Prepared By: City of Welland Comprehensive Asset Management Plan GMBP File: 614013 January 13, 2015 GUELPH OWEN SOUND LISTOWEL KITCHENER EXETER HAMILTON GTA 650 WOODLAWN RD. W., BLOCK C, UNIT 2, GUELPH ON N1K 1B8 P: 519.824.8150 WWW.GMBLUEPLAN.CA
TABLE OF CONTENTS EXECUTIVE SUMMARY...1 1. INTRODUCTION...3 1.1 Provincial Guideline...3 1.2 Goals of Asset Management...3 1.3 Scope of the AMP...3 1.4 Development of the AMP...4 1.5 Refinement of the AMP...4 2. STATE OF INFRASTRUCTURE...5 2.1 Sources of Asset Information...5 2.2 Asset Inventory...5 2.3 Asset Value...6 2.4 Asset...7 2.5 Asset and Availability...8 2.6 State of Services in Welland...8 3. LEVELS OF SERVICE...9 3.1 Types of Levels of Service...9 3.2 Performance Metrics...9 3.3 Levels of Service in Welland...9 4. ASSET MANAGEMENT STRATEGY...11 4.1 Asset Management Strategy Overview...11 4.2 The Relationship between Levels of Service and Infrastructure Investment Needs...11 4.3 Infrastructure Investment Needs High Level of Service...13 4.4 Infrastructure Investment Needs Low Level of Service...15 5. FINANCING STRATEGY...17 5.1 Scope and Process...17 5.2 Historical Results...18 5.3 Financing Strategy...21 5.4 Funding Shortfall...26 6. RECOMMENDATIONS...28 6.1 Improving the City s Understanding of their Infrastructure Investment Needs...28 6.2 Long Term Activities to Advance the City s Asset Management Strategy...30 7. CONCLUSIONS...31 I
COMPRHENSIVE ASSET MANAGEMEN PLAN CITY OF WELLAND EXECUTIVE SUMMARY In 2012 Ontario's Ministry of Infrastructure released a guide titled Building Together: Guide for Municipal Asset Management Plans. This guide forms part of a comprehensive strategy called the Municipal Infrastructure Investment Initiative (MIII) which aims to develop a strong and cooperative relationship between municipalities and the Province of Ontario to address the significant challenges that currently face our deteriorating infrastructure. The Province is seeking to achieve standardization and consistency in the management of municipal infrastructure. To achieve this, they are requiring that any City seeking provincial capital funding for infrastructure projects be required to prepare an Asset Management Plan (AMP) to demonstrate the particular need of a project to the social, economic or environmental priorities of the community. This report represents the City of Welland s first comprehensive AMP that reviews all of the assets that are owned or operated by the City. It builds upon the AMP that was completed in 2013 that included only the City s water, wastewater, storm water and transportation infrastructure. The analysis in this report has been completed based on readily available information in the City. The report also establishes a framework that supports an informed decision making process that is used to improve the management of the City s infrastructure. Welland has committed to continually improving this AMP over the coming years as additional information is collected and as knowledge of asset management in the City increases. This AMP is structured in the following sections: Section 1 introduces asset management and establishes goals for infrastructure management in the City. Section 2 summarizes the state of the infrastructure in the City and introduces the concepts of managing services through managing infrastructure. Section 3 documents the City s plan for understanding the current performance of the entire suite of levels of service that will be used to drive future infrastructure investment. Section 4 establishes the long term (50 year) infrastructure investment needs to sustain the City's existing infrastructure. The investment needs are quantified for two different level of service scenarios to demonstrate the relationship that they have to the investment needs. Section 4 also provides a list of activities that the City should consider implementing over the short term to advance the organization s asset management strategy. Section 5 reviews the City's finances and provides a strategy to achieve a sustainable level of investment to renew the existing infrastructure in perpetuity. Section 6 recommends a series of activities that the City should implement to improve their understanding of the infrastructure needs and to reduce the cost of renewing the infrastructure systems. 1
This first iteration of the AMP estimates the total value of the City s infrastructure at approximately $541 million. The analysis identifies an annual infrastructure capital investment need of between $18 and $28 million depending on the level of service targets that the City is trying to achieve. This investment need has been established based on a strategic review of the City s asset inventory. It should be emphasized that value represents the capital investments that are required to sustain the City s existing infrastructure and does not include the resources that are required to operate or expand the infrastructure systems. The City is striving to reach a position where the infrastructure needs equal the available revenues. Over the coming years, the City will continually review the infrastructure needs as better information becomes available and as technological improvements reduce the cost of renewing infrastructure. The City will also consider approaches to increase the revenue that is available to fund the renewal of existing infrastructure, including pursuing Provincial or Federal infrastructure grants. This strategy positions the City on a path to ultimately reach a point where the infrastructure needs equal the available revenue. It is important that the City invests the appropriate resources to understand the infrastructure needs that are required to achieve the target levels of service. The understanding of these needs will be developed by completing engineering investigations or studies into each individual infrastructure group. The priority projects that the City should implement are summarized as follows: Building Needs Study ($200,000 every 5 years) Water Distribution System Needs Study ($100,000 every 5 years) Sanitary Sewer Collection System Needs Study ($300,000 every 5 years) Parks and Canal Lands Asset Inventory and Needs Study ($100,000 every 5 years) Road Needs Study ($100,000 every 5 years) Bridge Needs Study ($20,000 every 2 years) The cost of these activities is an average of $170,000 per year. It is essential that the resources that are required to complete these investigations are incorporated into the City s annual budgets. 2
