A consulting firm says the township needs to more than double its annual investment in infrastructure and steadily increase taxes in order to reduce an infrastructure deficit identified in a new asset management plan.
Watson and Associates Economists Ltd. and BluePlan Engineering Consultants Limited were retained in March 2013 by Mapleton to prepare an asset management plan, after the provincial government announced such plans would be a requirement to receive funds under future infrastructure programs.
Dan Wilson of Watson and Associates told council at the March 25 meeting the plan is to be used as a tool during various decision making processes, including the annual budgeting and capital grant application processes.
“I think you’ll find that asset management will become a very great tool to the township,” said Wilson.
“It will serve a lot of different avenues to the staff. It will definitely help identify capital priorities in relation to the budget process. It really does become a long-term financial plan.”
Wilson explained the township presently owns capital assets with a 2013 replacement value of approximately $418.9 million (excluding land assets). This total is split into $390.4 million of tax-supported assets, $11.6 million of water assets and $16.8 million of wastewater assets.
“That’s a very significant investment,” said Wilson, adding that, for accounting purposes, “There’s a fairly large level of assets already at the end of their useful life.”
However, he noted the accounting formula does not take into account the “actual condition,” of the assets.
“Taking into account condition and risks, your immediate needs are much lower,” he explained.
The plan shows Mapleton is currently investing $1.7 million per year in asset management.
“You should be investing above $4 million per year, given the amount of assets you have and given what we believe you should be spending.”
To fund the infrastructure deficit, Wilson said Mapleton needs to plan for a 5.8 per cent levy increase every year for 10 years and 3.4% per year after that.
However, Wilson noted, those estimates don’t factor in any future infrastructure funding from upper levels of government or other third party sources. Such grants, Wilson says, would reduce the required expenditure by the township, but shouldn’t be counted on for planning purposes.
“The key here is to show the province you’re committed to trying to reduce that infrastructure deficit going forward,” he said.
Grant funding, said councillor Andy Knetsch, is, “one of the elephants in the room not only for this municipality but all municipalities and I think that well has gone bone dry.”
Wilson replied, “Municipalities are at a point in time now where they have to decide how much they want to be in charge of their own destiny. You can put an asset management plan in place and sit back and wait for province to bail you out and, if they don’t, then you’re in trouble.”
“I don’t know how we’re going to do that – tucking away millions of dollars a year,” said Knetsch.
Wilson pointed out there are “different ways of managing assets” which could include “strategies to extend their useful life.”
Councillor Neil Driscoll asked if the 5.8% increase factored in use of debentures or simply paying the costs outright.
“We’ve identified use of debentures in years where we feel there’s more capital needs,” Wilson replied.
Estimating that every percentage increase raises approximately $44,000, Driscoll projected, “We have to raise another $260,00 a year through taxation.”
Mayor Bruce Whale said, “The philosophy is probably to get started. Then, as some of this provincial and federal funding comes along, you can decrease your increase.
“Still, that’s over a 50% increase over 10 years.”
A resolution to accept and approve the asset management plan was passed by council.
