic
conditions improve at some unidentified future time.
One of the programs that the Board has chosen to defer for the past four years is the normal
maintenance and renewal of most of its buildings and facilities. The County needs to adequately
maintain its infrastructure to provide high quality and accessible services to its residents.
Continually deferring facility maintenance, renewal, and modernization needs has resulted in a
deferred maintenance financial liability to the County estimated to be between $251 million and
$265 million at the time of this report. The Board has not followed the recommendations of a
study contracted by the County in 2007. The County has not implemented or achieved the
specified actions, objectives, and goals called for in its own plan and strategy. The Board has not
stated when or how they intend to address the issue.
Failure to perform the projects identified in the study and activities outlined in the plan and
strategy documents could lead to asset deterioration and ultimately asset impairment.
Compounding the monetary implications of the County’s decision is the related health and safety
exposure to the public and employees. Some items classified as critical have been deferred.
Unlike other financial matters of concern to the citizens, current accounting practices allow the
County to choose the amount of detail and in what manner it discloses the seriousness of
deferred maintenance. There are very few places in any County documents or presentations that
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 2
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
refer to the deferred maintenance issue and, as a result, the citizens may be unaware of its
significance and potential future impact on operations and services.
BACKGROUND
Maintenance is the activity of keeping buildings and facilities in acceptable condition. It
includes preventive maintenance, normal repairs, replacement of parts and structural
components, and other activities needed to preserve the asset so that it continues to provide
acceptable service and achieve its expected life. Maintenance excludes activities aimed at
expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or
significantly greater than, those originally intended.
Deferred maintenance refers to expenditures for repairs that were not accomplished as a part of
preventive maintenance or normal repairs and which have accumulated to the point that facility
deterioration is evident and could impair the proper functioning of the facility. Deferred
maintenance projects represent catch-up expenses. Failure to perform needed repairs will
likely result in higher repair costs when the repairs are finally undertaken.
Accumulated deferred maintenance develops for several reasons. Underfunding of routine
maintenance can cause neglect that allows minor repair work to evolve into more serious
conditions. The problem is further compounded by choices made during austere financial times
when routine maintenance is often deferred in order to meet more pressing fiscal requirements.
Another cause is the failure to take care of major repair and/or restore facilities or building
components that have reached the end of their useful life.
In 2007, the General Services Department of the County engaged ISES Corporation to conduct a
comprehensive evaluation of the overall condition of 93 County-owned facilities. Facilities
inspected included office buildings, detention facilities, hospitals, clinics, homeless shelters,
animal shelters, libraries, and maintenance facilities. The resulting Facilities Life Cycle
Investment Program (FLIP) report identified deferred maintenance issues and projects that
needed to be completed in areas related to accessibility improvements, electrical systems,
exterior/structural rehabilitation, fire/life/safety, heating/ventilation/air conditioning systems,
interior finishes/systems, plumbing systems, and general site improvements.
Projects were ranked from Priority 1 through Priority 4. Priority 1 projects were defined as
needing immediate action to return a facility to normal operation, stop accelerated deterioration,
or correct a safety hazard. Priority 2 projects were defined as needing correction within a year to
avoid intermittent interruptions, rapid deterioration, or potential safety hazards. Priority 3
projects included conditions requiring appropriate attention to prevent predictable deterioration
or potential downtime and the associated damage or higher costs if deferred further. Priority 4
projects included items that represented a sensible improvement to existing conditions,
enhancing overall usability and/or reducing long-term maintenance.
