calgary.ca call 3-1-1

calgary.ca call 3-1-1 Infrastructure Status Report 2006

The City of Calgary Infrastructure Status Report The Infrastructure Status Report (ISR) is a key document to enable knowledgeable infrastructure investment decisions by City Council. It provides information on asset condition and the ability for assets to deliver services to the citizens of Calgary. The ISR: Benchmarks for infrastructure needs. Identifies short- and long-term infrastructure investment shortfalls. Recommends means for sustainable management of corporate infrastructure assets. City Council approved Calgary s Asset Management Strategy and the Corporate Asset Management Program in 2005. The ISR is a part of the integrated framework of processes, tools and documents to implement Corporate Asset Management in The City of Calgary. Calgary s Asset Management Strategy identified 11 essential elements of an effective asset management program, four of which guide the development of the annual ISR. These include: An accurate and consistent inventory for all municipal infrastructure. Continual infrastructure status reporting to enable asset stewards to develop infrastructure investment priorities and annual budgets. An integrated infrastructure risk assessment framework to inform infrastructure investment decisions. Benchmarking to measure infrastructure performance. The ISR provides the information to enable City Council to make and continually improve infrastructure investment decisions which ensure The City s infrastructure is well maintained and that maintenance, repair and development programs are adequately funded. The ISR is aligned with the National Research Council of Canada s recommendations for municipalities to be able to answer six key questions: 1. What do we own? 2. What is it worth? 3. What is its remaining service life? 4. What condition is it in? 5. What do we spend and what should we spend? 6. What is the gap? Asset management best practices will provide asset stewards the right information to make the right infrastructure decisions at the right time. Calgary s Asset Management Strategy, 2005 June 2007 INFRASTRUCTURE STATUS REPORT

Table of contents Executive summary... 1 Current infrastructure status... 5 What do we own?... 5 What is it worth?... 5 What is its remaining service life?... 8 What condition is it in?... 9 What do we spend and what should we spend?... 13 What is the gap?... 13 Capital budget conclusions... 15 Infrastructure gap conclusions... 18 Appendices I. The state of asset management at The City of Calgary... 21 II. Business unit summary... 25 III. General discussion of assets... 47 THE CITY OF CALGARY

Executive Summary The City of Calgary is under pressure to keep pace with rapid growth. The City s infrastructure is aging the majority constructed during the economic growth period from the 1960s to the mid-1980s and population growth and increased economic activity are challenging the capacity of existing infrastructure to meet the increased demand. More stringent environmental requirements and volatile construction costs are putting increasing pressures on the already limited funds for infrastructure investment. A prolonged and serious funding shortfall creates a backlog of priority projects that will eventually affect The City s ability to deliver quality public service to its citizens which will, in turn, have an impact on Calgarians quality of life. The City has a large infrastructure gap. Over the next 10 years, an additional investment of $8.2 billion is needed to fund both growth and maintenance. The City must work with other levels of government to establish sustainable and flexible infrastructure funding sources and work to prioritize current budget allocations based on priorities for capital maintenance. A corporate-wide infrastructure strategy must remain one of The City s foundational corporate initiatives to address growing infrastructure needs. Infrastructure Services works closely with City business units, external stakeholders and national infrastructure practitioners and experts as it leads the Corporate Asset Management program. Infrastructure Services is implementing new strategies and improved management tools while exploring alternative new funding approaches. What do we own? The physical assets owned by The City are extensive and varied. The City is responsible for water and sewer systems, solid waste management, roads, bridges, transit systems, parks, recreation facilities, fleet, equipment and information technology. The City also has significant land holdings in the form of open space, rightsof-way, public housing and non-public real estate holdings, which is not yet reported as part of the corporate asset management program. The 10-year infrastructure gap Unfunded ($ billions) Capital Maintenance $1.6 Operating $0.5 Capital Growth $6.1 INFRASTRUCTURE STATUS REPORT 1

