Special General Government

Committee Agenda

Date: Tuesday, September 12, 2017 Time: 9:30 AM Place: Garnet B. Rickard Recreation Complex – Full Hall 2440 Highway 2 Bowmanville, Ontario

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Special General Government Committee Agenda Date: September 12, 2017

Time: 9:30 AM Place: Garnet B. Rickard

Recreation Complex

Page 2

1 Call to Order

2 Adopt the Agenda

3 Declaration of Interest

4 Presentations

4.1 Nancy Taylor, Director of Finance/Treasurer, regarding the Asset Management Plan

4.2 Faye Langmaid, Manager of Special Projects and Nancy Taylor, Director of Finance/Treasurer regarding the Land Acquisition Strategy

5 Adjournment

2017 Asset Management Plan for Clarington

• This Asset Management Plan (AMP) is Clarington’s first comprehensive plan.

• This plan is a living document that is intended to meet provincial requirements and improve over time

AMP Facts & Figures

Replacement Value of Clarington’s assets = $756

Million

Cost per household for infrastructure

portfolio = $22,683

Infrastructure Deficit = $92

Million

Limitations of a Corporate Asset Management PlanThis AMP was prepared based on best available information rather than a fully implemented Corporate Asset Management program.

Some factors to consider, include:

1. No centralized asset management program for the Municipality

2. Tangible Capital Asset software is still being developed for asset management capabilities

3. Level of Service indicators are still in the beginning stages of development

4. Condition assessments vary between a technical assessment, based on age, or on the expert opinion of the staff using the asset

5. Given the type and level of data available for condition, risk and level of service indicators, there is limited ability to accurately determine trends at a detailed level

6. Life Cycle costs are not typically considered formally in the current process and usually no adjustment of the operating budget is made to accommodate the project until after the asset is operational.

What is Asset Management ?

Two Fundamental Considerations

Providing satisfactory levels of service to the

public

Ensuring the sustainability of

infrastructure assets over the long term

Asset Management PlanningThe process of making the best possible decisions to achieve the fundamental considerations.

• Made with consideration to entire lifecycle of assetBuilding Operating Maintaining Renewing Replacing Disposal

• Understanding both current and desired state of infrastructure

• Recognize what service levels the assets provide

• Prioritization of choices that must be made in terms of planning and investment

Vision for Desired Outcomes

Investments would be made on the basis

of the ability to sustain assets over the entire lifecycle

Considers all factors when prioritizing

investments – desired LOS, conditions, risk, financial implications

and long term sustainability

Complete and comprehensive AM

across Ontario would foster collaboration

and info sharing among municipalities.

One that has support for the importance of AM at all levels of the municipality – council, staff and the public. Ongoing support would improve the planning process and the implementation of AM plans

AMP Current Legislative Requirements• 2012 MIII/Building Together Guide outlines AMP content requirements

• Federal Gas Tax funding eligibility requirements include that Municipalities develop and implement an AMP by December 31st 2016 • Municipalities were granted an extension into 2017 with proof that the

AMP was near completion and being presented to Council as soon as possible

• Ontario Community Infrastructure Fund (OCIF) eligible projects must be identified as a priority in the applicant’s AMP.

AMP Future Legislative Requirements• Proposed Bill 6 – Infrastructure for Jobs and Prosperity Act, 2015

• All municipalities would be required to develop and adopt a strategic asset management POLICY by Jan. 1, 2019

• Municipalities would be required to prepare an Asset Management PLAN in three phases:

• PHASE I - include all core assets (roads, bridges and storm water management) by Jan 1, 2020• PHASE II - include all assets by Jan 1, 2021

• Requirements for PHASE I & II• Current Level of Service • Inventory Analysis• Estimated Costs to Sustain Current Levels of Service• Estimated Costs to Service Growth

• PHASE III – additional details to be provided for all assets by Jan. 1, 2022• Proposed Levels of Service• Lifecycle management strategy• Financial strategy• Addressing shortfalls• Financial strategy to Service Growth• Risk Analysis

