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Asset Management Planning:
Legislation & Integration
June 14, 2017
AMCTO Conference Dan Wilson, Director
Watson & Associates Economists Ltd.
Val Sequeira, Director of Corporate Services/Treasurer
Town of Gravenhurst
Agenda
1. Asset Management Introduction
2. Infrastructure for Jobs and Prosperity Act (IJPA)
Draft Regulation
3. Asset Management Integration
4. The Town of Gravenhurst Experience
5. Questions/Comments
1
Asset Management “the set of planned actions that will enable the
assets to provide the desired level of service in a sustainable way, while managing risk, at the lowest lifecycle cost”
Balancing lifecycle costs and levels of service
3
Asset Management in Ontario
Recent “push” in asset management:
Started with PSAB 3150
Moving towards being a requirement.
Federal Gas Tax Agreements (Canada wide)
Asset Management Frameworks (Canada wide)
Provincial Funding (Ontario)
Development Charges (Ontario)
IJPA & Draft Regulation (Ontario)
Great internal tool for infrastructure planning &
identifying capital priorities.
4
Infrastructure for Jobs and
Prosperity Act (IJPA)
Proclaimed on May 1, 2016
Authority for the Province to regulate municipal
asset management planning
Purpose:
Implement best practices
Provide a degree of consistency AND flexibility
Support collaboration between municipalities and with
the Province
6
Draft Regulation
Overview
Asset Management planning is essential
Need effective plans to take are of infrastructure
Need to better understand infrastructure needs
Foundation of improving long-term sustainability
Federal, Provincial, Municipal governments
need to work together
Phased implementation
Building on the 2012 asset management guide
7
2012 Ontario Building
Together Guide Guide documents the components, information
and analysis that are required to be included in an
asset management plan
1. Executive Summary
2. Introduction
3. State of Local Infrastructure
4. Expected Levels of Service
5. Asset Management Strategy
6. Financing Strategy
http://www.moi.gov.on.ca/en/infrastructure/building_together_mis/plan.asp
8
Draft Regulation
Strategic Asset Management Policy
Develop & adopt by January 1, 2019
Review and update every 5 years
Content:
Which municipal goals/plans/policies the AM Plan
would support (i.e. official plan, strategic plan, …)
How the AM Plan would affect the development of the
budget and any long-term financial plans
Approach to continuous improvement and
adoption of best practices
9
Draft Regulation
Strategic Asset Management Policy
Principles that would guide AM Planning
Including principles from section 3 of IJPA
A commitment to consider:
Actions that may be required to address risks/vulnerabilities
that may be caused by climate change
Mitigating approaches to climate change (such as
greenhouse gas emission reduction goals/targets)
Disaster planning (with any required contingency funding)
Process to ensure that AM Planning would be aligned
with Ontario’s land use planning framework
10
Draft Regulation
Strategic Asset Management Policy
Capitalization thresholds used for the AM Plan, and
how this compares to the municipality’s TCA policy
Commitment to coordinate planning between
interrelated assets with separate ownership structures
(i.e. collaborative opportunities)
Identify who is responsible for AM Planning,
including an executive lead and how Council is
involved
Commitment to provide opportunities for public input
11
Draft Regulation
Municipal Asset Management Plans
3 phases:
Phase 1 – core infrastructure, by Jan 1, 2020
Phase 2 – all assets by Jan 1, 2021
Phase 3 – further details on all assets by Jan 1, 2022
Additional requirements for municipalities above
25,000 population
Core infrastructure: roads, bridges, culverts, water,
wastewater, storm
12
Draft Regulation
Municipal Asset Management Plans
Inventory Analysis
Phase 1 & 2:
Summarize by asset class (type, quantity, replacement
value, average age)
Approach to condition assessments (industry accepted
engineering practices)
Summarize condition information
Phase 3:
Update inventory from phase 1 & 2
13
Draft RegulationMunicipal Asset Management Plans
Levels of Service (LOS)
Phase 1 & 2:
Current LOS
Community vs technical (for core infrastructure)
Performance measures
Cost to sustain current LOS
Lifecycle costs, and assumptions regarding future growth
Phase 3:
Proposed LOS
Community vs technical (for core infrastructure)
Performance measures
Outlined each year for a 10-year period
Why are proposed LOS appropriate? How they differ? 14
Draft Regulation
Municipal Asset Management Plans
Lifecycle Management Strategy (LMS)
Phase 1 & 2:
Municipalities over 25,000 population – Estimated costs to
service growth
Lifecycle costs required for new construction, and upgraded
capacity (including extension of services)
GGH – growth demands must conform to Growth Plan for GGH
Analyze links between providing LOS, costs and impact on
growth
“Encouraged” for smaller municipalities
15
Draft RegulationMunicipal Asset Management Plans
Lifecycle Management Strategy (LMS)
Phase 3:
Outline lifecycle management strategies needed to maintain
proposed LOS and manage risk
Consideration of full lifecycle costs
Options examined by the municipality to reduce overall
lifecycle costs
Green infrastructure
Non-infrastructure solutions
Demand management
Conservation measures
Summary of lifecycle activities for 10 year period, aligned
with LOS analysis16
Draft Regulation
Municipal Asset Management Plans
Financing Strategy
Phase 3:
Align with proposed LOS
Estimated capital forecast (lifecycle costs)
Revenue dedicated to capital financing
Capital reserve contributions/withdrawals
Debt service payments
Municipalities over 25,000 population – Financing Strategy to
service growth (revenues, costs)
Encouraged for smaller municipalities
Outline ongoing funding shortfalls, and how to address
shortfalls17
Draft Regulation
Municipal Asset Management Plans
Risk Analysis
Phase 3:
Municipalities over 25,000 population – Overview of risks
associated with the AM Plan
Ways the AM Plan could fail to provide proposed LOS
Actions proposed in response to the risks
Encouraged for smaller municipalities
18
Draft Regulation
Other
Update the AM plan at least every 5 years after Jan 1,
2022
Approval In writing by a licensed engineering
practitioner and the “executive lead”
Annual Progress Update to Council starting in 2021
Post strategic AM policy and AM plan on the
municipality’s website
Copies available to the public
Reporting to the Province
Actuals every year, projections at least every 5 years
19
Draft Regulation
Other
Recognition of the linkages between this regulation and
Safe Drinking Water Act, 2002
Development Charges Act, 1997
Support from the Province:
Training, support team, resources, sample documents
The regulation was posted May 25, 2017 and is going
through a 60 day public review
Submit comments/questions by July 24, 2017
20
Asset Management Process
22
Policies and Strategies
Integration
Continuous Improvements,
Updates & Monitoring
Tools (Software)
Internal Governance and
Ownership
Council Approval and
Support
Public Engagement and
Communication
22
Asset Register
Asset Listing
Condition Assessments
Risk Assessments
Performance Ratings
Criticality & Capacity
Component Replacement Value
Component Useful Live
Historical Cost Valuation
Capital Budget
Component Life Cycle Profile
Strategic LOS
Customer Expectations
Technical LOS
Long Term Plan (20 Years)
Financial Strategy
PSAB 3150 Reporting
Asset Register Integration
23
Maintenance Mgmt
LOS Integration
24
Services
Customer Expectations
Customer (Strategic) LOS
Technical LOS
Strategic Plan?
Departmental
Strategies?
Asset Capacity,
Functionality?
Operational
Procedures?
Other
Documents?
AM Integration
25
High-level decisions on Levels of Service
Outputs generated from the Asset Management Process
Input from Community drives:decisions regarding Levels of Service, Risk, Scenarios, Financial Analysis and
Preferred Approach
OrganizationalStrategic Plan
Rehabilitation, Renewal & Replacement
Expansion
Secondary PlansOfficial Plan
Master PlansEnvironmental Assessments
Staff Reports Other
Asset Management Plan
Budget Long-term ForecastDevelopment
Charge Background Study
User Fee Rate Studies
Budget Integration
26
Strategic AM
Policies
Assets
AM Strategy
LOS
Financial Strategy
Operating Budget
Capital Budget
Long-term Forecast
Reserves & Reserve Funds
Debt Projections
Other Revenues
AM Process
Budget
Process
GIS Integration
The
Town of Gravenhurst
Experience
June 14, 2017
AMCTO Annual Conference
Deerhurst Resort, Huntsville, Ontario
28
Asset Management
Long Term Financial Sustainability Plan
Agenda
• Where We Came From
• An Asset Management Plan Is Important!