Key findings and trends Over the past three years The City s infrastructure assets have appreciated considerably from $28 billion to $50 billion! Prime reasons for this increase in inventory replacements value includes unprecedented construction, cost escalation and inflationary market conditions. No less important, but of relatively lesser magnitude, are the increases in inventory replacement value by the regular additions of new assets both built by The City and acquired from developers. A final, but not as obvious a contribution to the increase, is improvements in reporting on existing assets. The percentage of assets in poor to critical condition and the remaining life of the assets have not changed over last year. City business units with the largest absolute values of poor to critical infrastructure are Calgary Transit, Roads, Water Services and Corporate Properties. Facilities infrastructure, which has the greatest percentage of assets in poor condition, is the area of greatest need and the highest corporate risk. The average remaining life of assets has not changed within the last year. Assets in Fleet, Emergency Medical Services and Information Technology have the shortest remaining life. The City of Calgary has identified $8.2 billion of infrastructure maintenance and growth over the next ten years that is unfunded. This infrastructure gap has grown from $5.4 billion in 2005. The capital maintenance portion of the gap has decreased over three years from a high of $2.3 billion to $1.6 billion. It is suggested the primary contributing factors to this trend is the corporation is more effectively identifying growth projects that concurrently eliminate capital maintenance needs. The capital growth portion of the infrastructure gap shows an increase to $6.04 billion in 2006 from $2.7 billion in 2005. This is attributable to a large increase in the cost of constructing unfunded projects (over that identified in 2005) coupled with the need to meet the additional requirements of higher than forecast population growth in the last year. Cost escalation and rapid growth are therefore driving the infrastructure gap. Current funding sources will not support sustainable infrastructure capital maintenance programs based on medium-term projected needs. The City must direct resources towards maintaining its current infrastructure and work with other levels of government to establish longterm, sustainable funding for both growth and maintenance. Infrastructure priorities should be reflected in current budget allocations. Budgets must be readjusted to allocate funds based on assets value, physical condition and remaining service life, criticality and risk exposure. 2 THE CITY OF CALGARY

What are these assets worth? The current replacement value of Calgary s infrastructure is estimated to be $50 billion. Over the past three years, The City s infrastructure assets have appreciated considerably to $50 billion from $28 billion due to cost escalation, inflationary market conditions, new assets (both built and inherited) and better reporting on existing assets. Assets ($ Billions) Transportation $13.90 Corporate Services (IT) $0.13 Community & Protective Services/ $3.32 Parks, Recreation, Civic Partners AMCW $1.55 Corporate Properties Fleet UEP $30.85 What is the condition? The City s infrastructure is currently in relatively good condition because of the following: The relative age of the infrastructure. Diligent preventative maintenance. Previous decisions by City Council in balancing the demands of infrastructure renewal and growth. What is the remaining service life? In the short-term, infrastructure investment needs are relatively high in some areas. Assets rated in poor to critical condition include: water distribution networks, bridge structures, traffic control/street lighting, assorted road resurfacing, parks and select pools and arenas. Overall, the remaining life of the infrastructure is about 30 years with an average life expectancy of 63 years. As The City s infrastructure ages, more investment is required for maintenance and rehabilitation. In the near future, an increasing percentage of assets will reach the midpoint of their life cycle. Typically, this represents a more expensive stage in the life cycle of an asset. What do we spend and what should we be investing? The City spends approximately $410 million per year on maintaining our existing assets. The City will spend approximately $7.8 billion over the next 10 years on both maintaining existing infrastructure and building new infrastructure related to growth. Asset managers The business units managing the majority of The City s infrastructure are: Calgary Police Service Civic Partners Corporate Properties & Buildings Emergency Medical Services Fire Fleet Services Information Technology Parks Recreation Roads Calgary Transit Waste & Recycling Services Water Resources Water Services Criticality Business units have reported that $3.5B is critical infrastructure. Proactive inspection and rehabilitation are deemed critical for assets where the financial, business or service level consequences of failure are severe. Transit ($1.4B) and Water Management ($956M) have the highest value of critical infrastructure. Police (66 per cent) and Transit (56 per cent) have the highest percentage of critical infrastructure. Risk $4.2B of The City s infrastructure is in the highest risk category. Risk is determined from a subjective assessment of probability of failure multiplied by a subjective assessment of the impact of failure. Roads ($2.2B) and Transit ($1.1B) have the most asset value at risk. Fire (72 per cent) and Police (50 per cent) have the highest percentage of risk-exposed assets. INFRASTRUCTURE STATUS REPORT 3