1. INTRODUCTION This report represents the first comprehensive Asset Management Plan (AMP) for the City of Welland that includes all of the assets own by the municipality. It establishes a framework that supports an informed decision making process that is used to improve the management of the City's infrastructure. This report builds upon the City s first AMP that was prepared in 2013 for only the water, wastewater, storm water and transportation assets. 1.1 Provincial Guideline In 2012 Ontario's Ministry of Infrastructure released a guide titled Building Together: Guide for Municipal Asset Management Plans. This guide forms part of a comprehensive strategy called the Municipal Infrastructure Investment Initiative (MIII) which aims to develop a strong and cooperative relationship between municipalities and the Province of Ontario to address the significant challenges that currently face our deteriorating infrastructure. Part of the Initiative from the Province includes making specific capital funds available to municipalities. To gain access to these specific funds a municipality must have completed an AMP to demonstrate the particular need of a project to the social, economic or environmental priorities of the community. Furthermore the AMP must demonstrate the coupling of capital investment to a customer expectation in terms of service provided by the infrastructure to which the capital investment is being made. This report and the accompanying analysis of the City s asset inventories will support the funding applications for this, and future, Provincial and Federal funding initiatives. 1.2 Goals of Asset Management Asset management strives to continually improve the management of infrastructure. The following is a list of goals that asset management strategies and processes aim to achieve: Explicitly defining customer expectations with respect to the quantity, quality and availability of service provided by infrastructure assets. A repeatable, systematic, informed and transparent decision making process that provides elected officials with the knowledge that they need to make decisions regarding capital expenditures, operating costs and revenue requirements (i.e. rate and tax levels). Optimized life cycle cost (i.e. total operating, maintenance and capital resources) of providing services to residents. Reduced risk exposure to the City and its customers by ensuring that assets are managed in a manner that matches the risk that their failure represents to the delivery of services. A mechanism to ensure that the services that are delivered through infrastructure can be provided at a sustainable level at a cost that is affordable to residents. 1.3 Scope of the AMP This AMP covers a period of 50 years and reports on the majority of the assets owned by the City, including: Water mains and water distribution system appurtenances Sanitary/storm/combined sewers and collection system appurtenances Stormwater management infrastructure Roads and traffic appurtenances Bridges and large culverts Buildings Parks Cemeteries Fleet Forestry 3
It should be noted that the assets required to support Fire and Emergency Services, Transit and the Welland Recreational Canal Corporation (WRCC) are included in the asset groups listed above (i.e. fleet, parks, buildings, forestry). 1.4 Development of the AMP This AMP was developed with a project team from the City and GM BluePlan. The following documents were reviewed and incorporated throughout the development of this AMP: Official Plan (2011) Urban Design Guidelines (2014) Municipal Standards (2013 Update) Development Charges Background study (2014) Traffic Master Plan (2001) Brownfield Community Improvement Plan (2007) Strategic Plan 2011 2016 (2011) National Engineering Vulnerability Assessment of Public Infrastructure to Climate Change City of Welland Stormwater and Wastewater Infrastructure Assessment Technical Report (2012) Taxpayer Affordability Strategy (2011) Transportation Planning Study (2001) Fire and Emergency Services Facility Needs Study (2013) Welland Transit Master Plan 2013 2017 Strategic Plan and Conventional Transit Working Paper (2014) O/Reg 239/02 for the Minimum Maintenance Standards for Municipal Highways TCA Documentation City Budgets and other Financial Documents Other Relevant City Correspondence 1.5 Refinement of the AMP The City is realistic in recognizing that this AMP is another step along a pathway that will be able to achieve the goals outlined above. Section 6 describes a series of activities that will improve subsequent iterations of the AMP. 4
2. STATE OF INFRASTRUCTURE This section summarizes the state of the City's infrastructure, including: Inventory of all assets what you own Value of assets what it is worth of assets how long will it last when will it need replaced based on the demands put upon it. The state of the services that are bring provided by the City what level of service is currently being provided 2.1 Sources of Asset Information The City of Welland maintains several asset inventories at varying levels of detail, summarized as follows: Tangible Capital Asset (TCA) Register The asset register was developed to achieve the requirements of the Public Sector Accounting Board (PSAB) 3150 regarding full accrual accounting of assets in municipalities. While this Asset Register is comprehensive, there is not sufficient information on the assets to make informed investment decisions other than replacing an asset when it reaches the end of its amortization period (i.e. construction dates and theoretical useful lives). GIS / Database inventories The City maintains Geographic Information System (GIS) inventories of a number