That Council accepts the report by Kerr Wood Leidal Associates Limited, dated January 2011, titled Public Works Asset Management Plan.

Transcription

1 REPORT TO: Council FOR: Committee of the Whole REPORT FROM: Engineering PRESENTED: February 15, 2011 FILE: SUBJECT: Public Works Asset Management Plan Recommendation: That Council accepts the report by Kerr Wood Leidal Associates Limited, dated January 2011, titled Public Works Asset Management Plan. 1. Purpose: The purpose of this staff report is to present key finding from the report by Kerr Wood Leidal, dated January 2011, titled Public Works Asset Management Plan 2. Time Critical: The report noted above identifies a number high priority items as well as many long term planning objectives. The high priority items which are described below in detail should be addressed as soon as possible as they directly relate to life/safety issues and integrity of existing infrastructure. Other sections of the report deal with initiatives that will be implemented over the next five to thirty years and while they are not as time critical the financial planning to deal with them should be addressed within the year. 3. Background: A major priority of the Service Squamish Initiative in 2010 was to complete a financial strategic plan as well as a long range plan for utilities and infrastructure. In May 2010, the District issued an RFP to complete a Public Works Asset Management Plan which would address the long term cost associated with the operation, maintenance and replacement of existing public works infrastructure. The District received a number of excellent proposals from some of the top consulting engineering firms in Canada. Kerr Wood Leidal and Associates (KWL), who have an excellent reputation in Asset Management and vast experience with the District of Squamish, was the successful proponent. New legislation introduced in June 2006, made it a requirement for municipalities to report Tangible

2 Capital Assets on their Statement of Financial Position. At this time the majority of municipalities were in a similar position as the District of Squamish in that they did not have a good understanding of their infrastructure and its value. Between June 2010 and January 2011, Squamish has gained tremendous ground in this area and is now on the leading edge of Infrastructure Asset Management in Canada. In June 2010 KWL along with District staff began a thorough assessment of municipal infrastructure. A complete inventory and condition assessment was performed. This type of detailed work had never been completed in Squamish, and has created a baseline for the next thirty years. As is common among many municipalities in BC and throughout Canada, much of the public works infrastructure in Squamish is at the end of its service life. Significant investment in this infrastructure will be needed over the next thirty years to maintain and replace existing infrastructure. 4. Project Information: This report is the first of many stages of an overall Asset Management strategy for the District. The scope of work was to provide a detailed engineering process which would discuss the quantity, condition, value, function, cost, and risk associated with all components of the public works infrastructure. The report also took a comprehensive look at timing and priorities as well as long term affordability of replacing the assets. The report followed the Asset Management framework as set out by the Federation of Canadian Municipalities (FCM). The infraguide a National guide to Sustainable Infrastructure was used to help answer the following questions. Inventory What do you have? Value What is it worth? Condition What is the remaining service life? Level of Service What do you want the asset to do? Costs and Risks How much will it cost? What are the risks of not acting? Timing and Priorities When do you need to act? Funding How do you ensure long-term affordability? To assess the many layers of our infrastructure, KWL retained some of the industry s experts on bridges, dykes, street lighting, roads, parks, trails, water and wastewater. The report was consistent with the District s strategic plans including the Official Community Plan and the Squamish Service Initiative. Inventory, Condition, Value, and Need The District s asset pool was determined to be worth $437 million and the estimated replacement value of these assets is approximately $420 million. The District is estimated to consume $6 million of

3 its asset value each year. Between 2011 and 2040 the following major replacement projects are anticipated: 70% of AC (asbestos cement) water and sewer pipes Between 2 and 4 water reservoirs The majority of sewage lift stations Wastewater treatment plant equipment, piping and electrical refurbishment Replacement of two bridges over the Cheakamus River Replacement of four dyke pump stations A number of key issues have been identified as they relate to each group of infrastructure assets. Water: - AC mains are estimated to have 10 years of remaining service life and compose 70% of the system - 8 of 14 PRV stations require replacement in the next years - Alice Lake and Brackendale Reservoirs are old and require rehabilitation in the next years - Plateau and Thunderbird Reservoirs are builts into rock and both experience leakage - Powerhouse Springs water supply will require pump replacement in the next 5-10 years Sanitary: - AC mains are estimated to have 15 years of remaining service life and compose 70% of the system - Inflow and Infiltration is an issue especially in downtown WWTP: - The plant is relatively new and in good working condition however there is no redundancy Roads and Bridges: - There is a significant backlog of paving work 22% of total surface to be completed in Only about 5% of the roads are in poor condition - Excessive distress on northern approach to the Government Road bridge - Low guard rail height and sinkhole on western approach to Mamquam Road bridge - Mashiter bridge has a bulge in all and excessive cracking - Both Cheakamus River bridges need to be replaced in the next 10 years Drainage: - Pumping stations are generally in poor condition and require extensive maintenance - The majority of drainage assets are not in the GIS mapping system Flood Protection: - Squamish River flood boxes to not open and close properly - Mamquam River flood boxes to not open and close properly - Cheakamus River riprap and dyke crest compaction are recommended