AMP Legislative Requirements• Municipalities will be required to UPDATE the AMP at least every 5

years after Jan. 1, 2022

**Approval** will require written approval by a licensed engineering representing the Municipality, and the executive lead of the Municipality prior to being presented to the municipal council for approval

• Clarington’s AMP will need to expand to incorporate new required components such as; climate change, demographics, land-use planning and lifecycle costing

• Clarington did provide comments on the draft regulation over the summer months

BMA Study Comparative: Percentage of Assets needing Repair of Replacement in

Selected Regions and Municipalities 2015Asset Consumption Ratio is Total Accumulated Amortization

Total Gross Costs of Capital AssetsM

ilton

Nia

gara

Fal

ls

Whi

tby

New

mar

ket

Cla

ring

ton

Osh

awa

Hal

ton

Hill

s

Pick

erin

g

Cal

edon

26.9% 36.7% 36.8% 37.5% 38.1% 39.1% 42.4% 50.3% 54.9%

What it would cost to replace our Asset’s

Bridges & Culverts $99,959,279

Buildings

$ 76,976,177

Erosion Control

$ 3,634,550

Fleet

$ 25,523,025

Miscellaneous

$ 10,078,130

Parks

$ 15,234,633

Roads & Roadside

$ 404,594,753

Storm Water Management

$ 119,965,932

Clarington’s Infrastructure Deficit = $91,939,659Bridges & Culverts

$13,361,424

Buildings

$ 13,269,716

Erosion Control

$ 0

Fleet

$ 7,128,275

Miscellaneous

$ 609,561

Parks

$ 1,322,028

Roads & Roadside

$ 54,749,568

Storm Water Management

$ 1,499,088

A closer look at the individual Asset Categories……………….

Bridges & Culverts - Inventory

Asset Type Asset Inventory Historic CostReplacement Value as of 12/31/2016

Bridges

Cast in Place 82 $ 7,576,741 $ 31,483,139

Precast Concrete 13 $ 10,876,951 $ 25,019,988

Steel 3 $ 475,525 $ 1,202,932

Timber/Wood 2 $ 107,196 $ 699,963

Culverts Culverts 152 $ 13,969,833 $ 41,553,257

252 $ 33,006,246 $ 99,959,279

Bridges & Culverts - Condition• Legislation requires the inspection of all structures 3.0 m and greater, Clarington exceeds

basic requirements and inspects all structures of a span of 1.2 m and greater

• Inspections performed by our Engineering Consultants completed on a biennial basis

• Inspection provides condition rating and recommendations for repair, rehabilitation, and replacement

• 78% of Clarington’s structures are considered to be in Good to Very Good condition based on their individual BCI (Bridge Condition Index) being higher than 70 out of a possible 100

• 13% of Clarington’s structures are considered to be in Very Poor condition based on their individual BCI (Bridge Condition Index) being lower than 60 out of a possible 100

Bridges & Culverts – Risk & Priorities• The AMP utilizes two parameters for determining RISK

• The PROBABILITY OF FAILURE which is calculated based on the asset’s condition• The CONSQUENCE OF FAILURE which is calculated based on the Asset’s other

contributing factors• The assets included in the Bridges category uses a weighted average of three

factors: Replacement Cost, Length, and Service Class

• The higher the replacement cost, the larger the structure and the higher the service class of the road the structure is on will result in a higher RISK factor for the Municipality

Bridges & Culverts – Risk & Priorities Matrix

Bridges & Culverts – Risk & PrioritiesThe top eleven (11) structure assets requiring replacement from the Risk analysis are as follows:

Leskard Rd Concrete Bridge (99045)

1948 50 68 $26,852 $293,096

Waverley Rd Overpass Concrete Bridge (99003)

1967 45 49 $301,352 $2,132,645

Highway 2 Concession 3 Clarke Bridge (98025)

1960 50 56 $45,332 $376,694

Middle Rd Concrete Bridge (99534)