of asset types. The inventories are an excellent source of information to support asset management decision making processes. They contain condition information of some asset groups and other relevant information that can be used for infrastructure planning purposes. Expert Systems The City currently owns and operates a number of specialized systems for the assessment and planning of capacity, capture of customer service requests and the documentation of the frequency, cost and extent of maintenance of infrastructure assets. StandAlone Spreadsheets The City also maintains several standalone spreadsheets that are used to collect and store information on some assets. Some of these spreadsheets are useful for asset management decision making processes. The City must strive to have all of their asset inventories in one location, referred to as asset centric data management, to allow asset management related information to be analyzed in a more timely and effective manner. GM BluePlan staff did observe that the City of Welland information holdings are more mature and better developed than client communities of an equivalent or similar population. 2.2 Asset Inventory Table 1 summarizes the asset inventory that is included in the scope of this Comprehensive Asset Management Plan. 5
Table 1 Asset Inventory Asset Category Includes items like Inventory Watermains Sewers Watermains, hydrants, valves and other water distribution system appurtenances Sanitary/combined/storm sewers, manholes and other related appurtenances 267.7 km 390.2 km Roads Road Network 288.3 km Sidewalks Sidewalks 323.7 km Bridges/Culverts Bridge decks and structures 15 Bridges Facilities All City buildings 45 Facilities Parks Playgrounds, ball diamonds, landscaping, paved surfaces 177 components Cemeteries Cemeteries 1 Cemetery Fleet All City vehicles and motorized equipment Forestry Trees 4194 Trees Traffic Street Lights, Traffic Signs, Parking Meters, traffic signals 34 Transit, 13 Fire, 109 miscellaneous vehicles 2320 Street Lights, 1878 Traffic Signs, 328 Parking Meters 2.3 Asset Value Table 2 summarizes the replacement value of the assets that are included in the scope of this Comprehensive Asset Management Plan. It is apparent from Table 2 that the total value of the assets owned by the City is approximately $541 million. Table 2 Asset Value Asset Category Replacement Value (millions) Sewers $159 Facilities $152 Watermains $80 Sidewalks $48 Roads $28 Bridges $35 Fleet $26 Parks $10 Forestry $3 Cemeteries Traffic Included with Parks Included with roads Total $541 6
2.4 Asset Understanding the condition of the City's assets is an essential component to an AMP. Ideally the condition information is based on assessment activities that provide firsthand knowledge of the condition of the infrastructure. This information must, in all cases, be standardized and comparative to allow for the comparison of infrastructure needs and furthermore the analysis of tradeoffs in capital investments. A significant portion of the assets in the City s portfolio lacks standardized and comparative condition information. In these cases the condition of the assets had to be estimated based primarily on estimated service life. This is a common practice in municipalities in Ontario and across Canada where no reliable condition information exists. Caution must be used with this method in that it: Assumes replacement of the asset at its service life plus one day; Assumes a uniform deterioration rate irrespective of the applied load on that asset and the asset s physical make up Does not factor in substantial rehabilitation of an asset since it was put into service The best practice to estimate the condition of an asset, where assessment activities have not been completed, is to evaluate the amount of its useful life that has been consumed. For example, an asset that has a useful life of 10 years would be considered to be in excellent condition if it is 1 year old and poor condition if it is 9 years old. Although this approach does not always provide an accurate condition of the asset, particularly in cases of buried linear infrastructure (i.e. water mains and sewers), it is a reasonable starting point where actual condition information is not easily accessible. The City's inventories contain information on the asset age and the useful life that has been estimated based on industry norms, and therefore it is possible to estimate the condition of the assets using this approach. For the purposes of this report, the condition of the assets where condition information was not available was estimated based on Table 3. It should be noted that there was actual condition information readily available for the following asset types: Roads pavement condition index information for 87% of the network Sidewalks condition assessment based on visual observations for 58% of the network Sewers condition assessment scores based on visual (camera) observations for 44% of the network Table 3 Translating Estimated Service Life to Asset Percent of Estimated Service Life remaining on Asset Very Good 75100% Good 5074% Fair 3049% Poor 1029% Very Poor <10% Table 4 summarizes the distribution of asset condition. It is apparent that $92 million worth of assets are considered to be in very poor condition. However, this is based on the assumption that this infrastructure is in very poor condition because it has reached the end if its useful life. 7
