EXECUTIVE SUMMARY Introduction The Asset Management Plan demonstrates sound stewardship of the Region s existing assets to support services at desired levels and to ensure the support of the Region s infrastructure is financially sustainable. The Asset Management relationships and dependencies at Halton Region are illustrated below. Asset Management Relationships and Dependencies Current State of Assets Level of Service Critical Assets Minimum Life Cycle Costs Long Term Funding Plan Halton Region s infrastructure assets are key resources used to provide services to the public. These services include the provision of a safe and efficient road network, safe drinking water, environmentally sound wastewater treatment, effective waste collection and processing, and the provision of social housing and facilities for other key services such as long-term care. All of these services contribute to the local economy and improve the quality of life for residents. The purpose of Halton Region s Asset Management Plan is to make the best possible decisions regarding the construction, operation, maintenance, renewal, replacement, expansion and disposal of these infrastructure assets while minimizing risk and cost to the Region and its taxpayers and while maximizing service delivery. The Asset Management Plan allows Halton Region to: provide input into long-term infrastructure master plans and the Budget and Business Plan; document existing and planned work practices and procedures; provide a business case for key infrastructure investments to support Regional services; develop a sustainable financial plan; support community engagement regarding customer desired levels of service derived from the infrastructure assets; meet legislative requirements; and support funding applications to the Government of Ontario. Halton Region s vision is to integrate Asset Management with Asset Financial Management as illustrated below. Asset Degradation and Rehabilitation Asset Management Asset Life Cycle Focused Risk Analysis Capacity and Operations Asset Data Status & Condition Asset Needs/ Plans Service Levels Asset Financial Management Financial Sustainability Balanced Budgets Expenditures Leveling Asset Depreciation and Financing Cost of Service Halton Region Asset Management Plan 2014 11
Asset Management Evolution Halton Region has been implementing various Asset Management practices for a number of years. In 2006, a vision for a comprehensive Asset Management program was developed. The vision implementation began with the development of the Regional Tangible Capital Asset register completed in 2009 to comply with new financial reporting requirements (refer to staff reports CS-31-06, CS-45-07, CS-52-07, CS-17-10). In 2012, utilising 2010 data, the Public Works first infrastructure condition report card was presented to Council, (refer to staff report PW-62-12). Subsequently the report card has been updated to reflect 2013 data and is presented in section 3.4 of the Asset Management Plan. The Public Works infrastructure condition report card will be reported on every three years. In 2014, a consultant was retained by the Public Works department to facilitate a review and develop a Corporate Asset Management Framework (Appendix PW18) and implementation plan to begin enhancements to the Public Works Asset Management Plan. Furthermore, the Asset Management Division has been undertaking a Building Condition Assessment process and feasibility study which enhances asset management planning for social housing and corporate facilities assets (refer to staff reports SS-25-08, CS-28-08). The Building Condition Assessments form the basis of the Asset Management Division Report Card which shows that the assets continue to be in a state of good repair. An overview of the evolution of Asset Management for Halton Region is presented in the following timeline. Asset Management Timeline Halton Region Asset Management Vision established CS-45-07 Public Sector Accounting Board, Tangible Capital Asset Project Update SS-25-08 and CS-28-08 Asset Management Building Condition Assessment Proposal CS-17-10 2009 Financial Statements for Halton Region - including new TCA financial reporting requirements PW-62-12 Public Works 2010 Infrastructure Condition Report Card 2006 2007 2008 2009 2010 2011 2012 2013 CS-31-06 Capital Asset Management and Reporting Framework CS-52-07 SAP Software to support Capital Asset Reporting TCA Financial Reporting Compliance Date (Jan. 1, 2009) AM Division Asset Management Plan Development Halton Region Corporate Asset Management Plan The Halton Region Asset Management Plan was developed with an objective to ensure financial sustainability in achieving desired service levels. A project team including staff from the Public Works Department, Legislative and Planning Services Department and the Finance Department, led the initiative, supported by a Steering Committee comprising of Directors from the above named departments. The Asset Management Plan was approved by the Commissioner of Public Works, Commissioner of Finance and Commissioner of Legislative and Planning Services. The first version of the Asset Management Plan was presented to Council through staff report PW-55-13/FN-27-13/ LPS-91-13. This Asset Management Plan continues to meet the requirements of the Ontario Ministry of Infrastructure Guide for Asset Management Plans issued in August 2012. P1 Halton Region Asset Management Plan 2014 12
