ASSET MANAGEMENT PLAN Town of Newmarket

Transcription

1 Town of Newmarket December 23, 2014

2 1 Acknowledgements The development of the Town of Newmarket s first Asset Management Plan was based on the contributions of many Town staff. This acknowledgement is to thank all who contributed to the Plan and to recognize the various municipal departments for their assistance and collaboration along the way. Strategic Leadership Team Bob Shelton, Chief Administrative Officer Anita Moore, Commissioner, Corporate Services Peter Noehammer Commissioner, Development and Infrastructure Services Ian McDougall, Commissioner, Community Services Steering Group Membership Peter Noehammer (Strategic Leadership Team Sponsor), Commissioner, Development and Infrastructure Services Chris Kalimootoo, Director, Public Works Services Mike Mayes, Director, Financial Services Rachel Prudhomme, Director, Engineering Services Working Group Membership Mike Mayes (Project Lead-Operational Leadership Team), Director, Financial Services Cindy Wackett, Corporate Project Consultant, Strategic Initiatives Lisa Ellis, Business Performance Coordinator, Development and Infrastructure Services Key Stakeholder Interviews Steve Hill, Database Administrator, Engineering Services Gord MacMillan, Manager, Capital Projects, Engineering Services Meredith Goodwin, Manager, Special Projects, Engineering Services Rod Smith, Manager, Operations, Public Works Services Bill Wilson, Manager, Water/Wastewater, Public Works Services Rick Bingham, Manager, Engineering Services Staff Resources Kevin Yaraskavitch, MFOA Intern Ted Horton, AMTCO Intern Nancy Herckimer, Administrative Assistant, Financial Services Support Departments Corporate Communications Information Technology - GIS

3 2 Contents EXECUTIVE SUMMARY What we provide What we will do What It Will Cost? Plan Life Next Steps... 8 INTRODUCTION Importance of Infrastructure Recent Regulatory Changes General Municipal Asset Replacement Practices Public Expectations for Municipal Services Asset Management Plan Relationship to Strategic Plan Asset Management Plan Relationship to other Plans & Programs Purpose of the Asset Management Plan Infrastructure Assets Timeframe Review Timeframe and Updates Development of the Plan Limitations in Plan Development Methodology Timelines Infrastructure Replacement Triggers Desired Service Levels Continuing Evaluation and Improvement Software Considerations...19 STATE OF LOCAL INFRASTRUCTURE Background Historic Costs Replacement Cost Overall Evaluation Roads Roads Needs Study (RNS) Funding Requirements Bridges and Culverts...27

4 Funding Requirements Water System Database Funding Requirements Wastewater System Database Funding Requirements Updates of Values and Condition of Assets Data Verification Policy Condition Assessment Policy Conclusion...35 DESIRED LEVELS OF SERVICE Strategic and Corporate Goals Legislative Requirements Best Practices and Standards Key Performance Indicators Road and Bridge Services Water Services Wastewater Timeframes to Achieve Targets External Trends and Issues Affecting Service Levels Performance...41 ASSET MANAGEMENT STRATEGY Objective Existing Asset Management Activities Current Asset Management Practices for Roads, Bridges and Culverts Current Asset Management Practices for Water Current Asset Management Practices for Wastewater System Current Decision Making Process Current Asset Management Practices for Roads, Bridges and Culverts Current Asset Management Practices for Water Current Asset Management Practices for Wastewater Future Asset Management Activities Procurement Methodologies Evaluation of Risks Associated with the Plan and Strategy...55

5 4 Financing Strategy Context Operating and Capital Budgeting Policy Guidelines for the Use of Reserves and Reserve Funds Asset Replacement Fund Capital Financing Sustainability Strategy (CFSS) Roads Needs Study (RNS) General Position Funding Objective Expenditures Non-infrastructure Solutions Maintenance Activities Disposal Activities Expansion Activities Funding Grants Development Charges (DC s) Dedicated Revenues Internal Cost Savings Reserves and Reserve Funds Property Taxes and Utility Rates Debt Financing Funding Gap and Alternative Scenarios Tax-Supported Rate-Supported...71 LIST OF APPENDICES Appendix A - Road Surfaces Appendix B - Road Bases Appendix C - Bridges Appendix D - Culverts Appendix E - Watermains Appendix F - Wastewater Sewers

6 5 LIST OF FIGURES Figure 1: Structure and Reporting Relationships Figure 2: Value of Assets by Remaining Useful Life Figure 3: Internal Information Flow of Newmarket s Capital Assets Figure 4: Newmarket s Target Capital Asset Information Flow Structure Figure 5: Interactions for Road and Bridge Assets Figure 6: Interactions for Water and Wastewater System Assets Figure 7: Call Volume Pertaining to Assets Compared to Population, Figure 8: Percent of Paved Lane Kilometres Exhibiting a Good to Very Good Rating Figure 9: Number of wastewater sewer backups per 100 kilometres of wastewater main in a year Figure 10: Number of water main breaks per 100 kilometers of water main in a year Figure 11: Contingency Analysis Figure 12: Contingency Analysis Cont'd Figure 13: Newmarket s Average Capital Expenditure Breakdown

7 6 LIST OF TABLES Table 1: Infrastructure Assets Table 2: Infrastructure Replacement Triggers Table 3: Tangible Capital Assets, December 31, Table 4: Historic vs. Replacement Cost Table 5: Estimated Current Replacement Costs Table 6: Actual Average Unit Replacement Costs incurred by the Town Table 7: Consumption Ratios Table 8: Length of Linear Assets Reported in MPMP Table 9: Roads Risk Assessment (km. of road by condition and use) Table 10: Projected Annual Funding up to Table 11: Area of Linear Assets Reported in MPMP Table 12: Bridges and Culverts - Annual Funding Requirements Table 13: Length of Linear Water Assets Reported in MPMP Table 14: Risk Assessment of Newmarket s Water System Table 15: Length of Linear Assets Reported in MPMP Table 16: Risk Assessment of Newmarket s Wastewater System Table 17: Priority of Funding Sources Table 18: Major Expenditures 2011 to Table 19: Annual and Project Roads Maintenance Costs 2011 to Table 20: Asset Replacement Activities 2011 to Table 21: Average Annual Asset Replacement Requirements Table 22: Summary of Historic and Projected Funding Table 23: Projected ARF requirements for Roads (including bridges and culverts) Table 24: Projected ARF requirements for Road-related infrastructure funded from the Roads ARF Table 25: Adjusted Projected ARF balance for Roads Table 26: Projected ARF requirements for the Water System Table 27: Projected ARF balance for the Water System Table 28: Projected ARF requirements for the Wastewater System Table 29: Projected ARF balance for the Wastewater System... 74

8 7 EXECUTIVE SUMMARY 1.1 What we provide The initial emplacement, maintenance and eventual replacement of infrastructure has always been one of the most important responsibilities of a municipality. The asset pool of local governments is quite different to that of most large businesses. It comprises of a diverse array of asset types, which perform a critical function for thousands of residents and workers. The total value of the assets is immense. In recent years, asset management has been linked to fiscal sustainability The Town of Newmarket is responsible for a variety of capital assets. These include: Linear infrastructure such as roads, bridges, sidewalks, trails, water and wastewater and storm sewers. Buildings including recreation centres, fire halls, pumping stations, library, operations centre and Town hall. Land improvements such as sports fields, parking lots and stormwater management (SWM) ponds. Vehicles and equipment including fire trucks, ploughs, ice resurfacers and mowers. The asset classes addressed in this Plan include: 1. Roads. 2. Bridges and Culverts. 3. Water System: watermains and valves. 4. Wastewater System: wastewater sewers, manhole covers and pumping stations. 1.2 What we will do The Town of Newmarket will use this Asset Management Plan (AMP) to help maintain its infrastructure and provide services to the community. This Asset Management Plan: Facilitates efficiency and effectiveness for the capital program and related operating costs. Includes consideration of risk management, service levels, and condition assessments to inform capital investments. And has a financing strategy to make it all happen.

9 8 Newmarket s Asset Management Plan (AMP) fulfills the provincial requirements outlined in the Building Together Guide for Municipal Asset Management Plans published by the Ontario Ministry of Infrastructure. 1.3 What It Will Cost? Over the next 10 years, Newmarket will require $64.7 million in funding to replace the existing assets included in this Pan. The breakdown of which is as follows: $33.0 million in funding for the road system. $6.0 million in funding for bridges and culverts. $6.7 million to fund the water system. $19.0 million to fund the wastewater system. Please note that these values are in current dollars and do not reflect construction price increases over the next 10 years. Over that time period, the total cost could escalate by about 50%. 1.4 Plan Life This plan covers 10 years of asset maintenance. However, the plan is only as useful if the information contained in it is current. Therefore, the Plan will be updated on an annual basis to include revisions of the asset inventory, replacement costs, expected revenues, and procedural and policy changes. Finally, the updates should reflect other changes to the supporting data and assumptions that form the basis to the plan. Considering the timing of the annual audit, budget and Roads Need Study, an annual update could be provided to Council along with the preliminary draft budget. A more thorough re-examination of the plan could be undertaken with each new term of Council, perhaps in their second year. 1.5 Next Steps Recommendations: 1. Address the recommendations from Hemson s Capital Financing Sustainability Strategy that have not been separately identified, such as: a. Move to condition-based asset management (see Section 2: Introduction). b. Create asset management report cards (see Section 4: Desired Levels of Service). c. Review and update the Town s Corproate Debt Policy (see Section 6: Financing Strategy). 2. Communicate the Asset Management Plan to the community (see Section 4: Desired Levels of Service).

10 9 3. Consolidate infrastructure inventory databases (see Section 3: State of Local Infrastructure). 4. Update the accounting for Tangible Capital Assets on the Financial Statements. 5. Schedule annual updates of the plan (see Section 2: Introduction). 6. Schedule a re-examination of the plan with each term of Council (see Section 2: Introduction). 7. Consult with Council and the Community to further develop Desired Levels of Service (see Section 4: Desired Levels of Service). 8. Expand the Asset Management Plan to other asset classes, beyond 10 years, and align more with operational and maintenance data (see Section 6: Financing Strategy). 9. Create an Asset Management function and determine where it fits in the organizational structure. 10. Investigate, purchase and implement Asset Management software (see Section 2: Introduction).

11 10 INTRODUCTION Newmarket s Asset Management Plan (AMP) fulfills the provincial requirements outlined in the Building Together Guide for Municipal Asset Management Plans published by the Ontario Ministry of Infrastructure. The Plan contains the following six key sections: 1. Executive Summary. 2. Introduction. 3. State of the Local Infrastructure. 4. Desired Levels of Service. 5. Asset Management Strategy. 6. Financing Strategy. The four asset classes addressed in this Plan include: 1. Roads. 2. Bridges & Culverts. 3. Water System. 4. Wastewater System. Additional asset classes will be included in future iterations of the AMP. This Asset Management Plan will serve Newmarket as a strategic, planning, and financial management document to ensure that Newmarket is well-equipped and managed in meeting existing and future operational demands and desired levels of service. It will guide Newmarket s processes to reflect sound and accountable governance of its municipal infrastructure. At the strategic level, Section 3: State of the Local Infrastructure of this document outlines current and future challenges to be addressed to sustainably maintain municipal infrastructure services for the long-term using a lifecycle approach. The Plan also identifies desired levels of service in Section 4 for each asset class through the use of key performance indicators. At the practical level, Section 5: Asset Management Strategy identifies current and future strategies to manage the Town s asset base with the goal of maintaining the assets in an acceptable condition. Recognizing that asset management is evolving to a service based focus that optimizes asset lifecycle costs considering quantifiable risk and level of service, the Town will develop a more fulsome corporate asset management program and strategy in At the financial level, Section 6: Financing Strategy depicts how the Town intends to implement a financial strategy which indicates how the Town will pay for the Plan and include details on expenditures, revenue sources and projections, and possible solutions for any funding gaps. 2.1 Importance of Infrastructure The Town is responsible for a diverse array of capital assets. The initial construction and/or commissioning of infrastructure, its maintenance, and eventual replacement, has

12 11 always been among the most important responsibilities of a municipality. The asset pool of local governments is quite different to that of most large, private sector businesses. It is comprised of asset types which perform critical functions for thousands of residents, workers and visitors, and forms part of a higher order of systems, such as the transportation, water, wastewater and storm water networks. The total value of these assets is significant. Since governments have long held a role of administering assets, the formal concept of asset management is not new; however, the linking of asset management to fiscal sustainability principles has become more prevalent in recent years. The capital assets Town of Newmarket is responsible for include, but are not limited to the following: Linear infrastructure: o Roads. o Bridges. o Sidewalks. o Trails. o Watermains. o Wastewater sewers. o Storm water sewers. Buildings: o Recreation centres. o Fire halls. o Library. o Operations centre. o Museum. o Arts and culture centre. o Administrative offices. Fields and Parks: o Sports fields. o Parks and playgrounds. o Equipment and furniture. o Outdoor ice rinks and pools. o Parking lots. o Stormwater management ponds. Fleet Vehicles and Equipment: o Automobiles, such as by-law enforcement vehicles. o Trucks, such as fire trucks and dump trucks. o Operational trucks and specialized equipment. o Ice re-surfacers. o Mowers. Although the long-range planning of replacement and growth related capital is not new, there are three important factors that have arisen recently which contribute to the heightened need for a comprehensive, capital financing strategy as noted in the following three sub-sections:

13 Recent Regulatory Changes Over the last decade, important regulatory changes have occurred in Ontario that have increased the need for a municipality s emphasis on capital planning. Firstly, starting in 2007, the Public Sector Accounting Board (PSAB 3150) introduced new accounting standards for tangible capital assets owned by governments in Canada. Accrual accounting was required for government services and many capital assets needed to be depreciated for the purposes of financial reporting. Although acquisition and depreciation costs are not ideal for financial planning, PSAB 3150 helped municipalities to better understand the magnitude of asset funding gaps. Secondly, municipalities need to prepare asset management plans (AMPs) as a requirement for certain grant applications, such as the Ontario Community Infrastructure Fund. In 2012, the Ontario Ministry of Infrastructure released the Building Together: Guide for Municipal Asset Management Plans, a how-to guide to assist municipalities in preparing an AMP. Municipalities have been given discretion by the Ministry in terms of the precise form of their asset management plan. However, four key components must be included: an analysis of existing infrastructure, a description of the desired level of service, an asset management strategy, and a financing strategy. This Plan has all four components General Municipal Asset Replacement Practices The Town of Newmarket, like many other Greater Toronto Area (GTA) municipalities, experienced its largest growth during the 1980 s and 1990 s. During this period, a large percentage of the capital investment made by GTA municipalities went into development-related assets since the bulk of the existing asset base was relatively new and in good condition and therefore did not need replacing. More recently however, municipalities like Newmarket have started to see the need for more infrastructure replacements for water, wastewater and buildings in the older village areas of their communities. Additionally, many of the roads that were built during the peak growth period are now over 30 years old and are getting closer to the end of their calculated useful lives. Older municipalities such as Toronto, Ottawa and Hamilton are further along the asset age curve and are experiencing cases where several important assets need to be replaced concurrently. For example, the Toronto Subway signalization and track beds require concurrent replacement, causing many lost hours of transit service and delays for residents. This experience in older cities has drawn attention to the situation that will eventually arise in many York, Peel, and Halton Region municipalities unless measures are taken to proactively address the situation. It is for this reason that the Town has begun to address the issue through the establishment of the Asset Replacement Fund (ARF) and other policies Public Expectations for Municipal Services Newmarket, like many municipalities in the GTA, delivers a consistently high level of service to its residents and businesses. These services depend to a large degree on the Town s complex range of assets, which for many years it has managed without major failures, during a period when technology was less advanced and capital reserve funding activities were minimal. The challenge facing municipalities today is to convince

14 13 taxpayers that despite the fact that services are still running well, more funding may be required than in the past. Due to the expectation of high performance levels and the greater awareness of health, safety and environmental issues, the public generally has a low tolerance for service disruptions. This expectation makes proactively addressing capital deficiencies essential on both technical and political grounds to avoid major service failures. Newmarket s prosperity, economic development, competitiveness, image, and overall quality of life are inherently and explicitly tied to the performance of its infrastructure. 2.2 Asset Management Plan Relationship to Strategic Plan Newmarket s Strategic Plan includes vision and mission statements, as well as key organizational areas of focus. Newmarket has a vision to be a community Well beyond the ordinary. This vision is complemented by the employee mission of making Newmarket even better. Together these elements provide the visionary framework for an AMP through Town Council`s focus on making Newmarket a well-equipped and managed corporation. Newmarket s AMP aligns with the Town s Strategic Plan, providing direction for the management of its assets. The Strategic Plan also provides direction on how municipal tax dollars and revenues are invested into the future through the Asset Replacement Fund. 2.3 Asset Management Plan Relationship to other Plans & Programs Newmarket s AMP will be a key component of the municipality s strategic planning process, linking with multiple other corporate plans and documents. Six examples are listed below: 1. Official Plan the AMP will influence land use policy directions in the Town s Official Plan and Secondary Plan for long-term growth and development as provided through coordination with the budget process. 2. Long Term Financial Plan the Town retained the services of Hemson Consulting to prepare a Capital Financing Sustainability Strategy (CFSS). The CFSS forms the basis for the AMP, which will in turn, influence the further development of a long-term financial plan, financial forecasts, and multi-year budgeting for the Town. 3. Roads Needs Study the inventory and condition appraisal of the Town s road network, bridges, major culverts, guide rail installations, trails, and paths over the next 10 years. The current year s appraisals consist of 25% of the Town s road and 100% of the Town s bridges, culverts, guiderail, paths, and trails. The Town retained the services of the MMM Group Limited (MMM) in 2013 to carry out the study. 4. By-laws, Standards, and Policies the AMP will influence policies and by-laws related to infrastructure management practices and standards. 5. Regulations the AMP must recognize and abide by industry and senior government regulations.

15 14 6. Business Plans the service levels, policies, processes, and budgets defined in the AMP will be incorporated into business plans as budgets, management strategies, and performance measures. Updates to existing and future municipal plans and programs having a direct or indirect impact on municipal assets, including municipal properties and facilities should reference the Town s AMP and consider the impact on capital planning and future projections. 2.4 Purpose of the Asset Management Plan The purpose of the Town s Asset Management Plan is threefold: 1. To be a strategic work plan for corporate capital assets which reflects the municipality s need for planning, building, operating, maintaining and financing its infrastructure in a sustainable way. 2. To fulfill provincial requirements, enabling the Town to apply for capital funding grants such as the provincial Gas Tax allocation and Ontario Community Infrastructure Fund (OCIF). 3. To make recommendations for further work towards a more robust corporate asset management system. 2.5 Infrastructure Assets The following chart lists the infrastructure assets included in this Asset Management Plan. Table 1: Infrastructure Assets Historic Cost Accumulated Net Book Amortization Value Roads $133,847,794 $61,888,646 $71,959,148 Bridges and Culverts 5,835,380 2,070,523 3,764,857 Water System 67,592,078 26,374,212 41,217,866 Wastewater System 87,370,269 34,469,318 52,900,951 SUBTOTAL $294,645,521 $124,802,699 $169,842,822 Other Assets 371,103, ,787, ,316,618 TOTAL $665,749,356 $237,589,916 $428,159,440

16 Timeframe The Plan is based on data as of December 31, 2013 and covers the 10 year period from 2014 to Review Timeframe and Updates In subsequent updates to this AMP, the actual project implementation method will be reviewed and measured through established performance metrics to quantify whether the desired level of service is achieved or achievable for each infrastructure class. If shortfalls in performance are observed, these will be discussed and alternate financial models or service level target adjustments will be presented. The Plan should be updated on an annual basis to include additions to the asset inventory, to update projected replacement costs and expected revenues, procedural and policy changes, and to reflect other changes to the supporting data and assumptions that form the basis of this Plan. Considering the timing of the annual audit, budget and Roads Need Study, an annual update is recommended to be provided to Council, along with the preliminary draft budget. A more thorough re-examination of the plan is recommended to be undertaken with each new term of Council, perhaps in their second year. RECOMMENDATIONS: Schedule annual updates of the plan. (5) Schedule a re-examination of the plan with each term of Council. (6) 2.8 Development of the Plan This Asset Management Plan has been developed with the contributions from key staff and reference documents. Under the direction of the Chief Administrative Officer, the Town s first AMP has been implemented through an AMP Task Force comprised of a senior level staff Steering Group and Working Group. The Steering Group and Working Group were represented by the Development & Infrastructure Services and Corporate Services Commissions, and the Office of the CAO. The Task Force was comprised of management and non-management staff under the following structure and reporting relationships.

17 16 Figure 1: Structure and Reporting Relationships Limitations in Plan Development The Town s desire for having an Asset Management Plan in place by the end of 2014 which satisfied the provincial guidelines in Building Together: Guide for Municipal Asset Management Plans proposed challenges for staff and staffing resources amongst the Town s current priorities. Consequently, a decision was made to prepare a Plan containing the essential components over the short term. In the development of the Plan, staff determined all key stakeholders of information and assessed current available data versus the extended time and effort required to collect data. Upon establishing these basics (time limitations and data availability), the Task Force proceeded to develop the Plan, deferring additional asset classes to future AMP updates.

18 Methodology The general approach to the development of an Asset Management Plan for the Town was to employ minimal resources and capitalize on the existing work being done in order to prioritize infrastructure investment in the areas of roads, bridges and culverts, water, and wastewater for a 10 year period. Understanding that there may be some opportunities for further work, the Working Group set forth to develop terms of reference for the Asset Management Plan Task Force. These terms defined the mandate, scope of work, governance structure, and staff, as well as other resources available in order to build an initial Asset Management Plan Timelines Development of a comprehensive AMP commenced in the fall of The initial AMP Task Force meeting was held on October 6, Working Group meetings were held on a weekly basis, reported back to the Steering Group biweekly, and worked toward having a draft Asset Management Plan to present to the Strategic Leadership and Operational Leadership Teams by December During the data collection stage, key staff were interviewed to determine information availability on asset classes, data type, ownership of data, etc. The framework for the plan was based on the Ministry of Infrastructure`s Building Together: Guide for Municipal Asset Management Plans, as well as a review of published municipal asset management plans Infrastructure Replacement Triggers There are indicators and metrics for the replacement of infrastructure assets. They may predict immanent failure or some other trigger. This AMP was developed with strong reliance on the Town s Roads Needs Study (RNS) for data on roads, bridges and culverts. The RNS uses a condition-based assessment, which is the preferred methodology; unfortunately, it does not extend to For that year, and for the water and wastewater systems, the Capital Financing Sustainability Strategy was used. It s methodology was age-based, which is generally considered to be not as reliable. The need to employ and consolidate both of these methodologies has resulted in some minor anomalies in the forecasts, but do to materially affect the results. Recommendation: Move to condition-based asset management The following chart identifies a theoretical basis for developing criteria to assess the need for asset replacement.

19 18 Table 2: Infrastructure Replacement Triggers State of Good Repair Health and Safety Capacity and Efficiency Intergration and Impact Professional Judgement Roads Roads Needs Study Roads Needs Study Bridges and Structures Ontario Structure Inspection Manual Ontario Structure Inspection Manual Water Breaks, Core Samples Adverse Water Quality Incidents Engineering Standards and Financial Analysis Community Effect Case by Case Wastewater Backups Sink Holes State of Good Repair (SoGR) and Health & Safety are general indicators or predictors of a system s condition, or its signs of failure, and are used for the Municipal Performance Measurement Program (MPMP). Health & Safety indicators tend to be very low frequency (e.g. boil water advisory) to be useful. Failure in one of these factors indicates that the infrastructure can no longer do the job it was designed for. The SoGR/MPMP will be used as the main initial AMP metrics, or key performance indicators. Assets can also be replaced for capacity or efficiency reasons, or reducing risk. Although an asset may still be performing its intended function, there are other drivers that would suggest maintenance or replacement of the asset. For example, new development may require additional capacity in watermains and wastewater sewers to accommodate a development project resulting in increased population density. On the other hand, downsizing capacity may be beneficial should there be a decline in use based on a lower density redevelopment. Infrastructure replacements may also be undertaken for efficiency reasons to reduce the risk of ongoing or higher maintenance costs. In this case, asset replacement decisions are based on fiscal responsibility and a result of financial operational necessity to efficiently manage the Town s capital assets. Although capacity and efficiency may initiate asset replacement, neither of these will be covered extensively in this Plan. The next criteria used to assist with prioritizing infrastructure investment, build upon the findings from above include: integration and impact, and professional judgement. Integration refers to the consideration that is given to adjacent assets both within and outside of the same class/system. Impact is the adjustment of priorities by staff based on the quantum of use. High usage could either increase an item`s priority or defer its maintenance or replacement. And finally, professional judgement is applied to all of the above factors, as intangibles may be determining factors as well Desired Service Levels Establishing desired levels of service cannot be fully completed within the project s timeframe and shall be deferred to a subsequent iteration of the AMP. Work has

20 19 commenced on desired service levels as identified by the Town s Capital Financing Sustainability Strategy consultant, however a thorough review is required to ensure the recommended service levels are appropriate for the community. As such, further consultation and public engagement should be undertaken upon receipt of Council direction in order to establish desired service levels. As part of the development of this Plan, consideration was given to using condition assessments as a measurement of service levels. However, staff experts consulted advised that condition assessments alone should not be relied upon to establish existing service levels or desired levels of services. Effective condition assessments can assist with improved planning, risk management and compliance yet have shortfalls where health and safety, capacity and efficiency, integration and impact, and professional judgement should be applied in addition to a condition assessment (refer to Table 2: Criteria for Prioritizing Asset Replacement) Continuing Evaluation and Improvement As a continuous improvement activity, the AMP will be evaluated and improved on a regular basis, including the review of the short-term actions and implementation timeframe. In subsequent updates to this AMP, actual project implementation will be reviewed and measured through the established performance metrics to quantify whether the desired level of service is achieved or achievable for each infrastructure asset class. If shortfalls in performance are observed, these will be discussed and alternate financial models or service level target adjustments will be presented for consideration. The Plan should be reviewed and updated on an annual basis to include additions to the asset inventory, to update projected replacement costs and expected revenues, to include procedural and policy changes, and to reflect other changes to the supporting data and assumptions that form the basis to the Plan. Considering the timing of the annual audit, budget process and Roads Need Study, an annual update could be provided to Council to coincide with the preliminary draft budget. As identified in Section 2.7 Review Timeframe and Updates, a comprehensive review of the plan should be undertaken with each new term of Council, preferably in the second year of the term Software Considerations Current software (Microsoft Excel and ArcView GIS) will continue to be used for all data collection, analysis, lifecycle projections, and budget models. It is recognized that there are software solutions that may result in further efficiency and effectiveness gains for managing the Town s capital assets. This was also identified in Hemson s Capital Financing Sustainability Strategy as some preliminary work was conducted. However, given the timeframe and the scope of this Plan, software recommendations will be deferred for future consideration and analysis.