Table 4 Estimated of Infrastructure by Value Value of Infrastructure in State (million) Percent of Total Very Good $166 31% Good $156 29% Fair $92 17% Poor $32 6% Very Poor $92 17% Unknown $3 (forestry/trees) <1% Total $541 100% 2.5 Asset and Availability The determination of asset capacity is an integral component of an asset management. An asset can be well within its estimated service life and exhibit like new condition however may not meet the capacity or availability requirements of customers. In essence capacity and availability can be described as: : the ability of an asset to meet the current demands put upon it both now and in the future by customers (i.e. sewer or water system capacity). Availability: the number of assets available to meet customer needs (i.e. number and utilization of park or recreational spaces to meet the needs of customers). In reviewing the information provided by City Staff, GM BluePlan observed that capacity data was lacking in some significant areas with the exception of water distribution. Recommendations in the latter sections of this report highlight the need for the collection of standardized capacity and availability information. 2.6 State of Services in Welland In 2014 the Canadian Infrastructure Report Card published an Asset Management Primer to contribute to municipal infrastructure management discussion and the understanding of asset performance. The following excerpt is particularly noteworthy: At the most basic level, municipalities exist to provide services to their residents. The concept of service levels can be difficult for many asset managers to describe and define because we manage the physical assets, and not the services provided by the assets. This changing mindset will shift the focus of asset management to the level of service delivered by our infrastructure systems. As a municipality develops an understanding of the physical condition of their assets, they will inevitably begin to understand how this condition impacts the service that the assets provide. This will lead to asset management processes that focus on managing services and how investment decisions may be used to best support the delivery of these services Over the next decade, this section of the AMP will transition from being titled State of Local Infrastructure to State of Local Services. The following section provides a discussion on levels of service in Welland. 8
3. LEVELS OF SERVICE A "level of service" is a term that is used to describe quality, quantity and availability of the service that that is being provided. In the context of asset management plans, levels of service are established as a way to guide the management of infrastructure in a manner that aims to achieve the level of service goal. This develops a systematic process for: Coupling the customer level of service expectation, Customer Level of Service, with technical units of measure, Technical Levels of Service, used by technical staff in the analysis of infrastructure need. Tracking the current level of service through Key Performance Indicators Deciding the appropriate target level at which to provide each service. Preparing a strategy to achieve the level of service target if it is not currently being achieved. Establishing a clear linkage between the costs of higher service levels. Discussing the willingness to pay for higher service levels. 3.1 Types of Levels of Service Levels of service vary widely depending on the level of sophistication of an organization. They can be related to regulations, customer expectations, or corporate vision. In terms of municipal infrastructure, the services that they provide are generally related to either condition or capacity of the asset or infrastructure system. Levels of service can also be based on managing the risk that the failure of the asset has on the service that it provides. Levels of Service The most basic level of service for the City is established around maintaining infrastructure in an acceptable state of repair. This strategy is based on replacing an asset when it reaches a condition state that reduces its ability to provide the service for which it was constructed. The specific condition state when the renewal of the asset is required will change based on the importance of the service that the asset provides (i.e. local roads compared to collector roads). Levels of Service levels of service are related to the amount or size of infrastructure that is required to provide the objectives of the organization. Similar to most municipalities in Ontario, Welland does not have many specific levels of service that are used to address the renewal of existing infrastructure based on capacity issues. 3.2 Performance Metrics Performance metrics, or Key Performance Indicators (KPIs), are used to assess how well the infrastructure is achieving the service levels. It is essential that each level of service have a corresponding performance metric that will be tracked on an ongoing basis because they will be used to make decisions about why and when to investment in the City s infrastructure systems. 3.3 Levels of Service in Welland As part of this project, a series of workshops were held with City Staff to develop levels of service and performance metrics (KPIs) for each infrastructure system. The results of these workshops were a series of tables, included in Appendix A of this report, that document: 1. A customer service statement that describes what service the City is providing through the infrastructure system. 2. Customer or Council focused levels of service and associated performance metrics that are used to convey how well the infrastructure system is providing its intended service to the general public. 9
3. Technical focused levels of service and associated KPIs that are used by Staff to convey how well the infrastructure system is providing its intended service to technical experts in the infrastructure business. Appendix A illustrates the outcomes of these workshops. The initial level of service statements indicated will be augmented through the use of a customer level of service survey which will allow residents to make informed choices or tradeoffs between investment levels and the quality, quantity and availability of services. 10
