Township of Centre Wellington Asset Management Plan

Transcription

1 Township of Centre Wellington 2016 Asset Management Plan November 16, 2016

2 Contents Page Executive Summary... i 1. Introduction Overview Plan Development Maintaining the Asset Management Plan Plan Integration State of Local Infrastructure Scope and Process Capital Asset Overview Asset Condition Analysis Data Accuracy and Completeness Expected Levels of Service Scope and Process Current Levels of Service versus Expected Levels of Service and Performance Measures Asset Management Strategy Scope and Process Risk and Criticality Assessment Priority Identification Long-term Forecast Asset Replacement Analysis Financing Strategy Scope and Process Historical Results Financing Strategy Tax Supported Services Water Services Wastewater Services Funding Shortfall Tax Supported Services Water Services Wastewater Services Improving the Annual Funding Deficit Recommendations Report Recommendations Future Plan Updates and Enhancements Appendix A Detailed Asset Inventory (Technical)... A_1 Appendix B Asset Management Assumptions...B-1 Appendix C Data Verification and Condition Assessment Policy... C-1

3 Appendix D LOS Impact Analysis Tax, Water and Wastewater (Technical)... D-1 Appendix E Capital Scenario Analysis Tax, Water and Wastewater (Technical)...E-1 Appendix F Tax Supported Asset Management and Financing Strategies (Technical)... F-1 Appendix G Water Asset Management and Financing Strategies (Technical)... G-1 Appendix H Wastewater Asset Management and Financing Strategies (Technical)... H-1

4 List of Acronyms and Abbreviations ADT CCTV CPI DC FIR LOS MPMP NRBCPI NWWBI OCIF OLG PSAB P3 RFP RFQ RSL SO UL VPSC WSIB Average Daily Traffic Closed-Circuit Television Consumer Price Index Development Charges Financial Information Return Levels of Service Municipal Performance Measurement Program Non-Residential Building Construction Price Index National Water and Wastewater Benchmarking Initiative Ontario Community Infrastructure Fund Ontario Lottery and Gaming Public Sector Accounting Board Public-Private Partnership Request for Proposal Request for Quotation Remaining Service Life Statutes of Ontario Useful Life Victoria Park Seniors Centre Workplace Safety and Insurance Board

5 Page (i) Executive Summary This report contains the Asset Management Plan for the Township of Centre Wellington, and has been organized as follows: Chapter 1: Introduction; Chapter 2: State of Local Infrastructure; Chapter 3: Expected Levels of Service; Chapter 4: Asset Management Strategy; Chapter 5: Financing Strategy; and Chapter 6: Recommendations. The State of Local Infrastructure Chapter provides an overview of the capital assets owned by the Township. This includes detailed information on the Township s asset inventory, including asset attributes, accounting valuations, replacement costs, useful life, age and asset condition. This information provides the foundation for other sections of the asset management plan. Expected Levels of Service compares the current levels of service provided by the Township to the levels of service determined to be expected in both areas. This analysis combines both descriptions/comments as well as performance measures in establishing service levels. The Asset Management Strategy provides a long term operating and capital forecast for asset related costs, indicating the requirements for maintaining, rehabilitating, replacing/disposing and expanding the Township s assets, while moving towards the specified expected levels of service identified above. The goal of the asset management strategy is to have the Township in (or moving towards) a sustainable asset management position over the forecast period. The Financing Strategy identifies a funding plan for the asset management strategy, including a review of historical results and recommendations with respect to the required amounts and types of funding (revenue) annually. Also, any infrastructure funding deficits/shortfalls are identified and recommendations are made regarding potential approaches to reduce and mitigate the shortfall over the forecast period. Overall, this asset management plan is a tool to be used by Township staff for capital and financial decision making. It can be tied to various existing reports (such as the Township s budget, official plan and strategic planning reports) to ensure the asset management plan can be updated to reflect any changes in Township priorities.

6 Page Introduction 1.1 Overview The main objective of an asset management plan is to use a Township s best available information to develop a comprehensive long term plan for capital assets. In addition, the plan should provide sound methodologies and support in order to improve the accuracy of the plan on a go forward basis. (Watson) was retained by the Township to update the Township s 2014 Asset Management Plan (dated December 4, 2014). With this 2016 update, all Township assets are now included in the plan. It is intended to be a tool for Township staff to use during various decision making processes, including the annual budgeting process and future capital grant application processes. This plan will serve as a road map for sustainable infrastructure planning going forward. The following assets are included in this asset management plan: Road related (roads, bridges and culverts); Facilities Vehicles and Equipment Land Improvements Water related (mains, facilities, vehicles and equipment); and Wastewater related (mains, facilities, vehicles and equipment). The Township s goals and objectives with respect to their capital assets relate to the levels of service being provided to Township residents. Services should eventually be provided at expected levels, as defined within this asset management plan. Township infrastructure and other capital assets should be maintained at condition levels that provides a safe and functional environment for its residents. Therefore, the asset management plan and its implementation will be evaluated based on the Township s ability to meet these goals and objectives. 1.2 Plan Development The asset management plan was developed using a program that leverages the Township s asset database information, staff input and asset management principles. The development of the Township s asset management plan is based on the steps summarized below:

7 Page Develop a complete listing of capital assets to be included in the plan, including attributes such as size/material type, useful life, age, accounting valuation and current valuation. Update current valuation, where required, using benchmark costing data or applicable inflationary indices. 2. Assess current condition of the assets, based on a combination of staff input, existing asset reports and an asset age based condition analysis. 3. Assess the risk of asset failure for each asset, based on determining the probability of each asset failing, as well as the consequence of the asset failing. This risk analysis identifies priority projects for inclusion in the Township s longterm forecast, as well as high risk assets that require mitigation. 4. Determine and document current levels of service, as well as expected levels of service, based on discussions with Township staff. 5. Prepare an asset management strategy (i.e. operating and capital forecast) based on the asset inventory, identified priorities, forecast scenarios, and levels of service analysis discussed above. 6. Determine a financing strategy to support the asset management strategy, thus determining how the operating and capital related expenses will be funded over the forecast period as well as the financial policies to be considered moving forward. 7. Prepare a comprehensive Asset Management Plan final report. 1.3 Maintaining the Asset Management Plan The asset management plan should be updated as the capital needs and priorities of the Township change. This can be accomplished in conjunction with specific asset legislative requirements as well as the Township s budget process. Township staff will have the tools available to perform updates to the plan when needed. When updating the asset management plan, note that the state of local infrastructure, expected levels of service, asset management strategy and financing strategy are integrated and impact each other. Looking at these components in reverse order, the financing strategy outlines how the asset management strategy will be funded. The asset management strategy illustrates the costs required to maintain expected levels of service at a sustainable level. The expected levels of service component summarizes and links each service area to specific assets contained in the state of local

8 infrastructure section and thus determines how these assets will be used to provide expected service levels. Page 1-3 While this report covers a forecast period of 20 years, the full lifecycle of the Township s assets were considered in the calculations. It is suggested that more focus and attention be put on the first 5 years of the asset management plan, to ensure accurate capital planning in the short term. 1.4 Plan Integration The municipal environment is a continually changing and demanding environment when it comes to legislation and other responsibilities. Integrating the asset management plan with the Township s budget process can make updates in both areas more efficient. Both the Township s budget process and asset management planning require a projection of capital and operating costs of future periods. The budget outlines total operating and capital requirements of the Township, while the asset management plan focuses in on specific asset related requirements. With this link to the annual budget, the budget update process can become an asset management plan update process. Further integration into other Township financial/planning documents would assist in ensuring the ongoing accuracy of the asset management plan, as well as the integrated financial/planning documents. The asset management plan has been developed to allow linkages to documents such as: Development Charge Background Study; Water and Wastewater Rate Study; Strategic Planning Reports; Fiscal Impact/Operating Studies; and Insurance valuations and records.

