Building Together: Guide for Municipal Asset Management Plans
Table of Contents
Part One: Context
1 Introduction
Public infrastructure is central to our prosperity and our quality of life. That is why the province released Building Together, a long-term infrastructure plan for Ontario, in June 2011. Building Together responds to the far reaching trends that will affect Ontario’s infrastructure needs, including a more global and service-oriented economy; a larger, older and more urbanized population; and the effects of a changing climate. The plan sets out a strategic framework that will guide future investments in ways that support economic growth, are fiscally responsible, and respond to changing needs. A key element of this framework is ensuring good stewardship through proper asset management.
Municipalities deliver many of the services that are critical to Ontarians, and these services rely on well-planned, well-built and well-maintained infrastructure. For example, municipalities are responsible for more than 15,000 bridges and large culverts and more than 140,000 kilometres of roads that support the movement of people and goods. In addition, more than 10 million Ontarians depend on municipal water and/or wastewater services.
The province, municipalities and the federal government share an obligation to address municipal infrastructure challenges. The province takes this obligation seriously. Since 2003, the province has invested approximately $13 billion in municipal infrastructure. This includes more than $1.8 billion that went towards municipal and community infrastructure stimulus projects in the wake of the 2008 economic downturn. These investments have helped municipalities to modernize and expand transit systems, repair and upgrade roads and bridges, improve water and wastewater treatment, and revitalize community infrastructure.
In addition, since 2003, the Infrastructure Ontario Loan Program has provided financing to eligible public sector clients to help renew infrastructure and deliver value to the public. The Loan Program borrows on behalf of municipalities and other eligible public organizations, allowing smaller borrowers to secure financing at more favourable interest rates than would otherwise be available to them.
To date, the Loan Program has approved and executed more than $5.8 billion in affordable loans – including some $4 billion to 215 municipal clients to help support more than 1,500 projects. These projects include important investments in roads, bridges, and water/wastewater systems across the province.
Provincial funding and financing for municipal infrastructure is complemented by other ongoing municipal support initiatives. These initiatives include the uploads agreed upon through the PMFSDR, which will ensure that more property tax dollars are available for important municipal priorities - including investments in infrastructure, funding provided through the OMPF, and others. The province’s ongoing support to municipalities has increased to $3.2 billion in 2012 – almost three times what was provided in 2003.
2 Municipal infrastructure strategy
Despite significant investments by all orders of government, more needs to be done to address current and emerging municipal infrastructure needs. That is why the province committed through Building Together to work with municipalities and the federal government to establish a municipal infrastructure strategy.
What will the strategy do?
A long-term, cooperative effort among all three orders of government will be required to address the challenges of current and emerging municipal infrastructure needs. The strategy will be guided by the following principles:
- Municipalities are the stewards of the infrastructure they own. The province and the federal government have an obligation to help municipalities address infrastructure challenges.
- Comprehensive asset management plans should guide investment decisions.
- Those who benefit directly from municipal infrastructure should pay for the service, whenever feasible.
- Opportunities should be pursued to provide infrastructure more efficiently by forging partnerships with other communities or consolidating services where possible.
- Maintaining roads, bridges, water, wastewater and social housing should be a top priority.
- Some communities face unique challenges that require tailored solutions.
- Infrastructure Ontario and the private sector can help address municipal infrastructure challenges.
As part of the strategy, policy activities in the following three areas will need to be discussed:
- Making asset management planning and public reporting universal.
- Making optimal use of the full range of budgeting and infrastructure financing tools.
- Addressing the structural challenges that are confronting small municipalities.
To minimize the reporting burden associated with asset management planning, the province intends to move toward a “one window” approach which means that a single comprehensive plan would satisfy all provincial requirements related to municipal asset management. This will help streamline activities such as potential future regulations under the Water Opportunities Act.
What is the first step?
Resolving municipal infrastructure challenges begins with improved asset management. The province views this as a prerequisite for a productive discussion about solutions, including permanent funding for municipal infrastructure.
In Building Together, the province stated that any municipality seeking provincial infrastructure funding must demonstrate how its proposed project fits within a detailed asset management plan. This will help ensure that limited resources are directed to the most critical needs.
What do detailed asset management plans need to include?
Part Three of this guide sets out the information and analysis that municipal asset management plans should include, at a minimum. The province is moving in the direction of standardizing municipal asset management planning and this guide will help municipalities get a head start on developing detailed asset management plans.
Municipalities that already have detailed asset management plans do not need to replace them. Part Three of this guide can act as a template, but municipalities may select any appropriate format, so long as their plans include the information and analysis described in Part Three.
Financing strategies are a key component of a detailed asset management plan. Municipal councils must be open to all available revenue and financing tools. For example, there may be a need for some municipalities to revisit their “zero debt” policies. Debt financing, such as debentures, loans, and construction financing agreements, helps to spread the cost of expensive capital projects over time so that both current and future users of services share the burden.
In addition, some municipalities may need to revisit their policies regarding user fees, such as water rates. The prices of water and wastewater services in Ontario are low compared to many other jurisdictions and in many cases rates charged do not reflect the full cost of services.
The Commission on the Reform of Ontario’s Public Services, in its report on transforming Ontario’s public sector, discussed the need for full-cost water pricing:
“… in municipal water and wastewater services…stable investment over the long-term is more efficient and results in greater intergenerational fairness… Moreover, full-cost pricing in water and wastewater services has the added benefit of encouraging conservation — an area in which Canada desperately lags the world’s best. The electricity sector already operates on a cost recovery model; so too should water and wastewater services.
Recommendation 12-2: Implement full cost pricing for water and wastewater services.”
Source: Public Services for Ontarians: A Path to Sustainability and Excellence, Report of the Commission on the Reform of Ontario’s Public Services (2012).
As a condition of future provincial infrastructure funding, municipalities will be required to demonstrate that a full range of available financing and revenue generation tools have been explored.
Provincial infrastructure funding will continue to be conditional on municipalities demonstrating that they are complying with all relevant legislative requirements, including completing bridge inspections as required under the Public Transportation and Highway Improvement Act, 1990 and submitting Financial Information Returns as required under the Municipal Act, 2001.
Responsibility for the safety and maintenance of Ontario bridges is set out in the Public Transportation and Highway Improvement Act, 1990, Regulation 104-97, Standards for Bridges. The Act requires that all provincial and municipal bridges be inspected every second calendar year under the direction of a professional engineer using the Ministry of Transportation's Ontario Structure Inspection Manual (Inspection Manual).
How will the province help municipalities that require assistance?
The province recognizes that small municipalities may have limited financial capacity to undertake asset management planning. Therefore, small municipalities (and Local Services Boards with water/wastewater systems in Northern Ontario) will be eligible to receive entitlement funding for asset management planning in 2012-13 through the new Municipal Infrastructure Investment Initiative (MIII). Municipal service managers who are responsible for a small number of social housing units will also be eligible through MIII to receive entitlement funding to improve asset management practices related to social housing units. Information about this program, including a guidebook and expression of interest forms, can be found at ontario.ca/municipalinfrastructure.
To help municipalities develop asset management plans, the province has launched a web portal to share resources and showcase best practices and success stories. The materials on the portal will grow and evolve in partnership with municipalities and municipal sector associations. The portal will be a key resource for municipalities (particularly small municipalities) that have limited experience with asset management. It can be accessed at ontario.ca/municipalinfrastructure.
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