2018-2022 Financial Plan

APPENDIX C: INFRASTRUCTURE FUNDING STRATEGY

District of Maple Ridge

TO:

Corporate Management Team Laura Benson, Policy Analyst

Date:

August 29, 2006 October 30, 2006

FROM:

Updated:

SUBJECT: Infrastructure Funding Strategy For the development of a strategic infrastructure program, some certainty around funding levels is required. For many years, the District has had a Long Term Capital Works Program, although there have been assumptions made around levels of funding that may or may not be directed towards the various categories of assets and services. As projects move closer towards the current year(s), often they get pushed off to later years due to lack of funding. At times, the lack of certainty means work that could otherwise happen in advance of a project is not able to proceed, such as advance planning, searching for ways to leverage our funds and booking contractors. In order to make the best use of District resources and at the same time leverage them to obtain funding from other sources, we require a longer term commitment on the funding side of the program. These are separated into two categories: Sustaining What We Have and Providing for Growth. Additionally, a set of guidelines is provided in Appendix 4 to set a framework around certain funding sources, specifically the infrastructure renewal funds, DCCs and debt. Sustaining What We Have The DCC reserve funds infrastructure projects to support growth, but provides limited funding for replacement or renewal and does not fund maintenance costs. In addition, subdivision infrastructure turned over by developers becomes the responsibility of the District and over time contributes significantly to the infrastructure inventory. In 2004 it was almost $10 million and in 2005 it was another $26 million. Where do we get the money to sustain an asset base that is growing at this pace? Ideally, a portion of the revenue from growth in the tax base should be set aside for this, but often it goes towards new initiatives and maintaining existing programs. In terms of funding asset replacement and renewal, we have a few different categories of assets that are funded through different methods. The water and sewer utilities have the ability to generate their own funds through the utility rate structures. The replacement reserve for operations equipment raises its own funds from general revenue through charge-out rates. Our other reserves are for the most part committed or flagged for specific purposes. So where do the funds come from to pay for other major infrastructure replacement and/or rehabilitation? The answer is mainly general revenue and the contribution from general revenue towards some of these initiatives has remained fairly flat for years, despite the huge growth in our inventory of roads, buildings and other assets. In addition, these initiatives must compete for funding with other projects. Some of the resources devoted to infrastructure sustainability are discussed below. Transportation and Traffic Management – The contribution from general revenue to the capital program is about $2.1 million annually. This has not changed since prior to 1998. Roads projects must compete with drain- age, technology and other projects within the overall capital program. TransLink provides funding for main- tenance of the major road network, but the District’s own infrastructure has no dedicated source of funding. Replacement value of the road infrastructure is estimated to be $460 million. Applying a lifecycle assumption of 25 years, we should be spending $18 million on an annualized basis, or the “sustainability requirement” that is required in order to keep our infrastructure in adequate condition. That is not to say that we need to spend $18 million each and every year; but on a long-term basis we need to be prepared for some years where significant funds are required and we won’t have the capacity to manage them within our annual operating and capital budgets. To put this into perspective, we are currently spending about $400,000 through the operating budget and the capital program averages another $400,000 per year (allocated as a portion of the $2.1 million annual general revenue contribution towards the capital program). This $800,000 investment in road maintenance is about 8% of the $18 million annualized requirement. Other infrastructure within the Transportation and Traffic Management category, such as bridges, traffic signals, lights, curbs, gutters, sidewalks, rail crossings and traffic signs bring the total replacement value to $568 million, with an annual sustainability requirement of $21 million. 1. Drainage – Also competing for the general revenue funds in the capital program ($2.1 million annually) are drainage projects. Replacement value of the drainage infrastructure is estimated to be $220 million with an annual sustainability requirement of $4.5 million. We are currently spending about $350,000 through the operating budget and another $300,000 through the capital program. This $650,000 investment in storm sewer maintenance is about 14% of the $4.5 million required.

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