4 - Stawamus River upstream riprap requires repair Parks and Trails: - Parks inventory and condition assessment have not yet been prepared. The Asset Management plan also included a detailed Geographic Information System (GIS) review. The District s Public Works assets have been imported into GIS software and been transferred to our inhouse GIS system. Engineering staff will be able to create graphical representations of our assets which will help plan capital projects, assist operations, create maintenance databases, and track service life of assets. The GIS database is still very young, however will be invaluable in implementing the Asset Management plan. Level of Service Level of service is a major focus of asset management. The plan aims to address the needs of District of Squamish residents, while protecting public health, safety and the environment. The District is currently providing adequate levels of service and meets minimum service requirements in most areas. Infrastructure replacement funding indicators were below national benchmark rates. Operations and maintenance costs were also generally below benchmark rates. As part of the Service Squamish Initiative, benchmarking has been rolled out across the board and is providing good information. Indicators for performance were measured against benchmarking data from other municipalities. While operation and maintenance are important to extend the useful life of assets, both the operating and capital budgets will need significant increase between 2011 and Between 2% and 2.5% of the value of the asset should be budgeted each year to replace that asset at the end of its life. The report describes the key service level indicators in detail. The following table provides a summary for each area. Asset Group Indicator Measure Squamish Result Average Benchmark Water Rate per household $/year $219 $300 Water Water use L/person/day 688L 265L Sewer WWTP Rate per household O&M cost/volume treated $/year $286 $325 $000s/ML treated $307 $179 Roads/Bridges Bridge inspection Frequency 9% 25%

5 Drainage Flood Protection Capital Reinvestment Tax revenue/populati on served Replacement value/year 0% 0.15% $/person $9.0 $47 Parks/Trails Cost/park area $000s/ha $9.1 $13 District of Squamish is currently exceling in level of service in some areas. A few highlights include: No boil water advisories in recent years No sewer overflows reported No WWTP tests out of compliance High ratio of park space per capita Cost, Risk, Timing and Priorities Each asset was assessed based on asset criticality criteria. For example what is the probability of failure and what is the consequence of that failure. The scale was used to help rank projects and create long term plans. When discussing cost and priority the question of preventative maintenance vs. capital replacement is introduced. Investing money up front will help ensure the asset reaches its service life, and will also decrease risk throughout the asset life. However, spending money on the asset before it reaches the end of its life is sometimes hard to justify when there are other pressing issues on the table. The following operational programs are proposed that will increase operational cost, extend asset life, and decrease risk. It should be noted that many of these programs are already underway. Water: Unidirectional flushing, hydrant maintenance, leak detection, cross connection control Sanitary: CCTV inspection, preventative maintenance WWTP: Additional operator, plant redundancy Roads and Bridges: Bridge maintenance Flood Protection: dyke maintenance, gravel removal Parks: Trail maintenance It is not uncommon for assets to fail early in their lifespan. This is often due to defective materials or construction, excessive loading or improper use. If well-maintained, most assets will tend to exceed their design lifespan. Therefore it is very important to have regular maintenance and inspection programs in place to assess how close an asset is to failure, and how much extended life can be obtained. Deferring capital replacement with ongoing best practice maintenance is the best option. Funding An important measure of whether the proposed infrastructure funding levels are sufficient to maintain the existing asset base is the Projected Net Book Value. A drop in Net Book Value indicates that the

6 service capacity of the system may be reduced. The Net Book Value of the assets is considered to be the same in 2040 as it is in When deferred replacement is included as a liability the balance of the District s asset value will decrease by 60% over 30 years with a total infrastructure deficit of $64 million that will need to be paid down in the next management cycle. This could be paid down in 6-10 years at the average funding rates proposed. Two cases were suggested for funding the Asset management Plan over the next 30 years. Case A an immediate increase to the average annual revenue in 2011, or Case B a gradual increase in 2011 to a levelized amount in The funding was separated into water utility, sewer utility, and general fund. Case A Case B Water Utility 68% 15% - 75% from 2011 to 2015 Sewer Utility 58% 13% - 64% from 2011 to 2015 General Fund 12% 3% - 14% from 2011 to 2040 If we consider that the municipality may gain funding through provincial and federal grants for some of the work proposed, roughly 10%, the required rate increases for water, sewer and general fund could be reduced by the following percentages. Water: reduced from 68% to 59% Sewer: reduced from 58% to 51% General Fund: reduced from 12% to 7% 5. Department Comments: The report by Kerr Wood Leidal Associates Limited titled Public Works Asset Management Plan provides extremely valuable information to the District of Squamish. This document will provide the basis for long term financial planning, operation and maintenance and capital project work which will support our ongoing infrastructure needs. It is intended that this will be a living document, which will be used to generate an Asset Management strategy. In addition to the report described above, staff will continue to work on implementation plans for improved operation and maintenance spending as well as capital spending. Staff will use the Asset Management plan to create detailed work plans for the next 5 years. This work represents some of the best work that is currently being done in municipal government on a national level. Squamish has positioned itself to be among the leaders in Asset Management planning and execution over the next 30 years. To continue to excel, the District will need to continue to focus on data collection and assessment, integration between engineering and finance, benchmarking, innovative funding and preventative maintenance; all objectives of the Service Squamish Initiative.

