Asset Management Plan

Transcription

1 Asset Management Plan

2 Contents Executive Summary... 4 Asset Management Plan... 6 Introduction... 6 Financial Overview Conclusion Attached Appendices Asset Management Strategy Introduction Purpose Desired Levels of Service Life Cycle Activities Risks Rating and Scoring Methodology State of Infrastructure Strategy Building the State of Infrastructure Report User-Rate Supported Infrastructure Water System User-Rate Supported Infrastructure Wastewater System Property-Tax Supported (Base Municipal Levy) Infrastructure Roads - Paved Property-Tax Supported (Base Municipal Levy) Infrastructure Roadside Roadside (Continued) Property-Tax Supported (Base Municipal Levy) Infrastructure Bridges and Culverts Property-Tax Supported (Urban Levy) Infrastructure Storm Sewer System Storm Sewer System (Continued) Financial Strategy General Overview of Financial Strategy Requirements Property-Tax Supported Infrastructure a. Funding Level b. Funding Level User-Rate Supported Infrastructure a. Funding Level b. Funding Level

3 Conclusion Next Steps Recommendations to Council

4 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 ongoing 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. 4

5 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. 5

6 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 6

7 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. 7

8 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 8

9 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; A business case involving investment choices that are policy driven with trade-offs among competing priorities; and 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. 9

10 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. 10

11 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 costeffective 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 11

12 Asset Management Strategy Appendix A 12

13 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. 13

14 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. 14

15 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. 15

16 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. 16

17 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. 17

18 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 non- 18

19 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. 19

20 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 o Regular maintenance required B Good Condition (Preventative Maintenance) 20

21 Adequate for now. Acceptable, generally approaching mid stage of expected service life Condition range o Crack sealing o Emulsions o Surface treatment C Fair Condition (Rehabilitation) Requires attention. Signs of deterioration, some elements exhibit deficiencies Condition range 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 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 A - Excellent Condition (Maintenance) Fit for the future. Well maintained, good condition, new or recently rehabilitated Condition range

22 o Regular maintenance required B Good Condition (Preventative Maintenance) Adequate for now. Acceptable, generally approaching mid stage of expected service life Condition range o Small Repairs C Fair Condition (Rehabilitation) Requires attention. Signs of deterioration, some elements exhibit deficiencies Condition range o Structural Lining D Poor Condition (Reconstruction) At risk of affecting service. Approaching end of service life, condition below standard, large portion of system exhibits significant deterioration Condition range o Replacement 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 Replacement Wastewater Systems A - Excellent Condition (Maintenance) Fit for the future. Well maintained, good condition, new or recently rehabilitated Condition range o Regular maintenance required 22

23 B Good Condition (Preventative Maintenance) Adequate for now. Acceptable, generally approaching mid stage of expected service life Condition range o Small Repairs C Fair Condition (Rehabilitation) Requires attention. Signs of deterioration, some elements exhibit deficiencies Condition range o Structural Lining D Poor Condition (Reconstruction) At risk of affecting service. Approaching end of service life, condition below standard, large portion of system exhibits significant deterioration Condition range o Replacement 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 Replacement Bridges and Culverts Ratings provided by engineer s report. Water Systems A - Excellent Condition (Maintenance) Fit for the future. Well maintained, good condition, new or recently rehabilitated Condition range

24 o Regular maintenance required B Good Condition (Preventative Maintenance) Adequate for now. Acceptable, generally approaching mid stage of expected service life Condition range o Small Repairs C Fair Condition (Preventative Maintenance) Requires attention. Signs of deterioration, some elements exhibit deficiencies Condition range o Mid to Large Repairs D Poor Condition (Reconstruction) At risk of affecting service. Approaching end of service life, condition below standard, large portion of system exhibits significant deterioration Condition range o Replacement 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 Replacement 24

25 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. 25

26 Risk Probability of Failure Consequence of Failure Condit ion-based I T I [ Cost-Based (Historical) I T I Unknown ~::::::::::::::::::::::::::::::::::::::::::::::::::::~ $ V.ry low 1 V.ry low Risk Rating: 2- V.ry Low High 5, ~ m ~ 0 v c 3, ~ ~ Low High Probability of Failure 26

