By Marshall MacFarlane
From the August 2023 Issue
When I joined the Town of Gilbert (population 260,000) in February of 2019, the first phase of its Long Range Infrastructure Plan (LRIP) was well underway. This effort was so important that a presentation to the town’s executive team on some LRIP questions was a part of my interview process. I guess it went OK, as I eventually joined the Team as Gilbert’s Parks and Facilities Manager. This position had responsibility for over 1,000,000 square feet of facilities, and nearly 800 acres of parks. Due to the dual nature of the position, it was housed in the Parks and Recreation Department, and I reported to the Department’s Director.
Gilbert, once the “Hay Capital of the World,” had grown in less than 100 years from a population of just under 900, to over 260,000 in 2021. It is a relatively affluent community, found approximately 25 miles southeast of Phoenix. It is an award-winning community; winning awards for everything from its low crime rates to its economic prowess and overall livability.
Gilbert’s rapid growth was part of the catalyst for its LRIP program–a large portion of the town’s assets were going to age out in the same period of time. From parks to sewer pipes, and facilities to lift station–much of Gilberts infrastructure was constructed or installed in the same two or three decades of explosive growth–meaning that many assets would need to be upgraded or replaces in a very small window of time, relatively speaking. This was a looming problem that the town decided to address. To that end, the town’s executive team made this a formal goal by making it a WIG (Wildly Important Goal): Long Range Infrastructure Plan. Complete the first comprehensive, town-wide LRIP, and bring a funding policy to council for consideration at the spring 2020 financial retreat.
The bulk of the project was taken on by the Public Works Department, along with the Parks and Facilities Departments. These two departments together were the owners and/or managers of the bulk of the town’s assets, and they would be responsible for maintaining, upgrading, and eventually replacing these assets that are such a vital part of the community.
The project was conducted on parallel paths by the two departments. The separation was necessary due the two funding models–parks and facilities repair and replacement are usually funded via general funds, while public works’ assets are usually maintained via funding provided at least in part, through water and wastewater billing.
Assets & Liabilities
The first step was to identify and catalog assets, which included: Useful Equipment Life (UEL); recommended preventive maintenance plans; value; number of assets; type; original costs; and more. Next, assets were evaluated as to their current “spot” on its individual life cycle, and estimated replacement cost(s). The town then utilized a third-party (Ameresco) to verify the data gathered, do a deeper dive in asset condition (including facilities) and replacement costs, and created a number of data sets that would enable taxpayers, staff, and council alike to analyze the issues from a number of perspectives. Finally, Ameresco provided the analyses and calculations that demonstrated the current value of the assets, the replacements costs over the next 50 years or so, and the required funding to keep the assets at a prescribed condition or rate of replacement. The cherry on top of this analysis was really to show the funding gap, and the influx of funding needed annually moving forward.
All of this work led to a total liability for the town (regarding assets) as stated in Figure 1 above. In essence, “The total liability represents the cumulative renewal needs of the portfolio based on the findings and results obtained from the life cycle renewal cost analysis.” Taking Parks and Rec’s assets as an example–there was a calculated liability of just over $7 million in 2020–comprised mostly of deferred maintenance backlog. By 2049, that calculated total liability would grow to just over $225 million, without any funding. Just as town executives had expected, this was a huge looming problem that needed to be addressed.
Public Works’ assets are a little trickier to demonstrate, due to both the funding model and analysis of deterioration/life cycle for things like water plants and sewer plants. For Parks and Facilities, however, there was a great relative measurement to use as a reference point–Facilities Condition Index. Ameresco had created FCI scores for town facilities and parks. It was a great visual to show that in order to keep FCI’s at certain level, this was the funding that had to be maintained. It was very easy to demonstrate FCI over time, overlayed with funding and no funding models. The best thing of course, is that once demonstrated, these principles could be applied to all of the town’s assets found in parks, facilities, and all of the areas of public works’ responsibility.
Presenting The Plan
All of this was bundled up and presented to the mayor and council during a spring financial retreat. Representatives from both departments presented to the group an overview of the project including need, process and results. Based on many discussions with the finance office, town manager’s office and both departments, the team made the following financial recommendations (for Parks and Facilities, Public Works not being operated from the general fund):
- Expand the general fund R&R to include all infrastructure (not just rolling stock)
- Begin making a series of one-time transfers to the R&R fund each year
- By FY 2025, build the transfers up to $11.9M per year (which would alleviate the calculated funding gap)
The mayor and council at the time approved this approach and became one of the only municipalities that we knew of, to have such a robust plan to address Long Range Infrastructure. Having presented this topic around Arizona and even nationally, I still have not encountered a municipal government that had addressed their infrastructure needs this formally, or this extensively. I’m sure there are some, but I think this is the exception, rather than the rule. The very nature of government makes it easy to kick problems down the road, particularly when they won’t manifest themselves fully for another 25 or 30 years.
At the time of writing, I have since moved on from Gilbert but the Town is still embracing the plan both in philosophy and practice. At the time, we made the following recommendations in Parks and Facilities to operationalize the new funding model:
- Work with OMB (office of management and budget) to solidify processes and budget strategies
- Consider capital creation strategies
- Do comprehensive gap analysis–staffing, PM programs, PdM opportunities
- Identify/procure/implement CMMS
Whether considering an entire facilities portfolio or individual assets, one of the most powerful and reliable measurement tools facility executives can deploy is a Facility Condition Index (FCI). Read more…
It may be worth noting that many organizations also develop strategies to offset, reduce, or mitigate the calculated funding liabilities. These might include FM Department Operational Optimization, adding passive solar when replacing roofs, improved PM and PdM programs, or implementing Energy Performance Contract Guaranteed Savings model (EPC GS) or similar programs.
Gilbert continues to live up to its reputation as a forward-thinking and bold town in creating the model whereby municipalities can identify assets and create funding strategies beyond O&M. Truly addressing the elephant that will be in the room, decades from now.
MacFarlane has been in Facilities Management for nearly 20 years, with significant experience in Preventive Maintenance, Security, and Emergency Planning. Marshall has worked in both the public and private sectors and also in manufacturing. He just ended his two-year term as President of the Greater Phoenix Area Chapter of IFMA and is a newly appointed IFMA Fellow.
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