MUNICIPAL ASSET MANAGEMENT & FINANCIAL PLANNING A CASE STUDY: THE TOWNSHIP OF SCUGOG

Transcription

1 MUNICIPAL ASSET MANAGEMENT & FINANCIAL PLANNING IN SMALLER MUNICIPALITIES A CASE STUDY: THE TOWNSHIP OF SCUGOG JULY 2012 By: David A. Stewart

2 THE PAPER VS. THE PRESENTATION The Paper Includes A literature review A detailed step by step description of an asset management and financial planning framework created for use in smaller municipalities A reflection and analysis into the challenges and learning experiences the Township of Scugog faced as a result of the project The Presentation Showcases how the framework was implemented at the Township of Scugog 2

3 INTRODUCTORY DISCUSSION

4 CONTEXT Material is based largely on my experience leading the planning and delivery of an asset management and financial planning framework for the Corporation of the Township of Scugog, a lower-tier municipality located in Central Ontario with a population estimation of 21,569 Information was obtained through my comprehensive research paper on the topics of long term asset management and financial planning in smaller municipalities (population 25,000 or less) and through collaboration and consultation with practitioners in the municipal sector 4

5 PRESENTATION PURPOSE Review the background and objectives of asset management in smaller municipalities Discuss emerging trends and the challenges of asset management in smaller municipalities Present an asset management and financial planning framework developed for use in smaller municipalities Present a case study on the Township of Scugog s journey towards manageable and flexible asset management and financial planning activities implemented as of June, 2012 *All from a finance department perspective 5

6 IMPORTANT QUESTIONS 1. Does your municipality have a comprehensive asset inventory? 2. Does your municipality have asset condition assessments on select/all tangible capital assets? 3. Have replacement costs for the majority of assets been determined? 4. Are annual contributions made to support the capital assets? If so, are you optimizing your capital investments? 5. Has your municipality attempted to identify the infrastructure investment gap? If so, has an action plan been developed to address the gap? 6

7 THE DESIRED RESPONSE The asset management and financial planning framework presented in this case study will help your Council and staff achieve the desired yes response to each important question listed on the previous slide 7

8 WHY DEVELOP AN ASSET MANAGEMENT PLAN? 1. Critical to the health, welfare and economic vitality to not only the nation but to communities of all sizes 2. A way to identify and address municipal infrastructure needs 3. Increased economic competitiveness 4. Promotes the coordination of infrastructure upgrade and repair activities, allowing municipalities to make informed and cost effective decisions 5. Potential condition for future funding opportunities Ontario s Long Term Infrastructure Plan (LTIP) 8

9 WHO IS RESPONSIBLE? In most municipalities, responsibility lies with the engineers in the works department Financing of asset management plans is the responsibility of Council, with input from the finance department Need a concerted and coordinated effort from all departments 9

10 WHO SHOULD BE INVOLVED? CORPORATE LEADER PROJECT MANAGER ELECTED OFFICIALS PUBLIC STAFF Finance All Departments CONSULTANTS 10

11 REASONS WHY ASSET MANAGEMENT IS IMPORTANT Municipal government owns most of the assets 67% in Ontario We have been under investing in our assets Infrastructure deficit Funders care and want to see a plan Municipalities have built a reliance on their assets to provide the services ratepayers rely on everyday, therefore a manageable asset management plan is needed to maintain and fund the replacement of assets so existing services can be maintained 11

12 BACKGROUND & OBJECTIVES

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14 ASSET MANAGEMENT Asset management is a strategic, proactive, long term comprehensive plan for managing existing and new infrastructure on a life cycle basis that includes: Objectives within time lines; An inventory/registry of current assets; Asset condition data collected on a regular basis; A maintenance program (adequate treatment options; including optimization schedules); A risk management analysis; and A financial plan/investment strategy BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 14

15 ASSET MANAGEMENT OBJECTIVES To provide better long term planning of capital investment; To provide fair, open and transparent management of capital assets; To encourage fiscal responsibility which is supported by appropriate due diligence; and To ensure risks are managed effectively and economically with public interest being protected BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 15

16 BASIC VS. ADVANCED AM PLANS A basic asset management plan is undertaken to meet organizational requirements for planning and reporting. It provides basic outputs such as; forward replacement programs and associated cash flow projections *Research has proven that there is merit in quickly developing a basic asset management plan* An advanced asset management plan seeks to optimize activities and programs to meet appropriate service levels based on the collection and analysis of key information on asset condition, performance, life cycle costs and treatment options BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 16

