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August 28 2018

New Laws Will Require Municipalities and Local Authorities to Develop, Adopt and Submit Infrastructure Asset Management Plans to the State

By: Bradley A. Fowler

Three recently enacted laws, Public Acts 323, 324 and 325 (the “Acts”), which took effect in July of 2018, will create an asset management framework for Michigan’s water, energy, transportation, and communications infrastructure and create interrelated councils to coordinate planning for those infrastructure systems at local, regional, and statewide levels. Among other things, the Acts place requirements on local municipalities, and sewer, water and road authorities to develop and adopt asset management plans. Below is a summary of some key points from the Acts:

  • Under the Acts, “asset” means “infrastructure related to drinking water, wastewater, storm-water, transportation, energy, or communications, including, but not limited to, drinking water supply systems, wastewater systems, storm-water systems, drains, roads, bridges, broadband and communication systems, and electricity and natural gas networks.”
  • By October of 2019, the Water Asset Management Council and the Transportation Asset Management Council must provide local agencies and asset owners with template asset management plans.
  • Beginning on October 1, 2020, each drinking water, wastewater, and storm-water agency and asset owner (meaning any municipality or agency, such as a sewer or water authority, which owns or operates drinking water assets, storm-water assets, or wastewater assets that serve 1,000 or more individuals) must submit an asset management plan to the newly created Water Asset Management Council. The plans must be adopted by local municipalities’ governing body, cover and be valid for at least three years, and must include the following components:
  1. An asset inventory including the location, material, size, and condition of the assets in a format that allows for digital mapping.
  2. A level of service analysis including performance goals that address such things as reliability, safety, capacity, affordability, environmental impacts, and legal and regulatory requirements.
  3. A risk of failure analysis identifying the probability and criticality of failure of the most critical assets and includes contingency plans.
  4. Anticipated revenues and expenses, including expenditures for repair, improvement, or replacement of assets.
  5. A performance outcomes analysis that looks at how the investment strategy achieves the performance goals and desired level of service and accounts for any gaps between what is possible and what is desired.
  6. A description of plans to coordinate with other asset owners to reduce duplication of effort regarding infrastructure maintenance.
  7. Proof of acceptance, certification, or adoption of the local asset management plans by the jurisdiction’s governing body.
  • Beginning in October of 2020, all local road agencies which are responsible for 100 or more certified miles of road must submit an asset management plan to the Transportation Asset Management Council. The plans must also be adopted by local municipalities’ governing body and must include the following components:
  1. An asset inventory including the location, material, size, and condition of the assets in a format that allows for digital mapping. All standards and protocols for assets would be consistent with government accounting standards, and standards and protocols for federal-aid-eligible assets would be consistent with federal requirements and regulations.
  2. Performance goals, including the desired condition and performance of the assets, which would be set by the local road agency. The performance goals could vary among asset classes under the local road agency’s jurisdiction. If a local road agency had jurisdiction over roads or bridges designated as part of the federal national highway system, the performance goals for that portion of the system must be consistent with established federal performance targets.
  3. A risk of failure analysis identifying the probability and criticality of failure of the most critical assets and includes contingency plans.
  4. Anticipated revenues and expenses, including expenditures for repair, improvement, or replacement of assets.
  5. A performance outcome analysis that looks at how the investment strategy achieves the performance goals and desired level of service and accounts for any gaps between what is possible and what is desired.
  6. A description of plans to coordinate with other asset owners to reduce duplication of effort regarding infrastructure maintenance.
  7. Proof of acceptance, certification, or adoption of the local asset management plans by the jurisdiction’s governing body.
  • All asset management plans must be implemented by October of 2024. If a road agency does not implement a plan by that date, the agency will not receive funding under Act 51 until it submits a satisfactory plan.
  • Each county road commission, and each city and village in the state must annually submit to the Transpiration Management Council a report on infrastructure conditions and investment that includes a multiyear program developed through the asset management process. Projects in the multiyear program of a reporting entity are required to be consistent with that entity’s own asset management plan and be reported consistent with categories established by the council.

As enacted, there is no requirement that a municipality obtain additional approval from the newly established councils prior to undertaking an asset management project, but municipalities and local road agencies and water authorities should be aware of the requirements of the Acts and begin to plan accordingly. If questions arise with respect to the development of asset management plans or reporting requirements under these Acts, please contact a Mika Meyers’ municipal attorney.