2018-2022 Financial Plan

APPENDIX C: INFRASTRUCTURE FUNDING STRATEGY

Guidelines Specific to Renewal Funds  Renewal Funds (1% Infrastructure Sustainability) must only be used to sustain current infrastructure. Where a project will include augmentation, that portion must be covered from an alternate funding source.  Example: An existing local road with gravel shoulder is degrading. As part of a rehab project, it is determined to widen and add curb & gutters. The resurfacing of the existing road-width can be funded from the Renewal funds; the extra width and curb and gutter must be funded from general revenue or other funding source. Guidelines Specific to DCC Funds  Where DCC works are financed through debt, funding the interest component from DCCs can only be done in very specific circumstances:  To build infrastructure in advance of adequate DCC collections so that growth can occur. Examples are: o Greenfield, where infrastructure is being provided to areas with no servicing; o Fixed-capacity infrastructure, such as water and sewage treatment plants;  Out-of-sequence projects, where construction is brought forward from timing set out in the DCC program. Examples would be upgrading the sewer main or water trunk lines.  Projected revenue for the DCC reserve fund is based on historical and projected growth patterns. There is a risk to locking ourselves into debt payments without a certainty in the incoming revenue stream. There are many outside influencing factor which could prevent the growth from materializing. Also, we are in a shift away from single-family housing and we don’t really know what to expect in terms of higher density housing. There are other factors as well that may have an influence on the DCC revenues, including potentially a new DCC rate structure that more closely ties in with an amended OCP. Therefore, short-term borrowing is strongly recommended, as revenue projections become less reliable as the time frame is expanded.  The DCC bylaw should be amended regularly to ensure that rates reflect changes to infrastructure needs and project costs, as well as changes to growth management objectives, at the same time recognizing the expectation by developers of a relatively stable rate. A current DCC bylaw will ensure that additional costs are spread over the greatest number of potential development units. This supports the DCC best practices guiding principles and FSP 9.0.

Excerpt from Financial Sustainability Plan, Policy 5.52 7. Infrastructure Maintenance & Replacement:

Discussion: The District has in excess of $1 billion invested in its infrastructure. This includes our direct investments and investments made by the development community that are turned over to the municipality to operate and maintain. As our community grows, this investment increases. We need to develop a plan to keep the infrastructure in a proper state of repair to avoid costly failures.

Policy 7.0 The District will establish an inventory of its infrastructure and will keep it up to date. A

maintenance/replacement program will be established using best practices. By 2015, this program must be fully funded and the current 5-year Financial Plan should start to address this on a phased basis. The required tax increase will be beyond that set out in Policy 3.

Policy 7.1 Annual operating and maintenance budgets will be adjusted to accommodate growth.

8.

Debt Management: Discussion: The maximum amount that the District can borrow from external sources is set by the Community Charter. Every effort should be made to keep levels at a minimum however; there may be instances where borrowing money is appropriate i.e. financing major infrastructure projects. Borrowing in such instances allows the costs of the project to be spread out over the useful life of the asset. This results in costs being paid by future beneficiaries and not just by current taxpayers. Policy 8.0 Projects that are to be funded by external debt should be submitted to Council with a business case, including recommendations on how the debt will be serviced.

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