A number of studies on public infrastructure indicate that over the life of an asset, capital and operating maintenance expenditures of two to four per cent of the current replacement value of the asset could be expected. Based on a total current replacement value of $50 billion, on average, it could be expected that between one and two billion dollars should be spent annually to maintain infrastructure assets. What is the gap + 3 year trends? City business units have identified a total 10-year envelope infrastructure gap of $8.2 billion. Of this gap, $2.1 billion is related to maintenance and $6.1 billion is for growth. Gap 2004 2005 2006 $5.30B $5.40B $8.20B Operating $0.5B $0.7B $0.52B Maintenance $2.3B $2.0B $1.59B Growth $2.5B $2.7B $6.04B Age (years) Expected life 68 70 63 Remaining life 31 45* 30 Value $27B $28B $50B Condition Physical 80% 80% 76% 14% 13% 17% 6% 7% 7% Functional 85% 80% 82% 11% 16% 15% 4% 4% 3% Demand 87% 85% 84% *Calgary Police Service and Parks did not report. 8% 10% 14% 5% 5% 3% The City will see maintenance costs significantly increase as its assets pass through middle age over the next decade, and as cost escalation impacts maintenance, new construction and rehabilitation costs. Environmental legislation, growth and annexation will worsen the situation. Growth and annexation will also, paradoxically, improve the situation by diluting or reducing the average age of infrastructure as new infrastructure comes on stream in newer subdivisions. 4 THE CITY OF CALGARY

Current infrastructure status What do we own? Infrastructure is defined as all the physical assets developed and used by The City to support the community s social and economic activities. The City owns and manages a broad range of infrastructure grouped into the following areas: Civic partners Corporate properties and buildings Fire, police and EMS Parks and recreation Road and right-of-way Transit and fleet Waste management Waterworks, wastewater and stormwater Replacement value of assets by type ($ Billions) Systems and Structures Totals $39.14 Land Totals Land Improvement Totals Facilities Totals Equipment Totals $0.53 $0.81 $3.52 $5.75 0 5 10 15 20 25 30 35 40 What is it worth? The total replacement value of The City s infrastructure is $50 billion. Major infrastructure replacement value growth is related to Water Services, Water Resources, Transit and Roads. Calgary s rapid growth and expansion directly influences these elements. The value of The City s infrastructure is recorded by asset type: buildings, equipment, systems and structures. Land values will be included in future reports. The impact of cost escalation on the current replacement value is substantial and is assessed in this year s report. Its impact has been most dramatic in the value of Roads Transportation assets, which increased to $11 billion in 2006 from about $8 billion in 2005 and, over the past three years, water assets have increased in value to $31 billion in 2006 from $15 billion in 2004. INFRASTRUCTURE STATUS REPORT 5

In 2004, Water Services valued all waterworks underground infrastructure at $4.6 billion. In March 2007, that estimate rose to $10.4 billion (although the addition of another 200km of underground mains was partly responsible for the increase). The large change resulted in using $1,350 per metre replacement cost in 2007 versus a $741 per metre for replacement cost in 2004. The difference accounted for an increase in CRV of $2.4 billion. The large increase in unit cost estimates is due to repair job estimates versus new construction job estimates. Roads provides another example of the impacts of inflation on replacement value. In 2004, the estimated replacement value of roadways was $7.9 billion. In 2005 that value had risen to $8.2 billion and in 2006, estimates placed the value at $11.4 billion, an increase of 44 per cent over two years. Replacement value of assets ($ billion) Water Waste Management Transit Roads Recreation Police Parks IT Fleet Services Fire EMS Corporate Properties & Buildings *Civic Partners Land $0.53 $0.08 $2.48 $0.43 $0.28 $1.20 $0.13 $0.20 $0.23 $0.00 $0.82 $1.17 Note: Heritage Park, Convention Centre did not report. $11.42 $30.77 0 5 10 15 20 25 30 35 The City owns and maintains infrastructure assets valued at $50 billion. However, $3.5 billion, or seven per cent of the assets, are estimated to be critical for service delivery. On average the inventory is 30-years old with a remaining life of 33 years. Existing non-critical assets, if allowed to deteriorate with little regard for maintenance and rehabilitation, will add to the inventory of critical assets. 6 THE CITY OF CALGARY

