Council reviews asset management plan

Sam Odrowski

The Town of Fort Frances has put an increased focus on the future planning of its assets and infrastructure since 2012 when it first started to develop its asset management plan. Nonetheless, town council is being urged to implement a 1.4 percent tax increase each year for the next 20 years to sock away more cash to replace infrastructure.

Since putting a greater focus on asset management, the town has made strong improvements to maintaining and planning for the future of its core infrastructure, according to Public Sector Digest’s (PSD) senior asset management consultant, Chris Vanderheyden, who made a presentation during last Monday’s council meeting.

“Your municipal staff and asset management team need to be commended for all the work they’ve done. I’ve worked in the municipalities throughout Canada and you’re way ahead of the curve here in Fort Frances,” he lauded.

And while the town has been making sustainable steps to better its management of assets, the “report card” received by PSD shows that there’s still lots of room for improvement.

“Think of this as a snapshot in time,” Vanderheyden said. “I’ve delivered this message to municipalities throughout Canada and you’re not alone, every municipality sees ‘Ds’ and ‘Fs’ but what I have to say about your town is you’re making progress”

“I’ve yet to see a municipality that is fully-funded for their future infrastructure requirements,” he added.

The town currently owns $355 million worth of assets, not including facilities or parks and recreations assets.

A large portion constitutes core assets or infrastructure which is primarily road networks, bridges, and water/sewer systems.

“Another way to kind of look at this to put it into more relatable terms for the community is asset ownership per household,” said PSD asset management consultant Matthew Smith.

“If you break down the numbers based on the 3,812 residential units in the town . . . it currently manages, operates, and maintains infrastructure, equivalent to $93,000 per residential unit.”

When looking at road networks section of the town’s report card, it scored a “C” in asset health and a “D” in financial capacity.

The average annual allocation required to sustain the road network is just over $3.25 million and the current funding is a little over $1.5 million, leaving a deficit of approximately $1.75 million.

For bridges, the town scored a “C” in asset health and an “F” in financial capacity.

Currently, 74 percent of the town’s brides are in very good or good condition but there is an annual deficit of $162,000 for its capital allocation.

The town’s water systems scored a “D” in asset health and “C” In financial capacity, with only 29 percent of the town’s related infrastructure being in “very good” or “good” condition and an annual funding allocation deficit of $500,000.

Just 24 percent of the town’s sanitary sewer network is in “good” condition or better and there’s an annual funding allocation deficit of $474 thousand, so the town received a “D” in asset health and “C” in financial capacity.

For storm sewer systems, the town landed a “C” in asset health and “F” in financial capacity, with 67 percent of the sewer systems in “good” or “very good” condition and an annual funding deficit of over $550,000.

Decades ago, the town was more focused on putting new infrastructure into place but more recently there has been a decline in new investments relative to previous years and more money is now being pumped into renewal and rehabilitation.

When looking at the service life remaining for the town’s assets, 14 percent are expired and decisions will soon have to be made to replace them.

On the flip side, 76 percent of the town’s assets have over 10 years of life remaining, and a lot of the underground infrastructure has a 75 year-plus lifespan.

Meanwhile, five percent of assets have zero to five years of life remaining and six percent has six-10 years before they expire.

For the condition of the town’s assets 13 percent are “very good,” 21 percent are “good,” 28 percent are “fair,” 18 percent are “poor” and 20 percent are “very poor.”

PSD recommended that Fort Frances use a life cycle activity scenario approach for its infrastructure where lifespans are extended through refurbishments and repairs instead of waiting until assets are fully deteriorated before replacing them.

“Instead of simply building a road and in 30 years replacing it, we build a road and then we do a crack sealing at year five, at year 10 we resurface, and there is a number of other events we can use to strategically extend the life of these assets,” Smith explained.

“These tend to be at a lower cost per added year of life to the asset as oppose to simply just letting it deteriorate and replace.”

