Asset Management Plan

Adelaide Metcalfe, Ontario

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Watson & Associates Economists Ltd. 905-272-3600 June 14, 2022 [email protected] Asset Management Plan Township of Adelaide Metcalfe FINAL ________________________ Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table of Contents Page 1. Introduction ...................................................................................................... 1-1 1.1 Overview ................................................................................................. 1-1 1.2 Legislative Context for the Asset Management Plan .............................. 1-3 1.3 Asset Management Plan Development ................................................... 1-4 1.4 Maintaining and Integrating the Asset Management Plan ....................... 1-5 2. State of Local Infrastructure and Levels of Service ..................................... 2-1 2.1 Introduction ............................................................................................. 2-1 2.2 Transportation ......................................................................................... 2-1 2.2.1 State of Local Infrastructure ....................................................... 2-1 2.2.2 Condition .................................................................................... 2-7 2.2.3 Current and Proposed Levels of Service ................................. 2-15 2.3 Water .................................................................................................... 2-17 2.3.1 State of Local Infrastructure ..................................................... 2-17 2.3.2 Condition .................................................................................. 2-18 2.3.3 Current and Proposed Levels of Service ................................. 2-19 2.4 Wastewater ........................................................................................... 2-20 2.4.1 State of Local Infrastructure ..................................................... 2-20 2.4.2 Condition .................................................................................. 2-22 2.4.3 Current and Proposed Levels of Service ................................. 2-23 2.5 Facilities ................................................................................................ 2-25 2.5.1 State of Local Infrastructure ..................................................... 2-25 2.5.2 Condition .................................................................................. 2-26 2.5.3 Current and Proposed Levels of Service ................................. 2-28 2.6 Fleet ...................................................................................................... 2-29 2.6.1 State of Local Infrastructure ..................................................... 2-29 2.6.2 Condition .................................................................................. 2-29 2.6.3 Current and Proposed Levels of Service ................................. 2-30 2.7 Equipment and Land Improvements ..................................................... 2-30 2.7.1 State of Local Infrastructure ..................................................... 2-30 2.7.2 Condition .................................................................................. 2-31 2.7.3 Current and Proposed Levels of Service ................................. 2-32 2.8 Population and Employment Growth .................................................... 2-33 3. Lifecycle Management Strategy ..................................................................... 3-1 3.1 Introduction ............................................................................................. 3-1 3.2 Lifecycle Expenditure Forecast ............................................................... 3-1 3.2.1 Lifecycle Model Approach .......................................................... 3-2 3.2.2 Professional Judgement Approach ............................................ 3-3 3.2.3 As-needed Replacement Approach ........................................... 3-4 3.2.4 Summary.................................................................................... 3-5 Table of Contents (Cont'd) Page Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 3.3 Average Annual Lifecycle Costs ............................................................. 3-6 3.3.1 Lifecycle Models Approach ........................................................ 3-7 3.3.2 Replacement Only Approach ..................................................... 3-8 3.3.3 Canadian Infrastructure Report Card Approach ......................... 3-9 3.3.4 Results ....................................................................................... 3-9 4. Financing Strategy .......................................................................................... 4-1 4.1 Introduction ............................................................................................. 4-1 4.2 Annual Contribution and Lifecycle Funding Target ................................. 4-1 4.3 Annual Costs .......................................................................................... 4-2 4.4 Funding ................................................................................................... 4-2 4.5 Tax Levy Impact ..................................................................................... 4-3 4.6 Water and Wastewater User Rates Impact ............................................. 4-4 Appendix A Financing Strategy Tables .................................................................. A-1 Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx List of Acronyms and Abbreviations BCI Bridge Condition Index C.I.R.C Canadian Infrastructure Report Card CCBF Canada Community-Building Fund HCB High-Class Bituminous IJPA Infrastructure for Jobs and Prosperity Act LCB Low-Class Bituminous O. Reg. Ontario Regulation OCIF Ontario Community Infrastructure Fund OSIM Ontario Structure Inspection Manual PCI Pavement Condition Index PSAB Public Sector Accounting Board ULC% Useful Life Consumed Percentage Report Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Chapter 1 Introduction Watson & Associates Economists Ltd. PAGE 1-1 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 1. Introduction 1.1 Overview The main objective of an asset management plan is to use a municipality's best available information to develop a comprehensive long-term plan for capital assets. In addition, the plan should provide a sufficiently documented framework that will enable continual improvement and updates of the plan, to ensure its relevancy over the long term. The Township of Adelaide Metcalfe (Township) retained Watson & Associates Economists Ltd. (Watson) to prepare a comprehensive asset management plan. One of the objectives of this plan is to move the Township's asset management practices into compliance with Ontario Regulation (O. Reg.) 588/17. It is also intended to be a tool for municipal staff and Council to use during various decision-making processes, including the annual budgeting process and future capital grant application processes. This is a comprehensive asset management plan covering all capital assets under the Township's ownership and management. The total current replacement cost of these assets is estimated at $86.7 million, or approximately $85,600 per household[1]. A breakdown of the replacement costs by major asset class is shown in Table 1-1, and illustrated in Figure 1-1. Roads, sidewalks and streetlights account for 57% of replacement cost, followed by bridges and structural culverts (structures) (18%), water and wastewater (11%), facilities (6%), fleet (6%), and equipment and land improvements (2%) [1] Based on 1,013 occupied dwellings, as identified in the 2021 Census. Watson & Associates Economists Ltd. PAGE 1-2 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 1-1: Replacement Cost by Asset Class Asset Class Description Replacement Cost (2022$) Roads, Sidewalks, and Streetlights 214.5 km of roads 3.5 km of sidewalks, 29 streetlights $52,450,000 Structures 13 bridges 34 culverts $14,150,000 Water 3.9 km of watermains $2,500,000 Wastewater 5.0 km of wastewater mains 1 treatment plant $6,270,000 Facilities 9 buildings $5,210,000 Fleet 22 vehicles $4,840,000 Equipment and Land Improvements Various equipment (e.g., fire hoses, welder, roadside mower) 5 land improvements (e.g., ball diamond, dugouts) $1,330,000 Total $86,740,000 Figure 1-1: Distribution of Replacement Cost by Asset Class Roads, Sidewalks, and Streetlights, $52.4 M, 60% Bridges and Structural Culverts, $14.1 M, 16% Water, $2.5 M, 3% Wastewater, $6.3 M, 7% Facilities, $5.2 M, 6% Fleet, $4.8 M, 6% Equipment and Land Improvements, $1.3 M, 2% $87 million Watson & Associates Economists Ltd. PAGE 1-3 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx The Township's goals and objectives with respect to asset management are identified in its Strategic Asset Management Policy. A major theme within that policy is employing sound asset management practices to ensure that all municipal infrastructure assets meet expected performance levels and continue to provide desired service levels in the most efficient and effective manner. Through the implementation of the asset management plan, the Township's practice should evolve to provide services at levels proposed within this document. Moreover, infrastructure and other capital assets should be maintained at condition levels that provide a safe and functional environment for the Township's residents. Therefore, the asset management plan and the progress with respect to its implementation will be evaluated based on the Township's ability to meet these goals and objectives. 