Critical asset value ($ millions) Water Waste Management Transit Roads Recreation Police Parks IT Fleet Services Fire EMS Corporate Properties & Buildings Civic Partners The graph below illustrates the risk costs associated with each business unit s assets and asset types. This indicates that Roads and Transit have the most assets at risk. High risk value estimate ($ millions) Water Waste Management Transit Roads Recreation Police Parks IT Fleet Services Fire EMS Corporate Properties & Buildings Civic Partners $20 $186 $0 $185 $0 $0 $15 $64 $0 $148 0 300 600 900 1,200 1,500 $15 $139 $168 $506 $569 $1,123 $956 $2,202 0 500 1,000 1,500 2,000 2,500 $1400 Calgary Fire Department holds 187 fire and support vehicles and 41 buildings including 33 Fire Stations, a 9-1-1 Communications Centre, fire inspector offices, a Fire Training Academy and one EMS Geopost. Calgary Police Service has 33 facilities and 916 vehicles. Calgary Transit has: - 28 substations - 36 LRT stations - 52 parking lots/bus shelters/bus loops - 17 bridges and 6 tunnels - 119 LRVs - 839 buses - 96 auxiliary vehicles - 94 km track length. Corporate Properties has 183 buildings and structures including Plus 15, 2,746,356 square feet or 255,145 m2. Fleet operates 2500 vehicles, including emergency response vehicles. Parks works with 405,000 trees, 700 km of local and regional pathways and 7600 hectares of open space on 3600 regional and local parks, natural areas roadway greens sites and five city cemeteries. Recreation holds 14 ice arenas, two leisure centres, two art centres, the Glenmore reservoir facility, 21 pools, six athletic parks, five golf courses and four associated facilities. Roads and right-of-way Total roads km 13,180 Total sidewalk sq m 6,460,665 Total grass sq m 10,665,922.30 Total back lanes sq m 10,014,116 Total fences m 329,759.55 Total pathway m 524,888.92 Water Resources storm system runs 3600 km of mains, 29 pump stations and 148 retention ponds. Information Technology offers 300 servers, 500 printers and 5000 desktop machines. INFRASTRUCTURE STATUS REPORT 7

Water Resources sanitary system runs two treatment plants, a concrete gravity dam, 290,000 valves, 4500 km of transmission/distribution pipe, reservoirs, pump stations and 290,000 service connections. Waste & Recycling Services has 275 vehicles, 46 facilities and buildings, three landfills and five transfer stations. Water Resources water system operates two treatment plants, 4000 km of mains and 295,000 lateral connections. Civic Partners Calgary Parking Authority looks after 6700 parking stalls in 35 parkade and surface lots. Calgary Public Library offers 22 branches. Calgary Zoo includes 89 buildings and six amphitheatres. EPCOR Centre features four auditoriums. Fort Calgary operates five facilities, including the historic Hunt House. Heritage Park boasts 118 buildings, some approaching 90 years old. TELUS Convention Centre is 12,263 m2. TELUS World of Science has two buildings. Remaining Life (yrs) Expected Asset Life (yrs) Replacement value of assets by service area ($ millions) UEP Transportation Community Services Corporate Infrastructure Protective Services Systems and Structures $26,769 Land Improvement Facilities $75 Equipment $4,004 Systems and Structures $11,880 Land Improvement Facilities $660 Equipment $1,363 Systems and Structures $420 Land Improvement $811 Facilities $1,508 Equipment $63 Systems and Structures $66 Land $530 Land Improvement Facilities $884 Equipment $201 Systems and Structures Land Improvement Facilities $397 Equipment $122 What is its remaining service life? 0 5,000 10,000 15,000 20,000 25,000 30,000 The life spans of The City s diverse assets vary from a few years (e.g. information technology) to over 70 years (e.g. sewers). Overall, the average remaining life is about 30 years with an average life expectancy of 63 years. Expected life/remaining life of City assets (years) Water Waste Management Transit Roads Recreation Police Parks IT Fleet Services Fire EMS Corporate Properties & Buildings Civic Partners* 4 4 6 3 6 8 9 11 17 17 16 23 21 24 31 32 35 0 10 20 30 40 50 60 70 80 40 39 44 50 53 60 72 8 THE CITY OF CALGARY