1928 50 88 $8,182 $117,094

George St Culvert (93504) 1940 50 76 $7,431 $119,639North Mill Lane Culvert (95506) 1970 40 46 $26,054 $163,695Squair Rd Clarke Culvert (98518) 1980 40 36 $60,320 $175,774Howden Rd East Culvert (99125) 1980 40 36 $129,808 $378,264

Elliot Rd Concrete Bridge (98037) 1940 50 76 $15,117 $243,384

East Townline Rd Clarke Culvert (98511)

1970 40 46 $23,780 $149,408

Soper Creek Concrete Bridge (94005)

Replacement Cost

1960 50 56 $106,358 $883,801

Asset Description (Structure ID) Age (Yrs)In-

Service Yr

Useful Life (Yrs)

Historical Cost

Buildings- Inventory

It’s highly unlikely that we would ever demolish an entire building to simply replace with a similar structure. The capital costs associated with the structure and interior of a building will represent more renovations and repairs over the life of the asset. The AMP applied a 25% factor to all structure and interior replacement costs for a more realistic capital forecast.

Asset Type Asset Inventory Historic Cost

Replacement

Value as of

12/31/2016

Administrative Buildings 1 14,912,018$ 9,251,241$

Maintenance Buildings 1 465,829$ 1,102,701$

Old New castle Fire Hall 1 206,312$ N/A

Health Services Cemetery Building 1 81,887$ 100,333$

Planning &

DevelopmentTourism Information Office

1 123,000$ 76,302$

Animal Control 1 430,509$ 303,660$

Fire Stations 5 8,901,874$ 4,616,048$

Arenas 5 30,031,873$ 29,792,714$

Pools 3 27,793,568$ 16,885,849$

Indoor Soccer Facility 1 3,362,681$ 2,070,299$

Community Centres 13 4,150,768$ 5,427,744$

Museums & Art Centres 4 1,127,658$ 1,561,623$

Library 4 8,779,600$ 3,365,331$

Transportation

ServicesRoads Maintenance Depot

3 1,964,188$ 2,422,332$

44 102,331,765$ 76,976,177$

Protection

Services

BUILDINGS

Corporate

Facilities

Recreational &

Cultural

Buildings - Condition• Buildings are organized into sub-categorizes such as; structure, interior,

mechanical, roof, ice rink, and pools

• Each sub-category is comprised of different useful lives and associated risks

• 48% of Clarington’s Building components are considered to be in Good to Very Good condition based on their age.

• 17% of Clarington’s Building components are considered to be in Very Poor condition based on their age

Buildings – Risk & Priorities• The CONSQUENCE OF FAILURE for Buildings includes a weighted

average of the following:• Replacement Costs – recalling that all structure and interiors are at 25% of

their calculated costs• Priority – all buildings were given a priority ranking based on likelihood

of being replaced and risk to the community • Asset Type – the building components are further ranked based on

likelihood of failure and service disruption risk

Buildings – Risk & Priorities Matrix

Buildings – Risk & PrioritiesThe top ten (10) Building assets requiring replacement from the Risk analysis are as follows:

Erosion Control- Inventory & Condition

Asset Type Asset InventoryHistoric

Cost

Replacement Value as of 12/31/2016

Erosion Control Erosion Control 16 $ 3,344,624 $ 3,634,550

16 $ 3,344,624 $ 3,634,550

• Tracking erosion control projects individually began in 2009, so these assets are currently in the early portion of their expected useful lives of 25 years

Fleet - Inventory

Asset Type Asset Inventory Historic Cost

Replacement Value as of 12/31/2016

Aerial Trucks 2 1,865,221$ 2,072,021$ Attachments 22 277,736$ 313,599$ Cars and Vans 18 521,652$ 578,691$ Heavy Duty Trucks 39 6,368,039$ 8,201,651$ Ice Resurfacers 6 476,761$ 539,972$ Light Duty Trucks 29 957,154$ 1,075,582$ Loaders/Graders/Chippers 13 2,229,853$ 2,631,861$ Medium Duty Trucks 15 810,827$ 911,466$ Pumpers 8 3,489,405$ 6,190,244$ Tankers 5 844,169$ 1,315,320$ Tractors/Mowers/ATV's 17 831,144$ 929,372$ Trailers 20 488,985$ 551,410$ Unlicensed Fleet Equipment 6 182,501$ 211,836$