21 20 RECOMMENDATION: Investigate, purchase and implement Asset Management. (1a)

22 21 STATE OF LOCAL INFRASTRUCTURE 3.1 Background The following seven definitions will assist in understanding the terminology used with reference to local infrastructure: Asset - anything tangible and of value owned or controlled by a corporation or individual. Capital Asset - infrastructure, land, buildings, machinery, equipment and other items that provide benefits to the community for several years. Tangible Capital Asset (TCA) capital assets as defined for financial reporting purposes. Infrastructure - capital assets that deliver essential public service to support community business, tourism and residential activities. (e.g. roads, bridges and culverts, water and wastewater systems). Local Infrastructure - infrastructure which is owned, operated and maintained by the local municipality. For the purposes of this Plan, the local municipality is the Town of Newmarket. This distinguishes local infrastructure from the upper tier levels of government infrastructure, including the Regional Municipality of York, Province of Ontario, and the Government of Canada. Public Sector Accounting Board (PSAB) - an independent body with the authority to set standards for the public sector, including all levels of government, agencies, boards and commissions. PS3150 the PSAB accounting standards that govern the reporting of Tangible Capital Assets Historic Costs In 2009, all municipalities were required to comply with PS3150 for the accounting and financial reporting of tangible capital assets. This was a huge undertaking as previously fund accounting entailed expensing these assets as they were purchased or built. Two significant challenges experienced were 1) the compilation of an asset inventory; and 2) the determination of historic costs for the tangible capital assets. At that time, it was recognized that many of these assets had lives that extended decades and that their cost records no longer existed. The starting points for the Town s infrastructure inventory and values, like most municipalities, were the TCA records. A TCA Policy was developed and approved by Council. The Policy established the methodology for costing, standard life spans, and thresholds all for accounting purposes. The thresholds established $40,000 as the minimum value for a Tangible Capital Asset 1. Consequently, anything below that value is expensed. 1 There is an exception for vehicles and equipment for which the threshold is $20,000.

23 22 The following table provides a breakdown of the Town s most current TCA information by class. PS3150 requires that Tangible Capital Assets be recorded at their historical cost the cost at which they were purchased or constructed, and not their current value or replacement cost. The column titled Accumulated Amortization refers to the total amount of the cost which has been expensed. This is an even allocation of the historic cost over the life cycle of the asset, in accordance with Town s TCA Policy. In common terms, this is often referred to as depreciation. The Net Book Value column is the data derived from the net of the two amounts the remaining amount to be amortized. Table 3: Tangible Capital Assets, December 31, 2013 Historic Cost Accumulated Amortization Net Book Value Roads $133,847,794 $61,888,646 $71,959,148 Bridges and Culverts 5,835,380 2,070,523 3,764,857 Water System 67,592,078 26,374,212 41,217,866 Wastewater System 87,370,269 34,469,318 52,900,951 SUBTOTAL $294,645,521 $124,802,699 $169,842,822 Land $ 90,730,708 - $ 90,730,708 Buildings 107,122,803 31,112,262 76,010,541 Storm Sewers 63,919,808 24,838,233 39,081,575 Land Improvements 32,894,240 17,857,493 15,036,747 Trails and Walkways 20,873,906 8,437,870 12,436,036 Sidewalks 15,783,767 10,744,449 5,039,318 Machinery and Equipment 10,793,839 6,297,771 4,496,068 Vehicles 7,299,678 3,067,375 4,232,303 Library Collections 2,569,565 1,446,868 1,122,697 Other Assets 19,115,521 8,984,896 10,130,625 Subtotal $371,103,835 $112,787,217 $258,316,618 TOTAL $665,749,356 $237,589,916 $428,159,440 Source: Town of Newmarket s 2013 financial statements and supporting analyses The asset classes covered by this Plan represent 44% of the costs and 40% of the net book value of the Town s tangible capital assets Replacement Cost While historic (TCA) costs are required for financial statement purposes, they have limited value in making infrastructure investment decisions. It is the replacement costs, the costs that will be incurred now or in the future, that are essential for decision-makers to be aware of. For example, the Old Town Hall, when it was new in 1860, cost $60,000 to construct. The current renovations, which are not even a full replacement, are estimated to cost

24 23 over $9 million. On a smaller scale, the same applies to our watermains and wastewater which have a lifespan of over 75 years. Table 4: Historic vs. Replacement Cost ASSET CLASS Historic Cost Used for PSAB Estimated Replacement Cost Replacement Cost as a % of Historic Cost Roads $133,644,634 $308,272, % Bridges and Culverts 5,835,380 14,810, % Water system 67,592, ,459, % Wastewater system 87,370, ,314, % Hemson Consulting was hired by the Town to assist in developing a Capital Financing Sustainability Strategy. The consultant reviewed the Town s infrastructure records and financing practices (which will be addressed further in Section 6 - Financing Strategy). Hemson estimated the current replacement costs of the Town s infrastructure as of December 31, These costs are much more meaningful for the purposes of this Plan than historic costs and can be used for planning purposes. The asset classes covered by this Plan represent 58% of the replacement costs for all of the Town s tangible capital assets. The share is higher than than of historic costs due to longer life spans for these assets and the exclusion of land, which does not require replacement. Table 5: Estimated Current Replacement Costs Asset class Estimated Replacement Costs Road $308,272,732 Bridges and Culverts 14,810,991 Water 131,459,439 Wastewater 183,314,604 SUBTOTAL $637,857,766 Buildings 188,054,509 Storm Sewer 113,775,534 Sidewalks 35,522,464 Street Lighting 31,737,948 Vehicles and Equipment 28,451,256 Land Improvements 27,894,795 Trails & Walkways 26,822,367 Parking Lots 7,715,789 SUBTOTAL $459,974,662 TOTAL $1,097,832,428

25 24 Table 6 below details the basis for the replacement costs. The replacement costs are based on actual costs spent by the Town for the specific types of assets, indexed by the Construction Price Index. Table 6: Actual Average Unit Replacement Costs incurred by the Town ASSET CATEGORY Unit cost ($2014) Road Base $156 per sq. m. Road Surface $17 per sq. m. Sidewalks $145 per sq. m. Water Mains $613 per m. Wastewater Mains $861 per m. Stormwater Mains $439 per m. Bridges and Culverts n/a Note: this is a representative average per asset class and includes an allowance for engineering and project management costs. 3.2 Overall Evaluation As will be explained in Section 4 - Desired Levels of Service, there is no universally agreed upon metric for determining the adequacy of infrastructure. The Asset Consumption Ratio is an indicator used by BMA Consulting, a private firm that performs an annual review of the financial measurements for municipalities in Ontario. This ratio compares the net book value of infrastructure to its historic cost. A low percentage may indicate "new" assets while a high percentage may indicate depreciated assets that may need more repair and possibly replacement. The obvious limitation of this measurement is that it deals with historic costs and does not consider the ability to provide the intended service. Despite these limitations, it is a starting point. Table 7: Consumption Ratios YEAR Asset Consumption Ratio % % % % % The 2013 BMA report indicates that Newmarket is grouped with the majority of municipalities in the 30-40% range, and better than the local municipal average of 37.6%.

26 25 The Ministry of Municipal Affairs and Housing (MMAH) applies a similar indicator on its annual report card titled Net Book Value of Capital Assets as a percentage of Cost of Capital Assets. The MMAH considers Newmarket to be at a low risk level in this area. The following chart prepared by Hemson Consulting provides an alternative way of illustrating this data. Figure 2: Value of Assets by Remaining Useful Life $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 1 to 10 Years 11 to 20 Years 21 to 30 Years 31 to 40 Years 41 to 50 Years 51 or More Years Tax Supported Rate Supported 3.3 Roads The Town has 218 centreline road kilometres within its road network. As previously noted, at the end of 2013, roads had a historic cost of $134 million and a net book value of $72 million. The estimated replacement cost is $308 million, consisting of $278 million for the base and $30 million for the surface. In addition, there are 27 kilometers of road that has yet to be assumed from developers or are owned by the Regional Municipality of York. In total, Newmarket maintains 243 kilometres of road. The majority of the Town s 243 kilometres of road has a high class bituminous (HCB) surface. The rest have low class bituminous (LCB), gravel, asphalt, concrete and other materials. The following table contains information on the growth of the road network as reported under the Municipal Performance Measurement Program (MPMP). Note that the measurement used is lane kilometres (i.e. doubled for 2-lane roads, quadrupled for 4- lane roads). As such, actual comparisons are difficult to make as the indicator data differs from the Roads Needs Study.

27 26 Table 8: Length of Linear Assets Reported in MPMP Year Roads (Lane Kilometres) Roads Needs Study (RNS) The Town contracts out the preparation of a Roads Needs Study on an annual basis. The study inventories all of the Town s roads and provides a condition assessment of the roads over a 4-year cycle. It also provides the majority of information on the Town s roads for the Asset Management Plan. Appendices A and B to this Plan include the data from the RNS segregated as Road Surfaces (Appendix A) and Road Base (Appendix B). This includes a list of the road sections, their length, year of construction and condition. Road condition is assessed using a scale of 5 ranges as follows: 1 to 7 Replacement of the road surface and base is required. 8 to 11 Resurfacing is required as a high priority. 12 to 14 Resurfacing is required as a low priority. 15 to 17 Adequate, no current needs. 18 to 20 Road is or is like new. The following table is a risk assessment of the Town s roads. The condition or risk of failure is derived from the Roads Needs Study. The impact of failure is measured by the AADT, which is the annual average daily traffic. Table 9: Roads Risk Assessment (km. of road by condition and use) Road Needs Study Values Condition Value Kilometers Total Reconstruction Rehabilitation Rehabilitation Adequate New Total Impact Annual Average Daily Traffic

28 Funding Requirements As of the end of 2013, 80% of the Town s roads were adequate. The 20% that required work were projected to require $28 million in funding, $5.3 million in the first 5 years. This is an average of $2.8 million per year. For 2024, which is beyond the scope of the RNS, the Capital Financing Sustainability Strategy projected $6.0 million would be required for the year Table 10: Projected Annual Funding up to 2024 Annual Year Funding Requirement 2015 $1.0 million 2016 $1.0 million 2017 $1.0 million 2018 $1.0 million 2019 $4.6 million 2020 $4.6 million 2021 $4.6 million 2022 $4.6 million 2023 $4.6 million 2024 $6.0 million Source 2013 Roads Needs Study Capital Financing Sustainability Strategy Total $33.0 million 3.4 Bridges and Culverts The Town has 33 bridges and 39 culverts. As noted above, at the end of 2013 they had a historic cost of $5.8 million and a net book value of $3.8 million. The estimated replacement cost is $15 million, consisting of $10 million for bridges and $5 million for culverts. In accordance with the Canadian Highway Bridge Design Code, there are two factors differentiating culverts from bridges as follows: Being less than 3 metres in length. Having more than 0.6 metres of fill on top. The following table shows information on the growth of the bridge network as reported under the Municipal Performance Measurement Program (MPMP). Note that the measurement is area and not length. Data was not available for 2008.

