Asset Management Plan

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Asset Management

Plan

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Executive Summary

Existing infrastructure in the Town of Essex is aging while demand grows for better infrastructure. This demand is in response to higher standards of safety, health,

environmental protection, regulations and to some degree growth. The solution to this issue is to examine the way the Town plans, designs and manages infrastructure to meet changing demands.

One proven way of doing this is to apply Long Range Infrastructure Planning (LRIP). LRIP has historically been utilized to identify the replacement needs and cycle of linear assets. It has evolved into what is now more commonly known as “Asset Management”. Staff have reviewed long range infrastructure strategies, current technical and financial practices and consolidated them into an Asset Management Plan. To ensure that the information

presented is as accurate as possible, the information contained in this document is for year ending 2012, which are the Town’s most recent audited financial statements.

This Asset Management Plan was developed using the requirements outlined within the provincial Building Together Guide for Municipal Asset Management Plans.

The Asset Management Plan as presented in this report is a systematic process that provides direction in determining the allocation of funds for the maintaining, upgrading and operating of the Town’s physical assets in a cost-effective manner, in order to meet current and on-going asset needs. This plan accounts for the Town’s linear infrastructure assets including; roads, roadside, bridges and culverts, storm sewer systems, water systems, and wastewater systems. By implementing an Asset Management Plan, the Town of Essex can meet

infrastructure demands in a fiscally responsible and environmentally sustainable framework while preserving the Town’s high quality of life.

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The asset management strategies attached have been compiled with the intent of being revised from time to time according to changes in best management practices, advances in technology, financial constraints, or changes to the condition assessments.

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Asset Management Plan

Introduction

An Asset Management Plan is a plan for the management of one or more assets within a municipality that combines various management techniques, including the technical and financial management of assets over their lifecycle. The objective is to attain a specified level of service in the most cost-effective manner. Integrated Asset Management Plans build upon this by linking all infrastructure assets that share a common location within an identified “Infrastructure corridor”. Good asset management can maximize the benefits provided by infrastructure as it deals with the long-term perspective. It also gives the Town the

opportunity to achieve cost savings by identifying decline early on so action can be taken to rehabilitate or renew the asset, or related assets found within the infrastructure corridor

Categories of assets contained within the infrastructure corridor generally include all asset categories as identified in this plan (roads, roadside, bridges and culverts, storm sewer systems, water systems, and wastewater systems). Each category of assets can have a different useful life, and in-turn lifecycle which results in the need for the technical and financial experts to consult and determine based upon the condition of each asset, the need for replacement or rehabilitation. Asset replacement strategies should be developed to

ensure that assets with shorter useful lives are maintained in an effective and efficient manner to allow the Town to match their replacement to the useful life of the longest asset in the utility corridor. Assets with the longest useful life generally included water and wastewater. As an example, if a road that requires resurfacing such as Fairview Avenue has surpassed its useful life of 25 years and cannot be maintained to an acceptable condition, this replacement would drive the need to review the condition of the water and wastewater system. If the water and wastewater assets in the infrastructure corridor are at the end or very close to the end of their 75 year useful life, full replacement of road, roadside, water and wastewater assets would be recommended. If the water and wastewater assets have a useful life of 25 to

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30 years remaining that is comparable to a fully reconstructed roads useful life of 25 years then the road would be recommended for replacement alone. If the useful life remaining for the water and wastewater assets is 10 years and the useful life of a new road is 25 years, then temporary repairs of the road to extend it an additional 10 years to meet the useful life remaining on the water and wastewater assets would be recommended if feasible, or full reconstruction of all assets in the infrastructure corridor need to carefully weighed, and considered. Through the linking of assets within identified infrastructure corridors, the Town of Essex can potentially realize savings through the planning and coordination of

maintenance and replacement activities.

The integrated asset management plan will incorporate any existing preventative maintenance and risk management programs currently in place. The preventative

maintenance component will ensure that the day-to-day wear and tear of an asset is dealt with to ensure that the asset can reach its expected useful life. Condition assessment and risk management components ensure that Town Administration effectively manage the risk of failure through due diligence. Good asset management results in informed and strategically sound decisions that optimize investments, better manage risk and take into account the potential impact of other factors such as climate change. Through the implementation of an integrated asset management plan, the Town can formalize the process of asset management planning. Through formalization of asset management planning the Town can ensure it is making the best possible decisions regarding the construction, operations, maintenance, renewal, replacement, and disposal of all infrastructure assets. This will allow the Town to maximize the benefits, manage risks, and provide satisfactory levels of service to the public in a sustainable manner.

In addition, an asset management plan requires a thorough understanding of the

characteristics and condition of infrastructure assets, as well as the service levels expected from them. It also involves setting strategic priorities to optimize decision-making about when and how to proceed with investments. Finally, it requires the development of a financial plan, which is the most critical step in putting the plan into action.

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Currently the Town utilizes asset inventory and capital planning software that identifies when assets are to be replaced each year, based on end of useful life, and condition assessment. For the purpose of this report, condition ratings based on useful life have been utilized, however moving forward it is recommended that condition assessments be performed. To ensure the accuracy and completeness of the asset inventory moving forward, Town staff have spent considerable time verifying the data contained in the. Tools such as recent studies, in-house measurements and staff knowledge were leveraged as part of the verification process.

It is the intent of the Town that this Asset Management Plan will be posted and updated, as required, so that residents will have the opportunity to review the state of the Town’s infrastructure. It is recommended that this plan be adopted and implemented as of December 2013, as identified in this report under Appendix D.