Using this strategy, the town could see an estimated savings of $371,000 per year.

Meanwhile, Fort Frances currently sets aside $3.7 million each year to replace or repair assets as they reach their life expectancy but PSD showed $7.95 million is needed per year to close the gap between capital requirements and available funding, creating a $4.2 million deficit.

“It’s pretty substantial and it’s a scary number to look at, but you’re not alone–it’s really common” Smith said.

“A lot of what has to happen here is certainly an evaluation of the financial tools you have available to raise capital allocation, but also strategically prioritizing projects as well, getting that assessed condition, knowing when you can defer projects in the short term but still planning for them into the future as well.”

PSD has recommended that the town take a 20-year approach to seal the annual $4.2 million deficit by increasing tax revenues by 1.4 percent each year, for a total tax/rate change of 28.1 percent.

“The message that we’re trying to share is that it should be a consistent contribution to the capital that you set aside for the replacement of this infrastructure,” Smith noted.

“You shouldn’t just be planning for it in the year that it needs to be replaced, you should be planning for it from the year that it’s put in service, and that should lead to a more stable capital budget on an annual basis.”

The amount of money needed to fund assets annually is based solely on data collected by PSD over the past few years and it will continue to be re-evaluated as more data is collected.

The town’s Operations and Facilities manager Travis Rob, who has helped develop the town’s asset management plan, said he doesn’t foresee council doing a “carte blanche” approval of the 1.4 percent tax rate increase each year but changes will be made.

“I see council increasing their capital contributions . . . to reserves if possible, but there’s also that underlying component to all of this as well that there’s the affordablity piece and I know this council is cognizant of that,” Rob said.

“That will definitely play into whatever decision making is going to come down the pipe from that in the future right.”

Coun. John McTaggart said the numbers are “mind boggling” and the task I daunting but is glad that a plan and road map has been put into place for their future.

“I think if we take these numbers and work them, that we can do it,” he remarked.

“It will be tough but we can do it.”

June Caul said it’s important to remember Fort Frances isn’t any worse off than any other community in Ontario and the town will become much better moving forward through the asset management plan, past their term on council.

“We will be helping councillors in the future to better asses and decide on how much money is needed and eventually that amount that we have sitting on our shoulders will diminish as the years go on,” she explained.

For Coun. Douglas Judson, the 20-year plan is a little different, being the youngest member of council, at age 32.

“I don’t like to see us mortgaging our future in irresponsible ways and much as we’ve discussed many time with this council…about controlling our uncontrollables and how we can nail them down,” he said.

“I think having a longterm strategy to do that is critical to that effort even though we may not see the catastrophe that could unfold before our eyes in the immediate future, beyond the term of this council we certainly want to equip those at this table to have the resources they need.”

Meanwhile, Rob has mixed feeling about the town’s current state of infrastructure, he’s happy to be getting assessments completed on its lifespans and a clear direction for the future but said there’s definitely more work to be done.

“We’re doing as much as we can with the money that we’ve got,” he said.

“We’re trying to spend it in the best places, we’re trying to go after the highest risk [assets], highest need areas, and we’re going after as much funding as we possibly can to get as much work done as we can, so in that regard I’m happy with where we’re at.”

Some of the benefits of completing an asset management plan is increased accountability to the public, town, staff, and to the community.

“It shows that you care, it shows that you have the interest of future generations at heart, and it shows that you don’t want to burden them with crumbling infrastructure and higher tax rates,” Smith explained.

Meanwhile, OREG 588 is a provincially mandated set of regulations municipalities must reach by certain deadlines to begin compliance with asset management standards across Ontario.

Rob said the town has been successful thus far in reaching OREG 588’s targets and will continue to moving forward to create sustainability within the town.

“We’re just going to keep working towards those milestones they’ve got laid out.”

Smith said Fort Frances is well on pace to meet all of the OREG 588 requirements in 2023 and 2024.