Expected life/remaining life by service area (years) UEP Transportation Community Services Corporate Infrastructure Protective Services Systems and Structures 37 Equipment Systems and Structures 21 Facilities 5 14 Equipment 9 23 Systems and Structures Land Improvement 23 Facilities 22 Equipment 4 Systems and Structures 3 9 14 Land Improvement Facilities 30 Equipment 4 6 Systems and Structures Land Improvement Facilities 14 Equipment 3 10 0 10 20 30 40 50 60 70 80 90 As the infrastructure ages and Calgary s population grows, greater demands will be put on the infrastructure. Life cycle maintenance and upgrades become more important with each passing year. What condition is it in? A standardized ranking system was used to determine the physical condition, demand/capacity and functionality of all City infrastructure. The ranking system has five levels: A - very good B - good C - fair D - poor F - critical Although the quality of available data varies and requires some assumptions in the assessment, this ranking system provides a strategic perspective of the state and condition of The City s infrastructure. Continued improvement to data collection and analysis will generate more consistent and accurate data. The majority of the physical condition, demand/capacity and functionality of The City s infrastructure are rated as very good or good (approximately 76 per cent). However, some areas are fair (approximately 17 per cent) and if not maintained will deteriorate to poor and critical condition. Currently, seven per cent of the infrastructure is in poor-to-critical condition. 2005 also had seven per cent of the infrastructure in poor to critical condition; and 2004 had five per cent in poor to critical condition. The increase in 2005 and 2006 is due to the aging of the infrastructure and implementation of condition assessment practices throughout the corporation. 42 46 47 52 52 57 77 84 Remaining Life (yrs) Expected Asset Life (yrs) Physical Condition Physical condition refers to the condition of the physical infrastructure that allows it to meet the intended service level. Good to very good 76 per cent. Fair 17 per cent. Poor to Critical seven per cent. Demand/capacity Demand/capacity represents the ability of the physical infrastructure to meet service needs. Good to very good 84 per cent. Fair 14 per cent. Poor to Critical two per cent. Functionality Functionality is the ability for physical infrastructure to meet program delivery needs. Good to very good 82 per cent. Fair 15 per cent. Poor to Critical three per cent. INFRASTRUCTURE STATUS REPORT 9

Physical Condition Physical condition refers to the condition of the physical infrastructure that allows it to meet the intended service level. Good to very good 76 per cent. Fair 17 per cent. Poor to Critical seven per cent. Capital funding is needed to ensure infrastructure in good condition, does not deteriorate and fair and critical infrastructure is appropriately funded to improve their status. Condition of The City s infrastructure Demand/capacity Physical condition 76% 17% 7% Demand/capacity represents the ability of the physical infrastructure to meet service needs. Good to very good 84 per cent. Fair 14 per cent. Poor to Critical two per cent. Functionality Functionality is the ability for physical infrastructure to meet program delivery needs. Good to very good 82 per cent. Fair 15 per cent. Poor to Critical three per cent. Good to very good Fair Poor to critical Demand/Capacity Functionality Physical conditon ranking 84% 14% 2% 82% 15% 3% 0 10 20 30 40 50 60 70 80 90 100 Water 77% 18% Waste Management 56% 26% 18% Transit Roads 69% 18% 87% 13% 9% Recreation 65% 25% 10% Police 62% 24% 14% Parks 64% 28% 8% IT 16% 83% Fleet Services 33% 25% 42% Fire 30% 37% 33% EMS Corporate Properties & Buildings 38% 10% 52% Civic Partners* 27% 52% 21% 0 10 20 30 40 50 60 70 80 90 100 5% 4% 1% Demand condition ranking Water 81% 17% 2% Waste Management 42% 19% 39% Transit 69% 22% 9% Roads 95% 3% 2% Recreation 61% 32% 7% Police 52% 44% 4% Parks 92% 8% IT 100% Fleet Services 100% Fire EMS 93% 5% 2% Corporate Properties & Buildings 100% Civic Partners* 64% 17% 19% 0 10 20 30 40 50 60 70 80 90 100 10 THE CITY OF CALGARY