7 6. Budget Implications: There is no budget implication associated with the proposed recommendation by staff, however, there will be budget implications associated with the implementation of the plan which will be presented throughout The following table gives a projection of these implications. The current total expenditure level for public works assets is approximately $8.5 million/year and is projected to rise to $13.6 million/year under the plan recommendations. Table 1 - Average Annual Public Works Budget Summary ( ) Asset Group 2010 Capital and Operating $ Proposed Capital and Operating $ Proposed Capital $ Proposed Operating $ Water Fund 1,972,000 3,450,000 1,520,000 1,930,000 Sewer Fund (incl. WWTP) 2,696,000 4,560,000 1,760,000 2,800,000 Roads 2,218,000 2,890,000 1,670,000 1,220,000 Drainage 245, , , ,000 Flood Protection 146,000 1,000, , ,000 Parks and Trails 1,138,000 1,140, ,000 1,000,000 General Fund 3,747,000 5,590,000 2,810,000 2,780,000 Total 8,415,000 13,600,000 6,090,000 7,510,000 Staff will review these numbers in detail and work towards a long term financial plan which will be presented later in Policy Implications: Although there are no direct policy implications at the current time, the next steps in the Asset Management strategy will include developing an Asset Management policy throughout the district. There has been work completed to date on this initiative among the Finance and Engineering departments; however the policy is not yet ready to roll out. 8. Environmental Considerations: There are no environmental considerations associated with the proposed recommendation by staff. 9. Alternatives to Staff Recommendation:

8 Staff Recommendation: That Council accepts the report by Kerr Wood Leidal Associated Limited, dated January 2011, titled Public Works Asset Management Plan. Alternative to Staff Recommendation: None Jenni Chancey, EIT Municipal Infrastructure Engineer Brian Barnett, P.Eng. General Manager, Engineering and Parks J. Greenlees, General Manager Financial Services CAO Recommendation: That the recommendation of the Engineering and Parks department be approved. K. Ramsay, CAO

9 District of Squamish Public Works Asset Management Plan Final Report January 2010

10 District of Squamish Public Works Asset Management Plan Final Report January 2010 KWL File No

11 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 STATEMENT OF LIMITATIONS This document has been prepared by Kerr Wood Leidal Associates Ltd. (KWL) for the exclusive use and benefit of the District of Squamish for the Public Works Asset Management Plan. No other party is entitled to rely on any of the conclusions, data, opinions, or any other information contained in this document. This document represents KWL s best professional judgement based on the information available at the time of its completion and as appropriate for the project scope of work. Services performed in developing the content of this document have been conducted in a manner consistent with that level and skill ordinarily exercised by members of the engineering profession currently practising under similar conditions. No warranty, express or implied, is made. COPYRIGHT NOTICE These materials (text, tables, figures and drawings included herein) are copyright of Kerr Wood Leidal Associates Ltd. (KWL). The District of Squamish is permitted to reproduce the materials for archiving and for distribution to third parties only as required to conduct business specifically relating to the Public Works Asset Management Plan. Any other use of these materials without the written permission of KWL is prohibited. REVISION HISTORY Revision # Date Status Revision Author 1 Nov 4, 2010 Draft MEH 2 Final Nov 29, 2010 Draft Added executive summary, figures, updated financials. MEH 3 Jan 16, 2011 Final Updated based on DoS comments. MEH KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

12 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 CONTENTS EXECUTIVE SUMMARY... II 1. INTRODUCTION BACKGROUND SCOPE ASSET MANAGEMENT FRAMEWORK GLOSSARY REFERENCES DISTRICT OF SQUAMISH KEY STATISTICS DATA COLLECTION AND ANALYSIS DATA SOURCES INTERVIEW RESULTS GAP ANALYSIS DATA SUMMARY ASSET INVENTORY ASSET VALUE ASSET CONDITION LEVEL OF SERVICE COSTS,RISKS, AND FUNDING PERFORMANCE AND BENCHMARKING ASSESSMENT ASSET MANAGEMENT GOALS PERFORMANCE ASSESSMENT PERFORMANCE INDICATORS BENCHMARK REFERENCES AND DATA PERFORMANCE AND BENCHMARKING ANALYSIS PERFORMANCE AND BENCHMARKING SUMMARY INVENTORY VALUE CONDITION LEVEL OF SERVICE COSTS AND RISKS TIMING &PRIORITY FUNDING CAPITAL AND OPERATIONS COST ESTIMATE CAPITAL COST ESTIMATE OPERATIONS COST ESTIMATE ASSET VALUATION NEEDS ASSESSMENT PLANNING HORIZON REMAINING SERVICE LIFE WATER SANITARY WASTEWATER TREATMENT PLANT (WWTP) ROADS DRAINAGE FLOOD PROTECTION KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

