Having a financial plan is critical for putting an asset management plan into action. In addition, by having a strong financial plan, municipalities can demonstrate that they have made a concerted effort to integrate asset management planning with financial planning and budgeting and to make full use of all available infrastructure financing tools.
5.1 Non-Infrastructure Solutions
As described in Section 4.1, there are a number of non-infrastructure solutions – actions or policies that can lower costs or extend asset life – that would greatly benefit the Town as they plan to sustainably manage their infrastructure assets. The forecasted costs of these recommended initiatives are presented in the following table.
Table 5-1 Non-Infrastructure Solutions Estimated Costs
Program Estimated Cost Timeline Notes
Water Conservation Plan $150,000 - $200,000 2014 Cost may vary depending on the size of the program Inflow and Infiltration
Program
$100,000 - $200,000 Ongoing Estimated Costs based on the Town’s capital budget Workflows, Data
Verification and Condition Assessment Policies
$50,000 2014 Undertaken as a separate
component of the Town’s Asset Management Plan. See Section 4.1.
Water and Wastewater Facility Inspections and Inventory Development
$80,000 for initial
development, and $20,000 – $30,000 for ongoing data maintenance
2014 Conducting this work will enhance the quality of data that currently exists in WorkTech.
CCTV Inspection Program $60,000 annually Ongoing Constant video inspection will result in refining the
preventative maintenance program as it relates to sanitary and storm sewers Leak Detection Program $40,000 - $60,000 bi-annually Ongoing Constant due diligence will
minimize the non-billable water usage within the Town. Preventative Maintenance
Program
$80,000 for initial development, and an increasing cost (~$150,000)
2014 Vital to ensuring that the life expectancy of the assets is maintained and in fact, in most cases, can be extended.
TOTAL $400,000 - $530,000 for initial development and one-time costs; $350,000 annual costs
5.2 Sustainable Asset Management
The Town realizes that to best manage its infrastructure assets, a financial plan is critical. The following section presents the Town’s past, current and forecast expenditures, summarizes the recommended funding to sustainably manage assets, and identifies the Town’s infrastructure funding shortfall. The Town’s planned operating expenditures and capital costs are as follows:
Table 5-2 Planned Operating Expenditures and Capital Costs
Expenditures 2011 2012 2013 2014 2015 2016 2017 2018 W a ter Operating Costs $2,852,854 $3,038,656 $3,073,524 $3,123,210 $3,436,873 $3,539,979 $3,746,179 $3,858,564 Contributions to Operating and Capital Reserves $2,449,758 $2,863,874 $2,260,206 $2,920,575 $2,365,000 $1,637,976 $780,148 $772,773 Contributions to Lifecycle Reserve Fund - - - $918,631 $1,837,261 $2,020,987
Long term debt repayment (principal and interest) $949,905 - - $172,406 - - - - Capital Projects - Growth Related $27,310,000 $16,860,000 - $35,684,700 $769,000 $100,000 $2,452,000 $3,066,000 Capital Projects - Non-Growth Related $500,300 $922,800 $1,177,700 $436,000 - - - - Capital Projects - Other - $100,000 $15,000 $40,000 $60,000 $62,500 $65,000 $65,000 Wastew ater Operating Costs $2,281,951 $2,368,496 $2,610,346 $2,685,344 $2,748,256 $2,830,704 $2,915,625 $3,003,094 Funds Transferred Operating and Capital to Reserves $1,442,094 $1,513,042 $1,157,911 $1,430,467 $1,576,058 $500,000 $540,000 $545,365 Contributions to Lifecycle Reserve Fund - - - $1,300,000 $1,500,000 $1,675,000
Long term debt repayment (principal and interest) $132,980 - - - - Capital Projects - Growth Related $330,000 $4,770,000 $5,058,250 $3,279,202 $35,394,000 $217,338 $7,900,000 $6,050,400 Capital Projects - Non-Growth Related $755,000 $147,500 $9,300 $587,317 $1,529,500 $95,000 - $1,512,600 Capital Projects - Other $220,000 - $190,000 $220,000 $200,000 $175,000 $175,000 $175,000
Roads Se rvi c es Operating Costs $4,615,543 $4,679,786 $5,328,944 $5,483,467 $5,647,971 $5,817,410 $5,991,932 $6,171,690 Capital Projects - Growth Related - - $7,914,000 $846,675 $1,663,000 - - $287,000 Capital Projects - Non-Growth Related $8,662,244 $6,447,692 $6,946,656 $5,822,165 $2,214,750 $552,000 $2,226,100 $343,000 Capital Projects - Other $535,000 - - - - Ot h er Engineering - Studies, etc. $350,000 $80,000 $150,000 $140,000 $115,000 $115,000 $165,000 $15,000
These values were derived from the Town’s capital budgets and water and wastewater rate studies. The Town’s revenues are derived from the following sources:
Alternative Revenue Source (ARS): This funding source is derived from OLG slot machine revenues at Georgian Downs race track. This revenue source has been used in the past to fund capital strategic or growth-related roads projects.
Capital Reserve Fund: Primary source of financing property tax based projects. This fund is typically used to fund non-growth related capital works and contribution into this fund is according to the Town’s policies.
Development Charges: To offset the cost of providing services in accordance with the Development Charges Act, municipalities are permitted to charge fees to developers. These fees are generally used to provide funding for growth-related infrastructure projects as well as non-infrastructure (e.g. libraries, etc.) projects.