17 WHAT IS THE RIGHT APPROACH? There is not ONE right answer Depends on many factors 1. Current Situation Most smaller municipalities are still in the development process as they take aim at consolidating and integrating asset data 2. Funding Scenario Now vs. Future Constant, decreasing, increasing 3. Political Consideration Councils = deciding factor in terms of their visions and objectives on the topics of long term asset management and financial plans BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 17

18 TRENDS & CHALLENGES

19 TRENDS IN SMALLER MUNICIPALITIES 1. *Keep It Simple (K.I.S.) 2. Hire Additional Staff and/or Consultants to work with staff 3. Working Groups 4. Create an Asset Management Coordinating Committee 5. *Create an Asset Inventory Database 6. Utilize Technology Advancements to Integrate Data 7. Product Sharing (for a nominal fee) 8. *Develop an Infrastructure Report Card *Examples presented in case study BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 19

20 CHALLENGES IN SMALLER MUNICIPALITIES 1. Non-specialized municipal staff on the topic of AM 2. Minimal resources and guidance available on the topic 3. Poor document management systems questions integrity of data 4. Inadequate financial software systems in place to support integration of asset data 5. Councils are uninformed with respect to the planning process and implementation timelines 6. A lack of political will 7. The short term political cycle 8. Managing amalgamation, revenue shortfalls, budget demands, public expectations and limited growth 9. Change management 10. Disconnects between departments 11. The need for increased capital program spending BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 20

21 ASSET MANAGEMENT & FINANCIAL PLANNING FRAMEWORK

22 WHY THE NEED? Municipal decision makers in smaller municipalities have discussed the need for information on how to plan, manage and implement asset management plans and financial plans Increasing demand for information on how smaller municipalities can identify their infrastructure investment gap and devise an action plan to manage and address their infrastructure needs Smaller municipalities want the ability to identify, communicate and manage their infrastructure needs BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 22

23 OVERVIEW OF THE FRAMEWORK - FRAMEWORK DIAGRAM LOCATED ON PAGE 87 OF REPORT - The framework has been created to help smaller municipalities implement asset management and financial planning activities with staff and elected officials It was developed through extensive research and through collaboration and consultation with practitioners in the municipal sector Much of the framework is focused on targeting smaller municipalities with a population of 25,000 or less The framework takes into consideration the unique factor Recognizes that each municipality will proceed at different speeds and with various levels of complexity and detail depending upon its population and population projections, land area, density, geographic location, service portfolio, age of infrastructure, demographics and socio-economic profile BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 23

24 IMPLEMENTING THE FRAMEWORK The Goal Work through the process ( what to do ) and process components ( how to do it ) The Implementation Schedule Depends on the size of the municipality and the resources involved and available The Timeline Will be unique for every municipality BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 24

25 TOWNSHIP OF SCUGOG CASE STUDY

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27 QUICK FACTS Lower tier municipality 65.5 FTE s Land area of 475 square km Population 21,569 (Statistics Canada, 2011) Located 65 km Northeast of Toronto Situated amongst the Greenbelt, the Oak Ridges Moraine and Lake Scugog 413 Km of Roads (221 Km paved, 192 Km unpaved) 1% Levy increase is approximately $98,000 Large Farm/Agriculture Tax Base Limited growth municipality BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 27

28 SENIOR ADMINISTRATIVE TEAM Chief Administrative Officer Assistant to the Mayor & CAO Human Resources Advisor Director of Community Services Director of Public Works & Parks Director of Finance/Treasurer Clerk Fire Chief 28

29 AREAS OF RESPONSIBILITY Road maintenance/rehabilitation Storm water management Building Planning Fire and emergency services Parks Facilities Bylaw enforcement Animal control Street lighting Recreation and culture Economic development Financial Services BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 29

30 ABSTRACT The case study was prepared in response to the Township of Scugog s Corporate Plan initiative to design, develop, implement and manage a long term asset management plan and financial planning framework for the municipality in the most cost effective way possible, by effectively utilizing in-house resources The case study includes a detailed description of the Township of Scugog s journey towards manageable asset management, a financial condition assessment of the corporation as well as financial models that capture the municipality s long term infrastructure needs A forty (40) year corporate needs model and fifty (50) year road network needs model has been selected for use in the study. Multiple spending scenarios are presented for each of the models BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 30

