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The Asset Management Plan presented to Central Elgin Council on December 23, 2013 by Arunas Kalinauskas of R.J. Burnside and Dan Wilson of Watson & Associates Economists Ltd. talked about taxation rate increases of 4% per year over each of the next five years, plus a 2% annual increase thereafter as needed to eliminate the deficit in municipal infrastructure funding.

Presentation

1. Central Elgin Asset Management Plan
Arunas Kalinauskas of R.J. Burnside and Dan Wilson of Watson & Associates Economists Ltd. will be in attendance to present Central Elgin's Asset Management Plan.

Excerpts from the Report

Roads

The Municipality's Transportation Assets make up one of the key services that reflect the economic and social development of the community. The Transportation assets in this study are made up of road surfaces [asphalt (72%), surface treatment (25%), gravel (0%), and unsurfaced (3%)], the roads bases [under asphalt (58%), under surface treatment (31%), under gravel (8%) and under no surface (3%)] bridges, bridge decks and culverts greater than 3 meters. Together at current replacement cost (2013) these Transportation assets account for $100.9 million dollars of the Municipality's assets. [Editor's note: no, the figures for road surfaces don't quite match the figures for road bases and the report gives no explanation for that difference.]

The Municipality has a vast network of maintained roads totaling over 210 km of roads. To establish more appropriate asset management processes the road assets were split into two asset types as Road Surfaces and Road Bases. Road environment as Urban, Semi-Urban and Rural were also defined to help define the complexity road maintenance the municipality undertakes. Road asset management best practices identify that paved roads will replace the asphalt surface twice before requiring the reconstruction of the road base. The Surface Treatment roads have been outperforming their useful lives due to the additional care the Municipality invests in their road reconstruction program. Road bases are constructed well and only then are hard top surfaces installed. This construction process is providing much better long term performance of the Municipality's roads. Gravel roads are topped up with gravel every 3 years. A high percentage of the annual gravel budget is used in the Municipality's reconstruction and resurfacing program.

The overall average condition rating of the Municipality's asphalt road surfaces is 77, which is reported to be at the high end of Good. It is clear that the last 10 years of invested effort by the Municipality has not only improved the overall rating of the Municipality's roads by 10% but has clearly declined the public's perceived concern over the Municipality's driving surfaces.

Bridges, Bridge Decks & Culverts

The Municipality undertakes bi-annual bridge and large culvert (greater than 3 meter) inspections by qualified engineers. ... The average condition of inspected bridges/culverts owned by the Municipality is "Good". ... The asset inventory identifies six bridge decks. It is recommended that this number be reduced to only those Bridge Decks that are considered for deck replacements as prescribed by the new MTO guidelines. Bridge Deck replacements are to be completed as a bridge's second rehabilitation. ... it is recommended that the Bridge Deck current useful life of 40 years be amended to reflect the MTO degradation replacement period of 60 years. This will improve the age based condition scores and reduce the risk levels for this asset type currently identified in this study.

Water Assets

Water assets are a critical asset group as these assets require a separate financial plan (Ontario Regulation 453/07) to ensure rate payers are not just paying for the water they use but also for the maintenance, operations and replacement of these water assets. The water asset inventory was developed as part of a Water Rate Study. All inventoried water assets are relatively young in age and therefore have very high estimated conditions. ... Water and water main asset replacement costs (2013) are valued at $47,732,720.00.

Wastewater Assets

Wastewater assets are also a critical asset group as these assets also require a separate financial plan to ensure rate payers are not just paying for the wastewater but also for the maintenance, operations and replacement of these wastewater assets. ... Many inventoried wastewater assets are relatively young in age and therefore have high estimated conditions. ... The Municipality has a camera inspection program in place covering approximately 20% of the wastewater system to identify any pipe maintenance and infiltration issues. It is recommended that the Municipality continue this camera inspection program to ensure that pipe issues are identified and rectified. This program will also assist in identifying the optimal time of when to insert a liner in the wastewater pipes to extend their useful lives. ... Wastewater facilities and main replacement costs (2013) are estimated at $29,541,118.00.

Financing Strategy

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.

Funding Deficits

Tax Supported
From a tax supported asset base perspective, the estimated annual sinking fund requirement, based on using the calculations discussed above, is approximately $3.4 million (in 2013 dollars). Based on the Municipality's 2013 budget, current annual capital investment is approximately $1.8 million. This would provide a high level estimate of the Municipality's annual tax supported infrastructure funding deficit at $1.6 million (in 2013 dollars).

Water
From a water asset base perspective, the estimated annual sinking fund requirement, based on using the calculations discussed above, is approximately $1.0 (in 2013 dollars). Based on the Municipality's 2013 budget, current annual capital investment is approximately $0 (excluding investments through debentures). This would provide a high level estimate of the Municipality's annual water infrastructure funding deficit at $1.0 million (in 2013 dollars).

Wastewater
From a wastewater asset base perspective, the estimated annual sinking fund requirement, based on using the calculations discussed above, is approximately $780,000 (in 2013 dollars). Based on the Municipality's 2013 budget, current annual capital investment is approximately $0 (excluding investments through debentures). This would provide a high level estimate of the Municipality's annual wastewater infrastructure funding deficit at $780,000 (in 2013 dollars).

