Local governments and deferred maintenance backlogs | Centrica Business Solutions
Why must local governments address deferred maintenance backlogs?
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Why must local governments address deferred maintenance backlogs?

Discover five reasons why local governments need to prioritize infrastructure upgrades to reduce overhead costs and carbon emissions, maximize taxpayer dollars, and ensure safe, healthy communities.

Cities, counties, parishes, special districts, towns, and villages – they all have a similar challenge. Local government facilities across the country are showing their age and require maintenance and repair. However, there are not enough resources in the budget to complete the necessary work. More often than not, the project goes into a maintenance backlog known as ‘deferred maintenance’ or ‘deferred maintenance and repairs.’

Due to shrinking and tight budgets, facility managers across all areas of local government face the daunting task of managing a growing deferred maintenance backlog. Aging facilities require renovations and retrofits – like lighting, HVAC, plumbing, electrical, and building envelope improvements like windows and roofing – to bring them to like-new condition, ensure compliance with various building codes, increase asset performance, and extend equipment lifespan.

Deferred maintenance is a local, state, and federal challenge. According to the American Society of Civil Engineers, America’s 2021 infrastructure scorecard is a C-. This score indicates that infrastructure – from parks to schools to drinking water systems – is deteriorating and requires attention, with some significant deficiencies in conditions and functionality, increasing vulnerability to risk. As of 2019, estimated deferred maintenance across the U.S. exceeds $1 trillion

Let’s look at a few examples of where investment is needed on a local level.

  1. Public parks are vital to building healthy communities and ensuring economic prosperity. They deliver value by making life better for communities and offering a wealth of recreational activities, from learning centers to events to retreats. However, investment is lagging in infrastructure upgrades, and as a result, facilities, drinking water systems, and other critical assets are deteriorating. State parks, for instance, face a $5.6 billion deferred maintenance backlog. The situation is even more urgent for local parks, which face a $60 billion backlog
  2. Public school buildings and facilities are essential community infrastructure that provides learning environments for children, hosts community meetings, and serves as emergency centers. K-12 school facilities need to be in good condition to provide safe and healthy environments for all occupants – however, 53% of public school districts face aging systems, including HVAC, that need replacement.
  3. Water and wastewater facilities are critical components that ensure the community’s well-being, delivering safe drinking water and treating wastewater to protect the community’s and environment’s health. This infrastructure is also a revenue generator – however, aging water infrastructure leads to an estimated 6 billion gallons of treated water lost each day, a waste of natural resources, and a loss of revenue, which local governments can reclaim through infrastructure improvements.

Addressing deferred maintenance and implementing energy and infrastructure upgrades are appealing because aging infrastructure and assets are inefficient, costly, and time-consuming to maintain. Reducing overhead costs is critical for local governments, as they face increasing pressure to maximize taxpayer dollars and accomplish more with less. Still, competing priorities usually mean that addressing outdated infrastructure takes a backseat in favor of funding community-focused services and initiatives.

It’s easy for local governments to push spending on facility improvements to the bottom of the priority list when this portion of the budget is competing against public-facing budget items that focus on bettering their community. After all, they have a fiscal and social responsibility to ensure the well-being of their constituents and build a thriving community.

However, deferring maintenance on back-end yet critical assets only puts infrastructure and the community at risk, as it can divert funding from where it’s most needed. For example, when energy costs are high or emergency maintenance on outdated equipment is necessary, it forces you to make budget trade-offs that shift resources. The challenge is to reduce spending and hit your budget without negatively impacting the services that you provide to your community. Therefore, delaying infrastructure upgrades cannot last forever, and addressing deferred maintenance is becoming more urgent to ensure the sustainability of your infrastructure.

Here are five reasons why you should take a hard look – right now – at tackling your growing backlog.

Reason 1. Aging infrastructure demands high energy costs

With budgets tight, local governments need to take a hard look at reducing operational costs and operating more efficiently to maximize taxpayer dollars. Aging infrastructure requires more resources to operate, and when buildings are not using energy efficiently, it has financial impacts, diverting budget away from the community. According to the U.S. Environmental Protection Agency, the average local government facility wastes about 30% of the energy it uses. And some, like water and wastewater plants, are massive energy consumers, dedicating 40% of their operating costs to energy.

Modernizing infrastructure and operating more efficiently will enable you to focus your budget on serving and bettering your community, maximize taxpayer dollars, and build a thriving, healthy, safe community. Capturing energy cost savings from more efficient energy usage can directly translate into enhancements that the community cares about – things that make life better, like new playgrounds, recreational facilities, community events, and more.

Reason 2. Aging infrastructure carries a high carbon footprint

Inefficient energy usage doesn’t simply affect your operational budget – high energy consumption and energy waste carry the additional price tag of carbon emissions. And this matters because the community’s attitude toward the climate is changing. In addition, the federal government has set clear net zero goals.

Local governments need to take a hard look at their infrastructure to boost the sustainability of their facilities and reduce carbon emissions. Upgrading energy technology is critical to meeting electrification and carbon targets while conserving natural resources. From energy upgrades that reduce consumption to installing renewable technologies that generate clean power on-site to offset grid energy consumption, the options for boosting the efficiency and sustainability of your facilities are endless.