31 SCUGOG S JOURNEY VISION: Vision is nothing if you do not have a plan to execute it. BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 31

32 SCUGOG S JOURNEY STOP #1 STOP #2 STOP #3 STOP #4 STOP #5 Corporate Tangible Capital Asset Inventory Created AMP Integrated into Corporate Plan Financial Condition Assessment The AMP Process 1. TON Schedules 2. Estimate TC s & RC s 3. Asset Condition Assessment AMP Linked to Capital Budget (Investment Strategies) 4. Corporate Priority Optimization 5. Financial Forecasting BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 32

33 STOP #1 Corporate TCA Inventory Created (Result of PSAB) A corporate database was created using Microsoft Excel Column headings included: Asset name (roll number if land) Asset class (major/minor/sub-class) Department asset belonged to Description of asset In service year Acquisition/Historic cost Estimated useful life of asset BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 33

34 STOP #2 AMP Integrated into Corporate Plan Scugog s Corporate Plan is a set of instructions to senior decision makers describing what role each department is expected to fulfill in the enhancement of the organizations objectives Scugog s Council and staff successfully integrated asset management initiatives into the Corporate Plan early in 2010 * Should initiate at the beginning of a Council term, if possible BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 34

35 STOP #2 AMP Integrated into Corporate Plan Keys to achieving organizational commitment: Raising the awareness of elected officials and the senior management team on the benefits of asset management and the associated financial implications Imparting an ownership of the process by involving key players such as the Mayor, Members of Council, senior management and staff Clearly and consistently communicating asset management objectives to staff BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 35

36 STOP #3 Financial Condition Assessment Assesses the municipality s financial health Councils can better understand where the municipality has been and where it is going Identifies key financial challenges based on historical trends Identifies hidden or emerging problems Presents and overall picture of strengths and weaknesses of the municipality Enables staff to provide the level of analysis and discussion necessary to address issues * Municipalities should consider hiring consultants to collect, compile and present this information BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 36

37 THE TYPES OF ANALYSIS USED Horizontal/Trend Analysis The horizontal/trend analysis focuses on changes from year to year. For example, declining capital program spending for a municipality may have had an impact on the roads resurfacing program Vertical Analysis The vertical analysis focuses on various items listed up and down the page of a financial statement or a budget for a given year. This analysis helps answer the question, what portion does each item contribute to the whole. For example, what percentage of the total budget does department A comprise over a 5 year period BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 37

38 THE TYPES OF ANALYSIS USED Ratio Analysis The ratio analysis focuses on analyzing recognized benchmarks and indices in order to better assess the municipality s financial independence and financial management. For example, a municipality could choose to use a debt to reserve ratio to better illustrate a spending story Comparative Analysis The comparative analysis focuses on comparing key performance indicators in the municipality against other neighbouring or similar municipalities to gain perspective on relative financial health. For example, a municipality could choose to compare capital program spending as a percentage of overall budget spending on an annual basis BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 38

39 TOWNSHIP OF SCUGOG SELECT EXAMPLES

40 GROWTH % OF TOTAL BUILDING PERMITS ISSUED FOR NEW RESIDENTIAL UNITS THE REGION OF DURHAM - BY MUNICIPALITY AVERAGE % Town of Ajax City of Oshawa Town of Whitby Municipality of Clarington City of Pickering Uxbridge Township Scugog Township Brock Township 40

41 HORIZONTAL/TREND ANALYSIS TOWNSHIP OF SCUGOG FINANCIAL POSITION ( ) 6,000, ,000, ,000, ,000, ,000, ,000, YEAR Municipal Financial Position 41