Asset Management Plan Structure The infrastructure assets currently included in the Halton Region Asset Management Plan are water, wastewater, transportation and waste management assets managed by each of the divisions within the Public Works Department. Corporate Facilities and the Social Housing assets are also included in the plan and are managed by the Asset Management Division of the Legislative and Planning Services Department. The Halton Region Asset Management Plan is divided into two parts: Part 1 - Public Works and Part 2 Corporate Facilities and Social Housing. Although the principles of asset management planning used by both departments are similar, specific policies and practices differ to account for the differences in asset types and their unique operational requirements. Part 1: Public Works Halton Region Asset Management Plan 2014 21 Part 2: Corporate Facilities and Social Housing Halton Region Asset Management Plan 2014 89 The Budget and Business Plan presented for formal Council approval covers a forecast period of 10 years. However, the Asset Management Plan provides a full asset life cycle analysis for up to 100 years for Public Works assets. For Corporate Facilities and Social Housing assets, Building Condition Assessment and feasibility studies and replacement cost estimates are prepared for a forecast period of 25 years. Asset Management Plan Updates Continuous improvements to Asset Management practices within Halton Region will result in updates to the Asset Management Plan, and as such, it is a living document that will require ongoing refinement to reflect the evolution of Asset Management maturing within Halton Region over time. Next steps include scoping and validating a roadmap of activities which will enhance the Public Works Asset Management Plan as detailed in Appendix PW1. Annual updates to this Asset Management Plan will be prepared on the same timeline as the Region s Budget and Business Plan. Asset Management Plan Summary 1. State of Local Infrastructure Public Works infrastructure includes transportation, water, wastewater and waste management assets. The total book value of these assets at December 31, 2013 was $3.0 billion. The total estimated replacement value in current dollars is $8 billion. This figure does not account for technological advancements and changes to legislative requirements; therefore, the actual current replacement value is expected to be higher in the year the asset is needed to be replaced (refer to Appendix PW2 for details). Most of those assets are assessed to be in good condition, (refer to Infrastructure Condition Report Card section 3.4). Asset information is compiled in accordance with Regional policies and procedures and is stored in the Region s accounting system and individual asset records. This asset information is also included in the annual financial statements which are subject to external audit. Halton Region Asset Management Plan 2014 13
Halton Region s transportation infrastructure includes: 1,013 lane kilometres of Regional roads 225 bridges and major culverts Water infrastructure includes: 7 bulk water stations 12 water treatment plants (3 lake & 9 ground water based) 19 municipal wells 2,218 kilometers of watermains 22 reservoirs 15 booster stations Wastewater infrastructure includes: 7 wastewater treatment plants 1,806 kms of wastewater mains 1 biosolids facility 88 pumping stations Waste management infrastructure includes: 1 open landfill 11 closed landfills and leachate pumping stations The Asset Management Division s Asset Management Plan covers all corporate facility and social housing assets totaling over 3.2 million square feet. The book value of owned Corporate Facilities as of December 31, 2013 was $75 million with a current replacement cost estimate of $175 million. (i) The book value of owned Social Housing assets as at December 31, 2013 was $93 million with a current replacement cost estimate of $266 million. These estimates are stated in current dollars and are based on insurance values, (refer to Appendix AM10 for details). These estimates do not take into account other cost factors such as technology advancements, (i) Includes Police portion of Halton Regional Centre and as such the replacement value is expected to be higher in the year the asset needs to be replaced. The condition of these assets is evaluated on an annual basis during the development of the capital and operating budgets and through Building Condition Assessments performed on a five-year rotating cycle. Most of the assets are assessed to be in good condition, (refer to Appendix AM2). Asset information is compiled in accordance with Regional policies and procedures and is stored in the Region s accounting system, individual property Building