Many local governments are already taking steps to mitigate their carbon emissions to reduce operational costs. They are developing sustainability and energy roadmaps, disclosing carbon emissions, and receiving public recognition.

Reason 3. Aging infrastructure is risky and costly to maintain

While convenient, delaying infrastructure upgrades can lead to more problems down the road. Outdated equipment isn’t simply less energy efficient – as equipment reaches the end of its lifespan, you could be facing more frequent and expensive emergency repairs. In short, deferring maintenance costs more in the long run – according to research by Rick Biedenweg, President of Pacific Partners Consulting Group and former Assistant Vice President of Information Resources at Stanford University, “each $1 in deferred maintenance costs $4 of capital renewal needs in the future.”

For example, postponing upgrades to aging HVAC systems or water and wastewater infrastructure is tempting. After all, while they are workhorse assets, they aren’t as appealing as a new community center. But what if these critical assets fail unexpectedly? You can no longer postpone maintenance and repairs, as the safety and comfort of your community is of the utmost importance.

Reactive maintenance usually comes with a price tag that perhaps you were not accounting for in the budget – which may divert funding away from serving your community to pay for costly emergency repairs.

Delaying upgrades can also carry safety risks. Facility managers are held accountable for providing safe environments for all building occupants, and the comfort and safety of buildings are more important than ever. For example, infrastructure upgrades like modern HVAC and lighting systems increase the efficiency of your facilities, so you pay less for energy and maintenance. These upgrades also create an optimal living, learning, and working environment by ensuring proper ventilation, indoor air quality, and lighting. In the case of water facilities, there can be no compromise on quality standards, and they must provide reliable service and meet regulatory and environmental demands at all times – upgrades address resilience needs and costly water loss.

Not to mention, constantly battling failure after failure with outdated energy infrastructure is not the best use of a facility manager’s time and budget. Operating in a reactive mode is stressful and time-consuming. It’s time for a change.

Reason 4. Taxpayers want to see their tax dollars at work

Your constituents want to see you demonstrate value with their money. They also don’t usually like to see tax increases, so it’s essential to maximize tax dollars for improvements that are important to the community. These could include cutting-edge buildings, curb appeal, recreational activities, economic prosperity, high property values, environmental commitment, and ensuring safety through fire stations and other emergency services.

Unaddressed infrastructure upgrades can be frustrating on many levels – regarding outdated assets’ visual appearance plus issues that directly impact safety and comfort – like HVAC system failures, uncomfortable lighting, and even loss of power during power outages. Reactive maintenance is a vicious cycle of postponing and emergency fixing. Making infrastructure upgrades now frees up time and budget so you can prioritize serving your community and making your community a desirable place to live.

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Reason 5. Funding options and the right partner make it achievable

Addressing your deferred maintenance backlog now and moving energy infrastructure upgrades up the priorities list has short and long-term financial benefits, helping you achieve your economic and environmental goals and satisfying the demands of your stakeholders. Upgrading aging energy assets and implementing cutting-edge integrated energy solutions can simultaneously deliver financial and decarbonization results, enabling you to unlock opportunities to monetize your energy infrastructure and reduce overhead costs.

While reaching your energy infrastructure and carbon reduction goals is easy to say, it can be hard to do. To get there, you need to overcome complex technical challenges and competing budget priorities. It can be daunting – where do you start, and how do you fund necessary upgrades without diverting precious capital away from the critical services you provide to your community?

The good news is that lack of capital is not a barrier to accessing these opportunities. A variety of financing mechanisms enable you to fund the infrastructure improvements you need to reduce your energy costs quickly, reduce your carbon emissions, and even reclaim revenue from your energy infrastructure – without taking on additional debt. In particular, an Energy Performance Contract, or EPC, is a great option to leverage, as it helps local governments maintain budget neutrality and overcome capital constraints while implementing needed upgrades. This financing method requires no initial investment, and it uses the energy savings achieved by the infrastructure upgrades to finance the cost of the upgrades.

Successful energy and infrastructure upgrades need to achieve the right balance between three priorities: cost efficiency, energy resilience, and carbon reduction. Working with the right partner is essential to ensure that you implement successful infrastructure upgrades while remaining aligned to your strategic and financial goals. Centrica Business Solutions is a DOE-qualified and NAESCO-accredited energy services company that works with all areas of local government to integrate sustainable energy solutions and remove complexity. We deliver a full range of bundled, end-to-end energy solutions and services that optimize energy and infrastructure comprehensively – for maximum energy savings and carbon reduction.

Our unique combination of strategic guidance, industry expertise, innovative technology, flexible funding, and full lifecycle support ensure you make the most of new opportunities, react quickly to market changes, and eliminate complexity and risk. We work with you step by step to comprehensively address your energy and infrastructure needs – to reach your energy savings and carbon reduction goals sooner while maintaining budget neutrality. And we deploy solutions in the proper order for maximum impact, focusing on energy conservation measures first to optimize more advanced technologies like solar.

Our process for working with you defines a clear and targeted approach to energy implementation – establishing your goals, identifying opportunities, installing solutions, and ensuring ongoing support and optimization over time. Each step is underpinned by expert resources, proven processes, and end-to-end accountability – ensuring that you are supported in delivering on your financial and environmental agenda. We empower you to have effective conversations, get the right stakeholders involved, and get projects done.