13 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH PARKS REMAINING SERVICE LIFE SUMMARY REPLACEMENT SCHEDULE CRITICALITY ANALYSIS NON-REPLACEMENT CAPITAL PROJECTS FINANCIAL ANALYSIS ANNUAL BUDGET ESTIMATE ASSET VALUE BALANCE FUNDING STRATEGY SENSITIVITY TO CAPITAL COSTS SUMMARY AND RECOMMENDATIONS SUMMARY ASSET MANAGEMENT FRAMEWORK DATA COLLECTION PERFORMANCE AND BENCHMARKING COST ESTIMATE REMAINING SERVICE LIFE NEEDS ASSESSMENT FINANCIAL ANALYSIS RECOMMENDATIONS REPORT SUBMISSION FIGURES At end of Sections Figure 2-1: Water System Assets Figure 2-2: Sanitary System Assets Figure 2-3: WWTP Assets Figure 2-4: Road Assets Figure 2-5: Drainage Assets Figure 2-6: Flood Protection Assets Figure 2-7: Parks & Trails Assets Figure 4-1: Asset Replacement Value Breakdown Figure 5-1: Water Mains Average Remaining Service Life Figure 5-2: Sanitary Mains Average Remaining Service Life Figure 5-3: Wastewater Treatment Plant Remaining Service Life Figure 5-4: Condition Assessment Dykes Figure 5-5: Average Remaining Service Life Weighted by Replacement Value Figure 5-6: Remaining Service Life Water Mains Figure 5-7: Remaining Service Life Sewer Mains Figure 5-8: Remaining Service Life Drainage Mains Figure 5-9: Water Mains Replacement Schedule Figure 5-10: Sewer Mains Replacement Schedule Figure 5-11: Storm Sewers Replacement Schedule Figure 5-12: Asset Replacement Overview Figure 6-1: Public Works Asset Groups and District Funds Figure 6-2: Projected Annual Budget Figure 6-3: Projected Municipal Revenue Requirement for Asset Management Plan ii KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

14 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 TABLES Table 1-1: Asset Management Plan Performance Index Table 2-1: Data Management and Context Performance Index Table 2-1: Critical Data for Completion of Asset Management Planning Table 2-2: Public Works Asset Inventory Table 2-3: TCA Valuation Inventory Table 2-4: Age and Material Data Availability Table 2-5: Level of Service Data Availability Table 2-6: Total Budget (Capital + Operations) Levels by Asset Group Table 2-7: Data Summary Matrix (Score out of 5) Table 3-1: Asset Management Goals Table 3-2: Water System Performance Indicators Table 3-3: Sanitary System Performance Indicators Table 3-4: WWTP Performance Indicators Table 3-5: Roads, Sidewalks, Streetlights and Bridge Performance Indicators Table 3-6: Drainage Performance Indicators Table 3-7: Flood Protection Performance Indicators Table 3-8: Parks & Trails Performance Indicators Table 3-9: Performance Index for Performance and Benchmarking Table 3-10: Performance and Benchmarking Summary Matrix Table 4-1: Estimated Replacement Value of Public Works Assets Table 4-2: Annual Operating (Non-Capital) Costs ($000s) Table 4-3: Tangible Capital Asset Valuation ($000s) Table 5-1: Design Lifespans for Public Works Assets Table 5-2: Remaining Service Life for Water Facilities Table 5-3: Remaining Service Life for Sewer Lift Stations Table 5-4: Remaining Service Life Summary Table 5-5: Probability of Asset Failure Rating Scale Table 5-6: Asset Consequence Rating Scale Table 5-7: Asset Criticality Matrix Table 5-8: Fixed Replacement Budgets for Roads, Dykes and Parks Table 5-9: Asset Criticality Funding Results Table 6-1: Average Annual Public Works Budget Summary ( ) Table 6-2: Schedule of Annual Capital and Operations Expenditures Table 6-3: Tangible Capital Asset Value Table 6-4: Annual funding required to finance 30-year capital/operating expenditures Table 7-1: Estimated Replacement Value of Public Works Assets Table 7-2: Annual Operating Costs ($000s) APPENDICES Appendix A: Interview Memorandum Appendix B: Data Analysis Matrices Appendix C: Performance & Benchmarking Matrices Appendix D: EBA Pavement Replacement Report Appendix E: DMD Streetlight Replacement Report Appendix F: GEA Bridge Assessment Report Appendix G: Detailed Replacement Cost Inventory Appendix H: MMK Financial Analysis Report KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