Functional condition ranking Water 77% 19% 4% Waste Management Transit Roads 72% 28% 92% 6% 94% 3% 2% 3% Recreation 57% 40% 3% Police 75% 7% 18% Parks 91% 9% IT 49% 51% Fleet Services 100% Fire 96% 3% 1% EMS Corporate Properties & Buildings 100% Civic Partners* 49% 38% 13% 0 10 20 30 40 50 60 70 80 90 100 Good to very good Fair Poor to critical Corporate Properties & Buildings, Water and Roads have the largest value of poor to critical infrastructure when taking the total replacement value of the infrastructure into consideration. Physical condition ranking ($ millions) Waste Management $14 $20 $42 Recreation Police Parks IT Fleet Services Fire EMS $1 $22 $41 $41 $66 $100 $84 $56 $66 $77 $86 $71 $110 $110 $172 $282 $336 $768 Corporate Properties & Buildings Civic Partners* $80 $230 $315 $304 $422 $576 0 100 200 300 400 500 600 700 800 Physical condition ranking ($ millions) $1,473 Water $5,501 76% Transit $337 $438 $1,709 84% $23,799 Roads $461 $1,062 82% $9,896 0 5,000 10,000 15,000 20,000 25,000 INFRASTRUCTURE STATUS REPORT 11

Transit, Water and civic partners have the largest value of poor to critical infrastructure with respect to demand/capacity. Good to very good Fair Demand condition ranking ($ millions) Poor to critical Waste Management Recreation Police Parks $30 $14 $32 $29 $10 $99 $139 $125 $144 $264 $1,000 IT $134 Fleet Services $200 Fire $4 $12 $218 EMS Corporate Properties & Buildings Civic Partners* $208 $187 $715 $817 $0 $200 $400 $600 $800 $1,000 Demand condition ranking ($ millions) $611 Water $5,092 76% Transit $216 $552 $1,717 84% $25,071 Roads $133 $394 82% $10,982 0 5,000 10,000 15,000 20,000 25,000 30,000 12 THE CITY OF CALGARY

Water, Roads and civic partners have the largest value of poor to critical infrastructure with respect to functionality when taking into account the total replacement value of the different infrastructure elements. Functional condition ranking ($ millions) Good to very good Fair Poor to critical Waste Management Recreation Police $21 $54 $11 $51 $20 $176 $246 $208 Parks $110 $1,094 $1,000 IT Fleet Services Fire $4 $6 $68 $65 $200 $225 EMS Corporate Properties & Buildings Civic Partners* $146 $419 $545 $817 0 200 400 600 800 1,000 1,200 Functional condition ranking ($ millions) $1,095 Water $5,963 76% Transit $58 $154 $2,273 84% $23,715 Roads $312 $367 82% $10,739 0 5,000 10,000 15,000 20,000 25,000 What do we spend and what should we spend? The City will spend approximately $7.8 billion over the next 10 years maintaining existing infrastructure and building new infrastructure related to growth. Of this, approximately $410 million will be spent on average per year on maintenance. What is the gap? City business units have identified a total 10-year envelope infrastructure gap of $8.2 billion. Of this gap, $2.1 billion is related to asset maintenance and $6.1 billion is for growth. This estimate is based on historical budget trends and new estimates from the business units of what is required. INFRASTRUCTURE STATUS REPORT 13

Gap analysis excluding growth This section translates the gap estimate in this report (physical condition, risk, age and criticality) into dollars. The table below shows these measurements of asset needs in terms of the capital and operating maintenance gap over the next 10 years, excluding growth. Business unit asset managers are using this data at the business unit level to make trade-off decisions as to what infrastructure needs funding on a year-by-year basis. Operations and capital maintenance 10-year gap The table below shows there are four approaches for estimating the infrastructure gap: physical condition, risk (the probability and impact of failure), age and criticality (the severity of financial, business or service level consequences of failure). To illustrate how we arrive at the infrastructure gap, we can look at physical condition. The estimated value of the poor to critical condition assets is $3.3B. We then add a straight line estimate of $8B for infrastructure deterioration over 10 years. Considering the available funding for infrastructure (approximately $4B), this gives an infrastructure gap of $7.3B. The same process is followed for the gap estimates for Risk, Age and Criticality. Calculations of the operations and capital maintenance 10-year gap (Billions) Available Funding (estimated) Physical condition Assets at risk Age Critical assets $4B $4B $4B $4B Value of assets requiring attention $(3.3B) $(4.2B) $(3.2B) $(3.6B) Deterioration estimate (straight line $50B over $(8B) $(8B) $(8B) $(8B) 63 years) Gap $(7.3B) $(8.2B) $(7.2B) $(7.6B) All these indicators of infrastructure asset status show a multi-billion dollar investment deficit of approximately $8 billion over the next 10 years on maintenance of infrastructure alone (approximately $800 M/yr.). Despite a current investment of almost two per cent of CRV and the relatively good condition of City assets, maintenance costs will increase significantly over the next decade as assets pass through middle age. The maintenance backlog will begin to grow at an accelerated rate in the near future. The rate will further accelerate with inflation, growth and annexation, and the costs associated with environmental legislation. 14 THE CITY OF CALGARY