Under the recommended financing strategy, the Municipality would be making proactive attempts to mitigate these funding gaps over the forecast period through:

  • Considering an increase in taxation as part of upcoming budget deliberations, dedicated to capital, to be transferred to capital reserve(s): 4.01% each year for the next 5 years and 2% annual increase thereafter
  • Water revenue increases consistent with the calculations provided in this report and the rate study: 6.4% increase in 2014; 8.3% increase in 2015; 5,9% increase in 2016 & 2017; 3% annual increase thereafter
  • Wastewater revenue increases consistent with the calculations provided in this report and the rate study: 13.9% annual increase for each of the next 4 years; 2.3% annual increase thereafter

This financing strategy is designed to make all of the municipal infrastructure sustainably self-funded without reliance on other levels of government, but does include the gas tax revenue as a predictable,knowable and dependable revenue stream.

To further mitigate the potential infrastructure funding deficit, the Municipality could consider:

  • Decreasing expected levels of service to make available capital funding;
  • Issuing debt for significant and/or unforeseen capital projects, in addition to the debt recommended within this report, while staying within the Municipality's debt capacity limits (this would have the impact of spreading out the capital repayment over a defined term);
  • Actively seeking out and applying for grants;
  • Consider approaching the development community for funding assistance with respect to growth/expansion related projects;
  • Rate increases, where needed (i.e. taxation, user fees); or
  • Implementing operating efficiencies (i.e. reduced operating costs to allow more capital investment).

This entire report can be viewed on line and downloaded at the municipality's website: https://centralelgin.civicweb.net/Documents/DocumentList.aspx?ID=45230

Report PW 94-13: Asset Management Plan (Roads, Bridges, Water, Wastewater Infrastructure) Adoption
by Deputy Mayor David Marr, Chairperson of the Asset Management Plan Steering Committee

Asset Value and Conditions

It should be noted that municipalities are stewards of assets that get used by its residents and the public. The value of these assets is quite large. In Central Elgin the replacement value of the assets that are covered by this Asset Management Plan is approximately $184 million dollars (2013 dollars).

The assets that make up this value are as follows:

  • Roads and Bridges $100,881,380
  • Potable Water Infrastructure $51,383,771
  • Waste Water Infrastructure $31,765,467

The Asset Management Plan for the Road, Bridge, Water and Waste Water infrastructure, identifies an annual infrastructure funding deficit as follows:

  • Roads, and Bridges $1.6 million (Property tax supported)
  • Water $1.0 million (Water Rate supported)
  • Waste Water $780,000 (Waste Water Rate supported)

It is important to note that while there is an infrastructure deficit that has been identified as a result of this study, it is smaller than most municipalities.

Waste Water (Sanitary Sewer)

The Waste Water system infrastructure is sustainable within the rates that were identified in the 2012 Water and Waste Water Rate Study provided that Council charges the Central Elgin Connection Charge to the residents in Phases 2 and 3 of the Eastwood Sanitary Servicing Project. Currently, the Asset Management plan contemplates only collecting the City charge and remitting it to the City. If this is Council's decision it will mean that Waste Water Service rates will need to increase beyond what was already identified in the 2012 study. These additional increases would be as follows:

  • 2014, 1.9%
  • 2015 and 2016, 4.9%
  • 2017, 11.9%
  • 2018 to 2023, 1%

Roads and Bridges

The Road and Bridge Assets are funded from the Property Tax supported portion of the budget. The infrastructure funding deficit is respectable as compared to many other municipalities. The deficit could be totally eliminated within a 10 year planning period if property tax rates were increased by 4% per year over the next five years, and then dropping this down to 2% for the remaining five years (assuming 1% assessment growth).

In the end, Council voted to accept the Asset Management Plan (Roads, Bridges, Water and Waste Water) dated December 19, 2013, and confirmed that they will have regard for the plan during future budget deliberations. AND THAT the Asset Management Plan be reviewed annually with a complete update being undertaken at a minimum of every 5 years.

Reports

PW 92-13: Belmont Municipal Drain Abandonment "The Belmont Municipal Drain was constructed in 1924 along Main, Lome and Rouen Streets and outletting at Kettle Creek to the north. Since the time of construction most, If not all of the original 1924 drain has been replaced with a more modern storm sewer. There is no record of any improvements or petitions in regards to this drain since the 1924 report." Council voted to abandon this drain.

By-laws
By-law 1671: Confirmatory By-law. Passed

New Business

Centennial Road: Recent weather events have pretty much wrecked the temporary surfacing of Centennial Road, making it virtually undriveable by late Saturday. The municipality graded it on Sunday even though they could not drain the water off it. They intend to follow up with more application of recycled asphalt to bring the grade f the road up to where the water will drain into the storm drains, and monitor the conditions from now until spring, when permanent repairs can be completed.

PSFT: Council feels the best avenue for the Port Stanley Festival Theatre with regards to their request for some assistance from the municipality with their "Expand the Experience" building campaign is for the theatre to apply for grant funding. The theatre will be sent an application form which must be completed and returned by the January 3, 2014 deadline.

Unfinished Business
1. Tree Cutting By-law: staff directed to prepare a draft by-law for Council's consideration
2. Front Street Bridge: staff directed to prepare a report on structure (This item is new)

Closed Session
CS1: Belmont Water System: A Proposed Acquisition or Disposition of Land (s.239(2)(c))
CS2: Closed Session Minutes


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