This amount includes the recommended increase of 1.16% each year for the next six years that was proposed in the AMP, to allow for existing assets to be funded at appropriate levels to sustain the services they provide for the community.
Part of the process for Capital Budget development includes the identification of changes which impact the previous capital budget projects which were approved in principle. Departments review projects previously approved in principle, which for this budget were projects in the 2020 to 2025 timeframe, to consider if any changes are required. These changes can be a result of several factors including but not limited to; changing demands, higher than expected tenders, unexpected infrastructure failures and/or matching funding requirements for grants.
Based on this review process, new projects and or increases to previously approved in principle projects have been brought forth within the 2020 – 2025 period. There has been minimal adjustment to previously approved in principle projects from the 2019 7year Capital Budget to accommodate higher priority requests. Appendix A – Summary of Adjusted Previously Approved in Principle Projects, provides a list of projects which Administration recommends be pushed out to future years funding. These recommendations are based on current and/or additional funding being sufficient to meet the needs of the project, reallocating funding so that projects with the ability to proceed are funded to allow them to be completed and or consolidating like projects so that like projects are addressed under one project.
Pre-committed and Placeholder Funding
The City has over the past number of years undertaken a practice whereby some capital funds are pre-committed thereby allowing the City to avoid the issuance of costly long-term debt and in place of such debt utilizing internal funds which are released for immediate use to complete priority projects. In these cases, internal financing costs (paid to the City) are included within the project budgets for the unfunded period. This practice is usually tied to the following scenarios:
1. The project is several years long (e.g., Cabana Road 10 years approx. $46 M). If tenders can be issued for larger sections then costs are lower, even if the work will span several years. If work was to be tendered year by year, as funding is approved, costs would be much higher as the tenders would be for smaller pieces of work and construction would take longer as the required tendering process would need to be done annually. Tenders or Requests for Proposals cannot be issued without confirmation of approved funding. The ability to commit several years of funding for such a project reduces the overall cost by allowing a current tender for a larger piece of work and reduces construction time as there is no start and stop each season. This also works well for bulk purchases of large assets such as playground and buses to take advantage of current and bulk ordering pricing.
2. The other advantage to pre-committing funding for larger multi-year projects is that is does not adversely impact any one year of the capital budget. For example, had Cabana Road been funded at $46 M the first year it started it would have consumed almost half of the entire capital budget for that year.