29 28 Table 11: Area of Linear Assets Reported in MPMP Bridges (Square Metre of Surface Area) N/A 3,813 5,815 5,815 5,815 5,815 The Roads Needs Study also does an assessment of bridges and culverts over a 2-year period. This is mandated by Section 3 of the Public Transportation and Highway Improvement Act, Ontario Regulation 104/97 Standards for Bridges. Overall, the culverts are considered to be in fair condition and the bridges are in good condition. Details of these assets are included in Appendices C and D. Appendix C is a list of the Town s bridges and Appendix D is a list of the culverts Funding Requirements As of the end of 2013, according to the Roads Needs Study, the 10-year funding requirements were projected to be $6.6 million, with $3.5 million in the first 5 years. For 2024, which is beyond the scope of the RNS, the Capital Financing Sustainability Strategy projected an annual provision of $0.2 million would be required for the next 10 years. Table 12: Bridges and Culverts - Annual Funding Requirements Annual Year Funding Requirement 2015 $0.7 million 2016 $0.7 million 2017 $0.7 million 2018 $0.7 million 2019 $0.6 million 2020 $0.6 million 2021 $0.6 million 2022 $0.6 million 2023 $0 million 2024 $0.2 million Source 2013 Roads Needs Study Capital Financing Sustainability Strategy TOTAL $6.0 million

30 Water System The Town has 287 kilometres of watermain and 2,761 water valves. As noted above, at the end of 2013 they had a historic cost of $66 million and a net book value of $41 million. The estimated replacement cost for the water system is $131 million. The watermain distribution system is made from four primary materials, as follows: 185 km of PVC (polyvinyl chloride). 62 km of ductile iron. 34 km of cast iron. 6 km of copper. The following table shows information on the growth of the water system as reported under the Municipal Performance Measurement Program (MPMP). Note that this is the length maintained, which includes watermains not owned by the Town, unassumed or Regional. Table 13: Length of Linear Water Assets Reported in MPMP Length Water (Main Kilometers) Database While roads have the Roads Needs Study for external verification and condition assessment, there is nothing similar for the water system. For historic costs (PSAB), the water system was assumed to match the road network and was assigned segments and lengths on that basis. Since the initial inventory was established in 2009, a separate inventory has been established in the Town s GIS system. This was developed from the final as-built drawings of the underground works, improving the accuracy of the historic data. It includes segments that are independent of the road system and therefore has a greater overall length than the TCA records. Some preliminary reasonability checks have been made but a full reconciliation of the two sets of records still needs to be undertaken. Appendices E and F are the GIS inventories for the water system Appendix E is the watermain and Appendix F is water valves. The following table is a risk assessment of the Town s water system. The condition or risk of failure is derived from the age of the infrastructure. The impact of failure is measured by the capacity of the infrastructure which is determined by the relative size of the watermains. Most studies show the average age for replacement of watermains to be in the 60 to 80 year range. On this basis, and to be conservative, 50 years was deemed to be the trigger that an asset was approaching the end of its life. An asset

31 30 currently with an age of 50 or more years will have an age of 60 years or more at the end of the 10-year planning period. Table 14: Risk Assessment of Newmarket s Water System Condition Value Kilometers Total Years Years Years Years Total Impact Watermain Size Up to 100 mm 101 to 150 mm 151 to 250 mm 251 to 350 mm Over 350 mm Funding Requirements 96% of the Town s watermains were built within the past 50 years. The cost to replace the 11 km of older watermains would require $7 million in funding. This is an average of $700,000 per year for the next 10 years. 3.6 Wastewater System The Town has 253 kilometres of wastewater sewers and 4,066 manhole covers. As noted above, at the end of 2013 they had a historic cost of $87 million and a net book value of $53 million. The estimated replacement cost for the wastewater system is $183 million, which includes $4 million for pumping stations. The following table shows information on the growth of the wastewater system as reported under the Municipal Performance Measurement Program (MPMP). Note that this is the length maintained, which includes watermains not owned by the Town, unassumed or Regional.

32 31 Table 15: Length of Linear Assets Reported in MPMP Length Wastewater (Main Kilometers) Database While Roads has the Roads Needs Study for external verification and condition assessment, there is nothing similar for the wastewater system. For historic costs (PSAB), the wastewater system was assumed to match the road network and was assigned segments and lengths on that basis. Since the initial inventory was established in 2009, a separate inventory has been established in the Town s GIS system. This was developed from the final as-built drawings of the underground works and as such it is more accurate. It includes segments that are independent of the road system and therefore has a greater overall length than the TCA records. Some preliminary reasonability checks have been made but a full reconciliation of the two sets of records still needs to be undertaken. Appendices G and H are the GIS inventories for the wastewater system: Appendix G provides information on the wastewater sewers; and Appendix H provides information on the manhole covers. The following table is a risk assessment of the Town s wastewater system. The condition or risk of failure is derived from the age of the infrastructure. The impact of failure is measured by the capacity of the infrastructure which is determined by the relative size of the sewers. Most studies show the average age for replacement of wastewater sewers to be in the 60 to 80 year range. On this basis, and to be conservative, 50 years was deemed to be the trigger that an asset was approaching the end of its life. An asset currently with an age of 50 or more years will have an age of 60 years or more at the end of the 10-year planning period.

33 32 Table 16: Risk Assessment of Newmarket s Wastewater System Condition Value Kilometers Total Years Years Years Years Total Impact Wastewater Sewer Size Up to 100 mm 101 to 150 mm 151 to 250 mm 251 to 350 mm Over 350 mm Funding Requirements 91% of the Town s wastewater sewers were built within the past 50 years. The cost to replace the 22 km of older sewers would require $19 million in funding. This is an average of $1.9 million per year for the next 10 years. 3.7 Updates of Values and Condition of Assets Replacement costs can be updated annually based on current construction experience. If the nature or volume of the projects questions the reliability of these numbers, then indexing can be done using the Construction Price Index. As previously noted, roads conditions are updated on a 4 year cycle, while bridges and culverts are completed on a 2 year cycle. The ages of the water and wastewater systems can be updated annually while more extensive condition rating is developed. 3.8 Data Verification Policy Currently, there is no formal policy for the verification of data. Information on roads, bridges and culverts is gathered by the Financial Services department for TCA purposes. This information includes year of construction and size. The annual updates of the Roads Needs Study verify this data. The main source of road, bridge and culvert data is through the Town s PS3150 compliance procedures. This includes additions, disposals, betterments, and write-offs. This is subject to an annual review by the Town s external auditor. In addition, the

34 33 information on inventory, construction date and size is reviewed as part of the annual update of the Roads Need Study. The following flowchart illustrates the flow of information: Figure 3: Internal Information Flow of Newmarket s Capital Assets ASSUMPTIONS ROADS NEEDS STUDY ADDITIONS CONDITION FINANCE STATEMENTS TCA Excel database LIST ADDITIONS DISPOSALS OPERATIONS CAPITAL PROGRAM Some items on the above figure require clarification. When a development is complete and ownership of the related infrastructure is turned over to the Town, this is an assumption. The current excel database is used only for financial reporting purposes and has no direct connection with operations. The data verification process for the water and wastewater systems is still under development. Until the implementation of Asset Management software, it is intended that the existing GIS database continue to be used to maintain the inventory and data. Public Works staff are currently reviewing and updating this information. This has yet to be reconciled with the TCA data.

35 34 The following flow chart identifies the target information flow structure: Figure 4: Newmarket s Target Capital Asset Information Flow Structure AS BUILTS CONDITION ASSESSMENTS CCTV & CORE SAMPLES TANGIBLE CAPITAL ASSETS ADDITIONS GIS DATABASE REVIEW CONDITION ASSESSMENTS BREAKS & BACKUPS FINANCIAL STATEMENTS WATER DEPARTMENT Some items on the above figure require clarification. When a development is complete and ownership of the related infrastructure is turned over to the Town, the final drawings of the infrastructure are drawn as they are built. Operations does condition assessments through closed circuit television scans (CCTV) and core samples and by tracking sewer breaks and backups. 3.9 Condition Assessment Policy The Town does not have a formal condition assessment policy. Its practice has been to use the Roads Needs Study for condition assessment on roads, bridges and culverts. This is being extended to other assets such as guide rails, trails and paths.

36 35 While there is no similar study done for the water and wastewater systems, there are a number of standard procedures involving analysis of breaks and backups, core samples, and cameras being developed. Future enhancements of this plan should consider the development of formal policies Conclusion The infrastructure included in this plan - roads, bridges, water and wastewater systemsare in good condition, with the minor exception of culverts which are in fair condition. Data related to infrastructure assets is collected in a variety of databases. The Plan contemplates reducing that to two: an excel database for roads, bridges, and culverts; and the GIS database for the water and wastewater systems. This is the first step. The next step would be to consolidate the two data bases with all other infrastructure data into a single database. During this process of consolidating databases, discrepancies may be found in the Tangible Capital Asset records. It is also probable that condition-based assessments may lead to longer life expectancy for the assets. This would result in updates to the TCA and financial policies and records. Recommendations: Consolidate infrastructure inventory databases. (3) Update the accounting for Tangible Capital Assets on the Financial Statements. (4) Investigate, purchase and implement Asset Management software. (10)

37 36 DESIRED LEVELS OF SERVICE 4.1 Strategic and Corporate Goals Asset management planning is a method of advancing Newmarket s long-term strategic goals of its infrastructure system. The Plan incorporates current management requirements while looking at how The Town can best serve the public now and in the future. Therefore, in order to achieve the overall corporate direction, the asset management plan needs to integrate the capital works plan, the Official Plan, the Transportation Master Plan, and the 6-year Water and Wastewater Financial Plans. 4.2 Legislative Requirements The following five provincial legislative documents affect asset management planning. Ontario Regulation 239/02: Sets minimum maintenance standards for municipal highways. The Ontario Structure Inspection Manual (OSIM): Sets the standards for detailed bridge inspections and provides a uniform approach for professional engineers and other inspectors to follow. Safe Drinking Water Act, 2002: Requires that municipalities plan for the long-term financial viability of their drinking water system. Water Opportunities Act, 2010: Sets the framework for a performance measurement regime and sustainability for water, wastewater, and stormwater over the lifetime of the infrastructure assets. Accessibility for Ontarians with Disabilities Act, 2005: Develops, implements and enforces accessibility standards in order to achieve accessibility for Ontarians with disabilities with respect to goods, services, facilities, accommodation, employment, buildings, structures and premises on or before January 1, Best Practices and Standards Drawing from the Ministry of Infrastructure s Guide for Municipal Asset Management Plans and examples of asset management plans across Ontario, the following section describes how the Town should best evaluate its assets from the perspective of service for their intended use and function. This includes an assessment of: Condition. Contribution to public health and safety. Level of financial resources required. Accuracy of monitoring and management.

38 Key Performance Indicators Key performance indicators provide a high level view of how the Town is meeting its desired service levels. The key performance indicator categories closely follow the infrastructure replacement trigger categories. However, measuring integration and impact is not as useful at a high level as this is not likely to change from year to year. Consequently, integration and impact have been replaced with operational indicators. The four categories of key performance indicators are: State of Good Repair; Health and Safety; Capacity and Efficiency; and Operational Indicators, and are described below Road and Bridge Services 1. State of Good Repair a) Average condition of roads. b) A breakdown of the condition of roads and the cumulative length of all roads that fall in each condition level. 2. Health and Safety a) Number of traffic collisions and fatalities by cause. b) Number of road closures. c) Number of speeding complaints. 3. Capacity and Efficiency a) Percent of capacity to which the roadways are used. b) Asset replacement fund contributions relative to amortization. c) Operating cost for paved roads per paved lane kilometres. d) Operating costs for bridges and culverts per square meter of surface area on bridges and culverts. 4. Operational Indicators a) Percent of roads inspected per year. b) Annual and bi-annual inspection of bridges and culverts (inspection required once every two years) Water Services State of Good Repair 1. Number of breaks per 100 kilometres of watermains. 2. Infrastructure leakage index. Health and Safety 1. Percent of water quality analyses that indicates an Adverse Water Quality Incident (AWQI) in the distribution system. 2. Weighted number of days when a boil water advisory was issued by the Medical Officer of Health, applicable to a municipal water supply, was in effect.

39 38 3. Percent of tests that met the fire hydrant flow standards as per Section D Watermains and Appurtenances of the Town s Engineering Design Standards. 4. Average pressure of mains (mains should be within 50 psi - 80 psi as per the Town s Engineering Standards). Capacity and Efficiency 1. Water main breaks repaired within x amount of time. 2. Percent of water flow that is non-revenue. 3. Asset replacement fund contributions relative to amortization. 4. Operating costs for treatment and distribution of drinking water per megalitre. 5. Cost of non-revenue water. 6. Average age and accuracy of water meters. Operational Indicators 1. Percent of non-revenue water that is measured or estimated. 2. Number of water meters inspected for accuracy Wastewater State of Good Repair 1. Number of backups per 100 kilometres of wastewater sewers. Health and Safety 1. Average time to repair wastewater backups. Capacity and Efficiency 1. Annual expenses relative to annual revenue. 2. Asset replacement fund contributions relative to amortization. 3. Total cost of borrowing compared to total cost of service. 4. Operating costs for collection and treatment of wastewater per megalitre. Operational Indicators 1. Meters of sewer inspected by closed circuit television scans. 4.5 Timeframes to Achieve Targets The Town of Newmarket receives feedback from the community in many ways. The Town records the purpose of interactions with the public; these interactions include calls, s, letters, and over the counter interactions. Below are breakdowns of the issues community members have raised about the assets in this plan over the last six years. Refer to Figures 5 and 6 for an illustration of the call volumes.

