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Asset Management and Revolving Loan Changes
Bob Schneider & Kelly GreenMichigan Department of Environmental QualityRevolving Loan Section
Asset Management Plan (AMP)
1. Asset Inventory2. Critical Assets3. Level of Service4. O&M Strategies5. Capital Improvement Planning
Community Water
SuppliesPublicly Owned CWS Privately Owned CWS
Serving >1,000 <=1,000 >1,000 <=1,000
Rule 1606 Capital
Improvements Plan
CIP developed by 1/1/2016
Propose CIP developed by
1/1/2018n/a
Rule 1606 Asset
Management Program
Propose AMP developed by
1/1/2018n/a
Propose AMP developed by
1/1/2018n/a
Asset Management
AM Provision in PermitsProposed AM Permit Language has been
drafted to be included in NPDES permits for some municipal systems – “Operation, Maintenance & Replacement/Asset Management”
First up: Detroit Water and Sewerage Department (DWSD) – Current Draft Permit Includes AM Provision
Then: All Major Municipals reissued in FY13 and the remainder over the next cycle (5 years)
After that: “Significant” Municipal MinorsDEQ - Asset Management 4
Proposed AM Permit LanguagePermit Language Requires an Approvable
AM Program to address:StaffingMapping Collection SystemInventory and Assessment of Fixed AssetsBudget and Rate SufficiencyAnnual Report
DEQ - Asset Management 5
SAW Expectations• Funds can be used to address any or all of the 5
AMP components; however after the 3 year grant period the final product is a complete and approvable AMP covering all 5 components.
• The applicant will need to certify that all grant activities have been completed at the end of three years.
• For wastewater systems the applicant must demonstrate significant progress towards funding the AMP.
• A stormwater funding structure is not required however an analysis of the costs to maintain the system and support the AMP is required.
If the wastewater AMP identifies a gap in the current revenue needs to meet expenses, then significant progress must be made toward achieving the funding structure necessary to operate the system. Significant progress is defined as a 5-year plan to eliminate the gap with a minimum initial rate increase to close at least 10 percent of the funding gap. The first rate increase must be implemented within three years of the executed grant.
SAW/NPDES Interface Under the SAW grant the asset analysis can involve grouping of asset
types, i.e. 50 manholes. Under the NPDES asset management requirements DEQ will require a detailed asset analysis, i.e. manhole 1, manhole 2…. This will have to be done in 1 year for WWTP assets and 3 years for collection system assets.
For Majors, those with discharges greater than 1 MGD, when the NPDES comes up for renewal the NPDES asset management requirements take effect. NPDES requirements will supersede the SAW asset management requirements. So for example if you get a grant in 2013 and your NPDES permit comes up for renewal in 2015, you can begin with a broad asset analysis in 2014 but in 2015 the NPDES permit requirement for a detailed analysis will come into effect.
For Minors, it is understood that when their NPDES permit comes up for renewal, asset management will be a part of that permit, however the implementation schedule in the permit will follow that of SAW. If the applicant does not have a detailed asset analysis, the timeframe for completing that requirement will be negotiated with the Permits Section.
Asset Inventory Table 1
Directions
A. List assets
B. Enter asset information
C. To add more assets use insert function and add rows then copy first asset row to new rows to transfer formulas
D. Enter information in highlighed cells
E. Remaining cells will calculate automatically.
A B C D E F G H I J K L
Source Assets Material Location Manufacturer Original Cost Replacement CostRemaining Useful
Life in Years Condition RedundancyLikeliness of
FailureConsequence
of Failure Criticality Factor
well #1 pump 0 0 5 5 25
Enter asset 0 0
Enter asset 0 0
Enter asset 0 0
Enter asset 0 0
Enter asset 0 0
Enter asset 0 0
If Criticality Factor is greater than 16 cell will turn RED
If Criticality Factor is greater than 16 add to CIP table
A B C D E F G H I J K L
Treatment Assets Material Location Manufacturer Original Cost Replacement CostRemaining Useful
Life in Years Condition RedundancyLikeliness of
FailureConsequence
of Failure Criticality Factor
chlorinator 0 4 5 20
Enter asset 0 0
Enter asset 0 0
Enter asset 0 2 3 6
Enter asset 0 4 4 16
Enter asset 0 5 5 25
Enter asset 0 0
If Criticality Factor is greater than 16 cell will turn RED
If Criticality Factor is greater than 16 add to CIP table
American Iron & Steel requirement
For DWRF and SRF funded projectsBeginning January 2014State will have ongoing compliance reviews
Onsite visitReview of compliance documentationPhotographsFollow-up letter
Water Resources Reform and Development Act (WRRDA)
State Revolving Fund Changes
State Revolving Fund - SRFLow interest loan funds to municipalities to
plan, design, and build water pollution control projects
Interest rates for loans are set below market rates each year
Projects on publicly owned sites
$4,372,430,000 in loans since 1988 in Michigan
Architectural/Engineering Procurement - QBSApplicant issues a RFQ based on scope of
workRFQ must be publicly advertisedMay choose to send RFQ to specific firmsStatement of qualifications are evaluatedFirms are rankedDiscussions must be conducted with no fewer
than three firms
Cost can not be a factor when ranking firms
Architectural/Engineering Procurement Applies to all A/E services for SRF projects executed after
10/1/2014
Project Planning EngineeringDesign Construction ManagementSurveying Project ManagementMapping Feasibility Studies
Must be used by all applicants regardless of longstanding relationships with specific A/E firms
Not required if work is done in-house or not included in SRF loan
QBS Certification
Must attach the RFQ advertisementMust list all firms that responded
If less than 3 firms must describe efforts taken to solicit
Certification Form will be submitted with the Part III application.
Form is still required if QBS does not apply
Fiscal Sustainability PlansApplies to all projects that include repair,
replacement, or expansion Does NOT apply to NPS or construction of new
treatment works projectsSRF projects with project plans submitted after
Oct. 1, 2014 must complyApplicants must self-certify they are complying or
are exemptNot required to be a stand-alone document, info
can be located in various documents and/or databases.
FSP Minimum RequirementsCan be project based
Inventory of critical assets
Evaluation of the condition and performance of inventoried assets
Financial plan for maintaining, repairing/replacing assets
Certification that the recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan
Loan Terms and Rates 20 and 30 year loansInterest rates for loans may differDependent on Useful Life of project
assetsOnly disadvantaged communities eligible
for 30 year loan (similar to DWRF)
Useful LifeDetermination is completed by the
engineer and included in the project planMay use weighted average
For projects involving a variety of components
Equipment with varying useful life estimates
Average must not be less than 20 yrs for typical loan, not less than 30 yrs for disadvantaged loan
Stay in the KnowUpdated Guidance and Documents GovDelivery
www.Michigan.gov/drinkingwaterrevolvingfundwww.Michigan.gov/cleanwaterrevolvingfund
Michigan Department of Environmental QualityRevolving Loan Section517-284-5433