Key Benefits

Specific benefits associated with an Asset Management Plan include:

• Leads to more effective communication with rate payers, elected officials, financial rating organizations and regulatory agencies;

• Facilitates the establishment and subsequent implementation of policy objectives and the related measurement of performance;

• Avoids problems and potential crises through the proactive utilization of resources; • Increases openness, transparency and accountability;

• Can reduce lifecycle costs;

• Allows for better decision-making regarding resource allocation; • Allows for more effective financial planning;

• Leads to more efficient data management;

• Provides consistent measurable levels of service to the public;

• Raises awareness of state of Town’s infrastructure and how it will be replaced; and • Facilitates the grant application process by knowing what projects are priority; and

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Can allow the Town to better manage risk.

Key Principles

Key principles of an Asset Management Plan include:

• A strategic and proactive approach that places a premium on data, information, collaboration and interdisciplinary management;

• A comprehensive long-term view of infrastructure performance and cost;

• An explicit, visible and transparent approach that requires effective communication among all stakeholders;

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A business case involving investment choices that are policy driven with trade-offs among competing priorities; and

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Alignment with two of the seven council priorities namely, enhanced transparency and increased energy efficiency through upgraded infrastructure.

Essential Components

In order for an asset management plan to fulfill the rationale of asset management, the following essential components must be contained in the overall plan:

1. Asset Costing:

All municipal infrastructure assets have a monetary value. Administration has determined the actual capital value for the majority of assets based on actual asset costs. This was done as part of the implementation of Public Sector Accounting Board Section 3150 – Tangible Capital Assets. For older assets where actual costs were not available an estimate based on actual cost of a replacement asset was done and indexed back to the asset’s acquisition date, to provide approximate historical costs for those assets.

2. Lifecycle Management:

All assets have a limited life expectancy. To some degree the rate of decline can be estimated. A decision made at any point in time in the lifecycle of an asset has an effect on the remaining life, and may have operational implications and related costs.

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3. Sustainability:

In terms of asset management, sustainable development has been defined in the National Guide to Sustainable Municipal Infrastructure as, “meeting the needs of the present generation without compromising the ability of future generations to meet their own needs”. The Asset Management Plan needs to identify a financial plan over the long term to ensure that sufficient monies are available. These monies provide the resources required to operate, rehabilitate, and ultimately replace the asset at the optimal time with the intention of achieving the lowest lifecycle. The plan helps ensure that current users pay a fair share for the service they receive so that future users do not have to pay a higher cost for the same level of service.

4. Risk Assessment:

Risk should be managed in any decision-making process. The owner of the assets should analyze and document acceptable risk tolerance. In the Town of Essex’s case, the probability of failure is taken into account while the condition of the asset is being analyzed. Risk factors can include financial, environmental, regulatory/legal, and public health and safety. It must be noted that although certain assets may have a higher risk rating than others, it does not mean that those assets will be the priority in every case. In addition assets with the lowest overall condition rating do not

necessarily have the highest risk. 5. Performance Measurement:

To optimize an Asset Management Plan, performance of the assets and rehabilitation strategies should be monitored regularly, and adjustments made at the appropriate stage in the asset lifecycle to achieve an acceptable balance between cost and performance (level of service). Benchmarks (for some of the assets) will be compiled into a comprehensive database and used to determine the performance of the asset. For example, levels of service for a water system could include how many breaks per 100 kilometre of watermain per year are acceptable.

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Financial Overview

It is important to recognize that, based upon the plan as presented, the amount of funds available through the Capital Budget and Capital Forecasting process may not be sufficient to sustain the current level of service. Administration will continue to collectively work together to accommodate the financial and technical requirements of this plan, including taking advantage of any grant funding programs that may be available today or in the future. Appendix C of this document outlines the Financial Strategy for the replacement of the Town’s assets, and options to reduce the funding gap.

Conclusion

The Asset Management Plan as presented in this report is a systematic process that allows for the maintenance, upgrading, and the operating of the Town’s physical assets in a

cost-effective manner. By implementing an Asset Management Plan, the Town of Essex can meet the new demands within a fiscally responsible and environmentally sustainable framework while preserving the current high quality of life.

Attached Appendices

The following appendices are attached to this plan: 1. Appendix A– 2012 Asset Management Strategy 2. Appendix B– 2012 State of Infrastructure Report 3. Appendix C– 2012 Financial Strategy of Assets 4. Appendix D– Recommendations to Council

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Asset Management

Strategy

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Asset Management Strategy

Introduction

An Asset Management Strategy is the set of planned actions that will enable an asset(s) to provide the desired levels of service in a sustainable way, while managing risk, at the lowest possible life cycle cost.

The Town of Essex provides complex networks of infrastructure assets consisting of; roads, roadside, bridges and culverts, storm water systems, water systems, and wastewater systems. In order for the Town to fully fulfill its obligation of service delivery to the community, the Town must ensure that the assets supporting these services are managed in a way that balances service level, risk and affordability. The majority of these assets are long-term and have useful lives measured in decades. They require significant ongoing investment in operating, maintenance and renewal activities to ensure they are safe, structurally sound and fit-for-purpose to support the delivery of services.

Purpose

Effective asset management requires support and guidance from top management. The strategy outlined in this document sets out the long-term systematic approach to the management of the Town’s assets. This document is presented at a point in time, and is continuously evolving as its intent is to respond to internal and external changes and challenges faced by the Town. Essentially, it is a set of planned actions that will enable the assets to provide the desired levels of service in a sustainable way, while managing risk, at the lowest lifecycle cost.

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Desired Levels of Service

Condition Assessments

The success of any Asset Management Plan hinges on having comprehensive and reliable information on its assets current condition. For the purpose of this report condition ratings based on useful life have been utilized, however for future versions of this report it is recommended that condition assessments be performed. Decisions regarding future

replacement, rehabilitation or upgrade of assets are based on condition assessments making those assessments an invaluable resource for future infrastructure planning as it can help to prevent future failures, reduce Town’s liability, lower costs relating to failure and

maintenance, and can extend the useful life on an asset. Assessments are annual, recurring events.

