ASU NAU UA


Building Renewal & Deferred Maintenance

 

Overview

The buildings and infrastructure within the Arizona University System are in a constant state of deterioration reflecting the wear and decline associated with their age and intensive use. Roofs start to leak as they age, floors look worn, and HVAC systems become inefficient. These building components must be updated through a process referred to as "Building Renewal". When compromised components are not updated, they become candidates for “Deferred Maintenance”.

 

When building performance and integrity are not high priorities, deferred maintenance costs increase dramatically. Failure to fund building renewal turns into deferred maintenance expense. Systems still need to be replaced, but it becomes more costly, and continued deferral increases the need for even more costly emergency repairs. This leads to the deterioration of the capital assets and ultimately lessens the quality of facilities available for teaching and research.

 

Building Renewal

ABOR defines Building Renewal to include major activities that involve the repair or reworking of a building and the supporting infrastructure that will result in maintaining a building's expected useful life.  

 

Each university in the system calculates every building’s renewal needs based on the Sherman Dergis Model and compiles those needs in the annual Capital Improvement Plan and State Operating Budget Request sent to the Governor's Office, as required by law (ARS §41-793).

 

The University System Building Renewal Request for FY2014 is $100,401,300.

 

Sherman-Dergis Model for Building Renewal

The Joint Committee on Capital Review approved the use of a modified Sherman-Dergis Model for calculating the Building Renewal request at each university. The formula takes into consideration each building’s age, replacement value, and expected life in the following configuration:

 

Building Renewal Request = (Replacement Value x .667) x (Age/1275)

 

The formula reflects the current year building value by updating the original construction cost by using a national building cost index. In addition, the formula recognizes that older buildings require more capital funding than newer buildings and that building renewal should cost less than building replacement. Unfortunately, the formula does not consider increased deferred maintenance expense resulting from less that 100% funding of Building Renewal requests in previous years.

 

Deferred Maintenance

ABOR defines Deferred Maintenance as deficiencies in a facility’s condition where deterioration and/or life safety concerns are evident, and affect the proper function and use of a facility. State law requires that all buildings be inspected every four years, and the next phase will be accomplished using a computer model due to budget restrictions.  The computer model takes previous inspection information, subtracts known improvements, and adjusts remaining costs for escalation and wear out.

 

Based on previous inspections and current computer modeling, the Arizona University System’s Estimated End of Year Deferred Maintenance for FY2014 is $511,406,300.

 

Stimulus Plan for Economic and Educational Development (SPEED)

The SPEED legislation, originally passed in 2008, provides financing supported by lottery and university resources for new construction, deferred maintenance and building renewal.  Anticipated SPEED expenditures are included in the Estimated End of Year Deferred Maintenance.  While some SPEED projects will address deferred maintenance and building renewal, SPEED financing does not eliminate the need for state supported building renewal funding.  


Funding History

Each year the University System submits a Building Renewal request representing the funds necessary to restore and maintain the buildings on campus in a satisfactory condition. Over the last twenty-five years, the State Legislature has funded only 14.2% of the System’s Building Renewal request which represents a net shortfall of over $1 billion.

 

Fiscal Year

Building Renewal Formula

State Appropriation

Difference from Formula

Percent of Formula

 

 

 

 

 

1987*

11,456,600

5,727,500

5,729,100

50.0%

1988

12,579,600

8,689,000

3,890,600

69.1%

1989

13,838,400

5,187,700

8,650,700

37.5%

1990

13,630,400

6,815,200

6,815,200

50.0%

1991

14,599,800

3,000,000

11,599,800

20.5%

1992

16,174,900

1,614,700

14,560,200

10.0%

1993

17,742,200

5,459,300

12,282,900

30.8%

1994

18,435,200

3,051,700

15,383,500

16.6%

1995

21,254,900

12,402,400

8,852,500

58.4%

1996

21,385,900

19,247,300

2,138,600

90.0%

1997

27,680,000

11,482,000

16,198,000

41.5%

1998

29,558,000

14,779,100

14,778,900

50.0%

1999

32,031,700

32,031,700

0

100.0%

2000

34,892,300

8,128,100

26,764,200

23.3%

2001

37,598,500

8,804,600

28,793,900

23.4%

2002

42,296,800

0

42,296,800

0.0%

2003

45,642,800

0

45,642,800

0.0%

2004

52,079,200

0

52,079,200

0.0%

2005

55,918,700

0

55,918,700

0.0%

2006

58,961,500

0

58,961,500

0.0%

2007

70,188,900

20,000,000

50,188,900

28.5%

2008

71,534,300

0

71,534,300

0.0%

2009

82,862,900

0

82,862,900

0.0%

2010

91,525,300

0

91,525,300

0.0%

2011

88,957,100

0

88,957,100

0.0%

2012

90,136,900

0

90,136,900

0.0%

2013

97,630,800

0

97,630,800

0.0%

Totals

1,170,593,600

166,420,300

1,004,173,300

14.2%


* A mid-year budget cut reduced the funding from 100% to 50%.

 

Building Inventory Summary

The Arizona University System includes 1,711 facilities, comprised of 40 million gross square feet, with a replacement value of $9.8 billion.

 

Institution

Number of Facilities

Gross Square Ft

Estimated Replacement Value

ASU

910

18,642,401

$4,063,670,926

NAU

109

5,934,077

$1,559,832,191

UA

692

15,356,471

$4,190,760,268

SYSTEM TOTAL

1,711

39,932,949

$9,814,263,385