1.2 Legislative Context for the Asset Management Plan Asset management planning in Ontario has evolved significantly over the past decade. Before 2009, capital assets were recorded by municipalities as expenditures in the year of acquisition or construction. The long-term issue with this approach was the lack of a capital asset inventory, both in the municipality's accounting system and financial statements. As a result of revisions to section 3150 of the Public Sector Accounting Board (PSAB) handbook, effective for the 2009 fiscal year, municipalities were required to capitalize tangible capital assets, thus creating an inventory of assets. In 2012, the Province launched the municipal infrastructure strategy. As part of that initiative, municipalities and local service boards seeking provincial funding were required to demonstrate how any proposed project fits within a detailed asset management plan. In addition, asset management plans encompassing all municipal assets needed to be prepared by the end of 2016 to meet Federal Gas Tax (now the Canada Community-Building Fund) agreement requirements. To help define the components of an asset management plan, the Province produced a document entitled Building Together: Guide for Municipal Asset Management Plans. This guide documented the components, information, and analysis that were required to be included in municipal asset management plans under this initiative. The Province's Infrastructure for Jobs and Prosperity Act, 2015 (IJPA) was proclaimed on May 1, 2016. This legislation detailed principles for evidence-based and sustainable long-term infrastructure planning. The IJPA also gave the Province the authority to Watson & Associates Economists Ltd. PAGE 1-4 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx guide municipal asset management planning by way of regulation. In late 2017, the Province introduced O. Reg. 588/17 under the IJPA. The intent of O. Reg. 588/17 is to establish standard content for municipal asset management plans. Specifically, the regulations require that asset management plans be developed that define the current and proposed levels of service, identify the lifecycle activities that would be undertaken to achieve these levels of service, and provide a financial strategy to support the levels of service and lifecycle activities. This plan has been developed to fully address the requirements of O. Reg. 588/17, utilizing the best information available to the Township at this time. 1.3 Asset Management Plan Development This asset management plan was developed using an approach that leverages the Township's asset management principles as identified within its strategic asset management policy, capital asset information, and staff input. The development of the Township's asset management plan is based on the steps summarized below: 1. Compile available information pertaining to the Township's capital assets to be included in the plan, including attributes such as size, material type, useful life, age, accounting valuation and current valuation. Update the current valuation, where required, using benchmark costing data or applicable inflationary indices. 2. Define and assess current asset conditions, based on a combination of municipal staff input, existing asset reports, and an age-based condition analysis. 3. Define and document current levels of service based on analysis of available data and consideration of various background reports. 4. Set proposed levels of service that the Township believes are achievable and affordable based on current information. 5. Develop lifecycle management strategies that identify the activities required to sustain the levels of service discussed above. The outputs of these strategies are summarized in the forecast of annual capital and operating expenditures required to achieve these level of service outcomes. Watson & Associates Economists Ltd. PAGE 1-5 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 6. Develop a financing strategy to support the lifecycle management strategy. The financing plan informs how the capital and operating expenses arising from the asset management strategy will be funded over the forecast period. 7. Document the comprehensive asset management plan in a formal report to inform future decision-making and to communicate planning to municipal stakeholders. 1.4 Maintaining and Integrating the Asset Management Plan The asset management plan should be updated as the strategic priorities and capital needs of the Township change. This can be accomplished in conjunction with specific legislative requirements (i.e., five-year review of the asset management plan as required by O. Reg. 588/17), as well as the Township's annual budget process. Further integration into other municipal financial and planning documents would assist in ensuring the ongoing accuracy of the asset management plan, as well as the integrated financial and planning documents. When updating the asset management plan, it should be noted that the state of local infrastructure, lifecycle management strategy and financing strategy are integrated and affect each other. For example, the financing strategy outlines how the lifecycle management strategy will be funded. The lifecycle management strategy identifies the lifecycle activities that need to be planned for in order to enable the Township to maintain or achieve proposed levels of service, and the associated costs. The asset management plan is a snapshot in time and is based on a number of assumptions regarding expected lifecycles and future performance of assets, lifecycle intervention costs, among others. The Township will need to establish processes for reviewing and updating these assumptions on a regular basis to keep the plan relevant and reliable. Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Chapter 2 State of Local Infrastructure and Levels of Service Watson & Associates Economists Ltd. PAGE 2-1 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 2. State of Local Infrastructure and Levels of Service 2.1 Introduction This chapter provides an analysis of the Township's assets and the current service levels provided by those assets. O. Reg. 588/17 requires that for each asset category included in the asset management plan, the following information must be identified: - Summary of the assets; - Replacement cost of the assets; - Average age of the assets (it is noted that the regulation specifically requires average age to be determined by assessing the age of asset components); - Information available on condition of assets; and - Approach to condition assessments (based on recognized and generally accepted good engineering practices where appropriate). Asset management plans must identify the current levels of service being provided for each asset category. For core municipal infrastructure assets, both the qualitative descriptions pertaining to community levels of service and metrics pertaining to technical levels of service are prescribed by O. Reg. 588/17. For all other infrastructure assets, each municipality needs to establish its own measures for levels of service. The rest of this chapter addresses the requirements identified above, with each subsection focusing on an individual asset category. 