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 3
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
The FLIP report further classified the projects into categories, estimated costs per project, and
provided the following summary table:
Table 1: FLIP Report Summary Table
PRIORITIES 2008-2017
Description 1 2 3 4 Estimated Cost
ACCESSIBILITY $362,029 $2,388,206 $5,704,842 $449,994 $8,905,073
ELECTRICAL 0
464,506 27,618,416 7,178,716 35,261,638
EXTERIOR
STRUCTURE 82,351 3,274,020 22,306,486 10,802,040 36,464,896
FIRE/LIFE/SAFETY 825,187 7,944,612 3,463,937
598,433 12,832,168
HEALTH 60,489
44,526 1,843,978 2,154,759 4,103,752
HEAT/AIR/
VENTILATION 0
59,878 57,844,995 14,627,824 72,532,697
INTERIOR FINISHES/
SYSTEMS 729,856 10,535,049 40,048,391 9,744,041 61,057,338
PLUMBING 0
86,189 12,339,773 1,988,541 14,414,503
SITE ISSUES 0
201,027 1,513,385
221,926 1,936,337
VERTICAL
TRANSPORTATION 0
883,865 2,367,969
414,294 366,128
Totals $2,059,913 $25,881,877 $175,052,172 $48,180,568 $251,174,530
In 2007, the total deferred facility maintenance liability exposure was estimated to be $251
million. The FLIP report further advised that “many high cost systems would be due for
replacement within the next ten years and that the County would be wise to prepare itself for
these expenditures since the aging systems would not provide reliable and efficient service much
further beyond their statistical life cycles.” The report also recommended that in order to
maintain the condition status of the facilities at that time, an investment of approximately $24.6
million annually for the next ten years would be necessary. The report called attention to the fact
that allowing the overall condition to degrade over that period would create an undesirable
scenario for the County, given the expenditure projection for the subsequent ten-year period.
In recognition of the importance of this issue, the County Budget Policy adopted in November,
2006 includes two requirements with respect to facility maintenance, as follows:
“The annual budget process will include funding decisions for maintaining the
County’s facility assets, allowing the Board of Supervisors to weigh competing
funding decisions using credible information.”
“Beginning in FY 2008-09, the annual budget process will include a strategic
planning and financing process for facilities renewal…and establishment of a
comprehensive management program for the County’s general government real
estate assets relative to acquisition, use, disposition, and maintenance.”
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 4
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
The Board directed County personnel to prepare and implement the referenced management
program by FY 2008-09.
After receiving the FLIP report and its recommendations, the County included a special section
in the FY 2008-09 Budget Summary publicly acknowledging the report and referencing the $251
million exposure. The Summary states that a plan to address the issue was being implemented.
In August of FY 2009-10, the plan, containing 13 objectives and 11 specific actions, was
completed and submitted for approval and adoption, first to the Board Finance Committee and
then to the full Board. The Board adopted the program, the Real Estate Asset Management
Program (RAMP), and directed County personnel to implement the program. The Board noted
at that time, “If the proposed RAMP goals and objectives are not implemented, there will be less
coordinated and efficient opportunities to optimize the use, preservation and value of the
County’s real estate assets.”
Beginning with the Budget Summary Report for FY 2008-09, and each year thereafter through
FY 2011-12, the County has stated that the issue is being addressed and referenced the amount of
$251 million from the 2007 consultant report as an indicator of the magnitude of the deferred
maintenance problem, even though it may have changed during the four-year period due to few
projects being completed, projects being added to the list, and the impact of inflation on costs.
Due to significant budget constraints, the County budget for fiscal years 2009-10, 2010-11, and
2011-12 did not include appropriations for deferred maintenance. In FY 2008-09, $1 million
was used from the Criminal Justice Construction Fund to address issues in Sheriff, Probation,
and Public Defender facilities. The County also received some small grants from the federal
government that were used on specific projects from the 2007 list. In total, it is estimated that $3
million has been spent on deferred maintenance projects during the past three to four years. The
FLIP report called for expenditures of over $70 million during that period.
