Asset Management Plan Applied to 2020 8-year Capital Budget

The City's updated Corporate Asset Management Plan was presented and approved by City Council in 2019, CR424/2019 CSC 329. The report identified an annual shortfall of approximately $30M in investments which sustain our existing assets at current levels of service. For purposes of clarity and consistency, moving forward these types of investments are being referred to as Service Sustainability. Service Sustainability encompasses all investments which are made to existing City assets and the nature of these investments is to provide maintenance, rehabilitation, reconstruction, disposal and or replacement of existing assets in a like for like fashion.

Given the approval of the AMP and understanding of funding levels and prioritization required for service sustainability, the 2020 8-year capital budget has been prepared with the inclusion of the annual 1.16% increase. This additional capital funding has minimized the impact the execution of the AMP would have on the 2019 previously approved in principle projects.

While the 2020 Capital Budget has been prepared inclusive of the additional funding proposed in the AMP, it is understood by Administration that City Council may choose not to approve the recommended increase, in whole or in part. As such, the recommended 2020 8-year Capital Budget as presented would need to be reduced to be in line with approved funding levels. Investments in Classification 1 would not be able to be reduced as they are not City funding and or are funds City Council has precommitted for immediate use on various projects. Therefore, in order to address reduced funding levels and preserve the required investments for service sustainability, as identified in the AMP, Administration would recommend projects listed in Classifications 3, 4 and 5 be considered first for reductions.

Should City Council elect to reduce investments in service sustainability projects the following risks should be understood:

• - Reductions to service sustainability projects should be focused on assets which pose a lower level of risk if not maintained or replaced. This would likely result in assets such as trails, sidewalks, benches, fountains and local roads being some of the first investments which should be reduced;
• - Reductions in service sustainability will result in current level of services being reduced and also likely result in higher funding requirements in the future to bring service levels back to what they currently are;
• - O. Reg 588/17 requires an annual review of the City's asset management progress, including progress in implementing the plan; factors impeding the municipalities ability to implement the plan; and a strategy to address these factors. Reference O.Reg 588/17, Section 9, Subsection 2, a, b and c.
• - The majority of grants which the City is able to apply for include compliance to O.Reg 588/17 to obtain funding, and in some cases to sustain approved grant funding.

As stated in the third bullet point above, O. Reg 588/17 requires on an annual basis that the City review our asset management progress for implementing the plan. While the