Condition Assessment records and the capital asset management software. Owned Corporate Facilities: Halton Regional Centre 3 Long-term Care Facilities 8 Halton Region Paramedic Services Facilities Halton Museum Woodlands Operations Centre (South Operations) North Operations Centre Halton Waste Management Building Facilities 3 Child Care Centres Social Housing: Halton Community Housing Corporation buildings (including a child care facility) Oakville Senior Citizens Residence 2,300 units (in 13 Senior Communities & 19 family Communities) Assets managed by the Asset Management Division: Land Banks Leased Facilities, including one child care centre owned by HCHC 4 First Line Properties (part of Public Works infrastructure assets) Halton Region Asset Management Plan 2014 14
2. Levels of Service Levels of service are a key business driver for Halton Region and influence all asset management decisions. Levels of service statements describe the outputs Halton intends to deliver to its customers and commonly relate to service attributes such as quality, reliability, responsiveness, sustainability, timeliness, accessibility and cost. Halton s levels of service can relate to technical and legislated requirements, as well as Council directives. Council directives are influenced by the Citizens Priorities, 2011-2014 Action Plan. P2 Other factors that influence levels of service include condition assessments, client needs and requests. To demonstrate that Halton Region is delivering on the priorities outlined in the Citizens Action Plan, detailed infrastructure master plans and the Budget and Business Plan support the initiatives listed in the Citizens Priorities Action Plan. To maintain transparency, a report card showing progress of the listed initiatives in the action plan is presented to Council annually. The first report card was issued in 2012. P3 Desired levels of service are based on technical, legislated and customer requirements approved by Council. Levels of service for the Public Works infrastructure relate to the delivery of service through the following: Transportation - Plan, construct and maintain a regional transportation system that includes 1,013 lane kilometres of major arterial roadways, signalized intersections, lighting, signs, 225 bridges and major structures. Water and Wastewater Infrastructure - Plan, construct and maintain a complex and integrated system of physical structures to deliver drinking water to Halton residents and dispose of wastewater in an efficient and sustainable manner. Environmental Protection and Conservation of Water - Protect water quality and the natural environment through effective treatment, source protection, conservation and adherence to regulations. Waste Management - Plan and implement an integrated and sustainable waste management system of collecting, processing and disposing municipal solid waste that incorporates the principles of reduce, reuse, recycle and resource recovery. A number of external trends and impacts are considered when reviewing levels of service including provincial legislation such as the Places to Grow Act, 2005 and changing weather patterns that affect storm occurrence inflow and infiltration rates. Water use patterns through conservation programs are factored in when planning for infrastructure and its funding. Waste diversion programs result in extending the remaining life of the landfill. Public Works measures levels of service through a number of tools and reporting mechanisms. These include Council reports such as the annual Transportation Services Progress Report documenting roadway infrastructure and the Wastewater System Performance Report. The Drinking Water Systems Flow Summary Report provides information relating to compliance. Additionally, Public Works has produced an overall Infrastructure Condition Report Card. Performance details are tracked internally using various information systems and tools. Halton Region Asset Management Plan 2014 15
Levels of service for the Asset Management Division are based upon the review of the long range infrastructure strategies, current technical and financial practices. The Asset Management Division takes a comprehensive long-term view of its infrastructure performance and costs and has several procedures and processes in place to ensure that asset performance is monitored to ensure that legislative requirements are met. External issues and trends such as changing legislative requirements are reviewed on a regular basis to ensure the levels of service are updated where required. 