9 Page State of Local Infrastructure 2.1 Scope and Process This section of the plan provides an opportunity to develop a greater understanding of the capital assets owned by the Township. The state of local infrastructure analysis includes: An asset database documenting asset types, sub-types including quantities, materials and other similar asset attributes; Financial accounting valuation; Replacement cost valuation; Asset condition information and analysis; Data Verification and Asset Condition policies; and Documentation of assumptions made in creating the asset inventory. The Township has a detailed asset management inventory listing as well as an inventory used for PSAB 3150 purposes. These asset inventories are updated annually and were used as a starting point in fulfilling the requirements of this report. While the PSAB 310 inventory provides current financial account valuations (i.e. historical cost, accumulated amortization and net book value), the asset management inventory provides more detailed asset breakdowns as well as attributes such as replacement cost, condition ratings and risk assessments. For the 2016 asset management plan update, Township staff provided updated financial information and revised asset inventory data.

10 Page Capital Asset Overview The Township presently owns and manages tax supported capital assets with a 2016 replacement value of approximately $602.3 million. Table 2-1 outlines the breakdown of these totals and Figure 2-1 illustrates the breakdown. Table Tax Supported Assets (2016 $) Asset Type Replacement Cost (2016$) Roads - Bases 390,022,129 Roads - Surfaces (Paved) 64,460,596 Bridges 57,402,986 Facilities 43,532,395 Culverts 17,219,600 Vehicles 12,027,000 Land Improvements 9,111,842 Equipment & Machinery 6,994,425 Pedestrian Bridges 1,487,892 Total Tangible Capital Assets (Tax Supported) 602,258,864 Figure 2-1 Tax Supported Assets Distribution Based on Replacement Cost 2% 1% 1% 0% 3% 10% 7% 11% 65% Roads - Bases Roads - Surfaces (Paved) Bridges Facilities Culverts Vehicles Land Improvements Equipment & Machinery Pedestrian Bridges

11 Page 2-3 The Township presently owns and manages water capital assets with a 2016 replacement value of approximately $114.1 million. Table 2-2 outlines the breakdown of these totals and Figure 2-2 illustrates the breakdown. Table Water Supported Assets (2016 $) Asset Type Replacement Cost (2016$) Water Infrastructure 85,664,263 Facilities 27,571,239 Vehicles 660,000 Equipment & Machinery 172,200 Total Tangible Capital Assets (Water) 114,067,702 Figure 2-2 Water Assets Distribution Based on Replacement Cost 1% 0% 24% 75% Water Infrastructure Facilities Vehicles Equipment & Machinery

12 Page 2-4 The Township presently owns and manages wastewater capital assets with a 2016 replacement value of approximately $127.0 million. Table 2-3 outlines the breakdown of these totals and Figure 2-3 illustrates the breakdown. Table Wastewater Assets (2016 $) Asset Type Figure 2-3 Wastewater Assets Distribution Based on Replacement Cost Replacement Cost (2016$) Sewer Infrastructure 64,757,294 Facilities 61,300,988 Vehicles 660,000 Equipment & Machinery 287,150 Total Tangible Capital Assets (Wastewater) 127,005,432 1% 0% 48% 51% Sewer Infrastructure Facilities Vehicles Equipment & Machinery PSAB 3150 Asset Valuation Table 2-4, 2-5 and 2-6 shows the Township s financial accounting valuation summary by asset type, as presented in the Township s 2015 Financial Information Return (FIR). Since 2009, the Township has been required under PSAB 3150 to maintain asset listings complete with historical cost (i.e. the original cost to purchase or construct an asset), accumulated amotization and net book value. These values are reported on the Township s audited financial statements each year.

13 Page 2-5 Table 2-4 PSAB 3150 Asset Inventory 2015 FIR Tax Supported Assets Tax Supported Assets Historical Cost 12/31/2015 Accumulated Amortization 12/31/2015 Net Book Value 12/31/2015 General Government 4,969,953 1,931,815 3,038,138 Protection Services 4,919,987 2,282,997 2,636,990 Transportation Services 182,451,686 82,230, ,220,968 Urban Storm Sewer System 1,374, ,481 1,012,086 Health Services 259,801 45, ,615 Social and Family Services 2,093, ,661 1,815,901 Recreation and Cultural Services 24,020,449 7,637,668 16,382,781 Total Tax Supported Assets 220,090,005 94,768, ,321,479 Table 2-5 PSAB 3150 Asset Inventory 2015 FIR Water Assets Water Assets Historical Cost 12/31/2015 Accumulated Amortization 12/31/2015 Net Book Value 12/31/2015 Water Treatment 17,891,376 4,333,428 13,557,948 Water Distribution/Treatment 31,374,219 8,979,319 22,394,900 Total Water Assets 49,265,595 13,312,747 35,952,848 Table 2-6 PSAB 3150 Asset Inventory 2015 FIR Wastewater Assets Wastewater Assets Historical Cost 12/31/2015 Accumulated Amortization 12/31/2015 Net Book Value 12/31/2015 Wastewater Collection/Conveyance 18,733,007 5,863,570 12,869,437 Wastewater Treatment & Disposal 42,695,987 10,444,966 32,251,021 Total Wastewater Assets 61,428,994 16,308,536 45,120,458 The detailed capital asset inventory has been provided in Appendix A and to Township staff in MS Excel format (to be used in future asset management refinements and updates). Assumptions pertaining to the asset inventory were documented as part of the asset management process and are shown in Appendix B. 2.3 Asset Condition Analysis Each asset is tracked based on estimated total useful life and remaining service life. Using this information, an age analysis of the Township s assets can assist in identifying

14 Page 2-6 potential areas of focus for the asset management plan. However, a condition based assessment provides a more accurate identification of areas of focus. Table 2-7 provides a condition analysis summary, which is weighted based on replacement cost, for all assets. The weighted average condition rating is utilized in favour of an age analysis as it more accurately portrays where an asset is in its lifecycle. Additionally, the source of each asset classes condition rating is provided within the table. Table 2-7 Asset Condition Analysis Tax Supported Assets Asset Type Condition - Weighted Average (/5) Condition Source Bridges 3.37 BCI Provided Culverts 3.62 BCI Provided Pedestrian Bridges 2.99 BCI Provided Roads - Bases 1.86 Normalized Age Rating Provided Roads - Surfaces (Paved) 3.30 PCR Provided Vehicles 3.05 Age Based Facilities 2.35 Age Based Equipment & Machinery 3.11 Age Based Land Improvements 2.68 Age Based Total Tangible Capital Assets (Tax Supported) 2.30 Water Assets Asset Type Condition - Weighted Average (/5) Condition Source Water Infrastructure 3.49 Life Score Provided Facilities 3.44 Age Based Vehicles 3.67 Age Based Equipment & Machinery 2.99 Age Based Total Tangible Capital Assets (Water) 3.48 Wastewater Assets Asset Type Condition - Weighted Average (/5) Condition Source Sewer Infrastructure 3.32 Life Score Provided Facilities 3.24 Age Based Vehicles 3.67 Age Based Equipment & Machinery 2.76 Age Based Total Tangible Capital Assets (Wastewater) 3.28

15 Page 2-7 Detailed asset data are documented in Appendix A. All condition ratings are on a scale of zero to five, with a five rating indicating a good condition and a one rating indicating a poor condition. Condition ratings were derived based upon Township calculations, with some being based on asset age (see references of condition source in the tables above). It is recommended that all remaining age-based condition ratings be transitioned to utilize accurate condition assessments to reflect the true condition of a given asset. This can be accomplished though inspection (staff or consultant), imaging (i.e. CCTV) as well as documenting and reviewing maintenance records. Including condition assessments in the asset management plan provides for a higher level of accuracy than simply relying on useful life assumptions, especially when it comes to older, highly used or more financially significant assets. Condition assessments can provide more realistic estimates of remaining service life, which can then be used to establish maintenance, rehabilitation and/or replacement schedules. Further discussion of condition assessments will take place in Chapter 4 when assessing asset risk and identifying asset priorities. 2.4 Data Accuracy and Completeness An important element of this asset management plan is ensuring that tools and procedures are in place to maintain accuracy and completeness of the asset data and calculations moving forward. As time passes, assets are used, maintained, improved, disposed of, and replaced. All of these lifecycle events can trigger changes to the asset database used within the asset management plan. Therefore, tools and procedures are essential to ensure the asset data remains accurate and complete. Please refer to Appendix C to this report for the Data Verification and Condition Assessment Guideline proposed for the Township. This guideline illustrates how the asset data could be updated and verified going forward. This includes the timing of condition assessments for each asset area, as well as what should be included within the condition assessment procedures.