Unfunded Shortfall (Gap) capital MTCE $(millions) $1,592.84 20% Shortfall (Gap) operating $(millions) $520.02 6% Shortfall (Gap) capital growth $(millions) $6,043.50 74% Key performance indicator Gap 2004 2005 2006 $5.3 billion $5.4 billion $8.2 billion The infrastructure gap is growing due to cost escalation of previously identified capital investment projects and the addition of new capital growth projects required to sustain service levels given dramatic increases in Calgary s population. Capital budget conclusions The link to the budget The City has an infrastructure gap of $8.2 billion - an estimate based on growth projections and predicted asset maintenance requirements. This indicates over the next 10 years, The City may need to spend an additional $820 million on infrastructure per year. Funds have been allocated in disproportion to the physical condition of a business unit s assets. For example, Corporate Properties and Buildings assets, which are in poor condition, represent 13 per cent of The City s poor to critical assets. They are worth $420 million. However, only two per cent or $90 million of The City s capital maintenance and operational maintenance is spent on this infrastructure. On the other hand, Roads currently has 14 per cent ($460 million) of The City s poor to critical assets and the full 14 per cent ($705 million) of available funds over the next 10 years have been allocated to Roads for operational and capital maintenance. According to the capital budget over the next five years, The City will be spending 62 per cent ($4.7 billion) on growth and service level projects and 38 per cent ($2.9 billion) on maintenance and upgrade projects. If we look at our condition indicators, we need to spend 27 per cent ($1.2 billion) for growth and 73 per cent ($3.2 billion) for maintenance. Percentage-wise, this is the exact opposite of what we are spending. This, however, does not take into account the overlap in projects in which growth actually solves a maintenance problem. INFRASTRUCTURE STATUS REPORT 15

Budget comparison of infrastructure investment ($ millions) Funded Funded operations (Excluding utilities and wages) Funded capital growth Funded capital maintenance 1 Civic Partners* $116.08 $217.35 $7.77 2 Corporate Properties & Buildings $83.00 $253.96 $6.00 3 Emergency Medical Services $0.65 $ - $14.94 4 Fire $87.78 $13.60 $187.12 5 Fleet Services $325.00 $30.00 $214.10 6 IT $ - $ - $68.53 7 Parks $306.05 $15.60 $65.09 8 Police $84.72 $36.35 $93.41 9 Recreation $21.96 $28.67 $98.20 10 Roads $567.80 $1,214.01 $137.51 11 Transit $10.97 $557.61 $154.30 12 Waste Management $ - $41.38 $78.89 13 Water $151.67 $1,348.04 $1,127.98 Totals $1,755.70 $3,756.57 $2,323.85 Unfunded Shortfall (gap) operations Shortfall (gap) capital growth Shortfall (gap) capital maintenance 1 Civic Partners* $63.14 $506.81 $21.22 2 Corporate Properties & Buildings $93.79 $1,293.09 $276.00 3 Emergency Medical Services $3.31 $15.50 $11.85 4 Fire $23.34 $159.00 $163.45 5 Fleet Services $ - $ - $ - 6 IT $ - $ - $29.82 7 Parks $90.39 $38.31 $232.52 8 Police $5.05 $465.00 $22.07 9 Recreation $0.80 $327.86 $5.45 10 Roads $238.47 $2,582.83 $334.06 11 Transit $1.72 $505.10 $394.42 12 Waste Management $ - $150.00 $102.00 13 Water $ - $ - $ - Totals $520.02 $6,043.50 $1,592.84 16 THE CITY OF CALGARY