27 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 to to to over 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. 27

28 Consequence of Failure: Wastewater System Main Diameter (millimetre) Consequence of Failure 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 Main Diameter (millimetre) Consequence of Failure 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 Main Diameter (millimetre) Consequence of Failure and over 5 28

29 State of Infrastructure Strategy Appendix B 29

30 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 dwelling 1. 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 Excellent Condition Fit for the future. Well maintained, good condition, new or recently rehabilitated. B Good Condition Adequate. Acceptable, generally approaching mid stage of expected service life. C Fair Condition Requires attention. Signs of deterioration, some elements exhibit deficiencies. D 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 values. 30

31 Table Status of Infrastructure Service Asset Replacement 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 $89,830,020 B 59.4% 17.4% 6.1% 10.1% 7.1% System Wastewater $65,200,440 B 13.0% 57.3% 10.6% 15.4% 3.8% System Roads $61,803,890 B 55.5% 16.1% 9.2% 17.3% 2.0% Paved Roadside $5,632,909 B 32.8% 15.3% 35.8% 15.1% 0.9% Bridges and $31,172,827 B 10.6% 84.6% 3.1% 0.4% 1.3% Culverts 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 Roadside 31

32 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. 32

33 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 Excellent B Good C Fair D 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 information the following year. 33

34 Water System Water System $87,274,685 $2,555,335 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, A $962, B $14,866, B $729, C $4,869, C $616, D $8,808, D $236, E $6,363, E $10,909 3 $87,274, $2,555,

35 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 Condition Index: Grade Range Description A Excellent B Good C Fair D 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 information the following year. 35

36 Wastewater System Wastewater System $56,742,268 $1,464,490 $4,494,127 $2,499,555 Segment 2012 Replacement Cost Mains $56,742,268 Forcemain $1,464,490 Pump Stations $2,499,555 Manholes $4,494,127 Total $65,200,440 Mains Forcemains Average Condition: B Average Condition: B Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Units) A $7,825, A $452,997 1 B $36,265, B $0 0 C $3,958,488 6 C $1,011,493 3 D $8,692, D $0 0 E $0 0 E $0 0 $56,742, $1,464,

37 Wastewater System (Continued) Pump Stations Manholes Average Condition: C Average Condition: E Grade 2012 Replacement Cost Units (#) Grade 2012 Replacement Cost Units (#) A $162,062 4 A $8,285 2 B $646,643 1 B $456, C $1,690,850 6 C $219, D $0 0 D $1,351, E $0 0 E $2,458, $2,499, $4,494,127 1,076 37

38 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 Condition Index: Grade Range Description A Excellent B Good C Fair D 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 information the following year. 38

39 Roads - Paved Paved Roads $5,422,862 $847,106 $55,533,922 Segment 2012 Replacement Cost Arterial $5,422,862 Collector $847,106 Local $55,533,922 Total $61,803,890 Arterial Collector Average Condition: C Average Condition: B 39 Grade 2012 Replacement Cost Quantity (Kilometres) Grade 2012 Replacement Cost Quantity (Kilometres) A $689, A $323, B $1,200, B $475, C $3,071, C $0 0.0 D $460, D $48, E $0 0.0 E $0 0.0 $5,422, $847,

40 Roads - Paved (Continued) Local Average Condition: Grade 2012 Replacement Cost B Quantity (Kilometres) A $33,259, B $8,250, C $2,591, D $10,170, E $1,261, $55,533,

41 Property-Tax Supported (Base Municipal Levy) Infrastructure Roadside Description: Includes street lights, street poles, street signs, and sidewalks. Total Value: 2012 Replacement Per Capita $5,632,909 $287 Condition Index: Grade Range Description A Excellent B Good C Fair D 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 information the following year. 41

42 Roadside Roadside $1,194,034 $883,515 $661,039 $2,894,321 Segment 2012 Replacement Cost 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, A $883, B $25, 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,