2.2 Transportation 2.2.1 State of Local Infrastructure The assets that support the Township's transportation services comprise roads, structures, sidewalks, and streetlights. The Township's road network has 214.5 kilometres of roads with three different surface types: high-class bituminous (HCB), low-class bituminous (LCB) and gravel. Over half Watson & Associates Economists Ltd. PAGE 2-2 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx of the network (54%) is gravel. The next most common surface type is LCB, 38% of the total road network length. Roads with HCB surface represent 8% of the total road network length. The estimated replacement cost of roads is $51.7 million. The average age of the road surfaces is 6.1 years. Table 2-1 provides a breakdown of the road network length, age, and replacement cost by surface type. A visual rendering of the data presented in Table 2-1 is provided in Figure 2-1 Table 2-1: Road Length, Age, and Replacement Cost by Surface Type Surface Type Length (Centreline- kilometres) Average Age of Surface Replacement Cost (2022$) HCB 16.5 8.8 years $11,720,000 LCB 80.9 11.7 years $17,290,000 Gravel 117.0 1.8 years $22,710,000 Total 214.5 6.1 years $51,720,000 In addition to roads, the Township's transportation assets also include 3,490 metres of sidewalks and 29 streetlights with a combined replacement cost of $730,000. Table 2-2 provides a breakdown of sidewalk and streetlight quantity, average age, and replacement cost by asset class. A visual rendering of the data presented in Table 2-2 is provided in Figure 2-2. Table 2-2: Sidewalk and Streetlight Quantity, Age, and Replacement Cost by Asset Type Asset Class Quantity Average Age Replacement Cost (2022$) Sidewalks 3,490 metres 7.2 years $540,000 Streetlights 29 lights 17.3 years $180,000 Total 9.8 years $730,000 The Township has 13 bridges and 34 structural culverts. The estimated replacement cost of the structures is $14.2 million. The average ages of bridges and structural culverts are 62 years and 40 years, respectively. Table 2-3 provides a breakdown of Watson & Associates Economists Ltd. PAGE 2-3 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx structure quantity, age, and replacement cost by structure type. A visual rendering of the data presented in Table 2-3 is provided in Figure 2-3. Table 2-3: Structure Quantity, Age, and Replacement Cost by Structure Type Structure Type Quantity Average Age Replacement Cost (2022$) Bridges 13 bridges 62 $7,400,000 Structural Culverts 34 culverts 40 $6,750,000 Total 47 structures 52 $14,150,000 Watson & Associates Economists Ltd. PAGE 2-4 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-1: Road Length, Age, and Replacement Cost by Surface Type Road Network Length (Centreline-kilometres) Average Age of Road Surface (Years) Replacement Cost (2022$) HCB, 17 km, 8% LCB, 81 km, 38% Gravel, 117 km, 54% 215 kilometres 8.8 years 11.7 years 1.8 years HCB LCB Gravel HCB, $5.1 M, 12% LCB, $17.3 M, 38% Gravel, $22.7 M, 50% $45 million Watson & Associates Economists Ltd. PAGE 2-5 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-2: Sidewalk and Streetlight Age, and Replacement Cost by Asset Class Average Age (Years) Replacement Cost (2022$) 7.2 Years 17.3 Years Sidewalks Streetlights Sidewalks $540,000 75% Streetlights $180,000 25% $730,000 Watson & Associates Economists Ltd. PAGE 2-6 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-3: Structure Quantity, Age, and Replacement Cost by Structure Type Quantity Average Age (Years) Replacement Cost (2022$) Bridges 13 28% Structural Culverts 34 72% 47 Structures 62.2 Years 40.0 Years Bridges Structural Culverts Bridges $7.4 M 52% Structural Culverts $6.8 M 48% $14 million Watson & Associates Economists Ltd. PAGE 2-7 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 2.2.2 Condition The Township had the condition of its paved roads assessed in 2021 by StreetScan. Paved roads were assessed using the Pavement Condition Index (PCI). The PCI is measured on a scale from 0 to 100, with 100 being an asset in as-new condition and 0 being a failed asset. The condition of gravel roads was estimated through a desktop exercise based on the time since the most recent re-gravelling. Gravel roads are re- gravelled on a three-year cycle. A three-point scale - Good (3), Fair (2), and Poor (1) - is used with the most recently re-gravelled roads being assigned a condition of "Good" and condition assumed to deteriorate by one point each year. To better communicate the condition of the road network, the numeric condition ratings for roads have been segmented into qualitative condition states. Moreover, descriptions and example photos of roads in these condition states are provided to better communicate the condition to the reader. Table 2-4 summarizes the various Pavement Condition Index ratings and the condition state they represent. Watson & Associates Economists Ltd. PAGE 2-8 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-4: Condition States Defined with Respect to Pavement Condition Index - Roads PCI Range[1] Condition State Example Photo Description[2] 85 ≤ PCI ≤ 100 Excellent A very smooth ride. Pavement is in excellent condition with few cracks. 70 ≤ PCI < 85 Good A smooth ride with just a few bumps or depressions. The pavement is in good condition with frequent very slight or slight cracking. 55 ≤ PCI < 70 Fair A comfortable ride with intermittent bumps or depressions. The pavement is in fair condition with intermittent moderate and frequent slight cracking, and with intermittent slight or moderate alligatoring and distortion. [1] The mapping of PCI values to Condition States (PCI Labels) is based on the intervals used by StreetScan. [2] Descriptions are from the SP-024 Manual for Condition Rating of Flexible Pavements (Ontario Ministry of Transportation, 2016) Watson & Associates Economists Ltd. PAGE 2-9 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx PCI Range[1] Condition State Example Photo Description[2] 40 ≤ PCI < 55 Poor An uncomfortable ride with frequent to extensive bumps or depressions. Cannot maintain the posted speed at lower end of the scale. The pavement is in poor to fair condition with frequent moderate cracking and distortion, and intermittent moderate alligatoring. 25 ≤ PCI < 40 Very Poor A very uncomfortable ride with constant jarring bumps and depressions. Cannot maintain the posted speed and must steer constantly to avoid bumps and depressions. The pavement is in poor condition with moderate alligatoring and extensive severe cracking and distortion. 10 ≤ PCI < 25 Serious No Examples The pavement is in poor to very poor condition with extensive severe cracking, alligatoring and distortion. 0 ≤ PCI < 10 Failed No Examples Watson & Associates Economists Ltd. PAGE 2-10 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-5 shows the average condition of the road network by surface type, which is weighted based on centreline-kilometres. On average, HCB and LCB roads are in the Good condition state and gravel roads are in the Fair condition state. Figure 2-4 and Figure 2-5 show the distribution of road length by condition state. Table 2-5: Average Road Condition by Surface Type Surface Type Centreline Kilometres Condition (Weighted Average) Average Condition State HCB 16.5 82 Good LCB 80.9 79 Good Gravel 117.0 2.2 Fair Figure 2-4: Distribution of Paved Road Length (centreline-km) by Condition State Excellent, 39 km, 41% Good, 32 km, 33% Fair, 15 km, 15% Poor, 9 km, 9% Very Poor, 2 km, 2% Overall Average: Good Watson & Associates Economists Ltd. PAGE 2-11 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-5: Distribution of Gravel Road Length (centreline-km) by Condition State The condition of the Township's sidewalks and streetlights are evaluated based on age relative to the expected useful life (i.e., based on the percentage of useful life consumed (ULC%)). A brand-new asset would have a ULC% of 0%, indicating that zero percent of the asset's life expectancy has been utilized. On the other hand, an asset that has reached its life expectancy would have a ULC% of 100%. It is possible for assets to have a ULC% greater than 100%, which occurs if an asset has exceeded its typical life expectancy but continues to be in service. This is not necessarily a cause for concern; however, it must be recognized that assets that are near or beyond their typical life expectancy are likely to require replacement or rehabilitation in the near term. To better communicate the condition of sidewalks, streetlights and other assets where ULC% will be used, the ULC% ratings have been segmented into qualitative condition states as summarized in Table 2-6. The scale is set to show that if assets are replaced around the expected useful life, they would have a rating of Fair. The rating of Fair extends to 140% of expected useful life. Beyond 140% of useful life, the probability of failure is assumed to have increased to a point where performance would be characterized as Poor or Very Poor. Good, 42.7 km, 37% Fair, 57.8 km, 49% Poor, 16.5 km, 14% Overall Average: Fair Watson & Associates Economists Ltd. PAGE 2-12 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-6: Condition States Defined with Respect to ULC% ULC% Range Condition State 0% ≤ ULC% ≤ 45% Very Good 45% < ULC% ≤ 90% Good 90% < ULC% ≤ 140% Fair 140% < ULC% ≤ 200% Poor 200% < ULC% Very Poor The useful life is assumed to be 50 years for sidewalks and 40 years for streetlights. With these assumptions, both sidewalks and streetlights are in the Very Good condition state on average. Table 2-7 shows the results of the age-based condition analysis for sidewalks and streetlights. Figure 