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SUSTAINABLE INFRASTRUCTURE AND FINANCING
by
InfraCycle Fiscal Solutions for the
2013 FOF Conference
InfraCycle Fiscal Solutions – Dedicated to improving your municipality’s fiscal performance
Ray Essiambre
President and Founder
Craig Davidson
CAO Hastings Highlands
Senior Associate
Sustainable Infrastructure and Financing
Issues and Solutions
Our Topic
External influences you do not control
Populations are generally declining
Residents have greater expectations – want more
Housing stock is aging and lower assessments
Assets are aging and they cost more
Defining the Problem
Internal influences and things you can change
Council’s Fiscal Theme
The decision making process
Access to tools and new techniques
Defining the Problem
Changes in land use trigger future lifecycle costs and revenues in perpetuity..............
Decisions at planning committee and council
Roll the dice - a good financial decision or a bad one?
Deal with fiscal implications after-the-fact at budget time
Treasurer is left out the process
The disconnect in decision making
Defining the Problem
Business Park$2million net gain over 10 years or $200,000/yr
Residential $(-50million net loss) over 10 years or (- $5million) net loss /yr
Net Loss ($4.8million/yr)
Solutions Improve Decision Making
Quantifying Land Use Options
Un-serviced Industrial$350,000
/1,000 acres
Agricultural $1,000
/1,000 acres
General Industrial $5,500,000/1,000 acres
Premium Mixed Use $16,000,000/1,000 acres
Predicting Success – Employment Areas
Using new technologies
Dam Road Bridge
Mink Lake
Hastings Highlands
Solutions Trends
Old Versus New
Construct in place
Total project from concept to completion estimated to be over 12 months
Road closure for many months
Increase need for detours Cost estimated at
$1,000,000
Prefabricated
Total project from concept to finish 6 month
Road closed for 10 days No detours Alternative plans
available
Cost - $500,000
Solutions Trends
Community engagement
Communication strategies
Compromise
Cooperation between work forces
Cooperation with residents
Cooperation with business community
A success?
Solutions Other Lessons Learned
Directions
What should be charged by use?
Subsidized operations? At what level?
Communicating the change
Solutions Other Lessons Learned
External influences you do not control
Services like libraries, community centres etc. may not be able to handle development without increased financial contribution
Defining the Problem
Historic underfunding of municipal operations for both operating and capital
External influences you do not control
As property taxes make up more of the household budget – more scrutiny about the value for money
Defining the Problem
Most municipalities derive most of their revenues from property taxes – 75% in rural Ontario on average
Defining the Problem
Short-term thinking and solutions don’t work
Municipal finance is more complex
Solutions need to extend beyond 1 or 2 terms of council
The current operating and capital budget processes are not enough
External influences you do not control
Less ability to develop smartly to increase revenues outside growth areas
Defining the Problem
Limited ability to create new sources of funding
Provincial downloading
External influences you do not control
Defining the Problem
Grant programs support start-up costs
Little support for ongoing costs outside municipal structure
No support for soft costs to keep programs running
External influences you do not control
Defining the Problem
Property Taxes increase over previous years
Little to reflect shrinking Provincial support for increasing operating costs
Little to reflect the increasing responsibilities of Municipalities
1975
Defining the Problem – Waiting Too Long
Avoid Risk and the
Slippery Slope
Municipality in Balance Reluctance to increase
taxes and user fees
Reduce reserves
Increase borrowing
Municipal crisis
Solutions - Avoid Risk Longer-term Financial Planning
Steep increase in taxes and user fees
Link land use to fiscal outcomes
SolutionsFiscal Impact Analysis
Capital
Replacement
Maintenance Operating
All inclusive calculation of the following
Time
Solutions Lifecycle Costing and Think Long-term
Life cycle cost Capital Building
Capital Books & Equipment
Financing Replacement Building
Replacement Books & Equipment
Resale Water Energy Staff Salary
43,950,000 10,000,000 1,200,000 250,000 3,000,000 2,400,000 0 2,500,000 4,000,000 17,600,000
Solutions Understand the True Cost
$(5,982,000)
Unfunded Liabilities
($22,982,000)
$(422,982,000)
Solutions Lifecycle costing of ALL municipal assets
Solutions Trends
Roads were constructed
Roads were used
Minor maintenance
Potholes filledLines painted
Road deteriorated
Road was reconstructed
Historically
Historical Factors
Level of funding
We all like new!
More emphasis on capital programing rather than ongoing maintenance
Solutions Trends
Shift in Priorities
Less funding
Looking for efficiencies
Looking for new way of operating
Focus on the asset
Solutions Trends
Life Cycle Approach
Regular maintenance
Major projects at life cycle significant points
Keep asset in good condition
Extends life of asset
Cost to maintain is less than cost to rehabilitate once the asset has deteriorated
Solutions Trends
Taxation vs User Charges
Factors for changeCouncil focus on tax ratesWalkerton – full recovery from ratesChange in approach from a cost shared by
assessment to a cost based on use
Solutions Trends
Ray Essiambre, President InfraCycle Fiscal Solutions
[email protected] 613-836-7541
How may we help you?
Craig Davidson, CAOHastings Highlands
Senior [email protected]
Questions ?
Three primary topics
Session Format
Questions and Answers
How to get started
Defining the problem – how did it come to this?
Solutions and examples
FAR - 0.13
FAR - 0.60
Economic Development Strategy
SolutionsIncrease Revenues – Better Choices