43 Roadside (Continued) Street Signs Average Condition: Grade 2012 Replacement Cost C Quantity (Units) A $114, B $9, C $0 0 D $536,771 2,568 E $0 0 $661,039 2,736 Sidewalks Average Condition: Grade 2012 Replacement Cost B Quantity (Kilometres) A $777, B $828, C $925, D $313, E $49, $2,894,

44 Property-Tax Supported (Base Municipal Levy) Infrastructure Bridges and Culverts Description: Includes bridges and culverts. Total Value: 2012 Replacement Per Capita $31,172,827 $1,591 Condition Index: Grade Range Description A Excellent B Good C Fair D 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 information the following year. 44

45 Bridges and Culverts Bridges and Culverts $25,746,526 $5,426,301 Segment 2012 Replacement Cost Bridges $25,746,526 Culverts $5,426,301 Total $31,172,827 Bridges Culverts Average Condition: B Average Condition: B 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, B $3,368, C $270,974 1 C $681,310 5 D $0 0 D $139,360 1 E $410,335 1 E $0 0 $25,746, $5,426,

46 Property-Tax Supported (Urban Levy) Infrastructure Storm Sewer System Description: Includes storm sewer mains, catch basins, curbs and gutters, and manholes. Total Value: 2012 Replacement Per Capita $34,215,552 $1,746 Condition Index: Grade Range Description A Excellent B Good C Fair D Poor E 0-19 Critical Overall Condition: Previous Condition Current Condition Desired Condition - C - 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 information the following year. 46

47 Storm Sewer System Storm Sewer System $27,065,078 $6,398,611 $751,863 Segment 2012 Replacement Cost 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, A $1,314, B $4,101, B $800, C $5,552, C $986, D $11,122, D $671, E $2,697, E $2,625,973 1,288 $27,065, $6,398,611 2,656 47

48 Storm Sewer System (Continued) Manholes Average Condition: Grade 2012 Replacement Cost D Quantity (Units) A $98, B $91, C $68, D $146, E $346, $751,

49 Financial Strategy Appendix C 49

50 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. 50

51 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 Level 3 Growth Requirements Service Enhancements Funding is fully sustainable and accounts for future investment needs Level 2 Inflation Requirements Funds replacement cost of exisiting assets only Level 1 Level 0 Amortization of Tangible Capital Assets Principal and Interest Payments Operating Expenses Funds amortized portion of existing assets only and does not plan for future Funds required cash outlays only and does not account for lifecycle costs 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. 51

52 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 longterm capital budgeting. Financial Planning Asset Management Plan Long-Term Budgeting Financial Strategy 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 52

53 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. Overall Infrastructure Funding Requirement Funding Sources 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. 53

54 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. 54

55 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 Category Average Annual Funding Available (2009 to 2012) 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%. As per Table 3, it can be seen that Property-Tax Supported (Urban Levy) Infrastructure is 55

56 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 Average Annual Funding Available (2009 to 2012) Average Annual Requirement User-Rate Gas Tax Other Total Funding Gap Category 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. 56

57 Table 4 Funding Level 1 - Property-Tax Supported Infrastructure - Lifecycle Requirement per year 2012 to 2051 (50 years) Average Annual Requirement 57

58 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 58 Average Annual Funding Available (2009 to 2012) Average Annual Requirement Tax Gas Tax Other Total Funding Gap 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

59 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 Average Annual Funding Available (2009 to 2012) Average Annual Requirement Tax Gas Tax Other Total Funding Gap 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. 59

60 Table 7 Funding Level 2 - Property-Tax Supported Infrastructure - Lifecycle Requirement per year 2012 to 2051 (50 years) Average Annual Requirement 60

61 2. User-Rate Supported Infrastructure Although a funding gap is presented for User-Supported Infrastructure, it should be noted that funding recommendations for water and wastewater infrastructure are not fully addressed in this report, but are dealt with during the water and wastewater rate setting studies. The Town s next study will occur in 2015, and at this time the Town can again review and gauge how the funding gap aligns with the Town s rates. 2a. 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. Table 8 below shows the funding gap for User-Rate Supported Infrastructure at funding Level 1. In 2003 the Province pushed for municipalities to develop water and wastewater rates that are fully funded through the implementation and creation of rate models. Due to the change in legislation and Provincial requirements, since 2003 water and wastewater rates have included a lifecycle component, allowing the Town to build up its reserves over time. Although the lifecycle information as presented will show a funding gap per year, during the last rate review performed in 2012 the funding gap was identified and will be eliminated through additional lifecycle contributions that come into effect in 2014 for both water and wastewater. 61