16 Page Expected Levels of Service 3.1 Scope and Process A levels of service (LOS) analysis gives the Township an opportunity to document the levels of service that is currently being provided in each area and compare it to the levels of service that is expected. This can be done through a review of current practices and procedures, an examination of trends or issues facing the Township, or through an analysis of performance measures and targets that staff can use to measure performance. Expected LOS can be impacted by a number of factors, including: Legislative requirements; Strategic planning goals and objectives; Resident expectations; Council or Township staff expectations; and Financial or resource constraints. The previous task of determining the state of the Township s local infrastructure establishes the asset inventory and condition, as well as asset management policies and principles to guide the refinement and upkeep of the asset infrastructure. The LOS analysis will utilize this information and factors in the impact of asset service level targets. It is important to document an expected LOS that is realistic to the Township. It is common to strive for the highest LOS, however these service levels usually come at a cost. It is also helpful to consider the risk associated with a certain LOS. Therefore, expected LOS should be determined in a way that balances both level of investment and associated risk to the Township. 3.2 Current Levels of Service versus Expected Levels of Service and Performance Measures The Township s current LOS has resulted in the current state of infrastructure discussed in Chapter 2. The current LOS also relates to the risk assessment discussed in later chapters. Regarding the cost of LOS, the Township has established an operating and capital budget for the current year that includes the cost of providing this LOS to residents. Therefore in moving from the current LOS to an expected LOS, consideration has to be made for the associated cost (or impact on the Township s current budget). Table 3-1

17 Page 3-2 outlines strategic LOS descriptions for both current and expected LOS. This analysis was documented through discussions with Township staff. It is anticipated that Township staff will further refine this analysis in future updates to the asset management plan. As this analysis relates to services that are guided by legislative requirements and standards (i.e. roads, water and wastewater), legislative requirements become a significant component of the LOS analysis. Appendix D of this report includes the financial impacts associated with implementing the expected LOS over the 20-year forecast period for tax supported, water and wastewater assets. As mentioned above, using performance measures in the LOS review can also be helpful in measuring the Township s goals and objectives when it comes to asset management. Table 3-2 provides a summary of asset performance measures (i.e. weighted average condition ratings) and the overall trend over the past several years (2013, 2014 and 2016 representing the years the asset management plan was updated). Trending data on asset condition informs Township staff on whether particular asset categories are increase in average condition, remaining consistent or decreasing in value. This data can then be used to adjust maintenance and capital programs annually in order to move towards desired condition levels. As the Township s asset management plan evolves over time, new performance measures can be introduced to further measure the LOS being provided in each service area. Roads Department Table 3-1 Strategic Levels of Service Analysis Current Level of Service Description Expected Public Works Meet minimum maintenance standards. Meet minimum maintenance standards. Public Works Planned annual road maintenance. Planned annual road maintenance. Public Works Annually resurfacing 1/4 of all gravel roads. Annually resurfacing 1/3 of all gravel roads. Public Works Monitoring number of roads related complaints as well as response time using WorkTech. Monitoring number of roads related complaints as well as response time using WorkTech. Use data to improve service delivery as well as minimize complaints. Public Works Planned capital. Data-driven planned capital in accordance with the asset management plan.

18 Page 3-3 Bridges & Culverts Department Public Works Public Works Table 3-1 (cont.) Levels of Service Analysis Current Some bridge maintenance/rehabilitation. All bridges are inspected bi-annually, as legislatively required. Level of Service Description Expected Increased bridge maintenance/rehabilitation. Move towards adequate conditions. All bridges are inspected bi-annually, as legislatively required. Public Works Proactive inspection of high risk bridges semiannually. Proactive inspection of high risk bridges semiannually. Public Works Public Works Public Works Bridges are currently either one lane or two lanes. Currently 9 structures carry load restrictions below 20 tonne. Reduce number of closed structures through rehab and reconstruction. All single lane bridges to be replaced with two lane bridge or culvert. Minimum load restriction: 20 tonne, to allow for snow plow, school bus, and emergency vehicles. No closed structures and proactive annual bridge replacements or rehabilitation. Water Department Current Level of Service Description Expected Water Meet legislative requirements. Meet legislative requirements. Water Minimize number of water main breaks. Less than 10 breaks per year. Water Water Unaccounted Water: 30% in Elora, 20-22% in Fergus, 22% overall. Flushing program is currently in place. Minimize Unaccounted Water: Leak detection program, capital upgrades (unaccounted water municipal average is 18%) Reduce dead ends to minimize the need for flushing and evaluate well treatment options. Water Water Quality Improvement Water Quality Improvement: Reduce water hardness. Water Turn valves once every 5 years. Proactively turn valves less than every 5 years. Water Planned capital. Data-driven planned capital in accordance with the asset management plan and w/ww rate study. Target mains with a history of breaks.

19 Page 3-4 Stormwater Department Table 3-1 (cont.) Levels of Service Analysis Current Level of Service Description Expected Stormwater Annual cleaning 1/4 of all catch basins. Cleaning all catch basins and flushing mains annually. Stormwater Ad hoc main inspections. CCTV mains and outfall inspections every 5 years.. Stormwater Ad hoc storm pond maintenance. Annual storm pond inspection and maintenance. Stormwater Ad hoc storm pond clean-out. 5 year sediment survey and clean-out. Stormwater Ad hoc oil and grit separator cleaning. Annual cleaning of oil and grit separators. Stormwater Stormwater Annual ditch cleaning of trouble areas and following complaints. Planned capital. Annual ditch cleaning and monitoring of high priority areas. Data-driven planned capital in accordance with the asset management plan. Buildings Department Current Level of Service Description Expected Various Various Various Proactive approach to building repair & maintenance, as identified in the Building Condition Assessment Reports. Proactive approach to Recreation related building repair & maintenance. Meeting all Legislative Requirements (Fire Code, Building Code, Accessibility Act). Proactive approach to building repair & maintenance, as identified in the Building Condition Assessment Reports. Proactive approach to Recreation related building repair & maintenance, as identified in the Building Condition Assessment Reports. Meeting all Legislative Requirements (Fire Code, Building Code, Accessibility Act). Various Planned capital. Planned capital.