42 HORIZONTAL/TREND ANALYSIS TOWNSHIP OF SCUGOG TAX LEVY PER CAPITA ( ) COST YEAR Tax Levy Per Capita 42

43 RATIO ANALYSIS TOWNSHIP OF SCUGOG DEBT TO RESERVE RATIO ( ) RATIO YEAR Debt to Reserve Ratio 43

44 TOWNSHIP OF SCUGOG RESERVES ( ) 9,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, YEAR Reserves 44

45 TOWNSHIP OF SCUGOG DEBT ( ) $3,500, $3,000, $2,500, $2,000, $1,500, $1,000, $500, $

46 TOWNSHIP OF SCUGOG DEBT PER CAPITA ( ) $ $ $ $ COST $80.00 $60.00 $40.00 $20.00 $ YEAR Per Capita 46

47 VERTICAL ANALYSIS ILLUSTRATION Capital Program Spending by Department Difference Fire & Emergency Services 15.7% 8.6% 9.7% 4.7% 1% -14.7% Public Works & Parks 65.2% 54.5% 77.2% 81% 77% 11.8% Community Services 12.6% 32.2% 12.1% 4.3% 10% -2.6% Corporate Services 6.5% 4.7% 1% 10% 12% 5.5% Total 100% 100% 100% 100% 100% 47

48 TOWNSHIP OF SCUGOG BUDGET OPERATING VS. CAPITAL 2012 YEAR ,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 ($) Operating Capital 48

49 COMPARATIVE ANALYSIS CAPITAL PROGRAM SPENDING LEVEL COMPARISON YEAR: 2012 (Capital program spending as a % of total budget) SCUGOG UXBRIDGE STOUFFVILLE 10% 20% 23% YEAR: 2011 SCUGOG STOUFFVILLE UXBRIDGE THOROLD KING 11% 20% 22% 23% 48% YEAR: 2010 SCUGOG UXBRIDGE STOUFFVILLE KING THOROLD 23.5% 28% 41.5% 50% 64% BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 49

50 FINANCIAL CONDITION ASSESSMENT RECAP Scugog is facing a need for: Increased capital program spending Increased revenue sources User fees Industrial tax base A reduction in operating expenditures Performance budgeting BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 50

51 STOP #4 The Asset Management Planning Process 1. Estimate Time of Need (TON) Schedules 2. Estimate Treatment Costs (TC s) and Replacement Costs (RC s) of assets in today s dollars This can be completed using the Non-residential Building Construction Price Index (NRBCPI) to obtain an approximated today's cost 3. Implement Corporate Asset Condition Assessment Plans to index/rate all assets This can be completed using a combination of consultants and staff to produce adequate assessments 4. Establish Corporate Priority Optimization for TCA s Including priority optimization schedules 5. Prepare long term financial forecasts (40-50 year planning horizon) Long term financial forecast prepared using Microsoft Excel BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 51

52 THE ASSET MANAGEMENT PLANNING PROCESS

53 1.Time of Need Schedules (TON) 2.Estimated Replacement Costs in 2012 Dollars (NRBCPI & SOFTWARE) Departments Total Capital Program Requests for Expenditures have been ranked based on priority optimization 3.Assets have undergone condition assessments and have been rated accordingly using the asset assessment bar 53

54 A SAMPLE ASSET ASSESSMENT BAR 54

55 THE FINANCIAL NEEDS DATABASE The database template design was created with input from the MFOA/OMAA Long Term Financial Planning pilot case study participants

56 OVERVIEW OF THE DATABASE Database drivers are: Non-residential Building Construction Price Index (NRBCPI) In Service Year Life Expectancy Historic Cost If the 1 st replacement year is less than the present year (2012), the database will project the replacement cost in the present year. For example, if the asset was due to be replaced in 2008 and wasn t its replacement cost will appear in the present year (2012) Replacement costs are in 2012 dollars. The calculation is done by (2011 NRBCIP/Assets In Service Year NRBCPI * Assets Historical Cost) The costs are totaled yearly in the database for capital expenditure planning purposes BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 56

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60 THE FINANCIAL NEEDS MODELS The figures presented are strictly estimations based on the information available at the time of this case study Equation: estimated long term infrastructure needs estimated capital spending = infrastructure gap

61 ESTIMATED FUTURE REVENUE FORECAST *BASED ON HISTORIC DATA CAPITAL 2008 CAPITAL 2009 CAPITAL 2010 CAPITAL 2011 CAPTAL YEAR AVERAGE LEVERAGED for Federal & Provincial ($) $7,234,383 $4,969,597 $4,089,970 $1,659,000 $1,568,500 $3,904,290 NOT LEVERAGED $3,372,733 $2,253,465 $1,416,500 $1,461,000 $1,568,500 $2,014,439 61