4. ASSET MANAGEMENT STRATEGY 4.1 Asset Management Strategy Overview The asset management strategy component of the AMP represents the set of planned activities to ensure that the infrastructure is able to achieve the level of service goals. The strategy is generally related to optimizing decisions with respect to: The replacement or rehabilitation of assets The optimal level of maintenance investment required to optimize the long term costs of the assets (i.e. does more maintenance result in a longer useful life?) Disposing of assets that are not required to meet service levels Addressing policies that impact the strategy for how to renew the asset (i.e. does the asset size/design need to change to meet a certain policy?) The items summarized above are the goals for an AMP (and the associated systems that support the plan) to achieve through an analysis of readily available information. In this iteration of the City's AMP, achieving a process that optimizes these goals is difficult due to a lack of readily available information and established processes to support the decisions. For example, the decision to rehabilitate a sanitary sewer is dependent on knowing if the size is sufficient or should be increased to provide adequate service to accommodate future growth. If the pipe is too small then rehabilitation is not an option. Therefore, the City needs to have the data in place (i.e. functioning hydraulic model of their sanitary sewer collection system with growth projections and spatial records of basement flooding complaints) in order to determine if the sanitary sewer is too small to support the decision making process of rehabilitation versus replacement. 4.2 The Relationship between Levels of Service and Infrastructure Investment Needs The relationship between the levels of service that are provided by an infrastructure systems and the corresponding investment needs is used in the City s Asset Management strategy to guide investment decisions. In this iteration of the City s Asset Management Plan there is limited data available to support an analysis of the infrastructure investments needs to provide the level of service targets that have been established for each asset group. However, there is data available to complete an analysis on the investments needed to provide target condition levels of service on the City s sewers, roads and sidewalks. Table 6 indicates the details for how both the high and low levels of service have been defined for the purposes of estimating the infrastructure investment needs in the following section. 11
Table 6 Level of Service Scenarios used for Estimating Infrastructure Investment Needs Asset Group High Level of Service Low Level of Service Sewers Roads Sidewalks All other assets Replace when Pipeline Assessment and Certification Program (PACP) score reaches 4 out of 5 Replace when Pave Index (PCI) score falls below 65 Replace when condition score falls below 65 Replace when asset reaches the end of its useful life Replace when PACP score reaches 5 out of 5 Replace when PCI score falls below 50 Replace when condition score falls below 50 Replace when asset reaches the end of its useful life It is recognized that subsequent refinements to the analysis of infrastructure needs to achieve the level of service scenarios described in Table 6 will consider opportunities to rehabilitate the asset when it falls below the target level of service. 12
4.3 Infrastructure Investment Needs High Level of Service Figure 1 illustrates the short term investment needs that are required to provide a high level of service. It is apparent from Figure 1 that over the next decade the investment needs are an average of approximately $28 million per year. This includes a significant backlog of investments which are required to renew assets that are currently below the target level of service. It is not realistic to renew this amount of infrastructure in one year, and therefore the backlog of needs has been included in the average renewal needs over the next 10 years. If the backlog is not considered then the average annual investment needs are approximately $18 million per year. Understanding the actual backlog that exists is an important reason to implement the recommendations in Section 6 of this report. 13
Figure 2 illustrate the long term renewal needs of the City s infrastructure over the next 50 years. It is apparent from Figure 2 that by this time the investment needs escalate to approximately $800 million over a tenyear period (or $80 million per year) when 3% annual inflation is factored into the analysis. 14
4.4 Infrastructure Investment Needs Low Level of Service Figure 3 illustrates the short investment needs that are required to provide a low level of service. It is apparent from Figure 3 that over the next decade the investment needs are reduced to an average of approximately $18 million per year. It is also apparent from Figure 3 that the backlog of investment needs to renew assets that are currently below the target level of service has been reduced to approximately half of the backlog of investment needs that are identified in Figure 1. 15
Figure 4 illustrates the long term renewal needs of the City s infrastructure over the next 50 years. It is apparent from Figure 4 that by this time the investment needs escalate to approximately $450 million over a tenyear period (or $45 million per year) when 3% annual inflation is factored into the analysis. 16
5. FINANCING STRATEGY 5.1 Scope and Process The financing strategy outlines the suggested financial approach to funding the scenarios outlined in Section 4, while utilizing the City s existing budget structure. This section of the asset management plan includes: Annual expenditure forecasts broken down by category; Actual expenditures in the above named categories for 2013 and budget expenditures for 2014 and draft 2015; A breakdown of annual funding/revenue by source; and Identification of the funding shortfall. The longterm financing strategy forecast (including both expenditure and revenue sources) was prepared, consistent with the City s departmental budget structure, so that it can be used in conjunction with the annual budget process. Various financing options, including taxation, reserves, reserve funds, debt, user fees (i.e. water and wastewater rates) and grants were considered and discussed with City staff during the process. Figure 5 below provides a visual representation of how various financing methods can be used for both initial asset purchases, as well as asset replacements. Figure 5 Financing Methods of Lifecycle Costs 17