• What Was Done
• What We Learned
• Managing Our Assets
• Financing The Plan
• Moving Forward
30
• Historical investment in maintaining/replacing/repairing
assets low
• Significant commitments to new facilities further
redirected resources away from asset management
• Resultant impact over the past three years:
– Asset deterioration required significant capital investment to
replace/repair
– Emergencies related to facilities exceeded the norm
– Newer facilities also had structural problems
Asset Management
Long Term Financial Sustainability Plan
Where We Came From
31
• Prudent stewardship of assets ensures safe and seamless
service delivery
• Provincial/Federal requirement of all municipalities for
access to capital related grants
• Timely investment in asset management actually saves
money in the long term
• Without a plan, the infrastructure deficit will worsen
requiring drastic service decisions
Asset Management
Long Term Financial Sustainability Plan
An Asset Management Plan Is Important!
32
• An inventory of all Town assets;
• broken out into appropriate components;
• with an assessment of current asset condition/remaining
life;
• an estimation of potential for asset failure/breakdown;
• the risk associated with asset failure/breakdown;
• estimated costs to replace assets;
• a 20 year projection of costs for “appropriate” management
of assets; and;
• a recommended financial strategy to pay for the plan.
Asset Management
Long Term Financial Sustainability Plan
What Was Done
33
• Historical investment in asset management had not kept
pace with need so a significant infrastructure deficit exists
• The Town had a wide range of assets, some in good
shape, others that required urgent attention
• Without an increase in resources in the immediate future
(years 1-5) the infrastructure deficit will worsen
• Storm sewers, roads and bridges required the most urgent
attention in the short term
Asset Management
Long Term Financial Sustainability Plan
What We Learned
34
• The data gathered through this process will form the basis
for the 2018 Capital Budget & Multi-Year Plan
• Projects will have to be prioritized based on potential risk and
liability as the “optimal” scenario is not affordable
• Recommended operating/maintenance activities will be
included in future operating budgets
• After years of reacting to emergencies and crises the Town
now has a forward-looking plan to manage assets
Asset Management
Long Term Financial Sustainability Plan
Managing Our Assets
35
• Asset management has taken a back seat to other corporate
priorities over the years
• Since 2016 Council has made a focused effort to increase
investment in capital. It has made a difference, but the
infrastructure deficit is still growing
• Developing a plan to finance the asset management plan
requires due consideration of reserves, debt balances, and
the impact on the tax rate
Asset Management
Long Term Financial Sustainability Plan
Financing The Plan
37
• Analysis includes the following:
– Smoothing of impact of the 20 Year Asset Management Plan
– Maintenance/studies recommended by consultants
– Inflationary increase to operating budget of 2% a year
– Assumes no new revenues/projections for additional future grants
– Assessment growth projection of 0.5% per year
• After 8 years:
– Tax increases drop to inflation
– Capital reserves start to grow and become self-sustaining
– External debt starts to fall while internal debt is manageable
– The infrastructure deficit trend reverses
Asset Management
Long Term Financial Sustainability Plan
Financing Considerations
38
Asset Management
Long Term Financial Sustainability Plan
Moving Towards Financial Sustainability
39
Financial Goals/Constraints 2017 2027 2037
Reserve balances should not fall below zero
Maximize use of Community Reinvestment Reserve
Fund to finance capital in perpetuity
Grow Capital Reserve Funds so Asset Management
Program is fiscally sustainable in future
Minimal external debt
Manage external debt balances down
Balance need with “ability-to-pay”
• The Asset Management Long Term Financial Sustainability
Plan is a comprehensive inventory of Town assets and lays
out a path to prudent stewardship of these assets
• The financing plan provides a framework to work with while
allowing for some flexibility subject to:
– Successful grant applications
– More aggressive assessment growth
– Review of asset data, capital project costing and priority
• Council approval of the recommendations in the report
provided direction to staff to implement the plan
Asset Management
Long Term Financial Sustainability Plan
A Significant Milestone
40
• Integration into the organization:
– Implement a new capital budgeting system
– Develop a related Capital Budget & Multi-Year Plan
– Update Capital Asset Accounting
– Keep asset management plan current. Look to put into a system.
– Prioritize financing for capital as a strategic investment
– Create awareness/demonstrate that responsible asset management
enables service delivery and enhances customer service
Asset Management
Long Term Financial Sustainability Plan
Moving Forward
41