40 39 Figure 5: Interactions for Road and Bridge Assets Car Bottoms out on Driveway Pot Hole Repair Bridge Maintenance and Repair Figure 6: Interactions for Water and Wastewater System Assets Discoloured Water Water Pressure - Low Water Quality Concerns Watermain Break Sewer Back Up

41 40 Interactions where the purpose pertained to the assets in this Plan appear low. The calls pertaining to roads and bridges amounted to 0.12% of Newmarket s population. Similarly, the calls pertaining to water and wastewater amounted to 0.29% of Newmarket s population. Considering that Council has been approving annual budgets that reflect the community s needs, this plan assumes that the assets are currently providing the desired level of service. Figure 7: Call Volume Pertaining to Assets Compared to Population, , It may be advantageous to consult with the community to refine desired service levels. Future public engagement to refine targeted desired service levels could include: Engaging the public to help envision what the municipality will look like in the future and the infrastructure needed to support it. Assisting the engagement process by identifying priority projects and developing costing scenarios. Having conversations about prioritization and the difficult choices that sometimes need to be made to prioritize infrastructure investments Population 354 Call Volume Recommendations: Create asset management report cards. (1b) Communicate the Asset Management Plan to the community. (2) Consult with Council and the Community to further develop Desired Levels of Service. (7) 4.6 External Trends and Issues Affecting Service Levels Growth is largely an external trend and presents both opportunities and threats to maintaining the Town s assets and service levels. For example, intensification can lead to efficient use of current assets, like an underused road will be used closer to capacity or roads that are currently at capacity can be upgraded to accommodate more efficient forms of transportation such as bus rapid transit, making road upgrades economically viable through growth. Another example is with respect to water services. Growth can help lower the frequency of adverse water quality incidents. Chloramine, which is added to water to keep it

42 41 potable, decreases over time while water flows through the distribution system. The longer water is in the distribution system, the more likely the residual level will drop below the regulated lower limit. Increased growth will help increase the turnover rate in certain areas of the Town, which will ensure water is delivered to customers while chloramine levels are at the recommended level. When the turnover rate is slow due to low demand, the Town flushes water through fire hydrants to ensure clean water replenishes the system. Growth can also pose a threat to maintaining proper water pressure. If growth exceeds the current capacity of the water distribution system, then water pressure issues may develop. However, since water consumption per capita has decreased by 30% over the last decade, it can be expected that there should be enough capacity in most watermains in Town. 4.7 Performance Below are the key performance indicators that have been collected for the Town s assets thus far. Upon future updates of this Plan, additional key performance indicator trends will be identified. The data collected will be used for annual comparisons. Figure 8: Percent of Paved Lane Kilometres Exhibiting a Good to Very Good Rating 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% This figure shows that the Town has been maintaining its roads at around 80% exhibiting Good or Very Good repair.

43 42 Figure 9: Number of wastewater sewer backups per 100 kilometres of wastewater main in a year The number of wastewater sewer backups peaked in 2007 because the summer of that year was particularly dry. When there is a shortage of moisture in the ground tree roots seek water from the wastewater sewers, which cause backups. Figure 10: Number of water main breaks per 100 kilometers of water main in a year No consistencies in break type or weather patterns were found as of the release of this report that would help determine the cause of the breaks to increase in This KPI along with the others will be monitored and addressed through this plan.

44 43 ASSET MANAGEMENT STRATEGY 5.1 Objective This section describes current and future strategies to manage the Town s asset base with the goal of maintaining the assets in an acceptable condition. Recognizing that asset management is evolving to a service based focus that optimizes asset lifecycle costs considering quantifiable risk and level of service, the Town will develop a more fulsome corporate asset management program and strategy in Existing Asset Management Activities This section summarizes the current asset management activities and practices of the Town for each of the Ministry s key focus areas; Roads, Bridges and Culverts, Water, and Wastewater Systems via a series of tables. Current Asset Management Practices Common to all service areas include the following: Non-Infrastructure Solutions Common to All Areas - Actions or policies that can lower costs or extend useful lives Development of controls and approvals. Updating and applying design standards. Financial and Planning strategies to control costs. Operational improvements. Improvements to employee capabilities, communications, training, etc. Coordination efforts to optimize construction between Town projects and external parties (Utility Coordinating Committees). Ongoing search for additional funding: user fees, rates, lobby for transfer funding, P3 s (Public Private Partnerships), etc. Public involvement practices. Developing Corporate Asset Management program Current Asset Management Practices for Roads, Bridges and Culverts Non-Infrastructure Solutions - Actions or policies that can lower costs or extend useful lives. Public involvement practices such as spring and Ward cleanups. Changes to levels of service. Promote intensification of land use.

45 44 Maintenance Activities - Including regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events. 24 hour maintenance response capability. Routine maintenance such as street sweeping, pothole patching, utility cut repairs, etc. Snow and ice removal maintenance and winter night patrol. Meet Provincial Minimum Maintenance Standards. Scheduled preventative maintenance programs such as the crack sealing program to stop leakage damage. Scheduled inspection programs -25% per year pavement quality and once every 2 years for culverts. Reactive maintenance for significant portion of asset inventory. Maintenance also triggered by the public inspection through phone calls, s, letters, and over the counter interactions and web interface available for public reports/complaints. Report a Pot Hole Program. Maintenance of Lighting and Signals infrastructure is contracted out. The nature and frequency of re-lamping and pole maintenance are based on best practices and requirements in the contracts. Signage -Major regulatory signs (e.g. Stop Signs) are tested for reflectivity on yearly basis and maintained based on the evaluation results. Minor regulatory (e.g. No Parking) and Guide/Information signs are managed reactively based on citizen inquiries and staff observations. Line markings on major routes are reapplied semi-annually. The condition of the line markings vary throughout the year based on traffic, type of marking and time since reapplication. Renewal/Rehab Activities - Significant repairs designed to extend the life of the asset. Road and Structures are maintained on a lifecycle basis through the selection of the optimal treatment based on their current condition and projected deterioration. Road renewal and rehabilitation treatments range from patching and crack sealing, to resurfacing, to total reconstruction, and are selected to minimize the lifecycle cost of operating each asset within its target state. Road sections that are at an optimal time for specific rehabilitation treatments are placed on a list for prioritization. Rehabilitation is dependent on budget availability. Structures rehabilitation or replacement is based on structure age and assumed life spans and the result of condition surveys: Renewal and rehabilitation

46 45 treatments include: Asphalt deck resurfacing, joint replacement, patching, etc. Replacement Activities. Roadways are maintained on a lifecycle basis through the selection of the optimal treatment based on their current condition and projected deterioration. Road sections that are at an optimal time for replacement are placed on a list for prioritization and constructed pending budget availability. Disposal Activities - Activities associated with disposing of an asset once it has reached the end of its useful life, or is otherwise no longer needed by the municipality. Roadway disposals are infrequent and generally related to rerouting. Should a section of a road be permanently closed, the section can be deconstructed and the land sold or repurposed. Expansion Activities - Planned activities required to extend services to previously unserved areas or expand services to meet growth demands. Undertake Environmental Assessments. Identify needs through traffic counts. Capital growth projects-road extensions and expansions, additional lanes, new bridges. Assumption of subdivisions, commercial and industrial extensions, etc. Whenever assets are built, applicable service improvements are made. These can include technologies such as traffic calming equipment, pavement material alternatives, etc Current Asset Management Practices for Water Non-Infrastructure Solutions - Actions or policies that can lower costs or extend useful lives. Encouragement of conservation of water and energy through policy, procedures, public outreach, etc. in cooperation with York Region. Maintenance Activities - Including regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events. Scheduled preventative maintenance programs including pressure relief valves, air and vacuum valve maintenance has been identified as a future need Scheduled inspection programs for key assets e.g. leak detection in consultation with York Region. 24 hour maintenance response capability

47 46 Reactive maintenance for significant portion of asset inventory Maintenance also triggered by the public inspection through phone calls, s, letters, and over the counter interactions and web interface available for public reports/complaints Renewal/Rehab Activities - Significant repairs designed to extend the life of the asset. Watermain rehabilitation based on the current condition of the pipe. o Cleaning. o Re-lining including cement lining and structural lining. o Cathodic protection (anode program). Replacement Activities - Activities that are expected to occur once an asset has reached the end of its useful life and renewal/rehab is no longer an option. Watermain replacement based on the current condition of the pipe and break history: o Complete open-cut replacement. o Horizontal directional drilling (HDD). Meter Replacement using newer technology. Whenever assets are built, applicable service improvements are made. Disposal Activities - Activities associated with disposing of an asset once it has reached the end of its useful life, or is otherwise no longer needed by the municipality. Water main disposal: o Abandoned in site, no cost recovery. o Removed, no cost recovery. Water facilities disposal: o Equipment removed. Land reused or sold. o Equipment disposed or inventoried as spare parts, no cost recovery. Expansion Activities - Planned activities required to extend services to previously unserved areas or expand services to meet growth demands. Undertake Environmental Assessments. Capital growth projects-watermain extensions and expansions, pump stations. Assumption of subdivisions, commercial and industrial extensions, local improvements, etc. Whenever assets are built, applicable service improvements are made.

48 Current Asset Management Practices for Wastewater System Non-Infrastructure Solutions - Actions or policies that can lower costs or extend useful lives. Development controls and approvals e.g. limit septic tank use. Sewer Use Bylaw that regulates discharge quality to sewer. Maintenance Activities - Including regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events. Scheduled preventative maintenance programs for the majority of assets Use JDE for work orders. Scheduled inspection programs for key assets e.g. CCTV visual. 24 hour maintenance response capability. Maintenance also triggered by the public inspection through phone calls, s, letters, and over the counter interactions and web interface available for public reports/complaints. Routine Flushing and Cleaning. Renewal/Rehab Activities - Significant repairs designed to extend the life of the asset. Wastewater pipe rehabilitation is based on the current age, condition and material of the pipe: o Pipe lining e.g. Cured In Place Pipe (CIPP), structural lining using horizontal drill machine. o Spot repairs. o Manhole replacement. o Joint sealing. o Flushing & Cleaning. Replacement Activities - Activities that are expected to occur once an asset has reached the end of its useful life and renewal/rehab is no longer an option. Wastewater pipe Replacement is based on the condition rating of the infrastructure. In most cases, once the pipe has been inspected and given a condition rating, staff can determine the best method for replacement. o Complete open-cut replacement. o Horizontal direction drilling (HDD). o Pipe bursting. Full replacement is the most common method for collapsed or heavily deteriorating pipe.