Pavement Inspections

Ontario Regulation 239/02 Minimum Maintenance Standards for Municipal Highways outlines the minimum maintenance standards for municipal roads. Internal inspections of road

surfaces capture information regarding the following (this is not an inclusive list):

• Potholes

• Shoulder drop-offs • Cracks

• Excessive crowning • Wheel track rutting

The process of inspecting paved municipal roads entails having Town employees perform surveys as prescribed by regulation using standardized inspection forms. For the year of implementation of the Asset Management Plan, the Town has used an age based condition rating, whereby the condition rating associated with each asset is calculated based on the asset age and remaining useful life.

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Unpaved Roads Inspections

Ontario Regulation 239/02 Minimum Maintenance Standards for Municipal Highways outlines the minimum maintenance standards for municipal roads. Internal inspections of road

surfaces captures information regarding the following (this is not an inclusive list):

• Potholes

• Shoulder drop-offs • Cracks

• Excessive crowning • Wheel track rutting

The process of inspecting municipal unpaved roads entails having Town employees perform surveys as prescribed by regulation using standardized inspection forms. For the year of implementation of the Asset Management Plan, the Town has used an age based condition rating, whereby the condition rating associated with each asset is calculated based on the asset age and remaining useful life.

Bridge and Culvert Inspections

Ontario Regulation 104/97 Standards for Bridges, under the Public Transportation and Highway Improvement Act requires all Ontario municipalities to inspect all structures that have a span of three metres or more. The regulation requires that a detailed inspection led or supervised by a trained, professional engineer be done every two years. In addition, a general maintenance inspection is conducted at least twice per year.

During inspections, inspectors carefully assess each part of the bridge and identify any maintenance work that needs to be completed. Each component is examined to ensure the structure is safe for travel. Inspectors examine the following components; barrier and railing, deck, piers, soffit, beams, abutment, wing wall, and sidewalk.

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Experienced, professional engineers and inspectors must follow the guidelines as laid out in Ontario’s Structure Inspection Manual. This manual provides inspectors with specific

inspection procedures that must be followed during all bridge inspections. As part of the regular inspections performed by the engineer, capital and maintenance recommendations are provided.

There are four types of inspections performed over the lifetime of the structure, and include:

• Detailed visual inspections occurs every two years where by the inspector checks the general condition of the structure, assesses each component close-up looking for any problems with its concrete or steel materials, identifies what repairs are needed for each component and if additional testing is needed, reports any potential safety issues to supervising engineers and maintenance crews. These repairs are fixed immediately. • General maintenance inspections takes place twice a year (spring and fall), and looks

at the general condition of the structure and identifies any safety issues. Repairs are done immediately.

• Road patrol inspections take place on a regular basis. These inspections are conducted by a Town employee who ensures the structure’s roadway is safe and checks for potential safety issues and will request a detailed inspection if any safety issues are identified.

• Emergency inspections take place after a major vehicle collision involving one or more bridge components, a flood, an earthquake, etc. These inspections are performed by a trained, professional engineer.

Engineers use technology when testing certain bridge components where needed. Examples of this technology include:

• External technology testing using ultrasonic magnetic particle tests. This test helps the inspector to determine if there is a crack that may be undetectable to the human eye.

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• Steel fatigue inspection are used for older steel structures using external technology testing such as ultrasonic testing to check for cracks in places where steel parts are connected.

• Internal technology testing removes small samples of concrete or steel and tests them in a lab to check the strength.

• Load capacity tests uses a special truck loaded with concrete blocks that drives across the bridge while instruments attached to the bridge measure and record its

movement. This measures how much weight the structure can safely carry at one time.

Storm Sewer System Inspections

Emergency repairs of a main can cost up to 50% more than the repair under normal

circumstances. The need for emergency repairs of buried mains can be significantly reduced if critical sections could be identified and repaired before a failure occurs. Maintenance and inspections of these mains can prolong the life of this asset.

There are various methods for assessing the condition of storm sewer systems. The Town utilizes these methods as needed. They are as follows:

• Smoke testing. A non-toxic smoke bomb or liquid smoke is paced in a manhole along with a blower. The blower pushes the smoke through the system. Cracks or improper connections are exposed when the smoke is seen filtering out of the main.

• Dye testing. This test will trace the flow of effluent through the system. This method can be used to check if storm water drains are connected to wastewater systems. A non-toxic powder dye is added to drains and mixes with fluid carried by the main, giving it a highly visible colour that can easily be traced.

• Video inspection. This is the most common method where a camera is placed into a mains and the picture is relayed to an operator above ground who interprets the images and records the location and nature of the deficiencies observed.

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• Zoom camera technology. Truck-mounted camera equipment with long-range zoom lens and powerful spotlights are used to conduct visual inspections. The camera is lowered into the manhole from the back of a truck to the elevation of the first main and remotely aligned with the main. A continuous image of the main’s interior surface is displayed on a monitor located in the truck while being recorded for future analysis.

Information regarding the condition of the mains can be gathered by collecting data such as age, number of failures, blockages, backups, soil condition, visual inspection of manhole and catch basins, and material type. This information helps to evaluate the condition of the mains and provides valuable information that can be used when assessing mains for replacement.

It is recommended the existing storm sewer condition practices be formalized into a storm sewer condition assessment program. These practices will provide an overall general condition rating for each main assessed.

Wastewater System Inspections

Emergency repairs of a main can cost up to 50% more than the repair under normal

circumstances. The need for emergency repairs of buried mains can be significantly reduced if critical sections could be identified and repaired before a failure occurs. Maintenance and inspections of these mains can prolong the life of this asset.