2-6 shows the distribution of sidewalk and streetlight replacement costs by condition state. Table 2-7: Average Sidewalk and Streetlight Condition by Asset Class Asset Class Quantity ULC% (Weighted Average) Average Condition State Sidewalks 3,490 metres 14% Very Good Streetlights 29 lights 43% Very Good Total 22% Very Good Watson & Associates Economists Ltd. PAGE 2-13 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-6: Distribution of Sidewalk and Streetlight Replacement Cost by Condition State In accordance with O. Reg. 104/97, the Township completes biennial inspections of its bridges and culverts following the Ontario Structure Inspection Manual (OSIM). The most recent inspections were completed by Spreit Associates Engineers & Architects in 2021. Each structure was assigned a Bridge Condition Index (BCI). The BCI is on a scale of 0 to 100, with 100 being an asset in as-new condition and 0 being a failed asset. Similar to road assets, to better communicate the condition of the bridge and culvert inventory, the numeric condition ratings have been segmented into qualitative condition states. Photographs and descriptions of these condition states and the corresponding range of Bridge Condition Index (BCI) values are provided in Table 2-8. Very Good, $540,000, 75% Good, $180,000, 25% Overall Average: Very Good Watson & Associates Economists Ltd. PAGE 2-14 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-8: Condition States Defined with Respect to Bridge Condition Index - Structures BCI Range Condition State Bridge Photos Culvert Photos Description 70 ≤ BCI ≤ 100 Good Maintenance is not usually required within the next five years. 60 ≤ BCI < 70 Fair No Examples Maintenance work is usually scheduled within the next five years. This is the ideal time to schedule major bridge repairs to get the most out of bridge spending. 0 ≤ BCI < 60 Poor Maintenance work is usually scheduled within one year. Structure may be at increased risk of requiring a loading restriction to be posted. Watson & Associates Economists Ltd. PAGE 2-15 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-9 shows the average BCI for structures. On average, the Township's bridges and structural culverts are in the Good condition state. Figure 2-7 shows the overall distribution of the Township's structures by condition state. Table 2-9: Average Structure Condition by Structure Type Structure Type Quantity Condition (Weighted Average) Average Condition State Bridges 13 structures 72 Good Structural Culverts 34 structures 74 Good Total 47 structures 73 Good Figure 2-7: Distribution of Structure Replacement Cost by Condition State 2.2.3 Current and Proposed Levels of Service The levels of service currently provided by the Township's transportation system are, in part, a result of the state of local infrastructure identified above. A levels of service analysis defines the current levels of service, establishes targets, and enables the Township to periodically evaluate these service level objectives. There are prescribed Good, $ 10.6 M, 75% Fair, $ 2.0 M, 14% Poor, $ 1.6 M, 11% Overall Average: Good Watson & Associates Economists Ltd. PAGE 2-16 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx levels of service reporting requirements under O. Reg. 588/17 for some transportation assets (i.e., roads, bridges and culverts). Table 2-11 includes the prescribed technical levels of service along with additional levels of service developed by the Township. The level of service measures were developed through identification of service aspects that are of interest to the users of roads and related assets. The tables are structured as follows: - The Service Attribute headings and columns indicate the high-level attribute being addressed; - The Community Levels of Service column in Table 2-10 explains the Township's intent in plain language; - The Performance Measure column in Table 2-11 describes a performance measure connected to the identified service attribute; - The 2021 Performance column in Table 2-11 reports current performance for the performance measure; and - The Target column in Table 2-11 reports the long-term performance that the Township intends to deliver for the performance measure. Table 2-10: Transportation Service Community Levels of Service Service Attribute Community Levels of Service Scope The Township's transportation assets enable the movement of people and goods within the Township and provide connectivity to County and Provincial roads. In addition to passenger vehicles, the Township's transportation assets support commercial truck traffic, and provide reliable emergency vehicle access to all areas of the Township. The Township's roads are distributed evenly across the municipality. The road network provides a good level of connectivity with few dead- end roads. Quality The Township strives to maintain road and bridge surfaces to a level that supports an adequate travel experience for road users. Descriptions of roads and structures in different condition states are shown in Table 2-4 and Table 2-8. Watson & Associates Economists Ltd. PAGE 2-17 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-11: Transportation Service Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Scope Number of lane-kilometres of arterial roads as a proportion of square kilometres of land area of the Township Not Applicable Not Applicable Number of lane-kilometres of collector roads as a proportion of square kilometres of land area of the Township 0.83 lane- km/km² 0.83 lane- km/km² Number of lane-kilometres of local roads as a proportion of square kilometres of land area of the Township 0.47 lane- km/km² 0.47 lane- km/km² Percentage of bridges in the Township with loading or dimensional restrictions 15% 15% Quality For paved roads in the municipality, the average pavement condition index value 80 80 For unpaved roads in the municipality, the average surface condition Fair (2.2) Fair For bridges in the municipality, the average BCI value (condition state) 72 (Good) Good For structural culverts in the municipality, the average BCI value (condition state) 74 (Good) Good Average condition of sidewalks (ULC%) Very Good (14%) Good Average condition of streetlights (ULC%) Very Good (43%) Good 2.3 Water 2.3.1 State of Local Infrastructure There are three areas within the Township where water services are available. All three areas are adjacent to the Municipality of Strathroy-Caradoc, as illustrated in Map 2-1. Treated water is supplied by the Municipality of Strathroy-Caradoc and the Township is only responsible for distribution infrastructure. Table 2-12 shows water main length, age, and replacement cost. Watson & Associates Economists Ltd. PAGE 2-18 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-12: Water Distribution Asset Length, Age, and Replacement Cost by Asset Class Asset Class Length (m) Average Age Replacement Cost (2022$) Water mains 3,883 14 years $2,500,000 Map 2-1: Water Service Area 2.3.2 Condition The condition of the water distribution assets is evaluated based on age relative to the expected useful life (i.e., based on the ULC%) as described for sidewalks and Watson & Associates Economists Ltd. PAGE 2-19 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx streetlights assets in subsection 2.2.1. The useful life for water mains is assumed to be 80 years. With this assumption, all segments are in the Very Good condition state, with an average ULC% of 17%. 2.3.3 Current and Proposed Levels of Service This subsection provides an overview of the Township's level of service framework for water. Table 2-13 and Table 2-14 show community levels of service and technical levels of service respectively. Table 2-13: Water Service Community Levels of Service Service Attribute Community Levels of Service Scope Water service is provided to customers in three areas adjacent to the Municipality of Strathroy-Caradoc boundary. Properties along three Township roads have water service available: Centre Road from Pannell Lane to Highway 402, Grogast Court, and County Lane. The scope of the Township's water system is illustrated by Map 2-1. The map shows the areas with water service. Reliability The Township strives to minimize disruptions in water service. O. Reg. 588/17 requires descriptions of boil water advisories and service interruptions. They are not included in this plan because the Municipality of Strathroy-Caradoc operates the system. Watson & Associates Economists Ltd. PAGE 2-20 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-14: Water Service Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Scope Percentage of properties connected to the municipal water system. 3.6% Increase Percentage of properties where fire flow is available. 3.6% Increase Reliability The number of connection-days per year where a boil water advisory notice is in place compared to the total number of properties connected to the municipal water system. 