62 Table 8 User-Rate Supported Infrastructure Category Average Annual Reserve Transfers (2009 to 2012) Average Annual Requirement User Rate Gas Tax Other Total Funding Gap Water System $1,322,829 $1,181,347 $0 $0 $1,181,347 ($141,482) Wastewater System $949,929 $509,415 $0 $0 $509,415 ($440,514) The average annual requirement for water systems is $1.3 million, with average annual reserve lifecycle contributions for a three year period being $1.2 million. This leaves an annual funding gap of $141 thousand. Water rate supported infrastructure assets are being funded at 89.3% of their long-term requirement. The average annual requirement for wastewater systems is $950 thousand, with an average annual reserve lifecycle contribution for a three year period equalling just over $500 thousand. Wastewater rate supported assets are therefore funded at 53.6% of the required contribution. Reserve balances for water and wastewater as of year ending 2012 are summarized in Table 9 below. Table 9 Water Reserve Balance Union Lifecycle $1,688,811 Harrow Colchester - Lifecycle $3,509,600 Total $5,198,411 Wastewater Reserve Balance Ward 1 - Lifecycle $58,684 Ward 3 Lifecycle $139,376 Ward 4 - Lifecycle $864,311 Total $1,062,372 62

63 2b. 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 Provides funding for the replacement cost of tangible capital assets at the end of their life. Table 10 below shows the funding gap for User-Rate Supported Infrastructure at funding Level 2. Table 10 User Rate Supported Infrastructure Category Average Annual Funding Available (2009 to 2012) Average Annual Requirement User-Rate Gas Tax Other Total Funding Gap Water System $8,047,749 $661,014 $0 $2,501 $663,515 ($7,384,234) Wastewater System $6,228,362 $331,635 $0 $0 $331,635 ($5,896,727) The average annual requirement for User-Rate Supported Infrastructure is just over $14.2 million, with an annual average requirement for water systems of $8 million and an annual average requirement for wastewater systems of just over $6.2 million. The three year average annual lifecycle reserve contribution is $661 thousand, and $332 thousand for water systems and wastewater systems, respectively. Funding Level 2 in turn presents a funding gap of $7.4 million per year for water systems and $5.9 million per year for wastewater systems. This means that User-Rate Supported Infrastructure is being funded for water systems at 8.2% and wastewater systems at 5.3%. Table 11 shows how averaging the annual requirement over the 50 year period allows the Town to avoid fluctuations in funding requirements as. 63

64 Table 11 Funding Level 2 - User Rate Supported Infrastructure - Lifecycle Requirement per year 2012 to 2051 (50 years) Average Annual Requirement 64

65 Conclusion In-order to ensure success of an asset management strategy, sustainability and affordability must be balanced. To achieve this balance the Town has identified the following next steps and recommendations to further build on what has been developed and to ensure that the funding gap is reduced through the appropriate use of valuation techniques and assessments, including overall condition assessments. 65

66 Next Steps and Recommendations Appendix D 66

67 Next Steps As Asset Management Plan is a living document with the information contained within it representing a snapshot at a point in time. To ensure that the Town is always moving forward to enhance and update the plan, the following are recommended as next step in this process. Update the Tangible Asset Policy by December 2014 and bring the revised policy back to Council for review. Update the Asset Management Plan by December 2015 to include all major assets that have a value greater than $100,000. This would include buildings, machinery and equipment and potentially vehicles. Define a framework that will help determine targeted levels of service for categories contained in this document. 67

68 Recommendations to Council The following three recommendations are presented for Council s consideration: 1) That the Asset Management Plan be received and approved as presented. 2) That a formal condition assessment program be established based on current practices for all asset categories contained in this document, to ensure accuracy in reporting, by December 31, ) That condition assessments, based on a formal condition assessment program be provided to the Finance Department for all assets contained in this document by July 31,