There are various methods for assessing the condition of wastewater systems. The Town utilizes these methods as needed. They are as follows:

• Smoke testing. A non-toxic smoke bomb or liquid smoke is paced in a manhole along with a blower. The blower pushes the smoke through the system. Cracks or improper connections are exposed when the smoke is seen filtering out of the main.

• Dye testing. This test will trace the flow of effluent through the system. This method can be used to check if storm water drains are connected to wastewater mains. A

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toxic powder dye is added to a storm drain and mixes with fluid carried by the main, giving it a highly visible colour that can easily be traced.

• Video inspection. This is the most common method where a camera is placed into a mains and the picture is relayed to an operator above ground who interprets the images and records the location and nature of the deficiencies observed.

• Zoom camera technology. Truck-mounted camera equipment with long-range zoom lens and powerful spotlights are used to conduct visual inspections. The camera is lowered into the manhole from the back of a truck to the elevation of the first main and remotely aligned with the main. A continuous image of the main’s interior surface is displayed on a monitor located in the truck while being recorded for future analysis.

Information regarding the condition of the mains can be gathered by collecting data such as age, number of failures, blockages, backups, soil condition, visual inspection of manholes, material type, and through inflow and infiltration studies. This information helps to evaluate the condition of the mains and provides valuable information that can be used when

assessing mains for replacement.

It is recommended the existing wastewater system condition practices be formalized into a wastewater system condition assessment program. These practices will provide an overall general condition rating for each main assessed.

Water System Inspections

Watermain inspections pose a challenge as there is a constant high pressure flow within the network.

Information regarding the condition of the mains can be gathered by collecting data such as age, number of breaks, soil condition, hydrant flow inspections and material type. This information helps to evaluate the condition of the mains and provides valuable information that can be used when assessing mains for replacement.

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It is recommended that the existing water condition practices be formalized into a water condition assessment program. These practices will provide an overall general condition rating for each main assessed.

Life Cycle Activities

Life cycle activities are specific activities applied at the appropriate time in an asset’s life to provide the optimal additional life at the lowest cost. The activities include:

• Maintenance. Regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events.

• Renewal/rehabilitation. Significant repairs designed to extend the life of the asset. • Replacement. Activities that are expected to occur once an asset has reached the end

of its useful life and renewal/rehabilitation is no longer an option.

• Disposal. Activities associated with disposing of an asset once it has reached the end of its useful life, or is no longer needed.

• Expansion. Planned activities required to extend services to previously un-serviced areas or expand services to meet growth demands and/or to upgrades services to accommodate changes in weather patterns.

The following outlines when certain work activities should be applied as it relates to the condition of the asset.

Paved Roads

A - Excellent Condition (Maintenance)

• Fit for the future. Well maintained, good condition, new or recently rehabilitated • Condition range 100 – 80

o Regular maintenance required B – Good Condition (Preventative Maintenance)

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• Adequate for now. Acceptable, generally approaching mid stage of expected service life

• Condition range 79 – 60 o Crack sealing o Emulsions

o Surface treatment

C – Fair Condition (Rehabilitation)

• Requires attention. Signs of deterioration, some elements exhibit deficiencies • Condition range 59 – 40

o Resurface – Mill and pave; asphalt overlay o Extensive surface treatment

o Pulverize and resurface

D –Poor Condition (Rehabilitation)

• At risk of affecting service. Approaching end of service life, condition below standard, large portion of system exhibits significant deterioration

• Condition range 39 - 20 o Rehabilitate

F – Critical Condition (Reconstruction)

• Unfit for sustained service. Beyond expected service life; widespread signs of advanced deterioration, some assets may be unusable

• Condition range 19 - 0 o Reconstruction

Storm Sewer Systems

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o Regular maintenance required

B – Good Condition (Preventative Maintenance)

• Condition range 79 – 60 o Small Repairs

o Structural Lining D –Poor Condition (Reconstruction)

• Condition range 39 - 20 o Replacement

Wastewater Systems

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o Structural Lining D –Poor Condition (Reconstruction)

Bridges and Culverts

Ratings provided by engineer’s report.

Water Systems

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o Regular maintenance required

C – Fair Condition (Preventative Maintenance)

o Mid to Large Repairs

D –Poor Condition (Reconstruction)

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Risks Rating and Scoring Methodology

Risks rating and scoring can be used to identify the importance of different assets in supporting the delivery of services, thus providing the ability to take into account the probability of asset failure and the associated consequences on residents.

The level of risk can be calculated as the product of the probability that harm occurs multiplied by the severity of that harm. Simply put – Risk equals the probability of failure (condition based) times the consequence of failure (scoring based).

When assessing the probability of failure, consideration is given to the current condition of the asset. The consequence of failure relates to the overall effect an asset’s failure will have. This information can be utilized during the capital budget process to determine which assets will be given priority over others. In general, a score of 5 assumes that the risk is high while a score of one assumes the risk is low.

The Town’s tangible capital asset system calculates the risk based on an asset’s probability of failure (condition-based) and consequence of failure (based on scoring chart). The sum of these two numbers produces the overall risk rating.

The screenshot on the next page is an example of how an asset is rated using the Town’s tangible capital asset software for each individual asset. To ensure accuracy it is imperative that these asset condition assessments, risk rating and scoring methodology are kept up to date.

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Risk

Probability of Failure Consequence of Failure

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The following scoring system can be a valuable tool when prioritizing capital projects and assist staff when assessing risks. In a lot of cases, infrastructure needs will exceed the funding available, making it essential that the right projects be brought forward for review during the budget process.

Each asset will be scored based on the following charts and entered into the Town’s asset management software to determine its overall risk.

Bridges are scored based on their size. It is assumed that bridges with greater values are larger and would have a higher consequence. Consideration will be given to traffic counts.