49 48 Look for clusters of poor condition rated sewers and apply high priority. Coordinate with water, roads projects and through UCC. Wastewater pumping facilities are replaced or upgraded based on facility inspection reports and are usually done on the pieces of equipment within the facility rather than the replacement of an entire wastewater pumping station. Whenever assets are built, applicable service improvements are made. Disposal Activities - Activities associated with disposing of an asset once it has reached the end of its useful life, or is otherwise no longer needed by the municipality. Wastewater pipe disposal o Current practice is removal with no cost recovery. Historically some left on site. Wastewater facilities disposal is very infrequent, usually pump stations o Removed and land is reused or sold. o Equipment disposed or inventoried as spare parts, usually no cost recovery. Expansion Activities - Planned activities required to extend services to previously unserved areas or expand services to meet growth demands. Undertake Environmental Assessments. Capital growth projects-wastewater trunk extensions and expansions, pump stations, upgrades. Assumption of subdivisions, commercial and industrial extensions, local improvements, etc. Interim works (typically one to ten years) built to provide temporary service pending construction of permanent infrastructure assets. These are usually sanitary pump stations and force mains. Whenever assets are built, applicable service improvements are made. 5.3 Current Decision Making Process The section summarizes the current asset management decision making approach for each of the Ministry s key focus areas; Roads, Bridges and Culverts, Water, Wastewater Systems via a series of tables Current Asset Management Practices for Roads, Bridges and Culverts Asset Inventory & Condition Condition surveys of the paved road network are contracted out to a consultant. Condition surveys are completed on approximately one quarter of the network annually such that the entire network is assessed every four years. The following

50 49 methodology was utilized by the consultant to carry out the Road Needs Study as follows: o Input the available roads data from the Town s roads database into the consultants in- house database format. o Undertake field inventory and condition rating of roads in the 2013 area. o Undertake a condition rating on the critical roads located outside the survey area. o Preparation of GIS road section mapping. o Preparation of Roads Needs Study Report. Condition inspections for structures (Culvert, bridges, retaining walls, guardrails etc.) are completed in a 2 year cycle for all major structures in accordance to the Ontario structure inspection manual. Bridge components are assessed for severity and extent of deterioration as well as overall condition. An overall Bridge Condition Index is provided. A value of 10 indicates that the bridge is in excellent condition and a value of zero indicates that the bridge is in extremely poor condition. Evaluation of Renewal Activities The condition of the road determines which type of available treatment (i.e. maintenance or rehabilitation activities) is applied such as crack sealing, shave and pave, or a full rebuild. New technologies, (i.e. new pavement materials, paint type, etc.), are tested and used based on their merit. The optimal rehabilitation alternative is determined using life cycle economic analysis techniques, which involves an assessment of both the effectiveness of each alternative and an estimate of the capital cost to implement it. The ratio of effectiveness to cost produces a cost effectiveness number (or more accurately a net benefit/cost ratio), which allows rehabilitation alternatives to be compared to each other. Alternatives are also assessed against design standards and guidelines. Project Prioritization/Coordination The Road Needs Study sets out the different options available to renew the individual road segments. The general philosophy used in identifying current road needs consisted of assigning an appropriate road improvement strategy based in part on the existing road condition rating and based on the Town s current road improvement practices. Roads were determined to either be Adequate or in need of a Spot Improvement (SR), Resurfacing (PR1, R1 or PR2, R2), or Reconstruction (BS, REC, RM, RNS or RSS). The overall structural condition of the road was assessed based in part on Structural Adequacy, Surface Condition, Maintenance Demands and Drainage Conditions. Structural Adequacy measures the overall structural condition of the road and is based on the following scale: o Structural Adequacy 1-7 = Reconstruction o Structural Adequacy 8-11 = High Priority Resurfacing Need o Structural Adequacy = Lower Priority Resurfacing Need o Structural Adequacy = Adequate (No current Needs)

51 50 The Surface Condition rating is based on the drivability of the road and is rated between 1 and 10 with 10 being a road in perfect condition. For the most part there is a close relationship between structural adequacy and surface condition. Maintenance Demand is a rating of the level of past spot maintenance requirements which is evidenced through pot hole repairs and other surface patches. Each road section is rated based on the following criteria: o Points Rating 1-2 = Excessive o Points Rating 3-4 = High o Points Rating 5-7 = Average o Points Rating 8-10 = Low Drainage Condition is assessed based on several drainage elements including the presence of adequate ditches, presence of low spots that create ponding, and adequacy of road surface cross slopes on rural cross-sections. On urban crosssections the presence of gutters and catch basins, slope of gutters, frequency of catch basins, and overall adequacy of the storm sewer system are all factored into the overall drainage condition assessment which is detailed in the following criteria: o Points Rating 1-7 = Serious Drainage Problems o Points Rating 8-11 = Well Below Standard o Points Rating = Somewhat Below Standard o Points Rating = Adequate The final product of the analysis becomes a list of road segments with suggested repair methodologies and the cost estimated for the work. Engineering employs a decision tree approach to determine the road rehabilitation strategy. The result is a documented list of roads, with a recommended rehabilitation treatment and the cost of the work. This forms the base for the road life cycle renewal budget deliberations. Similarly Structures inspection reports recommend routine, minor or major maintenance practices and include their corresponding cost for use in budget deliberations. Engineering in conjunction with internal and external parties and developers to establish priorities and coordinate construction in order to optimize project costs and reduce social impact. Financial Planning Budgetary constraints determine rehabilitation implementation strategies. Budget availability is also used to prioritize the projects in the most cost-effective manner through user defined budget scenarios. The budget and minimum regulatory requirements drive the road rehabilitation strategy rather than the need to optimize service delivery and asset performance Current Asset Management Practices for Water Asset Inventory & Condition Watermain and meter inventory information are stored in GIS.

52 51 Considerable data continues to be collected manually including leak detection, cathodic protection, water quality testing, meter testing and renewal, hydrant flow testing, valve maintenance records, and hydrant maintenance systems. Innovative inspection techniques such as electromagnetic, acoustic fibre optic listening, acoustic leak detection are being used to more accurately determine large diameter pipe condition and remaining life of these high value assets. Water facilities condition is assessed with occasional studies. Some studies are routine such the water reservoir inspections which are completed on a five year cycle. Evaluation of Renewal Activities The Town has prepared a 6 Year Financial Plan as directed by DWQMS. Water Services regularly evaluate newer technologies including cement lining, structural lining, anode program, HDD, CPP structural and leak inspection, etc. Sub-standard flow and pressure are identified by using the Town's hydraulic modeling and routine hydrant flow tests to provide additional input for pipe replacement and fire protection decision making. The identification of pipe renewal needs may be triggered by customer complaints on quality, measured quality deficiencies which is used to provide additional input for pipe rehabilitation or replacement decision making. Project Prioritization/Coordination Water quality and integrity of supply are the main priorities. Risk assessments including critical customers and funding analysis are used in the assessment of priorities. Engineering is responsible for managing the water capital project list and recommending the list for annual budget approval. They rely on a large number of background sources to make their determination including, field data provided by Water Operations staff, Water Modeling Information, the Drinking Water Quality Management System, the Official Plan, the Development Charges Study and the 6 Year Water Financial Plan. The Town coordinates high level planning with other utilities on annual basis followed by a more detailed level of planning for actual construction through Utility Coordinating Committees (UCC). UCC deals with both internal and for external utilities and meets every two weeks to coordinate construction schedules. Coordination is generally not required for minor scale maintenance work. Financial Planning The Town uses a 6 Year Water Financial Plan to describe infrastructure renewal planning, resource requirements and resulting water rates. It derives its information from estimates prepared by the Engineering and Operations groups. Approval of the current year projects and water rates are set annually through the budget process. Regulations continue to change rapidly in the water business impacting investment planning.

53 Current Asset Management Practices for Wastewater Asset Inventory & Condition Wastewater pipes face similar challenges for condition evaluation as water pipes but have the benefit of some better information through the use of video inspection capability. Inventory information is stored in the GIS. Condition information is most accurately determined through the video inspection which covers as much pipe as the budget allows usually in the order of 10 to 15% annually. Results from the CCTV investigations are used to develop strategic replacement, lining, and spot repair and excavation repair programs. This type of assessment is essential to administrators responsible for managing the Town's sewer assets. The Town also uses performance indicators like maintenance history via the number of failures and blockages to monitor condition and guide rehabilitation planning. Evaluation of Renewal Activities Once the decision is made to replace the wastewater pipe, alternatives for replacement are evaluated considering needs for growth, alternate routing, capacity, available technologies and cost. Based on the value of work; o a distinct project is created, o the work is merged into a pooled project containing several smaller locations, or o work is absorbed as part of the routine operating and maintenance workload. With respect to the pumping stations, major refurbishments are generally undertaken based on recommendations from studies. Some equipment is routinely refurbished based on a recognized life cycle. Project Prioritization/Coordination When determining the timing and priority for renewals, a number of factors are considered, including: o Seriousness of condition from video assessments (where available) o Inflow and Infiltration. o Environmental impacts/ issues (source water protection) o Incidents of basement flooding. o Spatially located assets (e.g. Water, Roads, utilities) age and condition rating. o Coordination with water and road renewal activities. Capital projects are prioritized based on available funds, growth, coordination with spatially located assets, age and condition of the asset.

54 53 Financial Planning The Town uses a 6 Year Water Financial Plan to describe infrastructure renewal planning, resource requirements and resulting water rates. It derives its information from estimates prepared by the Engineering and Operations groups. Approval of the current year projects and water rates are set annually through the budget process. Regulations continue to change rapidly in the water business impacting investment planning. 5.4 Future Asset Management Activities Historically, the Town guided asset management investments primarily by considering the condition and age of the asset. The Town is working towards adopting recognized asset life cycle management practices that include considerations for risk and level of service. The Town is working towards developing and asset management policy and strategies to better manage our assets. This section of the report describes the future actions that have been identified as a result of the work performed during this initial AMP. In the roads, area staff will be working towards incorporating MMM s Roads Needs Study information into the GIS including road condition as well as the priority matrix. In the water and wastewater area, staff are looking to improve the capture of field data via the use of tablets that will interface with the GIS database. Staff would like to perform an assessment of the Town s water and wastewater systems using a similar methodology as the Roads Needs Study. These studies will assist with determining the need for automated leak detection, hydrant flow testing as well as valve and hydrant maintenance systems among other things. 5.5 Procurement Methodologies The Guide for Municipal Asset Management Plans states that municipalities should have procurement bylaws in place to serve as the basis for considering various delivery mechanisms. The Town of Newmarket s Procurement By-law No enacted May 5, 2014, is publically available on the Town s web-site at: This By-law establishes the Town s policies for the sale and other disposition of land, hiring of employees, procurement of goods and services, public notice, accountability and transparency, and delegation of powers and duties, as required under section 270(1) of the Municipal Act, The purposes, goals, and objectives of this By-law are as follows:

55 54 a) To encourage competition among Bidders; b) To make goods, service(s) and construction Contractors to be accountable to the Owner and the public; c) To provide the highest level of government service at the least possible cost; d) To ensure fairness and objectivity amongst Bidders during the procurement process; e) To ensure openness, accountability and transparency while protecting the financial best interests of the Owner; f) To obtain the Best Value for the Owner when procuring goods and service(s) and construction; g) To avoid conflicts between the interests of the Owner and those of the Owner s employees and elected officials; h) To ensure compliance with applicable International, National and Inter-Provincial Trade treaties or agreements, as amended; i) To promote Responsible Purchasing which encourages procurement practices which encompass social, ethical and environmental considerations when acquiring goods, services and construction; j) To contribute to the reduction of waste, toxic or harmful emissions and substances and to increase the development and awareness of environmentally responsible procurement, the Governments Incorporating Procurement Policies to Eliminate Refuse (GIPPER) Guide, as amended may be referenced in acquiring goods and services and/or other best green procurement practices available when developing the Bid Call Document for goods, services and construction. It is recognized that a product and cost analysis may be required; k) To promote, where applicable, the requirements of the Ontarians with Disabilities Act (ODA) and the Accessibility for Ontarians with Disabilities Act, 2005 (AODA), as amended in procurement activities of the Owner as well as any requirements contained in other legislation (either provincial or federal) which may impact the procurement activities of the Owner. The Guide also states that to ensure the most efficient allocation of resources, best practice is for a number of delivery mechanisms to be considered - such as working with other municipalities to pool projects and resources, or considering an AFP model. Numerous agreements exist with neighbouring municipalities and third parties to pool projects resources, one of the most noteworthy being the work currently underway by VIVA on Davis Drive.

56 Evaluation of Risks Associated with the Plan and Strategy Without a Plan, the Town s ability to deliver essential services will be impacted. Figure 22 on the following page provides an overview of the risks, their impact, and actions that can be taken to mitigate the risk to maintain expected service levels.