In the last status update to the Board Finance Committee in February, 2011, the General Services
Department acknowledged the lack of progress being made and the growing magnitude of the
deferred maintenance issue. This update estimated that the cost of the problem had increased to
$265 million as follows in table 2A below:
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 5
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
Table 2A: General Services Department Status Update Summary Table
TOTAL DEFERRED MAINTENANCE/CAPITAL RENEWAL FOR COUNTY FACILITIES
PRIORITIES 2008 - 2017 System
Description 1 2 3 4 Estimated Cost
ACCESSIBILITY $343,232 $1,785,650 $5,703,867 $480,672 $8,313,421
ELECTRICAL 0 241,212 29,173,520 7,722,510 37,137,242
EXTERIOR
STRUCTURE
77,723
3,020,957
23,456,546
11,392,813 37,948,039
FIRE/LIFE/SAFETY 853,746 7,756,226 3,621,202 643,741 12,874,915
HEALTH 65,071 25,922 1,969,028 2,317,753 4,377,774
HEAT/AIR/
VENTILATION 0
4,563
60,687,883
15,565,453 76,257,899
INTERIOR FINISHES/
SYSTEMS
785,142
11,237,154
42,234,803
10,888,087 65,145,186
PLUMBING 0 86,005 12,938,395 2,106,645 15,131,045
SITE ISSUES 0 154,482 1,553,842 221,859 1,930,183
SECURITY SYSTEMS 100,690 0 0 0 100,690
VERTICAL
TRANSPORTATION 0
2,272,032
2,551,268
914,640 5,737,940
Totals $2,225,604 $26,584,203 $183,890,354 $52,254,173 $264,954,334
In that same status update to the Board Finance Committee, special emphasis was given to the
need to complete Priority 1 and Priority 2 projects, as shown below in table 2B:
Table 2B: General Services Department Table of High Priorities
PRIORITY 1 AND 2 DEFICIENCIES WHICH SHOULD BE COMPLETED AND
ASSOCIATED COSTS
PRIORITIES System
Description 1 2
ESTIMATED
COST
ACCESSIBILITY $343,232 $1,785,650 $2,128,882
ELECTRICAL 0 241,212 241,212
EXTERIOR STRUCTURE 77,723 3,020,957 3,098,690
FIRE/LIFE/SAFETY 853,746 7,756,226 8,609,972
HEALTH 65,071 25,922 90,993
HEAT/AC/VENTILLATION 0 4,563 4,563
INTERIOR FINISHES/
SYSTEMS 785,142 11,237,154 12,022,296
PLUMBING 0 86,005 86,005
SITE ISSUES 0 154,482 154,482
SECURITY SYSTEMS 100,690 0 100,690
VERTICAL
TRANSPORTATION 0 2,272,032 2,272,032
TOTALS $ 2,225,604 $ 26,584,203 $ 28,809,807
Contra Costa County 2011‐2012 Grand Jury Report 1203 Page 6
Grand Jury Reports are posted at http://www.cc-courts.org/grandjury
In response, the Committee offered no advice or direction regarding what specific actions should
be taken to address the lack of progress. Despite being several years behind schedule in terms of
implementing their plan and the recommendations from the study, the most recent guidance
being given by the Board to county staff is to “stay on schedule.”
FINDINGS
1. To date, four years after the FLIP report was completed and primarily because of budget
constraints, very little progress in program implementation has occurred and the magnitude
of the deferred maintenance problem has not been reduced.
2. Most of the actions included in the RAMP document have not been taken and few of the
objectives and goals of the plan have been achieved.
3. Fewer than half of the health and safety related needs identified in the FLIP report have been
addressed.
4. There is a lack of direction being provided by the Board concerning what actions should be
taken to address the lack of progress on completing needed maintenance that has been
deferred.
5. The County has made little progress addressing the issue of deferred maintenance and the
citizens have not been clearly informed regarding the status and magnitude of the problem.
RECOMMENDATIONS
1. The County should determine a way to measure progress of the implementation of the RAMP
directives and use that measure annually as a quantitative way of advising the citizens of the
progress achieved.
2. The County should consider acknowledging the growing magnitude of the deferred
maintenance issue, review the RAMP objectives and actions, and develop a realistic
approach.
3. Beginning with the FY 2012-13 Budget Summary, the County should consider providing
citizens a complete and accurate update of its progress in addressing deferred maintenance
and include disclosure of near-term plans, especially with respect to the critical and highest
priority needs.
REQUIRED RESPONSES
Findings
Contra Costa County Board of Supervisors 1-5
Recommendations
Contra Costa County Board of Supervisors 1-3