0 connection days / connection 0 connection days / connection The number of connection-days per year lost due to water main breaks compared to the total number of properties connected to the municipal water system. 0 connection days / connection 0 connection days / connection 2.4 Wastewater 2.4.1 State of Local Infrastructure There are two areas within the Township where wastewater services are available. One area is adjacent to the Municipality of Strathroy-Caradoc, as illustrated in Map 2-2. Wastewater from this area is treated by the Municipality of Strathroy-Caradoc and the Township is only responsible for the collection infrastructure. The other area with service is the community of Kerwood, as illustrated in Map 2-3. The Township is responsible for both collection and treatment of wastewater from this area. Watson & Associates Economists Ltd. PAGE 2-21 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Map 2-2: Wastewater Service Area Neighbouring the Municipality of Strathroy-Caradoc Watson & Associates Economists Ltd. PAGE 2-22 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Map 2-3: Wastewater Mains in the Kerwood Community Table 2-15 provides a breakdown of wastewater assets, including quantity, age, and replacement cost by asset class. Table 2-15: Wastewater Asset Quantity, Age, and Replacement Cost by Asset Class Asset Class Quantity Average Age Replacement Cost (2022$) Wastewater mains 5,024 metres 15 years $3,110,000 Wastewater Treatment plant 1 plant 12 years $3,150,000 Total 13 years $6,260,000 2.4.2 Condition The condition of wastewater assets has not been assessed directly. The condition of the wastewater distribution assets is evaluated based on age relative to the expected Watson & Associates Economists Ltd. PAGE 2-23 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx useful life (i.e., based on the ULC%) as described for sidewalks and streetlights in subsection 2.2.1. The useful life for wastewater mains is assumed to be 80 years. With this assumption, all segments are in the Very Good condition state, with an average ULC% of 18%. The wastewater treatment plant has been assigned the condition state Very Good based on the age of the facility and the fact that none of its components are expected to need replacement in the next 10 years. Table 2-16 presents the results of the condition analysis for wastewater assets. Table 2-16: Average Wastewater Asset Condition by Asst Class Asset Class Quantity Average ULC% Average Condition State Wastewater mains 5,024 metres 18% Very Good Wastewater Treatment plant 1 plant Not Applicable Very Good Total Very Good 2.4.3 Current and Proposed Levels of Service This subsection provides an overview of the Township's level of service framework for wastewater. Table 2-17 and Table 2-18 show community levels of service and technical levels of service respectively. Watson & Associates Economists Ltd. PAGE 2-24 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-17: Wastewater Service Community Levels of Service Service Attribute Community Levels of Service Scope The Township provides wastewater service in two areas, one adjacent to the Municipality of Strathroy-Caradoc and the other being the community of Kerwood. The area with service adjacent to the Municipality of Strathroy-Caradoc extends from Centre Road 270 metres north of Pannell road to 200 metres south of Highway 402. Wastewater from Centre Road is treated by the Municipality of Strathroy-Caradoc. The community of Kerwood has a small, self-contained system with both collection and treatment. The scope of the Township's wastewater system is illustrated by Map 2-2 and Map 2-3. The maps show the serviced area neighbouring the Municipality of Strathroy-Caradoc and the location of the wastewater mains servicing the community of Kerwood. Reliability The Township strives to minimize wastewater service interruptions. Stormwater enters sanitary sewers by two routes: inflow and infiltration. Inflow refers to stormwater flows entering into sanitary sewers via access points, such as maintenance holes, that are not fully sealed or through deliberate connection of sources of stormwater to the wastewater system (e.g., downspouts and basement sump pumps). Infiltration refers to groundwater entering sanitary mains through cracks, holes, failed joints, and incorrect or faulty connections. Wastewater assets are designed to be resilient to stormwater inflow and infiltration by having capacity to handle flows significantly higher than average daily flows. This enables them to keep up with higher flows that are created by stormwater inflow and infiltration. The final effluent design objectives for the Kerwood wastewater treatment plant are identified in the facility's Environmental Compliance Approval (ECA # 9920-7FARSJ) Watson & Associates Economists Ltd. PAGE 2-25 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-18: Wastewater Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Scope Percentage of properties connected to the municipal wastewater system. 6.6% Increase Reliability The number of connection-days per year lost due to wastewater backups compared to the total number of properties connected to the municipal wastewater system. 0.0174 connection days / connection 0 connection days / connection The number of effluent violations per year due to wastewater discharge compared to the total number of properties connected to the municipal wastewater system. 0 violations / connection 0 violations / connection 2.5 Facilities 2.5.1 State of Local Infrastructure The Township is responsible for nine facilities with a total replacement cost of $5.2 million, as shown in Table 2-19. Watson & Associates Economists Ltd. PAGE 2-26 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-19: Age and Replacement Cost by Facility Facility Age Replacement Cost (2022$) B01 - Egremont Dr. Municipal Office 38 $790,000 B02 - Egremont Dr. Works Garage 44 $870,000 B03 - Napier Road Building 50 $560,000 B04 - Adelaide Metcalfe Storage Shed 72 $220,000 B05 - Sand Storage Shed 32 $150,000 B06 - Fire Station 12 $1,930,000 B07 - Washroom/pavilion 1 $420,000 B08 - Storage shed 57 $150,000 B09 - Pavilion 32 $120,000 Total 27 $5,210,000 2.5.2 Condition All facilities were assigned a facility-level condition rating by Township staff using the scale shown in Table 2-20. Table 2-21 shows the assessed condition for each facility. The weighted average condition of the Township's facilities is Good. Figure 2-8 shows the distribution of facility replacement cost by condition rating. Watson & Associates Economists Ltd. PAGE 2-27 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-20: Facility-level Rating Scale Condition Description Very Good 5 No concerns. Good 4 Deterioration causes minimal influence on use of facility. Occasional concerns raised by users. Fair 3 Some deterioration beginning to be reflected in minor restrictions on operational uses. Concerns from users. Poor 2 Regular complaints from users. Very Poor 1 Generally not suitable for use. Table 2-21: Overall Condition by Facility Facility Condition B01 - Egremont Dr. Municipal Office Fair B02 - Egremont Dr. Works Garage Fair B03 - Napier Road Building Fair B04 - Adelaide Metcalfe Storage Shed Very Poor B05 - Sand Storage Shed Fair B06 - Fire Station Very Good B07 - Washroom/pavilion Very Good B08 - Storage shed Very Poor B09 - Pavilion Fair Watson & Associates Economists Ltd. PAGE 2-28 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-8: Distribution of Facility Replacement Cost by Condition Rating 2.5.3 Current and Proposed Levels of Service This subsection provides an overview of the Township's level of service framework for Facilities. Table 2-22 and Table 2-23 show community levels of service and technical levels of service respectively. Table 2-22: Facility Community Levels of Service Service Attribute Community Levels of Service Quality The Township maintains facilities at a level that provides a reasonable user experience. Table 2-23: Facility Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Quality Average condition of facilities Good (3.8) Good Very Good, $2.3 M, 45% Fair, $2.5 M, 48% Very Poor, $0.4 M, 7% Overall Average: Good Watson & Associates Economists Ltd. PAGE 2-29 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 2.6 Fleet 2.6.1 State of Local Infrastructure The Township currently maintains a fleet of 22 vehicles with a combined replacement cost of $4.8 million. Table 2-24 shows fleet asset quantity, average age, and replacement cost. Table 2-24: Fleet Asset Quantity, Age and Replacement Cost by Asset Class Asset Class Quantity Average Age Replacement Cost (2022$) Fleet 22 vehicles 11 years $4,840,000 2.6.2 Condition The condition of fleet assets is evaluated based on age relative to the expected useful life (i.e., based on the ULC%) as described for sidewalks and