62 40 YEAR NEEDS MODEL ( ) AMP THE CORPORATE LENS This 40 year financial needs model assumes replacement of all TCA s when the estimated useful life is complete (As per Scugog s TCA Policy) and are in 2012 dollars This model includes 89% of Scugog s TCA s (Excludes land) Replacement costs for Roads (Gravel, HMA, LCB), Bridges and Culverts are based on WorkTech Asset Management Software projections All other replacement costs have been calculated using the Non-residential Building Construction Price Index (NRBCPI) Two (2) scenarios are presented in this model Scenario 1 assumes no capital program spending ($0) Scenario 2 assumes existing capital program spending ($2,014,439 annually) BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 62

63 NEEDS TOWNSHIP OF SCUGOG Corpoate Needs Scenarios 1 & 2 Comparison 1,000,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, SCENARIO 1 SCENARIO 2 63

64 THE ESTIMATED INFRASTRUCTURE INVESTMENT GAP YEAR INVESTMENT NEED PROJECTED CAPITAL INVESTMENT YEAR INVESTMENT NEED PROJECTED CAPITAL INVESTMENT ,205, ,014, ,003, ,014, ,844, ,014, ,882, ,014, ,247, ,014, ,062, ,014, ,448, ,014, ,999, ,014, ,550, ,014, ,868, ,014, ,812, ,014, ,415, ,014, ,835, ,014, ,548, ,014, ,775, ,014, ,905, ,014, ,324, ,014, ,384, ,014, ,470, ,014, ,048, ,014, ,851, ,014, ,795, ,014, ,899, ,014, ,441, ,014, ,847, ,014, ,360, ,014, ,639, ,014, ,248, ,014, ,718, ,014, ,219, ,014, ,903, ,014, ,991, ,014, ,141, ,014, ,159, ,014, ,237, ,014, ,921, ,014, ,772, ,014, ,225, ,014, , ,014, ,616, ,014, ,709, ,014, TOTAL 778,854, ,591, GAP 696,262,

65 TOWNSHIP OF SCUGOG Corporate Infrastructure Investment Gap ,000, ,000, ,000, ,000, NEEDS $696,262, ,000, ,000, ,000, ,000, ,000, Estimated Infrastructure Needs Estimated Capital Investment 65

66 ROAD NETWORK 54% BREAKDOWN OF SCUGOG ASSETS BY REPLACEMENT VAULE 2010 Council Priority FURNITURE, FIXTURES & EQUIPMENT 1% VEHICLES & ROLLING EQUIPMENT 4% STORM WATER NETWORK 10% BUILDINGS 15% LAND IMPROVEMENTS 5% LAND 11% 66

67 ASSET CATEGORY (%) OF TOTAL TANGIBLE ASSETS (based on replacement value $) SPENDING PRIORITY 2012 RATING COMMENTS (major factors impacting scores) COMPARATIVE PREVIOUS 2011 RATING LAND 11% 8 B B LAND IMPROVEMENTS 5% 4 B B BUILDINGS 15% 2 C+ Select buildings are in need of repairs VEHICLES & ROLLING EQUIPMENT FURNITURE, FIXTURES & EQUIPMENT COMPUTER HARDWARE & SOFTWARE 4% 5 B B <1% 7 B B <1% 6 C Finance dept is in need of new financial software to manage operations ROAD NETWORK 54% 1 D Roads require crack sealing, gravel resurfacing, hot mix resurfacing and reconstruction STORM WATER NETWORK 10% 3 B B C+ C D SAMPLE SCUGOG INFRASTRUCTURE REPORT CARD 67

68 TOWNSHIP OF SCUGOG ROAD NETWORK = PRIORITY SELECT ROAD CONDITIONS 68

69 50 YEAR NEEDS MODEL ( ) AMP THE ROAD NETWORK This fifty (50) year financial needs model assumes adequate treatment to maintain the roads infrastructure The model (road network) represents 54% of Scugog s TCA s Road needs have been calculated using WorkTech asset management software which uses priority optimization Four (4) scenarios are presented in this model Scenario 1 assumes no capital program spending ($0) Scenario 2 assumes existing capital program spending ($1,000,000 annually) Scenario 3 assumes preservation capital program spending ($3,266,000 annually) Scenario 4 assumes optimal capital program spending ($5,020,000 annually) BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 69

70 TOWNSHIP OF SCUGOG Road Infrastructure Needs Scenario 1: No Capital Program Spending 350,000, ,000, ROAD INFRASTRUCTURE NEEDS 250,000, ,000, ,000, ,000, ,000, YEAR 70