Consequence of Failure: Bridges

Area (metre squared) Consequence of Failure

Up to 100 1

101 to 200 2

201 to 300 3

301 to 400 4

over 400 5

Roads are scored based on their classification. Consideration will be given to traffic counts.

Consequence of Failure: Roads

Road Type Consequence of Failure

Unpaved 1

Local 2

Collector 3

Arterial 4

Wastewater mains are scored based on their size. It is assumed that larger mains will affect a larger service area. Consideration will be given to developed areas.

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Consequence of Failure: Wastewater System

Main Diameter (millimetre) Consequence of Failure

100 – 199 1

200 – 299 2

300 – 449 3

450 - 599 4

600 and over 5

Water mains are scored based on their size. It is assumed that larger mains will affect a larger service area. Consideration will be given to developed areas.

Consequence of Failure: Water System

100 – 149 1

150 – 249 2

250 – 299 3

300 – 399 4

400 and over 5

Storm sewer system mains are scored based on their size. It is assumed that larger mains will affect a larger service area. Consideration will be given to developed areas.

Consequence of Failure: Storm Sewer System

100 – 199 1

200 – 299 2

300 – 450 3

451 – 1000 4

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State of Infrastructure

Strategy

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State of Infrastructure Strategy

The Town of Essex is responsible for managing physical public assets of more than $365 million. This represents an average of approximately $18,599 per person or $41,210 per dwelling1_{. These assets deliver services to the residents of Essex both directly and indirectly.}

Table 1 below provides a guideline of the condition ratings used to reflect the position of the assets presented in the summary.

Table 1

Condition Ratings Guideline Grade Range Description

A 80-100 Excellent Condition – Fit for the future. Well maintained, good

condition, new or recently rehabilitated.

B 60-79 Good Condition – Adequate. Acceptable, generally approaching mid

stage of expected service life.

C 40-59 Fair Condition – Requires attention. Signs of deterioration, some

elements exhibit deficiencies.

D 20-39 Poor Condition – At risk of affecting service. Approaching end of

service life, condition below standard, large portion of system exhibits significant deterioration.

E 0-19 Critical Condition – Unfit for sustained service. Beyond expected

useful life, widespread signs of advanced deterioration, some assets may be unusable.

Table 2 as presented, is a summary of the condition rating for the assets that support the various Town services. In the future, it will be focused on the physical condition of the assets as this is the most critical element of safe service provision. This data focuses on the age of the assets. Future reports will include the performance of the assets in terms of their ability to meet demand/capacity and functional requirements.

1_{Per 2012 Financial Information Return (Population 19,600 / Dwellings 8,857) and based on asset replacement}

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Table 2

2012 Status of Infrastructure Service Replacement Asset

Value Overall Average Asset Condition Rating % of Assets in Excellent Condition % of Assets in Good Condition % of Assets in Fair Condition % of Assets in Poor Condition % of Assets in Critical Condition Water System $89,830,020 B 59.4% 17.4% 6.1% 10.1% 7.1% Wastewater System $65,200,440 B 13.0% 57.3% 10.6% 15.4% 3.8% Roads – Paved $61,803,890 B 55.5% 16.1% 9.2% 17.3% 2.0% Roadside $5,632,909 B 32.8% 15.3% 35.8% 15.1% 0.9% Bridges and Culverts $31,172,827 B 10.6% 84.6% 3.1% 0.4% 1.3% Storm Sewer System $34,215,552 C 14.6% 14.6% 19.3% 34.9% 16.6%

The overall physical condition of the Town’s infrastructure assets has an overall average asset condition rating of B which translates to good condition. It is important that the Town recognize that continued reinvestment is essential to renew components that are in poor or critical condition. In order to do this, the Town need’s to implement a risk management approach that focuses on the likelihood and consequence of failure when assessing the condition of the Town’s infrastructure so that we can direct investments to those assets that pose the highest risk to service. In addition to this, there is a great need to invest in the substantial amount of assets that are in fair condition to ensure the optimum extension of life at the best value for the Town. Should these assets be left unmanaged, they will soon

become unsustainable for service.

For the purpose of this study only infrastructure assets will be addressed. These include:

Property-Tax Supported (Base Municipal Levy) Infrastructure • Roads – Paved

• Roads – Unpaved (not planned for replacement, therefore not included) • Bridges and Culverts

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Property-Tax Supported (Urban Levy) Infrastructure • Storm Sewer System

User-Rate Supported Infrastructure • Water System

• Wastewater System

Building the State of Infrastructure Report

The Asset Management Plan addresses the inventory and value of the Town’s assets that are needed to support the delivery of services and includes the condition and expected useful life of each asset. Under next steps of the Asset Management Plan as found in Appendix D, the levels of service expectations are to be developed along with what is needed to achieve those levels.

The State of Infrastructure Report outlines the physical condition of the Town’s assets at a point in time using various methods depending on the type of asset. Bridges and culverts are based on actual assessments performed by an engineer. Roads, roadside, storm sewer

systems, water systems, and wastewater systems are based on age condition assessments. Mains are based on size, material, age and estimated service life and are supplemented by condition assessments when approaching the end of their life or for higher risk assets.

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User-Rate Supported Infrastructure – Water System

Description: Water system assets include mains and hydrants.