20 Page 3-5 Table 3-2 Performance Measure Levels of Service Analysis Weighted Average Condition Trending Tax Supported Assets Asset Type Bridges Increasing Culverts Decreasing Pedestrian Bridges Increasing Roads - Bases Fluctuating Roads - Surfaces (Paved) Increasing Vehicles N/A N/A 3.05 TBD Facilities Decreasing Equipment & Machinery N/A N/A 3.11 TBD Land Improvements N/A N/A 2.68 TBD Water Assets Asset Type Water Infrastructure Increasing Facilities Decreasing Vehicles N/A N/A 3.67 TBD Equipment & Machinery N/A N/A 2.99 TBD Wastewater Assets Asset Type Weighted Average - Condition (/5) Weighted Average - Condition (/5) Weighted Average - Condition (/5) Trend Trend Trend Sewer Infrastructure Increasing Facilities Increasing Vehicles N/A N/A 3.67 TBD Equipment & Machinery N/A N/A 2.76 TBD

21 Page Asset Management Strategy 4.1 Scope and Process The asset management strategy provides the recommended course of actions required to move towards a sustainable asset funding position while moving towards delivering the expected levels of service discussed in the previous chapter. The course of actions, when combined together, form a long-term operating and capital forecast that includes: a) Non-infrastructure solutions: reduce costs and/or extend expected useful life estimates; b) Maintenance activities: regularly scheduled activities to maintain existing useful life levels, or repairs needed due to unplanned events; c) Renewal/Rehabilitation: significant repairs or maintenance planned to increase the useful life of assets; d) Replacement/Disposal: complete disposal and replacement of assets, when renewal or rehabilitation is no longer an option; and e) Expansion: given planned growth or other expansion or due to the introduction of new services. 4.2 Risk and Criticality Assessment Priority (or criticality) identification becomes an important process during the asset management strategy development. Priorities have been determined based on assessment of the overall risk of asset failure, which is determined by looking at both the probability of an asset failing, as well as the consequences of failure. As discussed in Chapter 3, moving to expected levels of service can result in both operating and capital budget impacts over the forecast period. This has to be taken into consideration, with the overall objective of reaching sustainable levels while mitigating risk. For the purposes of this plan, the risk of an asset failing is determined as the product of probability of failure and consequence of failure. Probability of failure has been linked to the condition assessments for assets that the Township had data available for, and based on an age based condition analysis for all other assets. For all assets, the guiding assumption is that an asset with a low condition rating would result in a high probability of failure, while an asset with a good condition rating would have a low probability of failure. Please refer to Table 4-1 for a breakdown of variables used in determining each asset classes probability of failure.

22 Page 4-2 Table 4-1 Determinants of Probability of Failure by Asset Class Asset Class Bridges and Culverts Roads - Bases Roads - Surfaces (Paved) Water Infrastructure Sewer Infrastructure Vehicles Facilities Equipment & Machinery Land Improvements Pedestrian Bridges Probability of Failure Average Daily Traffic (ADT), Bridge Condition Index (BCI) and Load Limits ADT and Age Based ADT, Pavement Condition Rating (PCR) and Road Condition Rating (RCR) Main Breaks per 100m, Anode Condition and Age Based Forcemain Status, Material Type and Age Based Age Based Consequence of failure has been determined by examining each asset type separately. Consequence refers to the impact on the Township if a particular asset were to fail. Types of impacts include the following: Cost Impacts: the cost of failure to the Township (i.e. capital replacement, rehabilitation, fines and penalties, damages, etc.); Social impacts: potential injury to residents or Township staff; Environmental impacts: the impact of the asset failure on the environment; Service delivery impacts: the impact of the asset failure on the Township s ability to provide services at desired levels; and Location impacts: the varying impact of asset failure based on the asset s location within the Township. Each type of impact was discussed with Township staff. Consequence of failure was determined by Township staff through utilization of asset attribute information contained in asset databases for each asset class. For example, regarding water and wastewater mains, pipe diameter plays a significant role in establishing the consequence rating (i.e. larger diameter pipe represents a higher consequence as it impacts more water customers), while for roads the average daily traffic (ADT) was used. Please refer to Table 4-2 below for a breakdown of variables used in determining each asset classes consequence of failure. For assets that have limited attributes available, professional judgement was used by Township staff.

23 Page 4-3 Table 4-2 Determinants of Consequence of Failure by Asset Class Asset Class Bridges and Culverts Roads Water Infrastructure Sewer Infrastructure Vehicles Facilities Equipment & Machinery Land Improvements Pedestrian Bridges Consequence of Failure Emergency Response Time, Detour Length, ADT, Local Access and Heritage Status ADT and Speed Limit Type of Utilization, Static Pressure (kpa), Trunk vs. Local and Pipe Diameter (mm) Forcemain Status, Pipe Diameter (mm), River Crossings, Proximity to Water and Type of Utilization Determined by Township Staff With both probability of failure and consequence of failure documented, total risk of asset failure was determined for each asset. All risk ratings range from 0 to 25, with a higher score representing a higher overall risk. Section 4.4 below outlines the various forecast scenarios that were created as part of this process. While scenario 1 is age based (provided for illustration purposes), scenarios 2 and 3 use the risk ratings identified above in assessing capital needs over the forecast period. Risk scores were translated into remaining service life ranges, representing when the asset should be rehabilitated or replaced. These ranges were created through discussions with Township staff, and differ among asset classes. For example, a high risk rating for Bridges of 20 to 25 would result in a recommendation that the asset be replaced in 1 to 5 years time, while Road Bases that need to be replaced in 1 to 5 years have a corresponding risk score of 22.5 to 25. Please refer to Appendix B for a breakdown of these ranges by asset class. Risk levels can be reduced or mitigated through planned maintenance, rehabilitation and/or replacement. An objective of this asset management plan is to reduce risk levels where they are deemed to be too high, as well as ensure assets are maintained in a way that maintains risk at acceptable levels. Please refer to Appendix A for the detailed risk assessment for each of the Township s capital assets. It is recommended that this risk assessment be refined and updated further by Township staff in the future.

24 Page Priority Identification Through discussions with Township staff and review of the preliminary asset risk of failure assessment, the following assets were identified as being priorities of the Township: Table 4-4 Project Priorities Area / Category Description Total Risk Planned Action Bridges Sideroad 15 - Queen Mary Bridge - 30-WG High Bridges Second Line Bridge Deck (31-WG) High Bridges Seventh Line Bridge - 9-WG High Bridges Fourth Line - 5-E High Bridges Fourth Line Bridge - 10-P High Bridges Sideroad 20 Bridge: 27-WG High Bridges Third Line - Carroll Creek Bridge - 24-P High Bridges St David St Bridge (Highway #6) - 2-F High Bridges First Line Bridge (24-WG) High Culverts Noah Road Culverts (32-P and 33-P) High Facilities Elora Community Centre - Replace Hall Roof High Facilities Elora Community Centre Ice Pad Replacement High Facilities Sportsplex Maintenance Building Insulation, Plumbing and High Heating Facilities Sportsplex Pad A Roof Replacement High Land Improvements Urban Forestry High Roads Eramosa/WG Townline - WR 29 to Third Line WG - High Paving Roads Eramosa/WG Townline - Third Line WG to Fifth Line WG - High Paving Roads Sideroad 20 - Fifth Line to Sixth Line Reconstruction High Roads First Line (WG) - Side Road 10 to Municipal #6641 High Roads Eramosa/WG Townline - Sixth Line to WR26 - Rebuild to High 'A' Gravel

25 Table 4-4 (cont.) Project Priorities Page 4-5 Area / Category Description Total Risk Planned Action Roads Nelson St. - WR 19 to George St - Paving High Roads St. Andrews St E - Tom St to Lamond St High Roads East Mill St - Metcalfe St to Geddes St High Roads Middlebrook Rd. - Third Line to WR 7 High Roads / Sewer Mains Hill St E - Herrick St to Gartshore St High Roads / Sewer Mains Colborne St Phase II - Geddes St to North Queen St High / Water Mains Roads / Sewer Mains Elora St. - Tower St. to Perth St. High / Water Mains Roads / Sewer Mains James St - Metcalfe St to Victoria Cres High / Water Mains Roads / Sewer Mains McNab St - High St. to Bridge St. High / Water Mains Roads / Sewer Mains Princess St - Church St to Grand River High / Water Mains Roads / Sewer Mains David St - John St N to Irvine St High / Water Mains Roads / Sewer Mains James St - Churchill Cres to Forfar St High / Water Mains Roads / Sewer Mains Price St - Church St to James St High / Water Mains Roads / Sewer Mains Irvine St - East Mill St to Church St High / Water Mains Roads / Sewer Mains St David St N - Menzies Ln. to Garafraxa St High / Water Mains Roads / Sewer Mains Churchill Crescent High / Water Mains Roads / Sewer Mains St George St E - Herrick St to Gartshore St High / Water Mains Roads / Sewer Mains St David St N - Garafraxa St to Edinburgh Ave High / Water Mains Roads / Water Mains Colborne St Phase III - John St to Wilson Cres High Sewer Mains / Water St David St - Bridge St to St Andrew St High Mains

