County plans to close 10-year asset lifecycle gap of $24.2 million by 2035; next step is budget

By Sharon Harrison
“We have $1.3 billion worth of assets, that does not include water, wastewater and rate-based assets; that’s really incredible when you think about it, that’s just a huge amount of assets to manage,” stated Arryn McNichol, the County’s director of finance and information technology.

“Over the next 10 years, we face $587 million in lifecycle costs, which is an average of $58.7 million per year. With existing sustainable funding, there is a roughly $24.2 million infrastructure deficit (or gap).”

A series of four working sessions over the summer discussed, deliberated and debated the extensive, and often difficult, topic of what core and non-core assets the municipality has, and essentially, if and how they should be maintained, and how much it will cost to either increase or maintain levels of service.

At last week’s committee of the whole meeting, the fifth and final such meeting, after much discussion, council voted to approve the final asset management plan (AMP).

No new information was contained in the final AMP since council made decisions and approved the level of service for each of the seven asset classes (bridges, roads, corporate fleet, fire fleet, facilities, equipment, and parks and recreation) at the Aug. 28 special committee of the whole meeting. (Link also below)

The AMP is a living document and each year, as more information is collected on the data on the municipality’s assets, the plan will be updated, making it stronger and stronger, McNichol said, adding that legislation dictates a full update is required every five years.

“This will give council an opportunity to review progress, incorporate new changes, and adjust priorities, as needed.”

The plan is to close the $24.2 million infrastructure gap by 2035.

“The tax levy will have to increase year-over-year compounding at 7.3 per cent, growing from $54 million to $109 million in 2035,” explained McNichol. “Basically, the capital portion of the levy would rise from $8.1 million in 2025, to $52 million in 2035.”

“In 2035, you are looking at close to a 50/50 split in spending, so the way the plan is forecast for costing, for every dollar spent roughly 50 cents on the dollar would be going towards operating, and 50 cents would be going towards capital.”

McNichol stressed these figures are not tax increases, but are illustrative only, a working plan that can be changed at the time of the budget (and at other times), as the taxes are set through the budget process (which is coming closer to the end of the year).

While the presentation materials show two examples with increases of 5.4 per cent and 7.3 per cent, McNichol said it was illustrative only, and would be ascertained at the budget where the rate will be calculated at that time. He further clarified that these figures refer to a levy increase (to raise a certain amount of money in the budget), not an increase in taxes, indicating how they are two separate things.

“Council can decide how much to spend, how much to defer to balance priorities,” he explained, “the AMP is a roadmap with the budget setting the rates.”

Councillor Janice Maynard called the situation the municipality is in with very little or no reserves, and a significant asset deficit, “a sobering reality”.

“I don’t believe we can continue to fund our assets renewal through debt and it’s just a reality we are now faced with and have to deal with,” she said. “I am hoping this is a chance for this council to be pro-active and forward thinking for the next generation because this is making generational decisions and changing how we deal with our asset planning.”

Councillor John Hirsch described the final AMP as a “watershed kind of moment.”

“We have the opportunity as a municipality to put a complete AMP in place to set the County up for future success,” said Hirsch. “We have struggled for years trying mandated fixes to our infrastructure with really not much success, and we know loud and clear from our constituents what they think of the state of our infrastructure (mostly roads).”

He said the plan will see road conditions improve from a 65 PCI (pavement condition index) average to an 83, reduce the facilities footprint by 25 per cent, while improving the condition of the remaining facilities, extend the fleet lifecycle by 25 per cent, and improve and maintain park assets.

“The financial plan outlined here wisely proposes a 10-year phase-in of the investment needed to succeed. Based on today’s dollars, taxpayers will likely see each year a 5.45 percent increase on their property taxes for capital projects,” explained Hirsch. “That’s for the next 10 years as we play catch-up after years of under-investment.“

Speaking to the 25 per cent reduction in facilities, councillor Phil St-Jean said, that is going to be “very difficult, that’s a pretty big hit”, where he asked when will those decisions will be made.

“When are we finally going to start making some decisions about that: we have some buildings, some operations buildings, that are not worth reinvesting in and it’s time to dispose of them,” expressed St-Jean. “It’s time to start getting rid of those excess, less useful properties. How are we going to do that and when are we going to start, more importantly?”

Hirsch also noted, and said it was important to understand that the County’s tax rate is currently significantly lower than all of the neighbouring municipalities on an equal assessment basis, and lower than almost all the comparative municipalities.

“That’s a real eye-opener: our taxes are low and unfortunately we are getting what we pay for, so we have the choice today to become a modern, well-functioning municipality that will attract business and new residents, or continue the decline of our infrastructure.”

Councillor David Harrison said he was afraid that the times we are in are not as easy to predict as they might have been four or five years ago. How we maintain being nimble in our requests is very definitely front and centre, he said.

He also said that while Prince Edward County may have the thirteenth lowest taxes in Ontario, he reminded that the vital signs reports say Prince Edward County has the third highest food insecurity.

St-Jean said he is thankful the municipality is now thinking 10 years ahead.

“We are planning ahead; we can’t continue the way we are, we have to be proactive, we need to be forward thinking,” he said. “We are the 13th lowest property taxes in all of Ontario, and it’s also been our goal here as a community: zero, zero, zero, zero, zero.”

“I think the reality of the real world has finally come up and slapped us in the face,” St-Jean added.

Mayor Steve Ferguson indicated how it will be a balancing act for a number of years, weighing the needs, the concerns, the worries of the community, also noting how the AMP paints a compelling picture of the status of municipal infrastructure.

“I think it’s fair to say, for whatever reasons in the past, the neglect, we as this council are addressing through this document. I am certainly mindful of the compelling need in the community and the lack of resources people have,” expressed Ferguson.

“The last thing we want is the migration of people out of here because they can’t afford it. By the same token, we have to attend to these infrastructure failures, but being mindful of the importance of those who make Prince Edward County what it is.“

Related documents, including the consultant’s 88-page asset management plan, can be found on the County’s website.

Asset management discussions conclude with decisions on proposed levels of service