A detailed ten (10) year financing plan was generated for tax supported, water rate supported and wastewater rate supported assets under the following scenarios: Scenario 1: Capital forecast assuming Low Level of Service (LOS) as described in Section 4; and Scenario 2: Capital forecast assuming High Level of Service (LOS) as described in Section 4. 5.2 Historical Results Table 7 outlines the historical maintenance/noninfrastructure costs for 2013, as well as 2014 and draft 2015 budgeted results. All maintenance for assets was funded through taxation revenue for tax supported assets, water revenue for water assets and wastewater revenue for wastewater assets based on the City s budget structure. Table 7 Historical Results of Maintenance & NonInfrastructure Solutions Tax Supported Description Actual 2013 Budget 2014 Budget 2015 Asset Maintenance 8,669,290 8,668,561 8,973,030 Taxation Funding 8,669,290 8,668,561 8,973,030 Net Unfunded Water Services Description Actual 2013 Budget 2014 Budget 2015 Asset Maintenance 2,056,391 1,869,073 2,057,535 Water Rate Revenue 2,056,391 1,869,073 2,057,535 Net Unfunded Wastewater Services Description Actual 2013 Budget 2014 Budget 2015 Asset Maintenance 1,009,460 789,177 900,616 Wastewater Rate Revenue 1,009,460 789,177 900,616 Net Unfunded Tables 8 to 10 outline the historical capital results for 2013, as well as budgeted results for 2014 and draft 2015. 18
Table 8 Tax Supported Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2013 Budget 2014 Budget 2015 Capital Expenses General 125,003 312,000 295,000 Fire 99,037 120,000 100,000 Streetlights 18,972 20,000 Sidewalks 366,404 580,000 425,000 Roadways 1,082,263 2,715,000 1,312,406 Traffic 156,478 80,000 760,000 Fleet 547,765 667,000 437,000 Storm Sewers 273,026 1,200,000 775,000 Parking 62,000 Parks 373,202 885,000 600,000 Transit 474,147 507,000 652,974 Recreation 900,000 Facilities 12,294,169 2,695,141 Canal Lands 122,800 Capital Expenditures 15,810,466 8,048,000 8,175,321 Capital Financing Provincial/Federal Grants 1,166,447 120,000 853,326 Federal Gas Tax 744,800 733,021 Provincial Gas Tax 640,000 652,974 NonGrowth Related Debt 1,704,200 1,971,000 Reserve Fund: Development Charges (All) 21,328 1,337,500 450,153 Reserve : All 747,856 Reserve : Capital Surplus 180,000 170,000 Reserve: Operating Surplus 478,120 275,000 Reserve: Parkland 81,880 Reserve: Sports & Culture Infrastructure 230,000 100,000 Reserve: Parking 12,000 Reserve: Fleet 75,000 111,222 Reserve: General 20,000 Reserve: National Trail Coalition 22,800 Hydro Dividend 325,000 Prior Year Surplus 160,000 20,000 Developer Contribution 273,000 82,325 Region 30,000 447,000 Transfer from Operating 1,866,291 1,961,500 1,961,500 Total Capital Financing 3,801,922 8,048,000 8,175,321 Total Capital Expenditures less Capital Financing 12,008,544 19
Table 9 Water Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2013 Budget 2014 Budget 2015 Capital Expenses Water Meter Replacement 400,000 50,000 Public Lead Service Replacement 74,508 100,000 100,000 LASSER Program 50,000 50,000 Watermains 472,073 1,750,000 850,000 Fleet 113,692 153,500 186,000 Utility Cuts 250,000 Plans and Studies 94,892 65,000 Capital Expenditures 755,165 2,768,500 1,236,000 Capital Financing Provincial/Federal Grants 252,355 750,000 629,629 Federal Gas Tax 409,000 109,071 NonGrowth Related Debt 516,000 186,000 Reserve Fund: Development Charges (All) 3,625 250,000 Reserve: Capital Surplus 15,000 Reserve: Operating Surplus 150,000 Reserve: General 400,000 50,000 Reserve: Fleet 17,200 Transfer from Operating 527,300 261,300 261,300 Total Capital Financing 783,280 2,768,500 1,236,000 Total Capital Expenditures less Capital Financing (28,115) Table 10 Wastewater Historical Results Renewal/Rehabilitation, Replacement/Disposal & Expansion Description Actual 2013 Budget 2014 Budget 2015 Capital Expenses Collection 1,329,535 2,585,000 2,075,000 Utility Cuts 250,000 Plans and Studies 340,866 115,000 100,000 Fleet 280,500 Capital Expenditures 1,670,401 2,950,000 2,455,500 Capital Financing Provincial/Federal Grants 703,984 550,000 629,629 Federal Gas Tax 312,200 623,950 NonGrowth Related Debt 502,800 811,300 Reserve Fund: Development Charges (All) 92,675 97,500 12,500 Reserve: Capital Surplus 15,000 Reserve: Operating Surplus 100,000 Capital Project Transfer 200,000 Developer Contributions 140,000 Region 800,000 125,000 Transfer from Operating 485,300 232,500 253,121 Total Capital Financing 1,281,959 2,950,000 2,455,500 Total Capital Expenditures less Capital Financing 388,442 20
5.3 Financing Strategy Tax Supported Financing Strategy A summary of the financial strategy results for scenarios 1 and 2 are as follows: Table 11 Tax Supported Scenarios Summary 10Year Period Description Low LOS High LOS Annual Impact on Taxation (Note 1) 4.58% 5.82% New Debt Requirements (over 10 years) $ 13,100,000 $ 20,400,000 Capital (inflated) $ 110,494,712 $ 139,990,590 Note 1: Includes impact of new debt as well as inflationary adjustments to operating accounts. Note 2: Detailed results for Low and High LOS scenarios are contained in Appendix B. Note 3: Exclude Expansion (Growth) related projects. Table 12 below shows the tax supported expenditure forecast by category for the first 10 years of the forecast period, under each scenario. While this summary only shows high level cost classifications, further detail can be obtained from Appendix B. Tax Supported Low LOS Asset Lifecycle Costs Table 12 Tax Supported Expenditure Summary Maintenance: Current Service Levels 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Maintenance: LOS Adjustment Total Asset Maintenance 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Replacement/Disposal 9,638,510 9,927,665 10,225,495 10,532,260 10,848,228 11,173,674 11,508,885 11,854,151 12,209,776 12,576,069 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 9,638,510 9,927,665 10,225,495 10,532,260 10,848,228 11,173,674 11,508,885 11,854,151 12,209,776 12,576,069 Total 18,791,000 19,263,205 19,747,746 20,244,956 20,755,178 21,278,764 21,816,076 22,367,486 22,933,377 23,514,142 Tax Supported High LOS Asset Lifecycle Costs Maintenance: Current Service Levels 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Maintenance: LOS Adjustment Total Asset Maintenance 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Replacement/Disposal 12,211,450 12,577,794 12,955,127 13,343,781 13,744,095 14,156,417 14,581,110 15,018,543 15,469,100 15,933,173 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 12,211,450 12,577,794 12,955,127 13,343,781 13,744,095 14,156,417 14,581,110 15,018,543 15,469,100 15,933,173 Total 21,363,941 21,913,334 22,477,379 23,056,477 23,651,045 24,261,507 24,888,301 25,531,878 26,192,701 26,871,246 Table 13 summarizes the annual tax supported funding by revenue source for each scenario. The funding shown in this table is intended to finance the asset related costs identified in Table 12. 21