26 4.4 Long-term Forecast Table 4-4 (cont.) Project Priorities Page 4-6 Area / Category Description Total Risk Planned Action Sewer Mains St. Andrew St. W. & Menzies Lane - Tower St to St. David High St. Storm Mains Trunk Storm - Moir St. to the High Gorge Water Mains Trunk Water Main on St Andrew St E from Gartshore St to High Tom St Water Mains Hill St E - Gowrie St to Cameron St High Water Mains Cuthbert St - Wellington Dr to Wellington Dr High Water Mains Wellington Dr - Cuthbert St to Cuthbert St High For many years, lifecycle costing has been used in the field of maintenance engineering and to evaluate the advantages of using alternative materials in construction or production design. The method has gained wider acceptance and has been used recently in the management of capital assets. By definition, lifecycle costs are all the costs which are incurred during the lifecycle of a capital asset, from the time it is purchased or constructed, to the time it is taken out of service for disposal. The stages which an asset goes through in its lifecycle are as follows: Figure 4-1 Asset Lifecycle Diagram Purchase Install Commission Operate Maintain Monitor Throughout Life of Assets To End of Useful Life Investment Costs Operating Costs Removal / Decommission Disposal Disposal Costs

27 Page 4-7 In defining the long-term forecast for the Township s asset management strategy, costs incurred through an asset s lifecycle will be considered and documented Asset Replacement Analysis The capital projects that are included in the Township s 20-year capital forecast were determined through the LOS analysis discussed in Chapter 3 as well as the risk assessments discussed above. In forecasting the Township s asset replacement needs, comparisons were made between the following scenarios: Scenario 1: Replacement forecast based on Age o Utilizing the year of installation and estimated service life, the replacement of each asset was projected (for illustration purposes only). Scenario 2: Replacement forecast based on calculated Risk o Assets with risk scores calculated by multiple variables (i.e. Bridges, Culverts, Roads and Water and Sewer Infrastructure) were assigned remaining service life ranges based on the tables contained in Appendix B. The capital needs in each range were equally distributed among years. All other assets utilized an age based analysis, identical to the first scenario. Scenario 3: Replacement forecast based on Phased-in Approach o Adjustments were made to the second scenario to allow for a phased-in approach to capital needs. With this scenario, some projects had to be deferred beyond the 20-year forecast period in order to gradually increase the annual investment in assets over time.

28 Future Replacement Cost (Inflated) Page 4-8 Scenario 1: Replacement forecast based on Age This replacement forecast provides a snapshot of assets at or nearing the end of their useful lives from a purely age based perspective. Figures 4-2 to 4-4 below show the forecasts over a 10-year period, where approximately $338.1 million (replacement cost) in tax supported capital assets, $20.2 million in water capital assets and $25.2 million in wastewater capital assets are designated for replacement. For this scenario, this simply means that these assets have reached the end of their useful lives. Please refer to Appendix E for charts and graphs depicting the entire 20-year forecast for this scenario. 300,000,000 Figure Year Forecast Tax Supported Assets Scenario 1 - Based on Age 250,000, ,000, ,000, ,000,000 50,000, Year of Replacement Land Improvements Equipment & Machinery Facilities Vehicles Roads - Surfaces (Paved) Roads - Bases Pedestrian Bridges Culverts Bridges

29 Future Replacement Cost (Inflated) Future Replacement Cost (Inflated) 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Figure Year Forecast Water Assets Scenario 1 - Based on Age Year of Replacement Page 4-9 Equipment & Machinery Vehicles Facilities Water Infrastructure 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Figure Year Forecast Wastewater Assets Scenario 1 - Based on Age Year of Replacement Equipment & Machinery Vehicles Facilities Sewer Infrastructure Scenario 2: Replacement forecast based on calculated Risk This scenario considers the calculated risk scores for Bridges, Culverts, Roads and Water and Wastewater Infrastructure assets and assigns each asset a remaining service life range. An age based analysis was performed for all other assets, identical to the first scenario. Appendix B provides details on how risk scores translate to remaining service life ranges.

30 Future Replacement Cost (Inflated) Future Replacement Cost (Inflated) Page 4-10 Figures 4-5 to 4-7 show the 10-year forecasts under this scenario, where approximately $265.9 million (replacement cost) in tax supported capital assets, $4.0 million in water capital assets and $21.5 million in wastewater capital assets are designated for replacement. Please refer to Appendix E for charts and graphs depicting the entire 20-year forecast for this scenario. 35,000,000 Figure Year Forecast Tax Supported Assets Scenario 2 - Based on Calculated Risk 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, Year of Replacement Land Improvements Equipment & Machinery Facilities Vehicles Roads - Surfaces (Paved) Roads - Bases Pedestrian Bridges Culverts Bridges 1,200,000 1,000,000 Figure Year Forecast Water Assets Scenario 2 - Based on Calculated Risk Equipment & Machinery 800, , ,000 Vehicles Facilities 200, Year of Replacement Water Infrastructure

31 Future Replacement Cost (Inflated) Page 4-11 Figure Year Forecast 9,000,000 Wastewater Assets Scenario 2 - Based on Calculated Risk 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Year of Replacement Equipment & Machinery Vehicles Facilities Sewer Infrastructure Scenario 3: Replacement forecast based on Phased-in Approach Within this scenario, capital deferrals were made to the second scenario such that the costs were phased-in over time. Figures 4-8 to 4-10 show the 10-year forecasts under this scenario. This is the recommended scenario for the Township, as it allows for a gradual increase in capital investments over the forecast period with Township staff utilizing the risk/priority rankings described in this chapter as a basis for selecting specific project timing. Please refer to Appendix E for charts and graphs depicting the entire 20-year forecast for this scenario. A total of $200.9 million in tax supported capital, $17.6 million in water capital and $46.7 million in wastewater capital replacement needs are identified over the 20-year forecast period ($70.9 million, $7.9 million and $22.4 million respectively in the first 10 years). This scenario requires significant deferral of tax supported capital projects identified in Scenario 2 to beyond the 20-year forecast period. This is necessary to create a financially feasible financing program, but does come with some inherent risk: The risk of asset failure increases the more that its rehabilitation/replacement is deferred; The deferred capital projects will cost more, given capital inflation adjustments over time;

32 Future Replacement Cost (Inflated) Future Replacement Cost (Inflated) Page 4-12 Capital deferrals may cause the levels of service being provided to reduce, as assets may reach lower condition levels than expected; and Any found funding or efficiencies in costs in future years should be utilized to catch up on deferred capital. Figure Year Forecast 12,000,000 Tax Supported Assets Scenario 3 - Phased-In Approach 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Year of Replacement Land Improvements Equipment & Machinery Facilities Vehicles Roads - Surfaces (Paved) Roads - Bases Pedestrian Bridges Culverts Bridges 1,000,000 Figure Year Forecast Water Assets Scenario 3 - Phased-In Approach 900, , , , ,000 Equipment & Machinery Vehicles Facilities Water Infrastructure 400, , , , Year of Replacement

33 Future Replacement Cost (Inflated) Page ,000,000 Figure Year Forecast Wastewater Assets Scenario 3 - Phased-In Approach 2,500,000 2,000,000 1,500,000 Equipment & Machinery Vehicles Facilities Sewer Infrastructure 1,000, , Year of Replacement Maintenance, Non-Infrastructure Solutions, Renewal & Rehabilitation For the recommended scenario to be feasible, the levels of service adjustments discussed in Chapter 3 and Appendix D are required in conjunction with current levels of service amounts in order to effectively maintain and rehabilitate the assets as needed. Additional rehabilitation programs have been added to the levels of service analysis (i.e. see Appendix D for Roads and Bridges) that should assist in extending the remaining service life of the Township s assets and make scenario 3 more feasible. The financing strategy discussed in the next chapter will incorporate the levels of service adjustments outlined in Appendix D into the recommended financing analysis. In addition, expansion related needs will be layered into the forecast to determine total capital needs for each year.