Reserve Funds: This fund is used primarily to fund the urbanization of 7th and 8th Line and is developer funded.
Reserves: This is the Town’s general reserve and is used to fund a variety of programs. Relating to infrastructure, the Water Equipment Reserve Fund and the Wastewater Equipment Reserve Fund are included in the Town’s reserves. This fund is not used to fund roads-related projects.
Gas Tax Reserve Fund: This source of funding comes from the federal government and has been put in place to provide predictable, long-term infrastructure funding. This fund has historically only funded roads- related projects.
Grants: This fund varies depending on the source of the grant, but includes such things as provincial grants.
External Capital Contributions: This source contains external funding that is not accounted for in other categories and may be used to fund infrastructure renewal. For example, contributions from Bradford West Gwillimbury for the water treatment plant expansion; and funding for the South Innisfil Creek Drain reconstruction are included in this source.
DC Prepayments – Developer: this source pertains to development charges paid prior to the start of the projects they fund.
Other: donated funds, fundraising etc. and is sometimes used to fund infrastructure projects. As shown in Section 4, the average annual lifecycle need, by asset type, is as follows:
Table 5-3 Average Annual Lifecycle Need
Asset Type Annual Need
Stormwater $742, 200
Roads $2,860,000
Streetlights and Traffic Signals $286,000
Bridges and Culverts $418,900
Water $2,682,800
Wastewater $2,420,800
Total $9,410,700
It should be noted that the annual need for roads, bridges and culverts has been calculated based on the 10-yr needs identified in the roads needs study and the bridge needs study. Considering the annual reinvestment recommended in the roads needs study is less than 1% annually, which infers an expected service life of over 100 years, it is expected that further funding will be required in later years.
5.2.1 Infrastructure Maintenance
For the purposes of this study, it is assumed that the Town’s current maintenance practices and budgets are adequate to maintain their systems. However, the maintenance portion of the Town’s current
operations and maintenance budget is focused on addressing immediate needs or failures. To steward their infrastructure assets sustainably, the Town will consider the development a preventative
maintenance program to extend the life of assets and reduce overall annual replacement costs.
The water and wastewater rates study suggested that the Town establish two operating reserve funds in 2016, one for water infrastructure, and the other for wastewater infrastructure, to provide a source of funding to offset any year-end operating deficits that may occur during the period and avoid rate increases (“spikes”) in the subsequent year. The annual contributions are to be based on maintaining balance of between 1.5% to 2% of the annual operating costs. The reserve closing balance of the water operating reserve fund is projected to be $192,000 (in inflated dollars) in 2031 and the closing balance of the wastewater operating reserve fund is projected to be $146,209 (in inflated dollars) in 2031.
The Town is also considering tracking their maintenance in a manner such that the maintenance cost can be directly related back to a particular asset. This will enable the Town to potentially reduce lifecycle costs as, for example, the Town can track which assets are in need of frequent repair and can better make replacement decisions.
5.2.2 Water and Wastewater
Currently, because these assets are fairly young, water and wastewater assets are assumed to be in good condition, and allow the Town to meet their levels of service. The Town has also developed a plan
through their Water and Wastewater Rate Studies to fund the expected lifecycle needs of this asset group through the establishment of a Water Asset Life Cycle Reserve Fund and a Wastewater Asset Life Cycle Reserve Fund. These funds are intended to facilitate building a reserve to fund asset replacement in 2031 and beyond. The Rates Studies suggest that the Town begin contributing to these reserve funds in 2016 to decrease the impact of on water and wastewater rates. Annual contributions of approximately $0.92M (water, inflated dollars) and $1.3M (wastewater, inflated dollars) in 2016 increasing to approximately $3.7M (water, inflated dollars) and $2.7M (wastewater, inflated dollars) by 2031 are projected. The annual closing balance is projected to be $50M and $39M by 2031 for water and wastewater respectively.
The amount to be contributed to lifecycle reserves is based on a lifecycle analysis of the Town’s current TCA inventory. As the Town’s inventory is improved upon, future rehabilitation and replacement needs can be more accurately identified and the required contribution values of these reserves can be improved upon.
Further information on how the Town proposes to meet their water and wastewater funding needs can be found in the Town’s Water and Wastewater Rate Studies. Because the Town’s water and wastewater rate studies have identified a financial plan based on lifecycle costs, there is no expected long-term funding shortfall. However, the assumptions and data through which the rate studies were completed should be revisited as the Town improves their asset inventory and can better identify their water and wastewater rehabilitation and replacement needs.
5.2.3 Roads
The Town is aware of a backlog of road rehabilitation and replacement. The Town’s primary source of revenue for this asset type is the federal gas tax funding. Based on the estimated gas tax funding
available, the Town’s Road Needs Study has recommended a program, as described in Section 4, which covers $13M worth of works. Until and unless further funding becomes available, the Town will not be able to address this backlog of works. Further detail on the Town’s strategy for roads infrastructure can be found in the Town’s Roads Needs Study.
5.2.4 Bridges and Culverts
The Town’s Bridge Needs Study has identified a total funding need of $4.2M in the next 10 years. The Town is planning to address these needs and has incorporated this strategy into their forecasted budgets. 5.2.5 Stormwater
The Town’s stormwater infrastructure is quite young. Because this infrastructure is still in good condition, the Town has not had to invest in rehabilitation and replacement to meet their levels of service. In future iterations of the Town’s asset management plan, a strategy will be developed to allow the Town to manage these assets and continue to meet the required levels of service with respect to the stormwater network.