Total Value: 2012 Replacement Cost Per Capita

$89,830,020 $4,583

Condition Index: Grade Range Description

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

Overall Condition: Previous Condition Current Condition Desired Condition

- B -

Trend Synopsis: As this is the first year of implementing an Asset Management Plan at the Town of Essex, there is no trend information available. Moving forward, the current grade as identified above will move to the previous grade with the current grade then being populated with new

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Water System

Segment 2012 Replacement Cost

Mains $87,274,685

Hydrants $2,555,335

Total $89,830,020

Mains Hydrants

Average Condition: B Average Condition: B

Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Units) A $52,366,624 182 A $962,624 261 B $14,866,988 49 B $729,298 207 C $4,869,282 21 C $616,070 170 D $8,808,010 28 D $236,434 65 E $6,363,781 24 E $10,909 3 $87,274,685 304 $2,555,335 706 $87,274,685 $2,555,335

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User-Rate Supported Infrastructure – Wastewater System

Description: Environmental Services is made up of the Town’s water and wastewater systems.

Total Value: 2012 Replacement Cost Per Capita

$65,200,440 $3,327

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

- B -

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Wastewater System

Mains $56,742,268 Forcemain $1,464,490 Pump Stations $2,499,555 Manholes $4,494,127 Total $65,200,440 Mains Forcemains

Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Units) A $7,825,981 12 A $452,997 1 B $36,265,529 53 B $0 0 C $3,958,488 6 C $1,011,493 3 D $8,692,270 16 D $0 0 E $0 0 E $0 0 $56,742,268 87 $1,464,490 4 $56,742,268 $1,464,490 $4,494,127 $2,499,555

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Wastewater System (Continued)

Pump Stations Manholes

Average Condition: C Average Condition: E

Grade

2012 Replacement

Cost

Units (#) _Grade _Replacement2012 Cost Units (#) A $162,062 4 A $8,285 2 B $646,643 1 B $456,121 108 C $1,690,850 6 C $219,600 52 D $0 0 D $1,351,602 320 E $0 0 E $2,458,519 594 $2,499,555 11 $4,494,127 1,076

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Property-Tax Supported (Base Municipal Levy) Infrastructure –

Roads - Paved

Description: Includes paved roads, and unpaved roads. Unpaved roads are not replaced, and therefore are not included in this state of infrastructure.

Total Value: 2012 Replacement Per Capita

$61,803,890 $3,153

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

- B -

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Roads - Paved

Paved Roads

Arterial $5,422,862

Collector $847,106

Local $55,533,922

Total $61,803,890

Arterial Collector

Average Condition: C Average Condition: B

Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Kilometres) A $689,674 1.9 A $323,265 1.2 B $1,200,962 2.1 B $475,552 2.3 C $3,071,624 4.2 C $0 0.0 D $460,602 1.1 D $48,289 0.2 E $0 0.0 E $0 0.0 $5,422,862 9.3 $847,106 3.7 $5,422,862 $847,106 $55,533,922

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Roads - Paved (Continued)

Local Average Condition: B Grade 2012 Replacement Cost Quantity (Kilometres) A $33,259,928 157.0 B $8,250,440 45.2 C $2,591,811 9.6 D $10,170,095 21.2 E $1,261,648 10.2 $55,533,922 243.2

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Property-Tax Supported (Base Municipal Levy) Infrastructure –

Roadside

Description: Includes street lights, street poles, street signs, and sidewalks.

$5,632,909 $287

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

- B -

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Roadside

Street Lights $1,194,034

Street Poles $883,515

Street Signs $661,039

Sidewalks $2,894,321

Total $5,632,909

Street Lights Street Poles

Average Condition: C Average Condition: A

Grade 2012 Replacement Cost Quantity (Units) Grade 2012 Replacement Cost Quantity (Units) A $74,938 53 A $883,515 505 B $25,840 32 B $0 0 C $1,093,256 1,239 C $0 0 D $0 0 D $0 0 E $0 0 E $0 0 $1,194,034 1,324 $883,515 505 $1,194,034 $883,515 $661,039 $2,894,321

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Roadside (Continued)

Sidewalks Average Condition: B Grade 2012 Replacement Cost Quantity (Kilometres) A $777,014 12.4 B $828,621 20.0 C $925,223 13.4 D $313,757 3.2 E $49,706 0.9 $2,894,321 49.9 Street Signs Average Condition: C Grade 2012 Replacement Cost Quantity (Units) A $114,763 148 B $9,505 20 C $0 0 D $536,771 2,568 E $0 0 $661,039 2,736

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Property-Tax Supported (Base Municipal Levy) Infrastructure –

Bridges and Culverts

Description: Includes bridges and culverts.

$31,172,827 $1,591

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

- B -

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Bridges and Culverts

Bridges $25,746,526

Culverts $5,426,301

Total $31,172,827

Bridges Culverts

Grade 2012 Replacement Cost Quantity (Units) Grade 2012 Replacement Cost Quantity (Units) A $2,063,125 5 A $1,236,907 4 B $23,002,092 53 B $3,368,724 22 C $270,974 1 C $681,310 5 D $0 0 D $139,360 1 E $410,335 1 E $0 0 $25,746,526 60 $5,426,301 32 $25,746,526 $5,426,301

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Property-Tax Supported (Urban Levy) Infrastructure – Storm

Sewer System

Description: Includes storm sewer mains, catch basins, curbs and gutters, and manholes.

$34,215,552 $1,746

A 80-100 Excellent

B 60-79 Good

C 40-59 Fair

D 20-39 Poor

E 0-19 Critical

- C -

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Storm Sewer System

Mains (km) $27,065,078

Catch Basin $6,398,611

Manholes $751,863

Total $34,215,552

Mains Catch Basin, Curb and Gutter

Average Condition: C Average Condition: D

Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Units) A $3,591,532 11.1 A $1,314,030 437 B $4,101,345 12.1 B $800,659 308 C $5,552,055 15.3 C $986,800 384 D $11,122,821 35.1 D $671,149 239 E $2,697,325 14.1 E $2,625,973 1,288 $27,065,078 87.7 $6,398,611 2,656 $27,065,078 $6,398,611 $751,863

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Storm Sewer System (Continued)

Manholes Average Condition: D Grade 2012 Replacement Cost Quantity (Units) A $98,911 77 B $91,686 70 C $68,810 53 D $146,257 111 E $346,199 260 $751,863 571

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Financial Strategy

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Financial Strategy

General Overview of Financial Strategy Requirements

The ‘building block’ approach as identified and recommended in the Provinces ‘Building Together: Guide for Municipal Asset Management Plans’ is being utilized for assets within the Town of Essex. This apporach depicts the various cost elements and resulting funding levels that should be incorporated into asset management plans based on best practices.