15 Executive Summary

16 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH EXECUTIVE SUMMARY PUBLIC WORKS ASSET MANAGEMENT PLAN The Public Works Asset Management Plan ( AMP ) was developed to guide the District s Public Works infrastructure funding and management of its existing asset base through the next 30 years. The primary intended outcome of this plan to is inform the development of future capital and operations budgets while meeting strategic corporate objectives in delivering municipal infrastructure services. The District s Public Works assets include water, sewer collection and treatment, roads, sidewalks, streetlights, bridges, drainage, dyking, flood protection, parks and trails. These assets provide most of the basic functionality of the District. Municipal infrastructure assets generally have a long lifespan, and need to be managed over their lifespans in order to achieve sustainable funding levels while meeting required service levels. This is the essence of asset management in the municipal context. Future growth-related assets were not studied as part of this plan, however, once acquired these assets should be managed within the same framework as the existing asset base. The AMP is considered a living document and should be updated periodically. Further, asset management plans for each asset group could be developed to fine-tune the findings of this study. ASSET MANAGEMENT PLAN FRAMEWORK KWL prepared the AMP using the InfraGuide Key Elements of Asset Management. This approach is holistic and based on best practices, and adopted by the Federation of Canadian Municipalities. The Key Elements of Asset Management: Inventory (what have you got?); Value (what is it worth?); Condition (what condition is it in and what is the remaining service life?); Level of Service (what is the level of service expectation and what needs to be done?); Costs and Risks (how much will it cost and what is the acceptable level of risk?); Timing and Priorities (when do you need it?); and Funding (how do you ensure long-term affordability?). These Key Elements can be translated into actions by assigning generalized goals for asset management, as shown in the following table. ii KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

17 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 Table 1: Key Elements and Goals for Asset Management Element Goal Inventory Centralize information and share knowledge Value Account for historic and replacement value of Tangible Capital Assets Condition Maintain system reliability and integrity Level of Service Protect public health, safety and the environment Costs & Risks Minimize life cycle costs Timing & Priorities Develop sufficient budget to meet infrastructure needs for existing and future ratepayers Funding Provide customer satisfaction at fair, competitive rates These goals are important to the overall program, as they help to set targets for performance, and provide context for interpreting infrastructure data. THE DISTRICT S PUBLIC WORKS ASSETS The District owns a significant amount of public works infrastructure, and acquires new infrastructure every year through replacement and growth. This infrastructure is also termed as Tangible Capital Assets or TCAs, which generally means non-financial assets that exceed a certain value threshold. Most of the District s TCAs are inventoried either in a Geographic Information System (GIS) database, or in the District s TCA database (Citywide), which tracks the value of the assets. During the course of this project it was determined that a portion of the District s TCAs are not inventoried, which should be a key focus for the District in upcoming years. One of the other goals of asset management is to centralize this information, such that the GIS and Citywide have matching records. An overview of the District s infrastructure data is listed in Table 2. Table 2: Public Works Asset Inventory Data Water Sanitary WWTP Roads Drainage Flood Parks 122 km water main 105 km sewer main 137 km paved road 19 km dykes 244 ha parkland 24 million litres/day capacity 18 lift stations 21 million litres/day capacity 5 major bridges 31 km storm sewer 72 km ditches 4 dyke pump stations 387 km trails ASSET VALUE The TCA ledger indicates that the District s TCAs are worth approximately $117 million based on historical acquisition costs. During this study, replacement costs were determined for all known assets, to a sum of $437 million. Deflating these costs back to the year of acquisition, a historic value of approximately $248 million was determined (as compared to $117 million in the database). The District is encouraged to conduct further inventory and valuation work to reconcile the gap in historical cost data. The following chart details the breakdown of asset replacement value for the District s public works infrastructure. KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers iii

18 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH Asset Replacement Value Flood Protection $76M 17% Parks and Trails $1M 0% Water $115M 27% Drainage $35M 8% Roads $71M 16% Sanitary $92M 21% Wastewater Treatment Plant $47M 11% Figure 1: Replacement Value of Tangible Capital Assets Public sector generally accepted accounting principles state that municipalities must record the value of their TCAs and amortize the value over the useful lifespan. This allows Finance staff to assess the rate of asset consumption. The District is estimated to consume approximately $6 million of its asset value each year. In theory, this amount should be balanced with replacement infrastructure investment or contributions to reserves in order to preserve the net value of the asset base. ASSET CONDITION The best available condition data for the study was the age and materials of the assets. From this information, an approximate design lifespan for materials is used to estimate the remaining service life of the assets. In reality, only a few assets will fail at precisely the design lifespan some will fail early and more will exceed the design lifespan if properly maintained. This is a key assumption for the overall study, as much of the scheduling of capital funding is based on the remaining service life estimates. iv KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

19 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 Remaining Service Life (Weighted Average by Historic Value) 160 Remaining Service Life (years) Water Sanitary WWTP Roads Drainage Flood Protection Parks & Trails Figure 2: Average Remaining Service Life Only a limited amount of physical inspection data is available, however, staff interviewed during the study had a good understanding of the condition of most visible assets. Underground asset condition will be better understood with physical condition assessment programs, and more detailed logging of asset condition will help to better determine the remaining service life of the District s assets. Between 2011 and 2040, the following major assets replacement projects are anticipated: - 70% of the water and sewer piping is composed of asbestos cement (AC), which has a shorter expected lifespan than other materials; water reservoirs will need refurbishment/replacement; - most of the sewage lift stations require replacement; - wastewater treatment plant equipment, process piping and electrical refurbishment/replacement; - replacement of two bridges over the Cheakamus River; and - replacement of the four dyke pump stations. Further, roads, sidewalks, streetlights, signs, dykes and parks assets will need replacement and rehabilitation on an ongoing basis through levelized annual budgets. KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers v