streetlights in subsection 2.2.1. The expected useful lives of fleet assets range from five to 25 years. On average fleet assets are in the Good condition state (ULC% is 67%). Figure 2-9 shows the distribution of fleet replacement cost by condition state. Figure 2-9: Distribution of Fleet Replacement Cost by Condition State Very Good, $1.9 M, 38% Good, $1.1 M, 24% Fair, $1.8 M, 38% Overall Average: Good Watson & Associates Economists Ltd. PAGE 2-30 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 2.6.3 Current and Proposed Levels of Service This subsection provides an overview of the Township's level of service framework for fleet. Table 2-25 and Table 2-26 show community levels of service and technical levels of service respectively. Table 2-25: Fleet Community Levels of Service Service Attribute Community Levels of Service Reliability The Township maintains vehicles so that they can be relied upon to perform as intended. Table 2-26: Fleet Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Reliability Average condition of vehicles (ULC%) Good (67%) Good 2.7 Equipment and Land Improvements 2.7.1 State of Local Infrastructure The Township has a variety of equipment and five land improvement assets. Table 2-27 provides a breakdown of equipment and land improvement quantity, age, and replacement cost by asset class. Watson & Associates Economists Ltd. PAGE 2-31 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-27: Equipment and Land Improvement Quantity, Age, and Replacement Cost by Asset Class Asset Class Quantity Average Age Replacement Cost (2022$) Equipment Not available[1] Not available $770,000 Land Improvements 5 assets 8 years $560,000 Total $1,330,000 2.7.2 Condition The condition of land improvement assets is evaluated based on age relative to the expected useful life (i.e., based on the ULC%) as described for sidewalks and streetlights in subsection 2.2.1. The expected useful lives of land improvement assets range from 20 to 50 years. On average, land improvement assets are in the Very Good condition state (ULC% is 25%). Figure 2-10 shows the distribution of land improvement replacement cost by condition state. [1] Some equipment assets are recorded as pooled assets without explicit counts. For example, there are 1,200 feet of fire hose where the number of sections is not recorded. Watson & Associates Economists Ltd. PAGE 2-32 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 2-10: Distribution of Land Improvement Replacement Cost by Condition State The condition of equipment has not been assessed. It is replaced on an as-needed basis. 2.7.3 Current and Proposed Levels of Service This subsection provides an overview of the Township's level of service framework for land improvements. No levels of service are being reported for equipment because equipment is being replaced as required to meet operational needs. Table 2-28 and Table 2-29 show community levels of service and technical levels of service respectively for land improvements. Table 2-28: Land Improvement Community Levels of Service Service Attribute Community Levels of Service Reliability The Township maintains land improvements so that they can be relied upon to perform as intended. Very Good, $0.3 M, 56% Good, $0.2 M, 44% Overall Average: Very Good Watson & Associates Economists Ltd. PAGE 2-33 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 2-29: Land Improvement Technical Levels of Service Service Attribute Performance Measure 2021 Performance Target Reliability Average condition of land improvements (ULC%) Very Good (25%) Good 2.8 Population and Employment Growth According to the 2021 census, the population of Adelaide Metcalfe was 3,011 in 2021. Based on current estimates, the population is expected to increase to 3,907 by 2046. This population growth is expected to result in incremental service demands that may impact the current level of service. The Township plans to implement development charges to cover growth-related capital costs. Utilizing development charges helps ensure that the effects of future population and employment growth do not increase the cost of maintaining levels of service for existing tax and rate payers. Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Chapter 3 Lifecycle Management Strategy Watson & Associates Economists Ltd. PAGE 3-1 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 3. Lifecycle Management Strategy 3.1 Introduction This chapter details the lifecycle management strategies that identify the recommended lifecycle activities required to achieve the proposed levels of service discussed in Chapter 2. Within the context of this asset management plan, lifecycle activities are the specified actions that can be performed on an asset in order to ensure it is performing at an appropriate level, and/or to extend its service life.[1] These actions can be carried out on a planned schedule in a prescriptive manner, or through a dynamic approach where the lifecycle activities are only carried out when specified conditions are met. O. Reg. 588/17 requires that all potential lifecycle activity options be assessed, with the aim of identifying the set of lifecycle activities that can be undertaken at the lowest cost to meet the targeted levels of service. Asset management plans must include a 10-year capital lifecycle activities expenditure forecast that forecasts the lifecycle activities resulting from the lifecycle management strategy. What follows are the lifecycle management strategies for all assets that have lifecycle activities funded through the capital budget. Gravel roads are excluded from the analysis because they are maintained through regular maintenance activities and a re- gravelling program that is fully funded through the operating budget. There are two outputs of the lifecycle management strategy. The first output is a 10-year lifecycle expenditure forecast that informs short- and medium- term planning. The second output is an estimate of average annual lifecycle costs to inform long-term financial planning and tax and rate setting. 3.2 Lifecycle Expenditure Forecast A 10-year forecast of lifecycle expenditures was developed for each asset class using one of three approaches, depending on the complexity of the lifecycle strategy and data availability for each respective asset class. The three approaches are: [1] The full lifecycle of an asset includes activities such as initial planning and maintenance which are typically addressed through master planning studies and maintenance management, respectively. Watson & Associates Economists Ltd. PAGE 3-2 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx - Lifecycle model; - Professional judgement; and - As-needed replacement (annual provision). The details of each approach are described in the following subsections. 3.2.1 Lifecycle Model Approach For assets with fully-defined lifecycles and good age or condition data, the lifecycle expenditure forecast was developed by first estimating where each asset currently is in its lifecycle and then forecasting the timing and cost of future lifecycle activities. This method was used to develop the lifecycle expenditure forecast for paved roads, water mains, wastewater mains, fleet, and land improvements. The lifecycle models used for roads are presented in Table 3-1 and Table 3-2 in subsection 3.2.1. The remaining asset classes for which the lifecycle model approach was used (i.e., water and wastewater mains, fleet, and land improvements) have only one lifecycle activity - replacement at the end of useful life. Figure 3-1 and Figure 3-2 present the lifecycle expenditure forecasts for paved roads and fleet respectively. No lifecycle activities were identified for the next 10 years for water mains, wastewater mains, and land improvements. Figure 3-1: Lifecycle Expenditure Forecast for Paved Roads (2022$) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars (Millions) Year Watson & Associates Economists Ltd. PAGE 3-3 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 3-2: Lifecycle Expenditure Forecast for Fleet (2022$) 3.2.2 Professional Judgement Approach For structures, facilities, and the Kerwood wastewater treatment plant, data is not currently available at a sufficiently detailed level to use the lifecycle model approach to produce a lifecycle expenditure forecast. Instead, the forecasts were compiled based on the professional judgement of Township staff and available background reports. For structures, the lifecycle expenditure forecast is based on the 2021 OSIM report, which identified lifecycle activities totalling $715,000 for the next five years. It is noted that in the 2021 OSIM report, these lifecycle activities were not assigned to specific years. Therefore, for the purposes of the lifecycle expenditures forecast in this asset management plan, it was assumed that these lifecycle activities will be spread evenly from 2023 to 2026, averaging $179,000 (2022$) per year, as shown in Figure 3-3. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars (Millions) Year Watson & Associates Economists Ltd. PAGE 3-4 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 3-3: Lifecycle Expenditure Forecast for Structures (2022$) For facilities and the Kerwood wastewater treatment plant, Township staff developed the lifecycle expenditure forecasts based on their operational knowledge of the assets. For facilities, lifecycle activities totalling $405,000 were identified for the 10-year forecast period, with timing of the corresponding expenditures shown in Figure 3-4. No lifecycle activities were identified for the Kerwood wastewater treatment plant for the next 10 years. Figure 3-4: Lifecycle Expenditure Forecast for Facilities (2022$) 3.2.3 As-needed Replacement Approach The Township intends to replace equipment on an as-needed basis. The lifecycle expenditure forecast includes an annual provision for equipment replacement totalling $77,000 (2022$), as shown in Figure 3-5. 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars Year 0 50,000 100,000 150,000 200,000 250,000 300,000 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars Year Watson & Associates Economists Ltd. PAGE 3-5 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 3-5: Lifecycle Expenditure Forecast for Equipment (2022$) 3.2.4 Summary Figure 3-6 combines the lifecycle expenditure forecasts for individual asset classes in one chart. The average annual capital expenditures over the 10-year forecast are estimated at approximately $1.30 million, as shown by the dashed black line. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars Year Watson & Associates Economists Ltd. PAGE 3-6 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Figure 3-6: Annual Capital Expenditures by Asset Class (2022$)[1] 3.3 Average Annual Lifecycle Costs While the 10-year capital plan provides an estimate of lifecycle expenditures in the short- and medium-term, it does not help set capital funding targets because it does not account for the full lifecycle of the assets. To account for needs beyond the 10-year forecast period, average annual lifecycle costs[2] need to be estimated. Depending on the asset class, one of three approaches was used to estimate average annual lifecycle costs: - Lifecycle models; - Replacement only; and - Annual reinvestment rates suggested in the Canadian Infrastructure Report Card. [1] The costs of projects for Kerwood Park in 2022 have been included with Equipment and Land Improvements. [2] The average annual lifecycle cost for an asset is the total cost of all lifecycle activities over its full lifespan divided by its expected useful life. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Dollars (Millions) Year Roads, Sidewalks, and Steetlights Structures Facilities Fleet Equipment and Land Improvements 2022-2031 Average Watson & Associates Economists Ltd. PAGE 3-7 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Each approach is described in the following subsections, followed by an overall summary. 3.3.1 Lifecycle Models Approach The lifecycles of roads and bridges typically involve both rehabilitative treatments (often multiple rounds) before a full reconstruction or replacement. All of these lifecycle activities need to be taken into account to quantify the full lifecycle cost of these assets. Once the total lifecycle costs have been estimated for an asset, average annual lifecycle costs can be calculated based on the asset's expected lifespan. The expected sequence of lifecycle activities for the Township's roads and bridges, along with estimated timing, unit costs, and the resultant average annual lifecycle cost per unit, are presented in Table 3-1, Table 3-2, and Table 3-3. . Table 3-1: HCB Road Lifecycle Year Lifecycle Activity Unit Cost ($ per centreline- km, 2022$) 15 Resurface $100,000 30 $100,000 58 Reconstruction $310,000 Total Lifecycle Cost $510,000 Average Annual Lifecycle Cost $8,790 Watson & Associates Economists Ltd. PAGE 3-8 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 3-2: LCB Road Lifecycle Year Lifecycle Activity Unit Cost ($ per centreline- km, 2022$) 6 Resurface (2/3 single surface treatment, $3.00/m²; 1/3 pulverize and double surface treatment, $6.33/m²) $31,000 12 $31,000 18 $31,000 24 $31,000 30 $31,000 36 $31,000 42 $31,000 48 $31,000 54 $31,000 60 $31,000 69 Reconstruction $212,000 Total Lifecycle Cost $522,000 Average Annual Lifecycle Cost $7,560 Table 3-3: Bridges Lifecycle Year Lifecycle Activity Unit Cost (Percentage of Replacement Cost) 25 Minor rehabilitation 15% 50 Major rehabilitation 35% 75 Replacement 100% Total Lifecycle Cost 150% Average Annual Lifecycle Cost 2% 3.3.2 Replacement Only Approach For many assets, the only lifecycle activity is replacement when the asset reaches the end of its useful life. For these assets, long-run average annual lifecycle costs are based on replacement cost and the expected useful life. Replacement costs for these Watson & Associates Economists Ltd. PAGE 3-9 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx assets are summarized in Chapter 2, and the expected useful lives are summarized in Table 3-4. Table 3-4: Expected Useful Lives for Replacement Only Assets Asset Class Expected Useful Life (Years) Structural Culverts 50 Water Mains 80 Wastewater Mains 80 Fleet 5 to 25 Land Improvements 20 to 50 Equipment 5 to 25 3.3.3 Canadian Infrastructure Report Card Approach The lifecycle models approach and the replacement only approach cannot be used to estimate average annual lifecycle cost for facilities and the Kerwood wastewater treatment plant because the detailed data required is not available. Instead, a high- level approach is used for these asset classes, based on annual reinvestment rate ranges recommended in the 2016 Canadian Infrastructure Report Card (C.I.R.C). The C.I.R.C identifies a target annual reinvestment rate of between 1.7% and 2.5% of asset replacement cost for buildings and non-linear wastewater infrastructure (i.e., facilities). The mid-point of this range, 2.1%, was used to estimate average annual lifecycle costs for the Township's facilities and the Kerwood wastewater treatment plant. 3.3.4 Results Based on the various approaches to estimating average annual lifecycle costs described above, the total average annual lifecycle cost for the Township's assets is estimated at $1.68 million. A breakdown of this total by asset class is provided in Table 3-5. Watson & Associates Economists Ltd. PAGE 3-10 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table 3-5: Average Annual Lifecycle Cost by Asset Class Asset Class Average Annual Lifecycle Cost (2022$) Tax Supported Assets Roads, Sidewalks, and Streetlights $773,000 Structures $283,000 Facilities $109,000 Fleet $274,000 Equipment and Land Improvements $99,000 Subtotal Tax Supported Assets $1,539,000 Water and Wastewater Assets Water $31,000 Wastewater $105,000 Subtotal Water and Wastewater Assets $136,000 Grand Total $1,675,000 Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Chapter 4 Financing Strategy Watson & Associates Economists Ltd. PAGE 4-1 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx 4. Financing Strategy 4.1 Introduction This chapter outlines the financing strategy that would sustainably fund the lifecycle management strategies presented in Chapter 3. This financing strategy focuses on examining how the Township can fund the lifecycle activities required to maintain its assets at the targeted levels of service, as identified in Chapter 2. The strategy presented is a suggested approach which should be examined and re-evaluated during the annual budgeting processes to ensure the sustainability of the Township's financial position as it relates to its assets. O. Reg. 588/17 requires at minimum a 10-year capital plan that forecasts the costs of implementing the lifecycle management strategy and the lifecycle activities required therein. The financing strategy in this asset management plan has been developed for a 10-year forecast period to be in compliance with this requirement. Various financing options, including reserve funds, debt, and grants, were considered during the process of developing the financing strategy and are described in more detail in section 4.4 below. 