Tax Supported Low LOS Table 13 Breakdown of Annual Tax Supported Funding (Revenue) by Source Funding (Revenue) by Source Taxation 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Grants 224,141 NonGrowth Related Debentures 4,900,000 4,300,000 2,700,000 1,200,000 Gas Tax Reserve Funds 1,422,672 1,422,672 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 Humberstone Royalties 260,000 267,800 275,834 284,109 292,632 301,411 310,453 319,767 Capital Reserve Fund 3,091,697 4,204,993 5,806,175 7,605,140 9,113,074 9,430,245 9,756,933 10,093,420 10,440,003 10,796,982 Total 18,791,000 19,263,205 19,747,746 20,244,956 20,755,178 21,278,764 21,816,076 22,367,486 22,933,377 23,514,142 Tax Supported High LOS Funding (Revenue) by Source Taxation 9,152,491 9,335,540 9,522,251 9,712,696 9,906,950 10,105,089 10,307,191 10,513,335 10,723,601 10,938,074 Grants 224,141 NonGrowth Related Debentures 7,100,000 6,200,000 4,300,000 2,500,000 300,000 Gas Tax Reserve Funds 1,422,672 1,422,672 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 1,459,320 Humberstone Royalties 260,000 267,800 275,834 284,109 292,632 301,411 310,453 319,767 Capital Reserve Fund 3,464,638 4,955,122 6,935,807 9,116,661 11,708,941 12,412,988 12,829,158 13,257,812 13,699,327 14,154,086 Total 21,363,941 21,913,334 22,477,379 23,056,477 23,651,045 24,261,507 24,888,301 25,531,878 26,192,701 26,871,246 These lifecycle costs are being recovered through several methods: Taxation funding is suggested for all maintenance costs. Debt financing is shown as required in years where significant capital needs are identified. Please note that this may require a review of the City s current internal debt policies. Provincial or Federal funding programs, such as the Ontario Community Infrastructure Fund. Gas Tax funding has been shown as a stable and longterm funding source for eligible capital projects. The City 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 City 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 City to implement a consistent, yet increasing annual investment in capital so that the excess annual funds can accrue in capital reserve funds. As the financing strategy under each scenario is based on the City funding the plan with own funds, if other funding sources become available (i.e. grant funding or third party contributions) or if maintenance and rehabilitation practices allow for the deferral of capital works, then the impact on the City s taxation levy would decrease. Water Financing Strategy A summary of the financial strategy results for scenarios 1 and 2 are as follows: Table 14 Water Supported Scenarios Summary 10Year Period Description Low LOS High LOS Annual Impact on Water Revenue (Note 1) 2.80% 2.80% New Debt Requirements (over 10 years) $ 100,000 $ 100,000 Capital (inflated) $ 14,724,530 $ 14,724,530 Note 1: Includes impact of new debt as well as inflationary adjustments to operating accounts. Note 2: Detailed results for Low and High LOS scenarios are contained in Appendix C. Note 3: Exclude Expansion (Growth) related projects. 22
The analysis provided in Table 14 does not change for the Low LOS and High LOS scenarios because the water assets did not have sufficient data available to support the development of level of service scenarios (refer to Table 6). Table 15 shows the water supported expenditure forecast by category for the first 10 years of the forecast period, under each scenario. While this summary only shows high level cost classifications, further detail can be obtained from Appendix C. Water Low LOS Asset Lifecycle Costs Table 15 Water Supported Expenditure Summary Maintenance: Current Service Levels 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Maintenance: LOS Adjustment Total Asset Maintenance 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Replacement/Disposal 1,284,428 1,322,961 1,362,650 1,403,529 1,445,635 1,489,004 1,533,674 1,579,685 1,627,075 1,675,887 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 1,284,428 1,322,961 1,362,650 1,403,529 1,445,635 1,489,004 1,533,674 1,579,685 1,627,075 1,675,887 Total 3,383,114 3,463,620 3,546,122 3,630,671 3,717,320 3,806,123 3,897,135 3,990,415 4,086,020 4,184,011 Water High LOS Asset Lifecycle Costs Maintenance: Current Service Levels 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Maintenance: LOS Adjustment Total Asset Maintenance 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Replacement/Disposal 1,284,428 1,322,961 1,362,650 1,403,529 1,445,635 1,489,004 1,533,674 1,579,685 1,627,075 1,675,887 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 1,284,428 1,322,961 1,362,650 1,403,529 1,445,635 1,489,004 1,533,674 1,579,685 1,627,075 1,675,887 Total 3,383,114 3,463,620 3,546,122 3,630,671 3,717,320 3,806,123 3,897,135 3,990,415 4,086,020 4,184,011 Table 16 summarizes the annual water supported funding by revenue source for each scenario. The funding shown in this table is intended to finance the asset related costs identified in Table 15. Water Low LOS Table 16 Breakdown of Annual Water Supported Funding (Revenue) by Source Funding (Revenue) by Source Water Rate Revenue 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Grants NonGrowth Related Debentures 100,000 Gas Tax Reserve Funds 307,869 307,869 322,528 322,528 322,528 322,528 322,528 322,528 322,528 322,528 Capital Reserve Fund 876,560 1,015,092 1,040,122 1,081,001 1,123,107 1,166,476 1,211,146 1,257,157 1,304,547 1,353,359 Total 3,383,114 3,463,620 3,546,122 3,630,671 3,717,320 3,806,123 3,897,135 3,990,415 4,086,020 4,184,011 Water High LOS Funding (Revenue) by Source Water Rate Revenue 2,098,686 2,140,659 2,183,473 2,227,142 2,271,685 2,317,119 2,363,461 2,410,730 2,458,945 2,508,124 Grants NonGrowth Related Debentures 100,000 Gas Tax Reserve Funds 307,869 307,869 322,528 322,528 322,528 322,528 322,528 322,528 322,528 322,528 Capital Reserve Fund 876,560 1,015,092 1,040,122 1,081,001 1,123,107 1,166,476 1,211,146 1,257,157 1,304,547 1,353,359 Total 3,383,114 3,463,620 3,546,122 3,630,671 3,717,320 3,806,123 3,897,135 3,990,415 4,086,020 4,184,011 23