34 Page Financing Strategy 5.1 Scope and Process The financing strategy outlines the suggested financial approach to funding the recommended asset management strategy outlined in Chapter 4, while utilizing the Township s existing budget structure. This section of the asset management plan includes: Annual expenditure forecasts broken down by: o Maintenance/non-infrastructure solutions; o Renewal/rehabilitation activities; o Replacement/disposal activities; and o Expansion activities. Actual expenditures in the above named categories for the last 2 years; A breakdown of annual funding/revenue by source; Identification of the funding shortfall, including how the impact will be managed; and All key assumptions documented. The financing strategy forecast (including both expenditure and revenue sources) was prepared, consistent with the Township s departmental budget structure, so that it can be used in conjunction with the annual budget process. Various financing options, including user fees, reserve funds, debt, and grants were considered and discussed with Township staff during the process. Figure 5-1 provides a visual representation of how various financing methods can be used for both initial asset purchases, as well as asset replacements. For the recommended asset management strategy scenario, a detailed twenty (20) year plan was generated. The plan identifies specific maintenance solutions, renewal and rehabilitation, replacement, and expansion activities required for the forecast period as described in Chapter 4.

35 Page 5-2 Figure 5-1 Financing Methods of Lifecycle Costs New Assets Financing Methods Replacement Assets Purchase Install Commission Development Charges (Growth) Reserves/Reserve Funds Debentures Taxation User Fees Grants Other Purchase Install Commission Operate Maintain Monitor (Throughout Life of Assets) (To End of Useful Life) Tax Supported Operating Budget User Fees Operating Budget Operate Maintain Monitor (Throughout Life of Assets) (To End of Useful Life) Removal / Decommission Disposal Proceeds on Disposal Funding of Disposal / Decommissioning Costs Removal / Decommission Disposal 5.2 Historical Results Tables 5-1 to 5-3 outline the historical actual results 2014, 2015 and the 2016 budget for Township tax supported, water rate supported and wastewater rate supported services, which includes operating (i.e. maintenance) and capital (i.e. renewal/rehabilitation, replacement/disposal, and expansion). The capital funding includes the use of development charges for growth (expansion) related costs, reserve/reserve funds, Gas Tax funds, operating contribution revenue, debt and grants/subsidies. A more detailed breakdown of historical results (operating and capital) can be found in Appendices F (Tax Supported), G (Water Supported) and H (Wastewater Supported).

36 Page 5-3 Table 5-1 Tax Supported Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2014 Actual 2015 Budget 2016 Capital Expenses General Government 1,081, ,201 - Protection to Persons & Property 418,828 (192,999) 8,000 Transportation Services 2,692,448 5,953,909 2,898,080 Health 51,276 89, ,000 Recreation and Cultural Services 614,659 1,473,897 1,651,000 Social and Family Services (VPSC) 801, ,714 - Planning and Development 19,186 5,238 - Transfer to RF (Interfund transfer) 4,695,110 (1,912,396) - Studies ,000 Corporate ,000 Municipal Buildings ,000 Vehicle Replacement - - 1,427,000 Equipment Replacement ,250 Total Capital Expenses 10,374,648 6,523,440 7,952,330 Capital Financing Subsidies 307, ,441 25,000 Developer Contributions 518,043 (246,314) - Municipal Contributions 10,088 25,000 - Partner Contributions 3,500 45,480 - Other (Donations) 138, ,623 50,000 Reserve/Reserve Fund: General 647, ,148 - Reserve/Reserve Fund: Protection to Persons and Property 436,887 (209,726) - Reserve/Reserve Fund: Roads 216,843 1,235,845 - Reserve/Reserve Fund: Health 14, ,749 - Reserve/Reserve Fund: Parks and Recreation 359, ,460 - Reserve/Reserve Fund: Planning and Development 2, Reserve/Reserve Fund: Social and Family Services (VPSC) 699, ,888 - Reserve/Reserve Fund: Reserves - - 4,253,780 Reserve Fund: Gas Tax 822, , ,500 Reserve Fund: Parkland-in-Lieu 20,000 30,000 - Reserve Fund: OLG 1,904,326 2,000,000 2,075,000 Reserve Fund: Development Charges 535,619 1,046, ,050 New Debt Issued - 140,759 - Total Capital Financing 6,636,194 5,852,579 7,952,330 Total Capital Expenses less Capital Financing 3,738, ,860 -

37 Page 5-4 Table 5-2 Water Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2014 Actual 2015 Budget 2016 Capital Expenses Environmental Services - Waterworks 850,183 1,383,367 2,002,395 Total Capital Expenses 850,183 1,383,367 2,002,395 Capital Financing Subsidy 46, Municipal Contributions - (410) - Reserve/Reserve Fund: Waterworks 500,409 1,029,424 1,933,395 Reserve Fund: Development Charges 38, ,362 69,000 Developer Contributions 46, ,403 - Total Capital Financing 632,683 1,754,779 2,002,395 Total Capital Expenses less Capital Financing 217,500 (371,412) - Table 5-3 Wastewater Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2014 Actual 2015 Budget 2016 Capital Expenses Environmental Services - Sanitary Sewer 7,067,577 1,717,384 1,317,525 Total Capital Expenses 7,067,577 1,717,384 1,317,525 Capital Financing Subsidy 750, ,000 - Reserve Fund: Sanitary Sewer (263,984) 1,288,031 1,359,775 Reserve Fund: Development Charges 26, ,600 (42,250) Developer Contributions 511, ,201 - Provincial/Federal Grants New Debt Issued 10,000, Total Capital Financing 11,023,530 2,016,832 1,317,525 Total Capital Expenses less Capital Financing (3,955,954) (299,448) - Table 5-4 outlines the historical maintenance for tax supported, water supported and wastewater supported assets. All maintenance for assets was funded through taxation revenue for tax supported assets, water rates for water related assets and wastewater rates for wastewater related assets based on the Township s budget structure.

38 Page 5-5 Table 5-4 Historical Results Maintenance Solutions Tax Supported Description Actual 2014 Actual 2015 Budget 2016 Asset Maintenance 4,271,779 3,682,288 4,217,400 Taxation Funding 4,271,779 3,682,288 4,217,400 Net Unfunded Water Description Actual 2014 Actual 2015 Budget 2016 Asset Maintenance 1,284,213 1,422,977 1,407,300 Water Rate Revenue 1,284,213 1,422,977 1,407,300 Net Unfunded Wastewater Description Actual 2014 Actual 2015 Budget 2016 Asset Maintenance 555, , ,100 Wastewater Rate Revenue 555, , ,100 Net Unfunded Financing Strategy Tax Supported Services Table 5-5 shows the tax supported expenditure forecast for maintenance, renewal/rehabilitation, replacement/disposal and expansion for the first 10 years of the forecast. While this summary only shows high level cost classifications, further detail (including the full 20-year forecast) can be obtained from Appendix F.