3. Asset Management Strategy An effective asset management strategy requires knowledge of the condition of the assets, the performance of the assets as compared to desired levels of service and the associated costs to maintain, rehabilitate, replace and expand the asset systems and components. Knowledge of disposal costs is also required. This section of the Asset Management Plan details the various components to ensure that actions are taken to enable assets to provide the desired levels of service in a sustainable way while managing risk at the lowest life cycle cost possible. The Asset Management Strategy at Halton Region is: Customer focused Clearly-defined levels of service and applied asset management practices to provide those levels of service and maintain the confidence of program areas and customers in how Regional assets are managed. Forward-looking Make appropriate decisions and provisions to enable assets to meet future challenges, including changing demographics and populations, program area expectations, legislative requirements, technological, and environmental factors. Integrated and service-coordinated Consider all the assets in a service context and take into account their interrelationships as opposed to optimizing individual assets in isolation. Risk-based Manage the asset risk associated with attaining the agreed levels of service by focusing resources, expenditures, and priorities based upon risk assessments and the corresponding cost/benefit recognizing that public safety is the priority. Value-based/Affordable Choose practices, interventions and operations that aim at reducing the life cycle cost of asset ownership, while satisfying agreed levels of service. Decisions are based on balancing service levels, risks and costs. Holistic Take a comprehensive approach that looks at the big picture and considers the combined impact of managing all aspects of the asset life cycle including direct and indirect impacts of the asset. Halton Region Asset Management Plan 2014 16
Systematic Adopt a formal, consistent, replicable approach to the management of assets that will ensure services are provided in the most efficient and effective manner. Innovative Continually improve the asset management approach by driving innovation in the development of tools, practices and solutions. In order to enhance infrastructure and financial sustainability planning, Public Works also reviews the long-term infrastructure life cycles, (refer to Appendix PW3). The divisions of the Public Works department have policies and processes in place for producing a tactical one-year budget as well as a 10-year Capital Plan forecast, (refer to Appendix PW4 and PW15). The process culminates in the production of an annual Budget and Business Plan. Public Works undertakes a number of programs, studies, condition assessments and maintenance reports which may identify specific projects that include but are not limited to: roadway crack sealing, roadway resurfacing, roadway replacements and expansions, watermain cathodic protection, watermain and wastewater main replacements, and expansions and facility refurbishments, upgrades and expansions. To ensure that infrastructure is maintained in a state of good repair and provides desired levels of service at the lowest possible life cycle cost, Public Works continuously develops and implements a number of non-infrastructure solutions. These include but are not limited to: travel demand management, smart commute initiatives, the water efficiency outreach program, the optimization program for linear assets and treatment plants, annual wastewater main flushing program, waste diversion programs and the coordination of water, wastewater, transportation and Local Municipality construction projects. Additionally, maintenance activities are carried out on a regular basis. Each division also performs renewal and rehabilitation activities. Replacements and asset expansions required are mainly identified through the maintenance, renewal and rehabilitation activities. All Public Works divisions follow the Region s policy for asset disposal. Risks relating to the Asset Management Strategy are evaluated on a regular basis. Through studies and condition assessments, different options are considered. The options analysis includes items such as: life cycle cost analysis, direct and indirect benefits and costs. Halton Region Asset Management Plan 2014 17
Asset information and desired levels of service form the basis of the Asset Management Strategy for the Asset Management Division. The Asset Management Strategy includes a review of options using a life cycle cost analysis and risk assessments to appropriately prioritize projects and to develop project plans. The Building Condition Assessments are a crucial cornerstone of information that forms the basis of the plan. The Asset Management Division incorporates existing preventative maintenance and risk management programs to preclude the risk of failure. The preventative maintenance components ensure that the asset meets or exceeds its expected life cycle. The risk management component ensures that administration manages the risk through due diligence. Maintenance activities of the assets are carried out on a regular basis. From these ongoing efforts information is gathered that supports the overall lifecycle program and its eventual replacement. The Asset Management Division also follows the Region s policy on for asset disposal. Through the management of the assets by current level maintenance activities as well as studies and condition assessments, the Asset Management Division develops lifecycle forecasting options. Each