71 TOWNSHIP OF SCUGOG Road Infrastructure Needs Scenario 2: $1,000,000 Annual Capital Program 350,000, ,000, ROAD INFRASTRUCTURE NEEDS 250,000, ,000, ,000, ,000, ,000, YEAR 71

72 TOWNSHIP OF SCUGOG Road Infrastructure Needs Scenario 3: $3,266,000 Annual Capital Program 350,000, ,000, ROAD INFRASTRUCTURE NEEDS 250,000, ,000, ,000, ,000, ,000, YEAR 72

73 TOWNSHIP OF SCUGOG Road Infrastructure Needs Scenario 4: $5,020,000 Annual Capital Program 350,000, ,000, ROAD INFRASTRUCTURE NEEDS 250,000, ,000, ,000, ,000, ,000, YEAR 73

74 ROAD INFRASTRUCTURE NEEDS TOWNSHIP OF SCUGOG Road Infrastructure Needs Scenarios 1-4 Comparison 350,000, ,000, ,000, ,000, ,000, ,000, ,000, YEAR SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 74

75 THE RED FLAG Can the Township of Scugog maintain their existing roads infrastructure (54% of TCA s) in a condition, which will provide appropriate levels of service at present levels of taxation and user fees? Analysis of Scenarios 2 & 3 Scenario 2 Annual Capital Program = $1,000, Need = $204,184,072 Scenario 3 Annual Capital Program = $3,266, Need = $84,497,439 Money needed for Scugog to fund scenario 3 = $2,266,000 $ 2,266,000/$ 98,000 (1% levy increase) = 23% annual levy increase to fund scenario 3 roads capital program Limited growth municipality BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 75

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77 PRIORITIZATION VS. OPTIMIZATION Prioritization places TCA s on a priority list indicating which TCA s are to be replaced/treated first Optimization focuses on the efficient allocation of limited budgets to achieve some objective Municipalities with access to asset management software are able to produce priority optimization project schedules to maximize capital dollars The following slides will show the difference between two proposed capital spending scenarios BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 77

78 SAMPLE PRIORITY OPTIMIZATION PROJECT SCHEDULES Examples: Scenario 2: $1,000,000 Annual Capital Program Spending Scenario 3: $3,266,000 Annual Capital Program Spending

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81 STOP #5 AMP Linked to Capital Budget (Investment Strategies) Debenture Rollover Strategy Independent Capital Reserve Account Strategy Bucket Allocation Strategy Capital Reserves or Cash to Capital Strategy Cash in Lieu of Future Road Needs Strategy Capital-Debt Strategy Debt Strategy Sale of Underutilized Assets Public-Private Partnerships (P3) Model Refer to pages in the report BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 81

82 SCUGOG S JOURNEY RECAP STOP #5 Investment Strategies STOP #1 Tangible Capital Asset Inventory Financial Needs Models Priority Optimization Schedules STOP #4 Asset Management Planning Process Scugog s Asset Management Planning Journey STOP #3 Financial Condition Assessment STOP #2 AMP Integrated into Corporate Plan 82

83 IMPORTANT QUESTIONS RECAP 1. Does your municipality have a comprehensive asset inventory? 2. Does your municipality have asset condition assessments on select/all tangible capital assets? 3. Have replacement costs for the majority of assets been determined? 4. Are annual contributions made to support the capital assets? If so, are you optimizing your capital investments? 5. Has your municipality attempted to identify the infrastructure investment gap? If so, has an action plan been developed to address the gap? BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 83

84 CASE STUDY KEY FINDINGS Scugog s journey revealed that municipal asset management plans and financial plans must be built on principles that include: Respect for the taxpayers money Clear and well defined objectives Ability and willingness to take on intellectual challenges Evidence based decisions Relentless reviews and conformity Mechanisms to measure productivity BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 84

85 CASE STUDY KEY MESSAGES I.M.A. = Identify Manage Address Identify Manage Address Financial Condition Assessment Estimated Infrastructure Needs Estimated Capital Investment = Infrastructure Gap (Over a Period of Time > 20 Years) Implement an appropriate asset management planning software system Optimize Investment ; Utilize Priority Optimization Schedules Long Term Financial Plan BACKGROUND & OBJECTIVES TRENDS & CHALLENGES AM & FP FRAMEWORK SCUGOG CASE STUDY 85