39 Page 5-6 Asset Lifecycle Costs Table 5-5 Tax Supported Capital Expenditure Forecast Forecast (Inflated) Maintenance: Current Service Levels 4,301,748 4,387,783 4,475,539 4,565,049 4,656,350 4,749,477 4,844,467 4,941,356 5,040,183 5,140,987 Maintenance: LOS Adjustment 10,200 57,222 31, ,046 28, Total Asset Maintenance 4,311,948 4,445,005 4,507,375 4,565,049 4,656,350 4,794,523 4,873,184 4,941,356 5,040,183 5,140,987 Renewal/Rehabilitation Renewal/Rehabilitation - LOS Adjustment 808, , , , , ,301 1,033,094 1,127,425 1,161,248 1,196,086 Total Renewal/Rehabilitation 808, , , , , ,301 1,033,094 1,127,425 1,161,248 1,196,086 Replacement/Disposal 5,990,561 6,184,889 6,384,593 6,589,813 6,800,687 7,017,360 7,239,979 7,468,697 7,703,667 9,560,151 Replacement/Disposal - LOS Adjustment Total Replacement/Disposal 5,990,561 6,184,889 6,384,593 6,589,813 6,800,687 7,017,360 7,239,979 7,468,697 7,703,667 9,560,151 Expansion: DC Related 4,567,020 3,695,327 7,168,835 11,285,477 3,976,542 1,744,749 4,182,186 2,973,363 3,995,226 4,115,083 Expansion: LOS Adjustment Total Expansion 4,567,020 3,695,327 7,168,835 11,285,477 3,976,542 1,744,749 4,182,186 2,973,363 3,995,226 4,115,083 Total 15,678,337 15,105,247 18,946,186 23,408,558 16,291,442 14,499,933 17,328,443 16,510,841 17,900,325 20,012,307 Items in Table 5-5 labelled as LOS Adjustment refer to the levels of service analysis discussed in Chapter 3 and Appendix D. Expansion related costs labelled as DC related refer to growth related projects identified in the Township s 10-year capital forecast (please refer to Appendix F). Table 5-6 summarizes the recommended strategy to finance the asset related costs identified in Table 5-5. Table 5-6 Breakdown of Annual Tax Supported Funding (Revenue) by Source Funding (Revenue) by Source Forecast Taxation 4,311,948 4,445,005 4,507,375 4,565,049 4,656,350 4,794,523 4,873,184 4,941,356 5,040,183 5,140,987 Transfer from Operating 721, , , , , , , , , ,400 Grants Other (Contributions, Donations, Misc.) 1,545,000 1,474,863 5,123,688 4,306, , , ,602 Debentures 2,500,000 1,400,000-4,000,000 1,500,000-1,000, Development Charges Reserve Funds 808, , ,036 1,126,072 1,082, , , ,789 1,528,415 1,574,268 Gas Tax Reserve Funds 811, , , , , , , , , ,500 OLG Reserve Funds 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 OCIF Reserve Funds 560, ,377 1,216,174 1,216,174 1,216,174 1,216,174 1,216,174 1,216,174 1,216,174 1,216,174 Capital Reserves/Reserve Funds 2,344,562 2,602,267 3,868,013 4,519,660 4,138,002 3,800,898 5,673,119 5,089,778 5,720,293 7,640,377 Total 15,678,337 15,105,247 18,946,186 23,408,558 16,291,442 14,499,933 17,328,443 16,510,841 17,900,325 20,012,307 These lifecycle costs are being recovered through several methods: Taxation funding is suggested for all maintenance costs, as well as levels of service adjustment related costs related to operations. Transfers from Operating are used each year, increasing by inflation. Debt financing is shown as required in years where significant capital needs are identified. The portion of newly acquired or constructed assets that are growth (DC) related are shown as financed by development charges. Gas Tax funding has been shown as a stable and long-term funding source for eligible capital projects.

40 Page 5-7 Ontario Lottery and Gaming (OLG) funds have been shown as a stable and longterm funding source for capital projects. Ontario Community Infrastructure Fund (OCIF) proceeds have been shown as a stable and long-term funding source for capital projects. The Township will be dependent upon maintaining healthy capital reserves/reserve funds in order to provide the remainder of the required lifecycle funding over the forecast period. This will require the Township to proactively increase amounts being transferred to these capital reserves during the annual budget process While the annual funding requirement may fluctuate, it is important for the Township to implement a consistent, yet increasing annual investment in capital so that the excess annual funds can accrue in capital reserve funds. In order to fund the recommended asset requirements over the forecast period using the Township s own available funding sources (i.e. using taxation, Gas Tax funding, OCIF funding, OLG funding, and debentures), an increase in the Township s taxation levy of 4.9% per year (including inflationary operating adjustments, assumed to be 2.0%) would be required for each year of the forecast period to 2030 with 2.89% annual increases required thereafter. However, if other funding sources become available (i.e. grant funding) or if maintenance and rehabilitation practices allow for the deferral of capital works, then the impact on the Township s taxation levy would decrease. Further detail on the Tax Supported Financing Strategy is presented in Appendix F Water Services Table 5-7 shows the water expenditure forecast for maintenance, renewal/rehabilitation, replacement/disposal and expansion for the first 10 years of the forecast. While this summary only shows high level cost classifications, further detail (including the full 20-year forecast) can be obtained from Appendix G.

41 Page 5-8 Asset Lifecycle Costs Table 5-7 Water Capital Expenditure Forecast Forecast (Inflated) Maintenance: Current Service Levels 1,435,446 1,464,155 1,493,438 1,523,307 1,553,773 1,584,848 1,616,545 1,648,876 1,681,854 1,715,491 Maintenance: LOS Adjustment , ,853 - Total Asset Maintenance 1,435,446 1,464,155 1,493,438 1,555,780 1,553,773 1,584,848 1,616,545 1,648,876 1,717,707 1,715,491 Renewal/Rehabilitation Renewal/Rehabilitation - LOS Adjustment 278, , , , , , , , , ,979 Total Renewal/Rehabilitation 278, , , , , , , , , ,979 Replacement/Disposal 724, , , , , , , , , ,942 Replacement/Disposal - LOS Adjustment Total Replacement/Disposal 724, , , , , , , , , ,942 Expansion: DC Related 309, , ,902 1,295, ,351,984 1,392,544 Expansion: LOS Adjustment Total Expansion 309, , ,902 1,295, ,351,984 1,392,544 Total 2,747,127 2,860,986 2,680,230 3,901,436 2,627,902 2,683,358 2,740,009 2,797,885 4,244,846 4,309,955 Items in Table 5-7 labelled as LOS Adjustment refer to the levels of service analysis discussed in Chapter 3 and Appendix D. Expansion related costs labelled as DC related refer to growth related projects identified in the Township s 10-year capital forecast (please refer to Appendix G). Table 5-8 summarizes the recommended strategy to finance the asset related costs identified in Table 5-7. Funding (Revenue) by Source Table 5-8 Breakdown of Annual Water Funding (Revenue) by Source Forecast Water Rate Revenue 1,435,446 1,464,155 1,493,438 1,555,780 1,553,773 1,584,848 1,616,545 1,648,876 1,717,707 1,715,491 Grants Other Contributions , , , ,084 Debentures Development Charges Reserve Funds 154, , , , ,750 Capital Reserve Fund 1,157,181 1,025,516 1,048,890 1,252,900 1,074,129 1,098,509 1,123,464 1,149,009 1,344,776 1,376,630 Total 2,747,127 2,860,986 2,680,230 3,901,436 2,627,902 2,683,358 2,740,009 2,797,885 4,244,846 4,309,955 These lifecycle costs are being recovered through several methods: Water rate revenue is suggested for all maintenance costs, as well as levels of service adjustment related costs related to operations. Other contributions include proceeds from developer/partner contributions. The portion of newly acquired or constructed assets that are growth (DC) related are shown as financed by development charges. The Township will be dependent upon maintaining healthy capital reserves/reserve funds in order to provide the remainder of the required lifecycle funding over the forecast period. This will require the Township to proactively increase amounts being transferred to these capital reserves during the annual budget process.