20 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH LEVEL OF SERVICE The Level of Service required varies between asset types, but generally describes how well a system performs at its intended function. At minimum, the District must provide levels of service as required by legislation such as the Drinking Water Protection Act, Waste Management Act, Fisheries Act and the Community Charter. Levels of service can often be measured with indicators that include the environment, public health and safety, ability to meet peak service conditions, and customer satisfaction. The following table lists a few of the Performance Indicators examined in the AMP. Table 3: Level of Service Performance Indicators Water Sanitary WWTP Roads Drainage Flood Parks 688 L/person/d water use 2 pump failures/lift station/yr effluent tests within compliance 24 ha park area/person 0 boil water advisories 0 sewer overflows energy use 10% higher than benchmark 60% of roads have condition rating of good or better % of District with stormwater treatment* % effective impervious area* current funding at 20% of benchmark *Identified as Performance Indicators but insufficient data available for complete benchmarking analysis. 2% of District dedicated to parkland The Performance Indicators are compared against benchmarking data from other municipalities to determine the District s performance in various categories. The District is currently providing adequate service levels under most measures, though water use is higher than the national average, the WWTP requires sludge handling improvements, and additional capacity and reliability is desired for the dyke pump stations. A number of energy efficiency measure could also be implemented. The District is encouraged to collect data for annual benchmarking to measure performance and trends. Levels of service are discussed in Section 3 of the report and Appendix C. REPLACEMENT COSTS Adopting the practice of asset management within the District s Engineering, Finance and Operations departments will require modest increases in departmental funding, primarily to operating budgets. However, there is a significant projected increase in District-wide capital spending as many of the District s assets are projected to come of age within the next 30 years. Capital spending highlights between 2011 and 2040 include: Water and sewer main replacement peaks between 2025 and 2030; Water facility upgrades and refurbishments; Half the sewage lift stations will be replaced by 2015; Major upgrades to equipment at Mamquam WWTP (2021 and 2031); Annual $1 million road repaving budget; Replacement of two bridges; and vi KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

21 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 Replacement of dyke pump stations and rip rap, as well as ongoing dyke upgrades. The following graphs show the projected capital and operational spending needs. $30M Annual Expenditures Water - Capital Water - Operations Sewer - Capital Sewer - Operations General - Capital General - Operations Annual Expenditure ($2010) $25M $20M $15M $10M $5M $0M Figure 4: Projected Annual Expenditures Capital & Operations Current operations and maintenance funding is adequate for provision of minimum service levels, but will need to be increased in the future to manage aging infrastructure. RISKS AND PRIORITIES Replacing assets on a schedule according to the remaining service life, regardless of condition may prevent the District gaining the maximum value out of its existing asset base, as many assets are expected to exceed the design lifespan. A criticality analysis was conducted to develop a threshold to decide whether or not to replace a given asset within the 30-year timespan of the AMP. This is determined by using a qualitative assessment of both probability of asset failure based on age, and the consequence of the asset failing based on a number of factors. The probability and consequence of failure were each rated using a 5-point scale, and then these numbers were multiplied to assess criticality. The criticality of a given asset increases over time, as the probability of failure increases. Table 4 lists the general criteria used to assess criticality. KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers vii

22 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH Table 4: Asset Criticality Criteria Rating Consequence Minimal Moderate Significant Severe Catastrophic Property /Environmental Damage Asset only <= $5,000 <= $50,000 < = $500,000 > $500,000 Loss of Life None None Remote Possible Certain Service Interruption < 1% of system < 5% of system Traffic Disruption < 10% of system < 50% of system > 50% of system Localized Neighbourhood District-wide Regional Multiple Major Asset Replacement Cost Probability of Failure in 5 Years Remaining Service Life $5,000 $50,000 $500,000 $5,000,000 Indeterminate Remote Unlikely Moderate Probable Imminent More than 50% remaining lifespan More than 10% remaining lifespan Less than 10% remaining lifespan Exceeded by more than 10% Exceeded by more than 50% This approach resulted in the planned deferral of approximately 20% of replacement capital to beyond the 30-year timeline, while maintaining the overall net book value of the District s assets. Most of the deferred capital works include water, sanitary and drainage piping. In order to be in a position to defer capital, the District must conduct sufficient levels of inspection and maintenance to identify which assets are suitable for deferral of replacement or rehabilitation. Taking a blind approach may result in unplanned asset failures, which diverts resources from planned maintenance and replacement. INFRASTRUCTURE FUNDING Funding for the long-term operations, maintenance and replacement of the District s infrastructure comes through the Water Utility, Sewer Utility and General Government Funds. Generally, this funding is sourced from municipal revenues including property taxes, parcel taxes and user fees. Alternate sources of funding include loans and grants for specific projects. MMK Consulting conducted a financial analysis to determine the impact on taxation under the proposed AMP expenditure levels. The projected tax revenue requirements were determined on a levelized basis for the 30-year time frame, and applied as Case A) an immediate increase to the average annual revenue in 2011; or Case B) a gradual increase in 2011 to a levelized amount in viii KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