200 19,343,447$ 25,523,025$

Fleet

Fleet- Condition• Clarington’s fleet inventory is vast with relatively quick replacement

cycles as the useful lives range from 7 years to a few assets lasting 20 years

• Fleet asset’s condition rating is based solely on age

• 32% of Clarington’s fleet are considered to be in Good to Very Good condition based on their age.

• 39% of Clarington’s fleet are considered to be in Very Poor condition based on their age

• All assets in the Very Poor condition rating are past their expected useful life

Fleet– Risk & Priorities• The calculation for Risk is based solely on age and replacement cost for Fleet.

The top eleven (11) Fleet assets requiring replacement are as follows:

Miscellaneous Assets - Inventory

Asset Type Asset Inventory Historic Cost

Replacement Value as of 12/31/2016

Bunker Suits Pooled Asset $ 337,725 $ 362,390

Communications 16 $ 743,895 $ 838,404

Communications - Fire 4 $ 756,991 $ 789,107

Computer Hardware Pooled Asset $ 526,282 $ 552,348

Computer Software 36 $ 1,544,763 N/A

Defibrillators 2 $ 11,736 N/A - no longer considered TCA

Equipment 38 $ 949,865 $ 1,036,199

Misc. Assets 4 $ 544,224 $ 625,427

Paved Parking Lots 42 $ 4,101,157 $ 5,809,496

Central Parking Meters 6 $ 51,124 $ 64,759

148 9,567,762$ 10,078,130$

Misc. Assets

Pooled Asset: assets of value below the materiality threshold ($5,000) when considered on an individual basis but collectively make up a significant group of assets that exceeds the threshold level of $50,000.

Computer Software: Not to Be Replaced - as the software condition doesn't deteriorate and future technology changes cannot be determined (ie. Cloud Based)

Miscellaneous Assets - Condition• Clarington’s miscellaneous inventory is a catch all for assets that don’t fit

into the other major classifications

• 53% of Clarington’s miscellaneous assets are considered to be in Good to Very Good condition based on their age.

• 26% of Clarington’s miscellaneous assets are considered to be in Very Poor condition based on their age

Miscellaneous – Risk & PrioritiesParking lots are the only asset category within the miscellaneous inventory that has an additional factor for consequence other than the estimated replacement cost. Each parking lot has received a priority rating from 1 (being the lowest level of consequence) to 5 (the highest level of consequence). This is determined by the facility or usage that each location receives.

The top ten (10) miscellaneous assets requiring replacement are as follows:

Parks - Inventory

Asset Type Asset Inventory Historic Cost

Replacement Value as of 12/31/2016

Parks

Play Courts 29 $ 587,027 $ 906,457

Parks-Miscellaneous 36 $ 2,323,587 $ 2,920,646

Play Fields 84 $ 6,292,290 $ 1,392,881

Playground Equipment 60 $ 2,461,479 $ 2,830,016

Playground Equipment-Water 13 $ 1,818,346 $ 2,059,617

Structures 78 $ 4,264,624 $ 2,510,512

Trails & Paths 81 $ 2,400,852 $ 2,614,504

381 $ 20,148,205 $ 15,234,633

Grass Play Fields: Not to be Replaced - as resurfacing sod not considered capital but rather a maintenance issue.

Play Field Lights: Not to be Replaced - as they are only replaced if damaged by an unforeseen accident.

Parks- Condition• Clarington has implemented policies to ensure compliance with CSA standard Z614-

07 for play structures which include; procedures for inspection, repairing and reviewing park structures

• 47% of Clarington’s park assets are considered to be in Good to Very Good condition based on their age.