These lifecycle costs are being recovered through several methods: Water revenue funding is suggested for all maintenance costs. Debt financing is shown as required in years where significant capital needs are identified. Please note that this may require a review of the City s current internal debt policies. Provincial or Federal funding programs, such as the Ontario Community Infrastructure Fund. Gas Tax funding has been shown as a stable and longterm funding source for eligible capital projects. The City 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 City 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 City to implement a consistent, yet increasing annual investment in capital so that the excess annual funds can accrue in capital reserve funds. As the financing strategy under each scenario is based on the City funding the plan with own funds, if other funding sources become available (i.e. grant funding or third party contributions) or if maintenance and rehabilitation practices allow for the deferral of capital works, then the impact on the City s water revenue would decrease. Wastewater Financing Strategy A summary of the financial strategy results for scenarios 1 and 2 are as follows: Table 17 Wastewater Supported Scenarios Summary 10Year Period Description Low LOS High LOS Annual Impact on Wastewater Revenue (Note 1) 3.39% 5.63% New Debt Requirements (over 10 years) $ 400,000 $ 6,000,000 Capital (inflated) $ 24,041,030 $ 48,310,410 Note 1: Includes impact of new debt as well as inflationary adjustments to operating accounts. Note 2: Detailed results for Low and High LOS scenarios are contained in Appendix D. Note 3: Exclude Expansion (Growth) related projects. Table 18 below shows the wastewater supported expenditure forecast by category for the first 10 years of the forecast period, under each scenario. While this summary only shows high level cost classifications, further detail can be obtained from Appendix D. 24
Wastewater Low LOS Asset Lifecycle Costs Table 18 Wastewater Supported Expenditure Summary Maintenance: Current Service Levels 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Maintenance: LOS Adjustment Total Asset Maintenance 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Replacement/Disposal 2,097,111 2,160,025 2,224,825 2,291,570 2,360,317 2,431,127 2,504,060 2,579,182 2,656,558 2,736,254 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 2,097,111 2,160,025 2,224,825 2,291,570 2,360,317 2,431,127 2,504,060 2,579,182 2,656,558 2,736,254 Total 3,015,740 3,097,025 3,180,566 3,266,426 3,354,670 3,445,367 3,538,585 3,634,397 3,732,877 3,834,100 Wastewater High LOS Asset Lifecycle Costs Maintenance: Current Service Levels 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Maintenance: LOS Adjustment Total Asset Maintenance 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Replacement/Disposal 4,214,142 4,340,566 4,470,783 4,604,906 4,743,053 4,885,345 5,031,905 5,182,863 5,338,348 5,498,499 Replacement/Disposal LOS Adjustment Total Replacement/Disposal 4,214,142 4,340,566 4,470,783 4,604,906 4,743,053 4,885,345 5,031,905 5,182,863 5,338,348 5,498,499 Total 5,132,770 5,277,567 5,426,524 5,579,762 5,737,406 5,899,585 6,066,430 6,238,078 6,414,668 6,596,345 Table 19 below summarizes the annual wastewater supported funding by revenue source for each scenario. funding shown in this table is intended to finance the asset related costs identified in Table 18. The Table 19 Breakdown of Annual Wastewater Supported Funding (Revenue) by Source Wastewater Low LOS Funding (Revenue) by Source Wastewater Rate Revenue 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Grants NonGrowth Related Debentures 400,000 Gas Tax Reserve Funds 461,803 461,803 483,792 483,792 483,792 483,792 483,792 483,792 483,792 483,792 Capital Reserve Fund 1,235,308 1,698,222 1,741,033 1,807,778 1,876,525 1,947,335 2,020,268 2,095,390 2,172,766 2,252,462 Total 3,015,740 3,097,025 3,180,566 3,266,426 3,354,670 3,445,367 3,538,585 3,634,397 3,732,877 3,834,100 Wastewater High LOS Funding (Revenue) by Source Wastewater Rate Revenue 918,628 937,001 955,741 974,856 994,353 1,014,240 1,034,525 1,055,215 1,076,319 1,097,846 Grants NonGrowth Related Debentures 2,200,000 1,600,000 1,300,000 700,000 200,000 Gas Tax Reserve Funds 461,803 461,803 483,792 483,792 483,792 483,792 483,792 483,792 483,792 483,792 Capital Reserve Fund 1,552,339 2,278,763 2,686,991 3,421,114 4,059,261 4,401,553 4,548,113 4,699,071 4,854,556 5,014,707 Total 5,132,770 5,277,567 5,426,524 5,579,762 5,737,406 5,899,585 6,066,430 6,238,078 6,414,668 6,596,345 These lifecycle costs are being recovered through several methods: Wastewater revenue funding is suggested for all maintenance costs. Debt financing is shown as required in years where significant capital needs are identified. Please note that this may require a review of the City s current internal debt policies. Gas Tax funding has been shown as a stable and longterm funding source for eligible capital projects. The City 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 City to proactively increase amounts being transferred to these capital reserves during the annual budget process. 25