42 Page 5-9 While the annual funding requirement may fluctuate, it is important for the Township to implement a consistent, yet increasing annual investment in capital so that the excess annual funds can accrue in capital reserve funds. In order to fund the recommended asset requirements over the forecast period using the Township s own available funding sources (i.e. using water rate revenue), an increase in revenue (i.e. combination of growth and rate increases) of 4.0% per year for the first three years of the forecast period, dropping to increases of 3.6% annually until 2025, and 2.0% thereafter is required. These revenue requirement increases are consistent with the recommended increases as calculated in the Township s 2015 Rate Study. However, if other funding sources become available (i.e. grant funding) or if maintenance and rehabilitation practices allow for the deferral of capital works, then the impact on Township water rate revenue would decrease Wastewater Services Table 5-9 shows the wastewater expenditure forecast for maintenance, renewal/rehabilitation, replacement/disposal and expansion for the first 10 years of the forecast. While this summary only shows high level cost classifications, further detail (including the full 20-year forecast) can be obtained from Appendix H. Asset Lifecycle Costs Table 5-9 Wastewater Capital Expenditure Forecast Forecast (Inflated) Maintenance: Current Service Levels 922, , , , ,199 1,018,163 1,038,527 1,059,297 1,080,483 1,102,093 Maintenance: LOS Adjustment , ,853 - Total Asset Maintenance 922, , ,438 1,011, ,199 1,018,163 1,038,527 1,059,297 1,116,336 1,102,093 Renewal/Rehabilitation Renewal/Rehabilitation - LOS Adjustment 278, , , , , , , , , ,857 Total Renewal/Rehabilitation 278, , , , , , , , , ,857 Replacement/Disposal 2,044,660 2,085,554 2,127,265 2,169,810 2,213,206 2,257,470 2,302,620 2,348,672 2,395,646 2,443,558 Replacement/Disposal - LOS Adjustment Total Replacement/Disposal 2,044,660 2,085,554 2,127,265 2,169,810 2,213,206 2,257,470 2,302,620 2,348,672 2,395,646 2,443,558 Expansion: DC Related - 2,102, ,372 1,812,744 10,955,140 13,667, ,445,928 2,519,306 Expansion: LOS Adjustment Total Expansion - 2,102, ,372 1,812,744 10,955,140 13,667, ,445,928 2,519,306 Total 3,244,942 5,414,902 3,485,111 5,297,541 14,479,550 17,265,389 3,673,212 3,749,997 6,310,199 6,427,814 Items in Table 5-9 labelled as LOS Adjustment refer to the levels of service analysis discussed in Chapter 3 and Appendix D. Expansion related costs labelled as DC related refer to growth related projects identified in the Township s 10-year capital forecast (please refer to Appendix H). Table 5-10 summarizes the recommended strategy to finance the asset related costs identified in Table 5-9.

43 Table 5-10 Breakdown of Annual Wastewater Funding (Revenue) by Source Funding (Revenue) by Source Page 5-10 Forecast Wastewater Rate Revenue 922, , ,438 1,011, ,199 1,018,163 1,038,527 1,059,297 1,116,336 1,102,093 Grants Other Contributions - 2,102, , ,960-1,129, ,094,161 2,156,986 Debentures ,283,794 12,913, Development Charges Reserve Funds ,217, , ,674 Capital Reserve Fund 2,322,760 2,371,997 2,422,301 2,438,243 2,197,556 2,203,738 2,634,686 2,690,700 2,887,396 2,950,061 Total 3,244,942 5,414,902 3,485,111 5,297,541 14,479,550 17,265,389 3,673,212 3,749,997 6,310,199 6,427,814 These lifecycle costs are being recovered through several methods: Wastewater rate revenue is suggested for all maintenance costs, as well as levels of service adjustment related costs related to operations. Other contributions include proceeds from developer/partner contributions. Debt financing is shown as required in years where significant capital needs are identified. The portion of newly acquired or constructed assets that are growth (DC) related are shown as financed by development charges. Debt financing is shown as required in years where significant capital needs are identified. The Township will be dependent upon maintaining healthy capital reserves/reserve funds in order to provide the remainder of the required lifecycle funding over the forecast period. This will require the Township to proactively increase amounts being transferred to these capital reserves during the annual budget process. While the annual funding requirement may fluctuate, it is important for the Township to implement a consistent, yet increasing annual investment in capital so that the excess annual funds can accrue in capital reserve funds. In order to fund the recommended asset requirements over the forecast period using the Township s own available funding sources (i.e. using wastewater rate revenue and debentures), an increase in revenue (i.e. combination of growth and rate increases) of 6.0% per year until 2024, dropping to increases of 4.2% for the next two years, and falling to 3.0% annually thereafter is required. These revenue requirement increases are consistent with the recommended increases as calculated in the Township s 2015 Rate Study. However, if other funding sources become available (i.e. grant funding) or if maintenance and rehabilitation practices allow for the deferral of capital works, then the impact on Township wastewater rate revenue would decrease.

44 Page Funding Shortfall Assuming the Township maintains adequate capital reserve funds, the recommended asset management strategy discussed in Chapter 4 will be fully funded. It is believed this can be accomplished through each annual budget process. However, the recommended asset management strategy does defer significant capital replacements outside of the 20-year forecast period (see high risk asset inventory items in Appendix A). In the event that certain deferred replacements result in increased risks and/or projected asset failures, further funding may be required to address the costs associated with accelerating replacement timelines and meeting legislative requirements. A fundamental approach to calculating the cost of using a capital asset and for the provision of the revenue required when the time comes to retire and replace it is the sinking fund method. This method first estimates the future value of the asset at the time of replacement, by inflating the current value of the asset at an assumed annual capital inflation rate. A calculation is then performed to determine annual contributions which, when invested in a reserve fund, will grow with interest to a balance equal to the future replacement cost. The contributions are calculated such that they also increase annually with inflation. Under this approach, an annual capital investment amount is calculated where funds are available for short-term needs while establishing a funding plan for long-term needs. Annual contributions in excess of capital costs in a given year would be transferred to a capital replacement reserve fund for future capital replacement needs. This approach provides for a stable funding base, eliminating variances in annual funding requirements, particularly in years when capital replacement needs exceed typical capital levy funding. Please refer to Figure 5-2 for an illustration of this method.

45 Page 5-12 Figure 5-2 Sinking Fund Method $120,000 asset, 10 year life On Dec. 31 of the 10 th year, balance in the reserve fund is exactly equal to the asset's replacement cost. $ Year Replacement Cost on Dec. 31 Beginning of Year Balance Annual Contribution Annual Interest Earned This is the recommended approach to developing the optimal capital investment amounts that feeds into the Financing Strategy and infrastructure funding deficit calculation below Tax Supported Services From a tax supported asset base perspective, the estimated optimal annual capital investment is approximately $14.1 million (in 2016 dollars). Based on the Township s 2016 budget, current annual capital investment is approximately $5.5 million. This would provide a high-level estimate of the Township s annual tax supported infrastructure funding deficit at $8.6 million (in 2016 dollars) Water Services From a water asset base perspective, the estimated optimal annual capital investment is approximately $1.7 million (in 2016 dollars). Based on the Township s 2016 budget, current annual capital investment is approximately $1.2 million. This would provide a high-level estimate of the Township s annual water infrastructure funding deficit at $500,000 (in 2016 dollars) Wastewater Services From a wastewater asset base perspective, the estimated optimal annual capital investment is approximately $3.2 million (in 2016 dollars). Based on the Township s 2016 budget, current annual capital investment is approximately $1.1 million. This