57 56 Figure 11: Contingency Analysis Risk Potential impacts Mitigating Actions Wasted investments Monitor and review Potential to shorten useful life Failure to deliver service Prioritization process fails Inefficient investments Plan is not followed Failed infrastructure Inadequate Funding Implement quality asset management processes Failure to deliver service Repair/replace Injury, death - staff and public Increase investment/ available funding Customers unable to carry on their business Innovative technology Non-compliance Non-infrastructure solutions Litigation Reduce or stop delivering service Damage to asset and neighbouring equipment and property (private or public) Damage to environment Additional unplanned costs Asset Loss Negative social impacts Increased risk of failure Reduce or stop delivering service Service reductions Find additional sources of funding Rising maintenance costs Increase investment/ available funding Asset Loss Update Planning Prematurely shortens useful life if not maintained Discard efforts on past planning Shift and increment burden to future ratepayers Defeat planning efforts Plans become redundant Lost opportunities Unpredicted future impacts

58 57 Figure 12: Contingency Analysis Cont'd Risk Potential impacts Con't Mitigating Actions Con't Poor decision-making Poor prioritization/projections Improper investments Inability to deliver service and risk metrics and ratings Poor quality asset information Planning Assumptions incorrect Regulatory requirements, standards, criteria change or do not exist Economic fluctuations, inflation, downturns, revenue and use reduces/increases Occurrence of Climate Change/Adverse Weather/Unforeseen events and emergencies, resulting in funds being diverted to assets that were not originally planned for Growth projections not as planned Service Provision Changes Invest in data systems and condition assessment Determine appropriate level of service Defeat planning efforts Monitor Plan, update and correct projections Non-compliance Lobby against additional expenditures Mandatory investments and schedule Lobby for additional transfer funding Disruption to Planning Efforts Reduce or stop delivering service Investment due to regulation reduces available Find additional sources of funding funding for others Increase investment/ available funding Additional costs Lobby organizations to provide standards Reduced/increased needs Change, create or stop delivering Waste resources maintaining oversized/undersized Service infrastructure Additional unplanned costs Deferral of planned renewals Damage and loss of assets Assess/increase insurance coverage Defeat planning efforts Increase/develop reserve funds Plans become redundant Develop contingency/emergency plans Lost opportunities Unpredicted future impacts Infrastructure oversized or undersized Defer or advance capital projects Inefficient use of available service related to growth and update plan Plan either does not address or contains Amend Plan redundancies

59 58 Financing Strategy The Financing Strategy is critical for putting the Asset Management Strategy into action. It details how we will pay for the Plan and includes details on expenditures, revenue sources and projections, and possible solutions for any funding gaps. 6.1 Context This section will make reference to a number of documents, studies and policies. The next paragraphs provide a brief summary of them Operating and Capital Budgeting Policy The Town s Operating and Capital Budgeting Policy FIN 2-01 establishes some general rules on budgeting, the use of reserves and reserve funds and the principles of the Asset Replacement Fund (ARF). A copy of this report can be found on the Town s website at Guidelines for the Use of Reserves and Reserve Funds Financial Services Report lists the Town s reserves and reserve funds, and prescribes their purpose, funding source and target balances. A copy of this Report can also be found on the Town s web-site at: reserve_funds.pdf Asset Replacement Fund The Town established the Asset Replacement Fund (ARF) in Its purpose is to have sufficient funds available to finance the replacement of capital assets at the end of their expected useful life calculated annually. Contributions from the water and wastewater rate groups started at 100% of the annual requirement. Contributions from tax-supported areas started at 50% and were gradually increased over time. The request for a review of the sufficiency of the ARF funding prompted the Capital Financing Sustainability Strategy Capital Financing Sustainability Strategy (CFSS) Hemson Consulting Ltd. was retained by the Town of Newmarket in the fall of 2012 to complete a Capital Financing Sustainability Strategy/Asset Replacement Fund (ARF) Study. The first phase of this assignment was a peer review of the Asset Replacement

60 59 Fund and its policies. The second phase of the project integrated the information already collected in Phase One and further explored more variables, particularity around funding. It linked anticipated expenditures and revenues, made recommendations and formed a more comprehensive analysis to provide a strategy for moving forward. It resulted in additional infrastructure levies in 2013 and Copies of the report and presentations can be found on the Town s web-site at: Much of this section relies on those findings Roads Needs Study (RNS) The RNS study was introduced in Section 3 - State of Local Infrastructure. It projects future funding requirements for roads, bridges and culverts over the next 10 years. 6.2 General Position Infrastructure projects, and by extension their funding, can be divided into three categories: 1. Repair and replacement of existing capital assets 2. Growth-related the addition of new capital assets to maintain existing service levels to a growing community 3. Enhancement of service levels, which may be driven by regulatory requirements, community expectations or strategic investment The following figure is a summary of historic spending in the above three categories. Figure 13: Newmarket s Average Capital Expenditure Breakdown $647,900 4% $2,280,700 16% $11,820,900 80% Replacement Enhancement Growth

61 60 The general rule in applying funding sources is to start with more specific, dedicated, non-resident funding in preference to more general funding and funding which directly impacts the community. The following table summarizes the order of priority for these three categories: Table 17: Priority of Funding Sources Funding Source Repair and replacement Growthrelated Enhancement of service levels Grants X X X Development Charges (DC s) Dedicated Revenues Internal Cost Savings Dedicated Reserves/Reserve Funds Asset Replacement Fund (ARF) General Reserves/Reserve Funds Property Taxes and Utility Rates X X X X X X X X X X Debt financing is not shown as an option. It is a tool for matching cashflow. The debt servicing payments will require one of the above-noted funding sources. 6.3 Funding Objective The primary funding objective is to meet the repair and replacement, growth-related and enhancement requirements for infrastructure, in that order of priority. However, the infrastructure service levels must be balanced against the availability of funding. As most funding ultimately comes from the community, through property taxation and utility rates, increases in these areas must be kept within acceptable levels. For this reason a long-term outlook is required.

62 Expenditures Non-infrastructure Solutions Non-infrastructure solutions are such items as studies, policies, condition assessments, consultation and other items that could potentially extend the life of assets or lower total asset program costs in the future but do not directly impact the asset itself. The following table lists the major expenditures in this category since Table 18: Major Expenditures 2011 to 2015 Roads Needs Study Water Infrastructure Inspections Wastewater Infrastructure Inspections budget 4-year average Projected for 2015 $19,096 $32,314 $0 $81,000 $33,102 $81, ,000 2,500 10,000 32,521 90,554 92,641 80,000 73,929 80,000 TOTAL $51,617 $122,868 $92,641 $171,000 $109,531 $171,000 The Capital Financing Sustainability Strategy projected that these expenditures would continue to grow at 4% annually. This is consistent with increases in the Construction Price Index.

63 Maintenance Activities On an annual basis, major maintenance is completed on the Town s infrastructure. These maintenance activities include crack sealing, spot repairs, etc. Historically, these were included in the capital program; however with the implementation of PS3150 they were removed: maintenance activities are not considered to be capital additions. As well, items which are not pooled and are not of sufficient value to be capitalized, are included in the following totals. Table 19: Annual and Project Roads Maintenance Costs 2011 to 2015 Maintenance year Activity budget average Projected for 2015 Roads Resurfacing Roads $327,936 $64,224 $345,497 $310,000 $261,914 $310,000 Crack Sealing 84,111 71,234 67,170 95,000 79,379 90,000 Regulatory Maintenance Spot Improvements 46,040 49,384 44,618 73,500 53,386 65, , , , , , ,250 Other 26,082 26,517 46,308 38,800 34,426 38,800 Total $587,012 $358,447 $679,688 $636,550 $565,424 $643,050 Regulatory Maintenance Water System $97,406 $198,172 $317,522 $143,000 $189,025 $173,000 Other 78,339 61,700 86, ,100 83, ,100 Total $175,745 $259,872 $404,306 $252,100 $273,006 $282,100 Wastewater System Pipe Relining $4,442 $41,338 $40,861 $182,500 $67,285 $182,500 Other 51, ,981 50,632 93,100 86,872 93,100 Total $56,215 $283,874 $91,493 $275,600 $154,157 $275,600

64 63 The Capital Financing Sustainability Strategy also projected that these expenditures would continue to grow at 4% annually, consistent with increases in the Construction Price Index. Table 20: Asset Replacement Activities 2011 to Budget 4 Year Average Roads $3,956,278 $4,384,867 $6,542,864 $13,353,861 $7,059,468 Bridges and culverts 30, ,000 70,153 Water System 606,256 43,871 26, , ,636 Wastewater System 769, , , , ,133 The following table is a comparison of the projected funding requirements for replacements: Table 21: Average Annual Asset Replacement Requirements 2014 to ASSET CLASS Per condition assessments Per Capital Financing Sustainability Strategy Roads $2,800,000 $3,326,000 $6,003,000 Bridges and Culverts 660, , ,000 Water System 700, , ,000 Wastewater System 1,900,000 32,000 0 The condition assessments in Table 27 are from Section 3 - State of Local Infrastructure, include the Roads Needs Study (RNS) and provide for water and wastewater system replacements at over 50 years. For roads, the Capital Financing Sustainability Strategy based replacements on lifecycle estimates. The CFSS is projecting annual expenditures 19% higher than those contained in the RNS. For the projections in this plan, the RNS as a condition-based assessment is more accurate than applying life cycle averages. For the rate supported assets (water and wastewater systems), the CFSS is significantly less than Section 3 projections. This illustrates the uncertainty created when using

65 64 average life spans to predict useful life. To be conservative, the higher number will be used for this plan. The CFSS looked beyond a 10 year projection and indicated that there will be an escalation in funding requirements. While using 10 years for the Asset Management Plan is a good starting point to phase in potential funding increases, it appears that to attain a sustainable level, future funding will have to consider these increases. It is anticipated that in 30 years, major replacements will be required for the underground infrastructure Disposal Activities There have been no recent significant disposals. For accounting purposes, the replacement of assets requires a disposal of the old asset. If there were any remaining useful life in TCA terms, then there would be a loss on disposal equal to the net book value. This is only a book entry and has no impact on funding Expansion Activities In addition to the replacement of infrastructure, there can be additions which may either be growth related or enhancements. Growth related additions are listed in the Background Study prepared for the Town s 2014 update of its Development Charges By-law, a copy of which can be found on the Town s web-site at: Town-wide engineering projects included in the Background Study, include roads, bridges, culverts and the water and wastewater systems, which can be funded 100% from Development Charges. They do not require an increase in service levels beyond historic levels and are not subject to any discount. There is the potential for some enhancements; however they cannot be determined until the new Council establishes its priorities for the new term. 6.5 Funding The key to infrastructure funding is sustainability and predictability sustainable in that it can be reasonably expected that funding will continue into the future and predictable in that the amount can be reasonably projected. These factors are necessary for future planning purposes. The next sub-sections provide details on the funding sources and are followed by a summary of historic and projected amounts.

66 Grants The most significant grant that the Town has access to is the allocation of the Federal Gas Tax. It is significant because it is sustainable and predictable the federal government has made a commitment to maintaining it and has provided projections of future funding. The Town s practice has been to apply this grant to road projects. Over the years, the provincial and federal governments have provided other grant opportunities. This peaked a few years ago with stimulus funding and now continues with the Ontario Community Infrastructure Funding (OCIF). Most of these grant opportunities require application and are neither sustainable nor predictable. The formula-based compenent of OCIF is an exception. The Town can anticipate funding of $317,700 for each of the next three years, and can reasonably anticipate similar funding levels into the future Development Charges (DC s) A Background Study was prepared for the Town s 2014 update of its Development Charges By-law, a copy of which can be found on the Town s web-site at: DC s will be able to fully fund the growth-related expansion of roads, bridges, culverts, and water and wastewater system projects included is the Town-wide Engineering Study Dedicated Revenues The Town collects fees and charges for its services and the use of its facilities. These revenues recover a portion of the costs for delivering these services in accordance with the Town s Service Pricing Policy, which can be found on the Town s web-site at: As such, with one exception, this revenue is not applied directly to infrastructure funding. The one exception is the Recommending A Strategy (RAS) Surcharge which is applied to recreation fees. However, as it is used to finance debt servicing for facilities, which are not covered under the current Plan, it is not included in the current Plan version. In addition, there can be revenues that are derived from a capital project that are used to fund it. This is a form of investment which is considered in the Investment Strategy as a non-traditional investment refer to Financial Services Report for details, at the following location on the Town s web-site: FINALsigned.pdf An example of a non-traditional investment would be the construction of solar panels financed by the sale of electricity generated by these panels, and parking lots financed through parking permit revenues earned at the parking lots.

67 66 Newmarket seeks out opportunities to partner on a variety of initiatives on a regular basis to improve its operational efficiency. This may entail sharing costs with a neighbouring municipality or obtaining sponsorship from the private sector. Currently these methods are not applicable to or being considered for the infrastructure assets included in this version of the Plan. Utility Rates are covered in a separate section below Internal Cost Savings Another use of the Investment Strategy s non-traditional investments is to finance capital projects from the resulting cost savings. An example would be the two phases of the energy retrofit program in conjunction with Honeywell Limited. The facility and streetlight retrofits are being financed from the energy savings that are guaranteed by the private partner Honeywell. Currently, this method is not applicable to or being considered for the infrastructure assets included in this version of the Plan Reserves and Reserve Funds For purposes of infrastructure funding, reserves and reserve funds may be segregated into three categories: dedicated, Asset Replacement Fund (ARF), and general. The Town has reserve funds that are dedicated to specific infrastructure assets. Most provide revenues that are not reliable or predictable, and are funded from uncertain sources such as occasional contributions or operating surpluses. The few that are sustainable are not for the classes of assets covered by this plan. General capital reserves are available. They are funded from both sustainable and nonsustainable sources. On an annual basis, $312,776 is contributed from general revenues. These reserves are generally used for enhancement projects, which have no other source of funding and tend to be discretionary. Roads, bridges and culverts, and water and wastewater system capital projects are usually for replacements and so do not benefit from this funding source. With few exceptions, the Asset Replacement Fund will be the source of funding for these projects. The Town established the Asset Replacement Fund (ARF) in Its purpose is to have sufficient funds available to finance the replacement of capital assets at the end of their expected useful life calculated annually. Contributions from the water and wastewater rate groups started at 100% of the annual requirement. Contributions from tax-supported areas started at 50% and were gradually increased over time.