23 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 Projected Tax Revenue Requirements Case A Case B $30M Average Annual Tax Revenue ($2010) $25M $20M $15M $10M $5M $0M Current Funding Rate 2010* *2010 Budget Figure 6: Projected Municipal Revenue Requirements The chart shows property taxes will need to be increased to fund the sustainable maintenance and replacement of the District s infrastructure as follows: Water Utility: 68% increase over 2010 (Case A); or 15%/year to 75% increase over 2010 (Case B); Sewer Utility: 58% increase over 2010 (Case A); or 13%/year to 64% increase over 2010 (Case B); and General Fund: 12% increase over 2010 (Case A); or 3%/year to 14% increase over 2010 (Case B). This approach assumed the District would maximize its debt carrying load, while finishing in the same net financial position in 2040 as for 2010, in order to buffer taxpayers from the full cost of the AMP capital program in any given year. KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers ix

24 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH CONCLUSIONS &RECOMMENDATIONS The following key conclusions regarding the District s Public Works assets were determined from the AMP: The District lacks a common platform for managing infrastructure data, and the Engineering, Finance and Operations departments would benefit from increased data sharing and accessibility, as well as having one staff member to coordinate general asset management responsibilities between departments. Asset inventories range from very detailed (water, sanitary) to almost no information on individual assets (WWTP, parks, streetlights, sidewalks, signs), depending on the asset group. The existing TCA ledger contains less than 50% of the historic value of the District s assets estimated in the AMP. The estimated replacement value of the District s Public Works assets is approximately $420 million. Asset physical condition is not well-understood on a widespread basis, and a historical record of asset condition is not available in most cases. Age and material provide the current basis for determining asset condition, but this is an approximation and can only be used as a guideline for determining asset replacement needs. Performance Indicators suggest the District is currently providing adequate levels of service, and meets minimum service requirements in most areas. Most infrastructure replacement funding indicators were below national benchmark rates. Operations and maintenance costs were generally lower or near benchmark rates. The proposed AMP replacement program will increase replacement funding to significantly higher than benchmark rates. Funding 100% of the scheduled replacement of Public Works assets is estimated to cost approximately $2 million more per year than a risk-based approach to funding asset replacement. This effectively delays 25% of scheduled replacement work between 2011 and 2040, after which time the need for replacement is reduced. The current (2010 Budget) total expenditure level for public works assets is approximately $8.5 million/year, which is projected to rise to $13.6 million/year under the AMP recommendations. The proposed financing strategy, which includes a combination of maximizing debt capacity and increasing tax revenues, is estimated to result in an overall tax increase of 22% by 2015, which would be carried through 2040 in real terms. Further to these conclusions, KWL makes the following recommendations. Recommendation #1: Invest in Asset Management Infrastructure Adoption of asset management practices requires buy-in from all departments involved, particularly Finance, Engineering and Operations. Common software systems and data sharing between departments is a key principle in implementing asset management for an organization of x KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

25 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 the District s size. A champion to coordinate asset management roles between departments would be beneficial to overall plan implementation. Investigate the possibility of implementing a centralized data management system that links GIS, TCA ledger, SCADA and work order management. Recommendation #2: Completion of Data Collection This plan is developed based on limited information in a number of areas. Future asset management efforts will be much more credible with added inventory data as follows: water facilities; streetlights; sidewalks; bridges; wastewater treatment plant; drainage; flood protection; and parks. Recommendation #3: Physical Condition Assessment Programs The following specific physical condition assessment programs are recommended: targeted sampling and destructive testing of AC piping; video inspection for sanitary and storm sewers; pavement condition assessment (already underway); detailed physical assessment and equipment itemization for water and wastewater facilities; and continued dyke inspections as required by law. Recommendation #4: Annual Benchmarking In order to monitor performance year-over-year, as well as providing impetus for collecting and managing operations data, it is recommended that the District conduct an annual benchmarking exercise based on the template provided in the AMP. Recommendation #5: Planning for Infrastructure Renewal The needs assessment conducted in this study is of sufficient accuracy to develop long-range budgets for infrastructure renewal and develop a generalized priority for infrastructure renewal projects. In order to refine the results of this study, cost-benefit analysis should be conducted to determine the most cost-effective approaches to infrastructure renewal. This would assist in confirming timing for replacement or repair of assets, as well as identifying where cost savings are possible with preventative maintenance work. KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers xi

26 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH Recommendation #6: Implementation of Asset Management Plan Funding In order to meet long-term infrastructure needs, the following actions are recommended: Develop a financial plan based on the proposed funding increases in order to provide adequate capital and operating budgets for infrastructure needs. Use future condition assessment programs to more precisely identify where capital expenditures can be deferred without significant risk of failure where consequences are not tolerable. With additional infrastructure data, more detailed AMPs for each asset group, and continuing refinements to this AMP, the District may be able to find further cost savings, defer additional capital expenditures and minimize the overall impact on taxpayers. xii KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

