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Town facing over $3 million yearly shortfall for asset management plan

July 14, 2022   ·   0 Comments

By Sam Odrowski

Orangeville council unanimously approved its 2022 Asset Management Plan during a regular meeting on Monday (July 11), where a roughly $31 million funding shortfall for core assets over the next 10 years was forecasted. 

Currently annual funding is projected to be $1.8 million short of the $5.4 million needed each year in transportation and stormwater assets, while water and wastewater assets are $1.3 million short for the $5.3 million needed annually. An additional 13 per cent projected cost due to inflation brings those funding shortfalls to $2.8 million and $2.1 million each year, respectively. This brings the funding gap for assets over the next 10 years up to $49 million. 

However, the current gap in funding is only a baseline figure, as Orangeville collects more data through condition assessments, a more refined number will be presented to council, said town treasurer, Nadini Syed. She added that the current asset management plan only covers core assets. The cost of maintaining non-core assets will be presented to council in 2024. 

The idea behind an asset management plan is to take an inventory of all the assets in a municipality, assess their current lifespan, and begin allocating funding to prepare for when they inevitably need to be replaced or repaired. 

The province has mandated such plans in an effort to prevent municipalities from having several pieces of infrastructure failing at once and no stash of funds to pay for it. 

“The province is looking for municipalities to be fully financially sustainable as it relates to their service delivery, as well as asset management,” said Syed.

The asset management plan presented to Council on July 11 is based on data and information currently available, which means funding figures could be under or overestimated, as they’re based on assumptions, said Aman Singh, engineer and senior partner at SLBC Inc., hired by Orangeville to create an asset management plan.

Singh’s calculations show to replace all of the aging assets in town, it would cost $968 million, with $375 million for transportation, $239 million for wastewater, $213 million for water, and $141 million for stormwater.

Transportation, which covers roads and sidewalks, is on average approaching midlife, while bridges and culverts are past half of their lifespan.

Singh noted that it’s important to not have all assets in very good condition as its not practical from a cost perspective. Instead, the municipality should focus on allocating money to repair or replace assets in advance of them breaking down.

“This is a financially prudent approach to supporting the long-term financial sustainability for any municipality,” said Singh.

Approximately $13.6 million or 1.7 per cent of Orangeville’s assets fall into the high-risk category, made up primarily of large sanitary sewers and water mains that have reached near the end of their life.

There are a few different strategies the town can use to finance the management of its assets. One would be to increase funding through taxes, debt, grants, and third-party contributions. Another strategy is implementing a stormwater user fee, where property owners are charged a fee for constructing concrete or pavement surfaces. This is because pavement and concrete contribute to floods as rain water or melted snow can’t be filtered through the ground.

When looking at service levels, the town’s pavement condition was rated good overall and stormwater assets are in compliance with provincial regulations for five and 10 year storm design standards. 

Water assets are judged by the lost connection days due to water main breaks per year. Orangeville has an average 48 lost connection days per 10,000 properties for water and an average of three days of lost connection per 10,000 properties for wastewater assets.

Singh noted the importance of addressing funding deficits for long term sustainability as assets generally slowly degrade and then fail more rapidly.

Going forward, Orangeville will begin working on identifying the cost and condition of its non-core assets, with an asset management plan in place for July, 2024 and a plan on proposed levels of service for July, 2025.

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