The required funding levels are progressive, with the next level including the funding levels and assumptions of the previous level. The levels are broken down as follows and further illustrated in Table 1.

Level 0 Funded from operations and covers all operational costs and principal and interest payments. This level would include any maintenance costs associated with tangible capital assets.

Level 1 Only contributes enough funding to offset the amortization of tangible capital assets in current dollars. Does not account for inflationary increases or earning potential of built up reserves. Provides funding at the current replacement cost of assets.

Level 2 Builds off of level 1 by adding funding for inflation. This level

provides funding for the replacement cost of tangible capital assets at the end of their life. Provides funding for the estimated future replacement cost of assets.

Level 3 Includes additional funding for growth requirements and service enhancements. This level is not addressed.

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For the purpose of this report, Level 0 funding is assumed as part of the operational budget and is therefore not adressed here. Level 1 and Level 2 are included as part of the funding analysis, and Level 3 will be addressed in a future version of this report.

Table 1

Building Blocks of Asset Management and Funding Levels

Growth Requirements _{Funding is fully} sustainable and accounts for future investment needs Service Enhancements

Inflation Requirements Funds replacement cost of exisiting assets only Amortization of Tangible Capital Assets Funds amortized portion of existing assets only and does not plan for future Principal and Interest

Payments _{Funds required cash} outlays only and does not account for lifecycle costs Operating Expenses

Breaking the ‘Building Block’ approach up into funding levels will allow the Town to identify the funding gap between historically allocated funds and the different levels of required funding.

Level 1 Level 2 Level 3

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In order to assess and address the Town’s funding needs, the financial strategy was

developed by integrating the Town’s Asset Management Plan, financial planning, and long-term capital budgeting.

The deliverables derived from the asset management plan must be fully integrated into financial planning and long-term budgeting to ensure that the asset management plan is sustainable through the commitment of financial resources. Desired levels of service and forecasted growth requirements are also key components of a functional financial strategy.

The financial strategy will be broken up into two components.

1. Property-Tax Supported Infrastructure, addressing;

a. Funding Level 1 – Lifecycle requirements for Amortization of Tangible Capital

Assets

b. Funding Level 2 – Lifecycle requirements for Amortization of Tangible Capital

Assets and Inflation

2. User-Rate Supported Infrastructure, addressing;

a. Funding Level 1 – Lifecycle requirements for Amortization of Tangible Capital

Assets

b. Funding Level 2 – Lifecycle requirements for Amortization of Tangible Capital

Assets and Inflation

Financial

Strategy

Asset

Management Plan

Financial Planning

Long-Term

Budgeting

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The financial strategy will briefly touch on funding sources under each of the funding levels. Funding sources can include:

a. Tax levies b. User fees c. Reserves

d. Senior government transfers; i. Gas tax

ii. Grant programs e. Debt

f. Development charges (growth related)

If the financial plan component of an asset management plan results in a funding shortfall, it is required by the Province that a specific plan be developed and included to identify how this shortfall will be managed.

The funding shortfall is the difference between funding requirements and funding sources and is referred to in this report as the “funding gap”.

The Province at any-time may evaluate a municipality’s approach to eliminating the funding gap, by ensuring that service levels are appropriate and policy is functional yet flexible in allowing municipalities to utilize all available tools to eliminate the gap.

Overall Infrastructure

Funding Requirement

Funding

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For the purpose of this report and the developed Asset Management Plan, overall infrastructure funding requirements are broken down between Property-Tax Supported Infrastructure and User-Rate Supported Infrastructure.

Property-Tax Supported (Base Municipal Levy) Infrastructure consists of: • Roads – Paved

• Roads - Unpaved • Bridges and Culverts • Roadside

Property-Tax Supported (Urban Levy) Infrastructure consists of: • Storm Sewer Systems

User-Rate Supported Infrastructure consists of: • Water Systems

• Wastewater Systems

The forecast period used for this report is 50 years. This is to ensure that most replacement events in an asset’s lifecycle are captured. Due to the nature of infrastructure assets, the allocation of funding is averaged over a 50 year period, allowing the Town to allocate evenly the significant fluctuations in funding requirements from year to year. Funding is identified and allocated based on a condition rating tied to the estimated useful life of the assets for the purpose of this report.

1. Property-Tax Supported Infrastructure

Property-Tax Supported Infrastructure can further be broken down into a ‘Base Municipal Levy’ and an ‘Urban Levy’. The base municipal levy applies to roads – paved, roads – unpaved, bridges and culverts, and roadside. The urban levy applies to storm sewer systems.

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1a. Funding Level 1

By ensuring that funding Level 1 is fully funded each year the Town will be able to maintain current service levels in the short-term. In other words the Town will be able to maintain the condition ratings as identified under Appendix B. However, it should be noted that with inflationary impacts this service level will decline over the mid-term to long-term. .

Level 1 Only contributes enough funding to offset the amortization of tangible capital assets in current dollars. Does not account for inflationary increases or earning potential of built up reserves. Provides funding at the current replacement cost of assets.

Table 2 below shows the funding gap for Property-Tax Supported (Base Municipal Levy) Infrastructure at funding Level 1.