year, the 10-year forecast for the Operating Budget is updated to reflect the changing needs to operate and maintain infrastructure and to incorporate the impact of additional infrastructure included in the Capital Budget (i.e. growth related infrastructure). Key sources of revenue for the Operating Budget include tax revenue and user fees. The estimated forecasted capital expenditures and financing sources for Public Works based on the 2014 Budget and Business Plan are presented in the following graphs: 2014-2023 PW Total Capital Expenditures: $2.8B Water 32% Transportation 44% Wastewater 22% Waste Management 2% 4. Financing Strategy The annual Budget and Business Plan is compiled by the Financial Planning and Budgets division working with each of the program areas. For the state of good repair Capital Budget, a 10-year forecast of proposed projects representing asset rehabilitation and replacements is reviewed taking into consideration program needs, trends and priorities. Once the budget request is finalized, financing options are determined based on the optimum funding plan including the following key sources of funding: debt, reserves, grants/recoveries, and development charges (for asset replacement of assets involving growth related infrastructure). The financing of the capital plan is determined using provincial and Halton Region guidelines and policies relating to debt capacity and provisions to fund capital reserves and future infrastructure needs. The capital reserves are then replenished by the operating budget contributions based on a financial plan. Non-capital expenditures such as repairs and maintenance are part of the Operating Budget. Reserves 50% 2014-2023 PW Capital Financing: $2.8B Development Charges 44% Subsidies & Recoveries 1% Debentures (Debt) 5% Halton Region Asset Management Plan 2014 18
The estimated, forecasted capital expenditures and financing sources for each of the programs based on the 2014 Budget and Business Plan are presented in the graph below: 2014-2023 Asset Management Capital Program Expenditures: $106M Social Housing 47% Corporate 53% The forecasted total net operating expenditures, of $1.7 billion between 2014 and 2023 include maintenance but exclude capital financing for the Public Works department based on the 2014 Budget and Business Plan. For the Corporate and Social Housing infrastructure, the Asset Management Strategy sets out planned actions to enable assets to provide the desired levels of service in a sustainable way while managing risk at the lowest life cycle cost possible. Once the Asset Management Strategy is developed, the financing strategy to fund the proposed projects is prepared using a minimum time horizon of 10 years. Project cost details, what if scenarios, actual cost comparisons, costs associated with maintenance of the assets, energy usage, and sustainability assumptions are used. Project costs developed are reviewed along with available funding sources to ensure sufficient funding is available to meet legislated requirements as well as desired levels of service. Key funding sources include reserves and tax revenue. The detailed Asset Management Divison capital budget forms part of the Region s Budget and Business Plan. Halton Region Asset Management Plan 2014 19
Conclusion Halton Region Asset Management practices have resulted in assets meeting desired levels of service and being maintained in a state-of-good-repair as illustrated in the Public Works 2013 Infrastructure Condition Report Card and the Corporate and Social Housing Assets 2013 Infrastructure Condition Report Card developed as part of the Building Condition Assessment process. Although the majority of assets are rated to be in good condition, there are individual assets that fall within the fair and poor categories. Utilizing a strategic prioritization process, these assets will be addressed through the annual Capital Budget. As stated in the 2015 Budget Directions (staff report FN-26-14), the state-of-goodrepair budget continues to be the key driver for budget increases due to increasing infrastructure needs. For example, capital financing for the water and wastewater state-of-good-repair program will continue to increase by 9.3 per cent for 2015. Funding needs will continue to be assessed to determine sustainable funding levels that meet the desired levels of service and identified infrastructure needs due to aging and expanding infrastructure. This will continue to be performed through the development of a financing plan to align resources to the defined need. The Asset Management Plan ensures the best decisions are made regarding the construction, maintenance, renewal, replacement, expansion and disposal of infrastructure assets. The science of balancing risks, levels of service and optimizing utilization is the essence of Asset Management and will be the focus of future continuous improvement initiatives. The ultimate goal is to have a long-term financially sustainable Asset Management Plan that integrates Asset Management with Asset Financial Management. Halton Region Asset Management Plan 2014 20