27 Section 1 Introduction

28 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY INTRODUCTION 1.1 BACKGROUND The District of Squamish (District) has initiated a Public Works Asset Management Plan (AMP) that includes Water, Sanitary, Wastewater Treatment, Roads (incl. Sidewalks, Streetlights and Bridges), Drainage, Flood Protection, and Parks infrastructure. The District retained Kerr Wood Leidal Associates Ltd. (KWL) to provide assessments of available data, asset condition, performance indicators and benchmarking, and budget requirements for ongoing maintenance and replacement of the District s public works assets. 1.2 SCOPE This document contains the methodology and findings in developing the Asset Management Plan. Specifically, the tasks included in the scope of work were: collection of asset inventories and performance data; application of a data tracking and rating system; condition assessment based on age, material or other condition data; identification of performance indicators and benchmarks; quantification of performance indicators and comparison against benchmarks; determination of asset replacement needs and additional capital funding requirements; capital and operations cost estimates; annual budget estimates; and financial modelling. 1.3 ASSET MANAGEMENT FRAMEWORK The proposed asset management framework is built around a matrix that cross-references the District s asset groups against InfraGuide s Essential Elements of Asset Management. This approach ensures that all aspects of asset management are dealt with for each infrastructure system. This framework is built in layers, with each layer representing a key aspect of asset management. The cells in the matrix will contain the information for each layer: asset management plan objectives; catalogue of asset data in each category; benchmarks and statutory requirements; key performance indicators and ratings; funding mechanisms; and KERR WOOD LEIDAL ASSOCIATES LTD. 1-1 Consulting Engineers

29 PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 DISTRICT OF SQUAMISH recommended strategies and actions. This framework will allow the District to track its asset management activities, and can also be used as a reporting tool by rating the level of completeness or confidence in each cell, as well as being able to summarize overall asset management performance across rows and columns. We proposed a five-point scale to gauge the level of understanding and completeness for each layer, as per the following table. Table 1-1: Asset Management Plan Performance Index 5 Top Performance 4 Above Average 3 Average to Above Average 2 Poor to Average 1 Poor Performance The index and colour-coding will be applied to each cell individually to provide a dashboard -style report, which allows for quick identification of knowledge gaps at any level of the asset management framework. 1.4 GLOSSARY Discussion of asset management issues necessitates the use of acronyms and jargon language, including the following terms and abbreviations. Aggregation grouping like assets that have a lower value than the capitalization threshold. Asset Class Specific type of asset within an asset group (e.g. water main, sewer lift station). Asset Group Functional group of assets (i.e. water, sanitary, etc.) Capitalization amortization of the gross book value of a TCA over its economic lifespan. Capitalization Threshold the minimum value of a TCA or pool of TCAs to be capitalized. Gross Book Value (Historic Cost) the total cost of acquiring a TCA, nominal cost for year acquired. Level of Service qualitative and quantitative measures of how well an asset group performs at its intended function. Net Book Value the Gross Book Value less accumulated amortization. 1-2 KERR WOOD LEIDAL ASSOCIATES LTD. Consulting Engineers

30 DISTRICT OF SQUAMISH PUBLIC WORKS ASSET MANAGEMENT PLAN FINAL REPORT JANUARY 2011 PSAB Public Sector Accounting Board. PS 3150 PSAB standard enacted January 1, 2009 requiring public sector agencies to report the value of Tangible Capital Assets in financial statements. Segmentation breaking an asset group into smaller component assets with different lifespans, for instance, a pump station has concrete, piping, pumps, electrical and instrumentation components all with different lifespans. Tangible Capital Asset (TCA) non-financial assets having physical substance that: i. are held for use in the production or supply of goods and services, for rental to others, for administrative purposes or for the development, construction, maintenance or repair of other tangible capital assets; ii. have useful economic lives extending beyond an accounting period; iii. are to be used on a continuing basis; and iv. are not for sale in the ordinary course of operations REFERENCES InfraGuide: Guide to Decision Making for Municipal Infrastructure Assets. Federation of Canadian Municipalities, InfraGuide: Developing Benchmarks and Indicators. Federation of Canadian Municipalities, Ontario Municipal Benchmarking Initiative Annual Benchmarking Report, OMBI, National Water and Wastewater Benchmarking Initiative Public Report Earth Tech, Government Finance Officers Association of BC TCA Issue Paper #1. GFOABC, DISTRICT OF SQUAMISH KEY STATISTICS 2006 Census Population 14, Census Total Number of Households 5,625 Average Household Size 2.6 cap/household 2010 BC Stats Est. Population 16,100 Total Land Area 95.4 km 2 1 GFOA BC. TCA Issue Paper KERR WOOD LEIDAL ASSOCIATES LTD. 1-3 Consulting Engineers