• 20% of Clarington’s park assets are considered to be in Very Poor condition based on their age

Parks- Risks & Priorities• Park assets use age-based condition rating to determine the probability that the asset

will fail and the replacement cost of the asset to provide the consequence is that asset is to fail.

The top six (6) park assets requiring replacement are as follows:

Roads and Roadside - Inventory

Asset Type Asset Inventory Historic Cost

Replacement Value as of 12/31/2016

Roads - Base 974 km 217,274,442$ 234,923,705$

Roads - Surface 869 km 78,731,702$ 165,688,896$

Traffic Control Signals 18 1,442,894$ N/A

Guiderails 25 km 3,017,519$ 3,982,152$

Sidewalks (Pooled Asset) n/a 21,607,908$ N/A

Street Lights (Pooled Asset) n/a 15,089,698$ N/A

337,164,163$ 404,594,753$

Roads

Roadside

Traffic Control Signals & Street Lights: Not to be Replaced - as they are only replaced if damaged by an unforeseen accident.

Sidewalks: Not to be Replaced - as they are only replaced in small sections as a maintenance issue and never fully replace entire segments

Roads - Base (RURAL): Not to be Replaced - as they typically don't require complete replacement

Roads and Roadside – Inventory• Rural roads typically don’t require replacement of the road base

• The replacement of the base for urban roads typically occurs only when underground services such as water mains, sanitary sewers, and storm sewers need to be replaced.• An assumption of 80 years was determined to be the average life span on those underground

services which was applied to base for the AMP• The replacement costs for the base was calculated based on unit prices from recent road

reconstruction prices

• The replacement costs for roads surface was also based on unit prices from recent road reconstruction prices• Surface work was split into three different types of projects:

• Surface Treatment (high float) replacement• Rural hot mix upgrade or replacement• Urban surface replacement

Roads and Roadside - Condition• Best practices for road system management include the application of pavement

preservation practices throughout the road’s life to extend the life of the road rather than replacing the road after it has completely failed

• Clarington’s Engineering department uses a pavement management computer module to determine the most cost effective mix of treatments to provide the right treatment at the right time throughout the life span of the road

• The trigger in the AMP for replacement of the road surface is the condition of the road, using a Pavement Condition Index (PCI) of 30 for the threshold to fully replace

• 43% of Clarington’s road and roadside assets are considered to be in Good to Very Good condition based on their age.

• 28% of Clarington’s road and roadside assets are considered to be in Very Poor condition based on their age

Roads and Roadside – Risk & Priorities• The CONSQUENCE OF FAILURE for Roads

includes a weighted average of the following:• Price Per Meter of Road – based on historic costs

inflated using CPI tables• Service Class – based on speed limit and traffic

count

• The CONSQUENCE OF FAILURE for Roadside assets is calculated based on their associated replacement cost

Roads and Roadside – Risk & Priorities Matrix

Roads Roadside

Roads and Roadside – Risk & PrioritiesThe top ten (10) Road assets requiring replacement are as follows:

Storm Water Management

Storm sewers and ponds have an extremely long useful life which results in 94% of those assets have condition ratings in the Fair to Very Good status.

Asset Type Asset Inventory Unit Historic Cost

Replacement Value as of

12/31/2015

Conduit 226 km 62,721,875$ 90,653,512$

Structures 4,172 Each 12,514,853$ 18,138,832$

Storm Water Management Ponds 25 Each 8,284,250$ 11,173,588$

4,423 83,520,978$ 119,965,932$

Storm Sewers

TABLE 3-2.09 STORM SEWERS

Key Factors that Impact Level of Service

Community Expectations

Strategic and Corporate

Goals

Legislative Requirements

Asset Performance

Funding Availability

Technical and Operational

Requirements

Levels of Service• The AMP includes LOS for all asset categories, pulling

performance measures from various sources as a starting point for Clarington

• Next steps will include:• Target setting for desired LOS• Calculating financial implications of service level

changes• Incorporating taxpayer expectations and demands on

service levels• Expanding on measurable for each asset category

Asset ManagementOBJECTIVE: outline and establish a set of planned actions, based on best practices that will enable our assets to provide a sustainable level of service while managing risk at the lowest life cycle cost.