68 67 The Capital Financing Sustainability Strategy projected that the ARF funding levels for Roads (including bridges and culverts), water and wastewater were sufficient to meet short-term requirements. Long-term requirements will need additional funding Property Taxes and Utility Rates By default, any funding requirements not met by any of the previous funding sources, requires the use of general revenues property taxes or utility rates as appropriate. This is also known as pay-as-you-go financing. The Town s past practice has been to use property taxes and utility rates for enhancements only but this changed recently with the introduction of an Infrastructure Levy in 2013, and again in The implementation of these levies can be attributed to the recommendations of the Capital Financing Sustainability Strategy. In 2013, there was a 0.80% levy increase in the amount of $363,773, which was added to the ARF contribution for Roads. In 2014, another levy increase of 0.74% added an additional $208,000 to the Roads ARF ($150,125 went to Fire). Hemson Consulting has recommended ongoing tax increases for infrastructure of between 0.85% and 1.8%. At this time, Council has not adopted a policy with respect to future infrastructure levies Debt Financing Debt financing is not included as a funding option, however it can be a tool for managing cashflow or for matching costs to the benefits derived in the future. The debt servicing payments will require one of the above-noted funding sources. The Town s current debt policy was established and adopted in It sets restrictions on the use of debt: For capital expenditures only. Debt servicing not to exceed 10% of own-source revenues (i.e. excluding grants and the use of reserves). The policy does not prescribe when to use debt or the use of internal loans from reserve funds. The Capital Financing Sustainability Strategy recommends that the Debt Policy should be updated and the Investment Strategy should continue to be used. Recommendation: Review and update the Town s Corproate Debt Policy. (1c) The Investment Strategy allows investing in projects that can earn a better return on investment than the cost of debt servicing. Typically, this would be an internal loan from reserve funds. This would be the mechanism to apply internal cost savings and dedicated revenues that would be realized in the future. Such a methodology does not appear applicable to the infrastructure classes included in this plan.

69 68 Table 22: Summary of Historic and Projected Funding Year Gas tax Grants ARF Roads & Bridges ARF Water System ARF Wastewater System 2010 $2,283,685 $0 $3,888,801 $2,602,191 $2,282, ,295, ,586,019 3,166,137 2,814, ,295, ,063,036 2,606,475 2,901, ,312, ,351,352 2,882,665 2,352, ,376, ,683,447 2,629,698 2,837,062 5-year $2,312,697 $ - $4,314,531 $2,777,473 $2,777,473 average ,315, ,700 4,667,880 2,340,537 2,650, ,431, ,700 4,667,880 2,340,537 2,650, ,431, ,700 4,667,880 2,340,537 2,650, ,547, ,700 4,667,880 2,340,537 2,650, ,600, ,700 4,667,880 2,340,537 2,650, ,700, ,700 4,667,880 2,340,537 2,650, ,700, ,700 4,667,880 2,340,537 2,650, ,800, ,700 4,667,880 2,340,537 2,650, ,800, ,700 4,667,880 2,340,537 2,650, ,000, ,700 4,667,880 2,340,537 2,650, year projection average $2,632,592 $317,700 $4,667,880 $2,340,537 $2,650,528 Historic funding includes interest earned on fund balances. Roads and bridges includes culverts, sidewalks and other road-related works. 6.6 Funding Gap and Alternative Scenarios The funding gap and alternatives can be divided into two components tax-supported and rate-supported Tax-Supported The Capital Financing Sustainability Strategy reviewed all tax-supported infrastructures. It concluded that the annual replacement requirements will rapidly increase in the 2020s as many of the roads that were built in the 1980s will require reconstruction. It further projected that without increases in ARF contributions; the combined negative reserve fund balance is forecast to increase from $25.7 million in 2013 to $155.9 million in While most of this funding gap applies to other assets parks, facilities and stormwater management, which are not included in this plan there is a funding gap projected for roads and bridges.

70 69 Year Indexing has been applied to current replacement costs to estimate what they will be in the future. This is a projection of increases in the Construction Price Index. The assumed annual increase of 4% is based on historical trends and is consistent with that used by Hemson Consulting for the Capital Financing Sustainability Strategy The following table projects the requirements on the tax supported Asset Replacement Fund for roads. Table 23: Projected ARF requirements for Roads (including bridges and culverts) Road replacements Bridges & culverts replacements Noninfrastructure solutions Maintenance activities Total Indexing Total with Indexing 2015 $1,060,000 $700,000 $81,000 $643,050 $2,484,050 $100 $2,484, ,060, ,000 81, ,050 2,484, ,583, ,060, ,000 81, ,050 2,484, ,686, ,060, ,000 81, ,050 2,484, ,794, ,600, ,000 81, ,050 5,924, ,930, ,600, ,000 81, ,050 5,924, ,207, ,600, ,000 81, ,050 5,924, ,495, ,600, ,000 81, ,050 5,924, ,795, ,600, ,000 81, ,050 5,924, ,107, ,003, ,000 81, ,050 6,943, ,882,125 The next table projects the balances in the Roads Asset Replacement Fund based only on the capital requirements of the preceding table. Gas Tax contributions have been included as it has been the Town s practice to apply this grant to roads projects. Year Beginning Balance ARF Contributions Gas Tax Contributions Total Contributions Capital Expenditures Ending Balance $1,592,395 $4,667,880 $2,315,796 $6,983,676 $2,484,050 $2,907, ,907,231 4,667,880 2,431,586 7,099,466 2,583,412 7,423, ,423,285 4,667,880 2,431,586 7,099,466 2,686,748 11,836, ,836,003 4,667,880 2,547,376 7,215,256 2,794,218 16,257, ,257,040 4,667,880 2,600,000 7,267,880 6,930,301 16,594, ,594,619 4,667,880 2,700,000 7,367,880 7,207,513 16,754, ,754,987 4,667,880 2,700,000 7,367,880 7,495,813 16,627, ,627,054 4,667,880 2,800,000 7,467,880 7,795,646 16,299, ,299,288 4,667,880 2,800,000 7,467,880 8,107,471 15,659, ,659,697 4,667,880 3,000,000 7,667,880 9,882,125 13,445,452

71 70 It appears that there will be sufficient funding but the Roads Asset Replacement Fund is used for more than just roads, bridges and culverts; it is also the funding source for major maintenance and the replacement of sidewalks, streetlights, signalizations and the stormwater management system. These items are outside the scope of this plan and highlight the need to expand the scope of this plan in the future. The next table shows what the additional ARF requirements are from the other roadrelated works sidewalks, streetlights and stormwater management. These amounts are taken from the Capital Financing Sustainability Strategy they have not been reviewed as part of this Plan and timing of replacements is based on age and not condition. Table 24: Projected ARF requirements for Road-related infrastructure funded from the Roads ARF Year Sidewalks Street Lighting Storm Water Management Maintenance Activities Total Indexing Total with Indexing 2015 $242,000 $1,045,000 $562,000 $451,000 $2,300,000 $100 $2,300, ,000 1,045, , ,000 2,300, ,392, ,000 1,045, , ,000 2,300, ,487, ,000 1,045, , ,000 2,300, ,587, ,000 1,045, , ,000 2,300, ,690, ,000 1,045, , ,000 2,300, ,798, ,000 1,045, , ,000 2,300, ,910, ,000 1,045, , ,000 2,300, ,026, ,000 1,045, , ,000 2,300, ,147, ,000 1,045, , ,000 2,300, ,273,617

72 71 The next table is a revision of the previous ARF projection with the inclusion of all roadrelated works that are funded from the Roads ARF. Table 25: Adjusted Projected ARF balance for Roads Year Beginning Balance ARF Contributions Gas Tax Contributions Total Contributions Capital Expenditures Ending Balance $1,592,395 $4,667,880 $2,315,796 $6,983,676 $4,784,050 $607, ,231 4,667,880 2,431,586 7,099,466 4,876,050 2,830, ,830,647 4,667,880 2,431,586 7,099,466 4,971,730 4,958, ,958,383 4,667,880 2,547,376 7,215,256 5,071,237 7,102, ,102,402 4,667,880 2,600,000 7,267,880 8,614,725 5,755, ,755,557 4,667,880 2,700,000 7,367,880 8,722,352 4,401, ,401,085 4,667,880 2,700,000 7,367,880 8,834,284 2,934, ,934,682 4,667,880 2,800,000 7,467,880 8,950,693 1,451, ,451,869 4,667,880 2,800,000 7,467,880 9,071, , ,010 4,667,880 3,000,000 7,667,880 10,216,667-2,700,797 The revised ARF projection shows a funding gap with a deficit occurring in Recommendation Expand the Asset Management Plan to other asset classes, beyond 10 years, to delve more into operational and maintenance issues. (8) To manage this funding gap, these options were provided by Hemson: 1. Status quo make no changes to funding and have a $500 million shortfall by Full funding - 1.8% annual additional tax increases to Adjusted targets lowering the service level targets, such as roads to 90% of their projected funding level, could reduce the annual additional tax increase to 1.08% tax increase to Creating a decimated stormwater management rate to further reduce the required annual tax increase to 0.85% to Rate-Supported The Capital Financing Sustainability Strategy determined that the forecasted capital contributions for the water and wastewater systems will be adequate for the next 20 years. This assumes implementation and regular updating of the 6-Year Water and Wastewater Financial Plans.

73 72 Since the useful lives for water and wastewater infrastructure are much longer than other asset classes, the major impact of these replacements will likely not be felt until the mid-2030s. The post-2046 period will be critical and should be addressed in the next 6-Year Water and Wastewater Financial Plan update. Indexing has been applied to current costs to estimate what they will be in the future. This is a projection of increases in the Construction Price Index. The assumed annual increase of 4% is based on historical trends and is consistent with that used by Hemson Consulting for the Capital Financing Sustainability Strategy The following table projects the requirements on the water-rate supported Asset Replacement Fund. Table 26: Projected ARF requirements for the Water System Year Replacements Noninfrastructure solutions Maintenance activities Total Indexing Total with Indexing 2015 $700,000 $10,000 $282,100 $992, $992, ,000 10, , , ,031, ,000 10, , , ,073, ,000 10, , , ,115, ,000 10, , , ,160, ,000 10, , , ,207, ,000 10, , , ,255, ,000 10, , , ,305, ,000 10, , , ,357, ,000 10, , , ,412,068

74 73 The next table projects the balances in the Water Asset Replacement Fund based on the capital requirements of the preceding table. Table 27: Projected ARF balance for the Water System Year Beginning Balance Contributions Capital Expenditures Ending Balance 2015 $19,658,201 $2,340,537 $992,100 $21,006, ,006,638 2,340,537 1,031,784 22,315, ,315,391 2,340,537 1,073,055 23,582, ,582,873 2,340,537 1,115,978 24,807, ,807,432 2,340,537 1,160,617 25,987, ,987,352 2,340,537 1,207,041 27,120, ,120,848 2,340,537 1,255,323 28,206, ,206,062 2,340,537 1,305,536 29,241, ,241,063 2,340,537 1,357,757 30,223, ,223,843 2,340,537 1,412,068 31,152,312 The following table projects the requirements on the wastewater-rate supported Asset Replacement Fund. Table 28: Projected ARF requirements for the Wastewater System Year Replacements Noninfrastructure solutions Maintenance activities Total Indexing Total with Indexing 2015 $1,900,000 $80,000 $275,600 $2,255, $2,255, ,900,000 80, ,600 2,255, ,345, ,900,000 80, ,600 2,255, ,439, ,900,000 80, ,600 2,255, ,537, ,900,000 80, ,600 2,255, ,638, ,900,000 80, ,600 2,255, ,744, ,900,000 80, ,600 2,255, ,854, ,900,000 80, ,600 2,255, ,968, ,900,000 80, ,600 2,255, ,086, ,900,000 80, ,600 2,255, ,210,422 The projected requirements in the table above do not include the replacement of pumping stations. No replacements are anticipated within the next 10 years.

75 74 The next table projects the balances in the Wastewater Asset Replacement Fund based on the capital requirements of the preceding table. Table 29: Projected ARF balance for the Wastewater System Year Beginning Balance Contributions Capital Expenditures Ending Balance 2015 $19,658,201 $2,650,528 $2,255,600 $20,053, ,053,129 2,650,528 2,345,824 20,357, ,357,833 2,650,528 2,439,657 20,568, ,568,704 2,650,528 2,537,243 20,681, ,681,989 2,650,528 2,638,733 20,693, ,693,784 2,650,528 2,744,282 20,600, ,600,030 2,650,528 2,854,054 20,396, ,396,504 2,650,528 2,968,216 20,078, ,078,816 2,650,528 3,086,944 19,642, ,642,400 2,650,528 3,210,422 19,082,506 The combined water and wastewater balances look quite healthy, growing by $8 million over the 10-year period of the Plan. Caution must be applied to drawing any conclusions from that. The Capital Financing Sustainability Strategy forecasts a rate-supported ARF deficit will occur in 2043 and will escalate. Considering that the Plan is suggesting that the requirements may be higher (see table 21), the deficit may occur sooner than expected. Further analysis is required.