Table 2

Property-Tax Supported (Base Municipal Levy) Infrastructure

Average Annual Funding Available (2009 to 2012)

Category

Average Annual

Requirement Tax Gas Tax Other Total Funding Gap

Roads - Paved $2,383,956 $1,108,769 $734,770 $0 $1,843,538 ($540,417) Roads - Unpaved $0 $0 $0 $0 $0 $0 Roadside $238,197 $91,285 $0 $0 $91,285 ($146,912) Bridges and Culverts $377,305 $374,580 $248,230 $0 $622,811 $245,506 Total $2,999,457 $1,574,634 $983,000 $0 $2,557,634 ($441,823)

The average annual requirement for Property-Tax Supported (Base Municipal Levy)

Infrastructure is just under $3 million, with the three year average annual funding of just over $2.5 million, leaving a funding gap of $442 thousand per year. This means that Property-Tax Supported (Base Municipal Levy) Infrastructure is being funded at 85.3%.

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currently being funded at 36.3%, leaving a funding gap of 63.7% or $393 thousand per year. The annual average requirement is just over $600 thousand per year, while the average annual funding over a three year period is only $224 thousand per year.

Table 3

Property-Tax Supported (Urban Levy) Infrastructure

Category

Requirement User-Rate Gas Tax Other Total Funding Gap

Storm Sewer

Systems $617,137 $223,831 $0 $0 $223,831 ($393,306)

By increasing the average annual funding available for both Property-Tax Supported (Base Municipal Levy) Infrastructure and Property-Tax Supported (Urban Levy) Infrastructure, to eliminate the funding gap, the Town would have enough funding to cover the amortization of assets in 2012 dollars. At this point the Town would achieve funding Level 1 as identified in Table 1, on page 51.

By funding at Level 1 the requirement can be seen as fairly flat over the 50 year period as there are no inflationary impacts as shown in Table 4.

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1b. Funding Level 2

Funding Level 2 identifies the average annual requirment to meet full funding of existing assets at the end of their estimated useful life. Funding Level 2 provides funding for

inflationary impacts, in addition to the funding levels already identified under Level 1 and is viewed as a long-term goal of the asset management plan.

Level 2 Builds off of level 1 by adding funding for inflation. This level

provides funding for the replacement cost of tangible capital assets at the end of their life.

Table 5 below shows the funding gap for Property-Tax Supported (Base Municipal Levy) Infrastructure at funding Level 2.

Table 5

Property-Tax Supported (Base Municipal Levy) Infrastructure

Category

Roads - Paved $6,684,683 $1,108,769 $734,770 $0 $1,843,538 ($4,841,145) Roads - Unpaved $0 $0 $0 $0 $0 $0 Roadside $702,401 $91,285 $0 $0 $91,285 ($611,116) Bridges and Culverts $2,477,368 $374,580 $248,230 $0 $622,811 ($1,854,557) Total $9,864,452 $1,574,634 $983,000 $0 $2,557,634 ($7,306,819)

The average annual requirement for Property-Tax Supported (Base Municipal Levy)

Infrastructure is just under $9.9 million, the three year average annual funding is the same at just over $2.5 million, leaving a funding gap of $7.3 million per year. This means that Property-Tax Supported (Base Municipal Levy) Infrastructure is being funded at 25.9%.

Table 6 below shows that Property-Tax Supported (Urban Levy) Infrastructure is currently being funded at 7.8%, leaving a funding gap of 92.2% or $2.7 million per year. The annual

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average requirement is slightly under $2.9 million per year, while the average annual funding over a three year period is remains unchanged at $224 thousand per year.

Table 6

Property-Tax Supported (Urban Levy) Infrastructure

Category

Storm Sewer

Systems $2,882,493 $223,831 $0 $0 $223,831 ($2,658,662)

Due to the significant costs associated with infrastructure assets, it would be impractical to allocate the identified funding requirement per year to achieve funding Level 2. Thus by averaging the annual requirement over the 50 year period it allows the Town to avoid fluctuations in funding requirements as shown in Table 7.

Asset Management Plan

Asset Management

Plan

Contents

Executive Summary

Asset Management Plan

Introduction

Key Benefits

•

Key Principles

•

•

Essential Components

Financial Overview

Conclusion

Attached Appendices

Asset Management

Strategy

Asset Management Strategy

Introduction

Purpose

Desired Levels of Service

Condition Assessments

Pavement Inspections

Unpaved Roads Inspections

Bridge and Culvert Inspections

Storm Sewer System Inspections

Wastewater System Inspections

Water System Inspections

Life Cycle Activities

Paved Roads

Storm Sewer Systems

Wastewater Systems

Bridges and Culverts

Water Systems

Risks Rating and Scoring Methodology

I

I [

I

I

~::::::::::::::::::::::::::::::::::::::::::::::::::::~

,

•

•

,

8

State of Infrastructure

Strategy

State of Infrastructure Strategy

Building the State of Infrastructure Report

User-Rate Supported Infrastructure – Water System

Water System

Water System

User-Rate Supported Infrastructure – Wastewater System

Wastewater System

Wastewater System

Wastewater System (Continued)

Property-Tax Supported (Base Municipal Levy) Infrastructure –

Roads - Paved

Roads - Paved

Paved Roads

Roads - Paved (Continued)

Property-Tax Supported (Base Municipal Levy) Infrastructure –

Roadside

Roadside

Roadside

Roadside (Continued)

Property-Tax Supported (Base Municipal Levy) Infrastructure –

Bridges and Culverts

Bridges and Culverts

Bridges and Culverts

Property-Tax Supported (Urban Levy) Infrastructure – Storm

Sewer System

Storm Sewer System

Storm Sewer System

Storm Sewer System (Continued)

Financial Strategy

Financial Strategy

General Overview of Financial Strategy Requirements

Financial