Asset Life Cycle CostingAs the AMP evolves, developing processes for managing and maximizing the performance of an asset while minimizing its costs throughout the course of its lifecycle will enable Clarington to make better asset investment decisions.

Asset Management – Capital Budget Implications

An objective moving forward, service areas will be able to base their decision making on a more consistent asset based approach rather than financing approach

Risk Based Analysis

•Quantifies the risk of failure of asset, identifies mitigation measures and sets out to reduce risk in most cost effective manner

Cost-Benefit Analysis

• Identifying the financial impacts of various alternatives within a business case

Multi-Criteria Analysis

•An objective guide to determine which combination of capital projects represent the best overall value based on the level of benefits they provide to the community

Financial Management StrategyThe financial strategy indicates the current funding resources utilized and the required funding to sustain the current capital asset inventories while achieving the desired level of service.

Tax Levies Reserves Reserve Funds

Development Charges

External Financing Debt

Sources of Capital Funding

Provincial Guidelines for Financial Management Strategy• The AMP is required to identify any funding shortfall relative to the

financial requirements that cannot be eliminated by either service levels or asset management and/or financing strategies

• Municipalities are required to discuss the impact of the shortfall and how the impact will be managed

• Province may review municipality’s financial strategy to confirm shortfall is justifiable

• Province may analyze service levels to ensure the municipality has considered decreasing applicable services

• Province could review that all asset management and financial strategies have been considered for funding (i.e. Debt Capacity)

AMP Financial Scenarios

•Tax Levy increase of 1% for the first 10 years•Tax Levy increase

of 1.5% for next 10 years

•Tax Levy increase of 1% for the first 10 years•Tax Levy increase

of 1.5% for next 10 years•Roads are capped

at $9.5 million of funding per year

•Tax Levy increase of 2% for the first 10 years•Tax Levy increase

of 1% for next 10 years

In developing the asset management plan, three (3) alternative scenarios were considered. All scenarios assume that all identified asset requirements will be incurred and the infrastructure deficit of $91.9 million will be spread evenly over the next 20 years

Tax Levy Support to Capital

• The tax levy support to Capital continues to require an increase over the past budget years to fund AMP requirements

• To ensure the Municipality’s reserve funds maintain a positive balance, this strategy includes a reallocation of the tax levy for Capital to increase the transfers of tax levy to the reserve funds

Application of Reserve Funds• The financial strategy

utilizes eleven (11) Reserve Funds to finance both the accumulated infrastructure deficit and the annual replacement costs

• The overall increase in annual capital funding required has significantly increased many of the Reserve Funds annual transfers from Tax Levy

Utilization of Debt

• Based on 15 year term at a 5% interest rate

• Capacity of annual repayment limits of $14 million

• Capacity of total principal balance of $147 million

• Currently, Clarington has outstanding debt of $17 million which equates to 11% of total available debt capacity

• Proposed scenarios offer various debt peaks;

• #1 - $81 million in year 2027• #2 - $66 million in year 2037• #3 - $59 million in year 2026

Debt Capacity

Debt Utilization

Ten Year Historical Tax Levy Support to Capital

Financial Strategy Conclusion and Recommendation

• The infrastructure deficit of $91.9 million is a priority

• The three proposed scenarios are viable with changes to the current budget allotments for capital financing

• An increase in Tax Levy support is required for transfers to Reserve Funds and direct capital financing

• The AMP utilizes debt financing or debentures as a crucial funding source to maintain our asset inventory

The AMP recommends scenario #3 which results in the lowest amount of new debt while still funding all forecasted asset replacements

Next Steps………………………..• Final AMP report to GGC on September 25th

• Awaiting final regulations from Proposed Bill 6 – Infrastructure for Jobs and Prosperity Act, 2015

• Improvements to current AMP processes and assumptions

• Strategic integration to budget

• Utilizing Citywide works with the AMP process

• Integrating growth related assets

Questions?