4.2 Annual Contribution and Lifecycle Funding Target An annual lifecycle funding target describes the amount of funding that would be required annually to fully finance a lifecycle management strategy over the long term. By planning to achieve this annual funding level, the Township would theoretically be able to fully fund capital works as they arise. In practice, capital expenditures often fluctuate year-to-year based on the asset replacement and renewal/rehabilitation projects being undertaken in a particular year. By planning to achieve the lifecycle funding target over the long term, however, the periods of relatively low capital needs would allow for the building up of lifecycle reserve funds that could be drawn upon in times of relatively high capital needs. The annual lifecycle funding target is the long-run average annual lifecycle cost identified in subsection 3.3.4, $1,675,000. This is the amount that has been built into the financial strategy outlined below. Watson & Associates Economists Ltd. PAGE 4-2 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx In comparison, the Township budgeted to contribute approximately $1,343,000 from the tax levy and other current revenue sources towards capital-related needs in 2022. Included in this are budgeted contributions to capital projects in the current year, contributions to capital-related reserve funds, and reliable and long-term federal and provincial grants (i.e., Canada Community-Building Fund (CCBF) and Ontario Community Infrastructure Fund (OCIF)). The sum of these components is the amount of funding the Township contributed in 2022 to the provision of capital-related needs. The difference between the annual lifecycle funding target and current annual contribution is referred to as the lifecycle funding gap. The Township is currently underfunding the annual lifecycle funding target by approximately $332,000 annually. 4.3 Annual Costs The annual capital expenditures for the Township's assets from 2022 to 2031 are presented in Table A-1 in Appendix A and are summarized in Figure 3-6 in subsection 3.2.4. This expenditure forecast is based on the Township's 2022 capital budget and the lifecycle activities identified in preceding sections of this plan for 2023 and onwards. The expenditure forecast includes a capital inflation factor of 4% annually, which aligns closely with the historical 20-year annual average rate of inflation as witnessed in Statistics Canada's Non-residential Building Construction Price Index. 4.4 Funding Table A-6 in Appendix A summarizes the recommended strategy to finance the asset lifecycle costs identified in Table A-1. This funding forecast was based on the funding sources identified in the Township's 2022 budget. The lifecycle costs required to sustain established level of service targets are being recovered through several methods: - OCIF formula-based funding is identified for years in which the funding amount is known (2022). The Ontario Government more than doubled the Township's OCIF grant in 2022 as part of a five year initiative to support small, rural, and northern communities that started in 2022. In the financial strategy, the 2022 Watson & Associates Economists Ltd. PAGE 4-3 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx level of OCIF funding is maintained for the five-year duration of the provincial initiative. It is then reduced back to the 2021 funding level for 2027 to 2031. - CCBF funding has been shown as a stable and long-term funding source for eligible capital projects. Annual funding estimates are based on the Township's 2022 funding level. This financing strategy has been developed to be fully funded, and therefore no funding shortfall has been identified. This means, however, that if identified grants are not received at expected amounts then shortfalls may present themselves. In such an event, the difference could be made up through increases to the tax levy/user rates over-and-above those presented hereafter. It is noted that this fully funded financing strategy phases in annual contributions towards capital such that the Township reaches full lifecycle funding levels by 2031. 4.5 Tax Levy Impact As discussed in section 4.2, while the annual funding requirement may fluctuate, it is important for the Township to implement a consistent, yet increasing, annual investment in capital so that the excess annual funds can accrue in capital reserve funds. Table A- 6 in Appendix A presents a summary of the impacts on the tax levy as a result of this financing strategy. In order to fund the recommended lifecycle management strategy using the Township's own available funding sources (i.e., using taxation, CCBF funding, and OCIF funding), an increase in the Township's taxation levy of 3.2% annually would be required from 2023 to 2031. Consideration for cash flow and positive reserve fund balances has been included in setting the capital reserve transfer amounts. A detailed continuity schedule of all capital-related reserves/reserve funds related to assets other than water and wastewater assets can be viewed in Table A-2, Table A-4, and Table A-5 in Appendix A. Layering on assessment increases resulting from new assessment growth, assumed to be 0.64% annually, the impacts on individual property tax bills resultant from the financial strategy are estimated to be increases of 2.6% annually from 2023 to 2031. Watson & Associates Economists Ltd. PAGE 4-4 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx The taxation impacts identified above include inflationary adjustments to the Township's operating costs and revenues as identified in its 2022 budget (i.e., general operating inflation of 2% annually). If, however, other funding sources become available (as mentioned above), or if maintenance practices allow for the deferral of capital works, then the impact on the Township's taxation levy would potentially decrease. Further detail on the Financing Strategy is presented in Appendix A. 4.6 Water and Wastewater User Rates Impact As discussed in section 4.2, while the annual funding requirement may fluctuate, it is important for the Township to make consistent, annual investments in capital so that the excess annual funds can accrue in water and wastewater capital reserves and reserve funds. Consistent with the Township's historical practice, in this asset management plan it has been assumed that the tax levy will cover the gap between full lifecycle funding needed for water and wastewater and revenues raised through user fees. The only adjustment made to user fees over the forecast period is an inflationary adjustment of 2% per year. It is noted, however, that full cost user fees are strongly encouraged for water and wastewater services. The Township should consider undertaking a detailed rate study to identify appropriate full-cost water and wastewater rates. A detailed continuity schedule of all capital-related reserves/reserve funds for water and wastewater can be viewed in Table A-3 in Appendix A. Appendices Watson & Associates Economists Ltd. H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Appendix A Financing Strategy Tables Watson & Associates Economists Ltd. PAGE A-1 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table A-1 Capital Budget Forecast (Inflated $) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Capital Expenditures Tax Supported Roads, Sidewalks, and Steetlights 270,000 2,798,811 1,382,843 379,505 448,054 561,631 59,090 1,292,778 948,547 806,275 Structures - 185,900 189,280 201,913 212,622 - - - - - Facilities - 104,000 270,400 44,995 - 18,250 - - - - Fleet 418,000 630,573 466,819 877,394 91,249 - - 61,586 853,987 - Equipment and Land Improvements 81,700 80,378 83,593 86,937 90,414 94,031 97,792 101,704 105,772 110,003 Kerwood Park 428,500 - - - - - - - - - Total Tax Supported 1,198,200 3,799,661 2,392,935 1,590,743 842,339 673,912 156,882 1,456,067 1,908,306 916,278 Water and Wastewater Water - - - - - - - - - - Wastewater - - - - - - - - - - Total Water and Wastewater - - - - - - - - - - Total Expenditures 1,198,200 3,799,661 2,392,935 1,590,743 842,339 673,912 156,882 1,456,067 1,908,306 916,278 Capital Funding Tax Supported Debenture Issuance - - - - - - - - - - Transfer from Operating 656,385 - 108,200 - - - - - - - Transfer from Capital R.F.s 27,500 3,232,285 1,985,135 1,285,243 530,739 469,912 (51,218) 1,243,867 1,691,906 695,478 Transfer from CCBF R.F. 334,543 333,908 98,700 100,600 102,600 104,700 106,800 108,900 111,100 113,300 Transfer from OCIF R.F. 175,172 233,468 200,900 204,900 209,000 99,300 101,300 103,300 105,300 107,500 Donation 4,600 - - - - - - - - - Total Tax Supported 1,198,200 3,799,661 2,392,935 1,590,743 842,339 673,912 156,882 1,456,067 1,908,306 916,278 Water and Wastewater Debenture Issuance - - - - - - - - - - Transfer from Capital R.F.s - - - - - - - - - - Total Water and Wastewater - - - - - - - - - - Total Funding 1,198,200 3,799,661 2,392,935 1,590,743 842,339 673,912 156,882 1,456,067 1,908,306 916,278 Description Watson & Associates Economists Ltd. PAGE A-2 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table A-2 Tax Supported Capital Reserve Funds Description 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Opening Balance 4,528,045 4,839,427 2,922,345 2,207,199 2,383,642 3,418,288 4,624,211 6,478,111 7,144,002 7,466,071 Transfer from Operating 243,991 1,257,903 1,226,710 1,414,948 1,498,360 1,585,163 1,675,660 1,769,680 1,867,582 1,969,430 Transfer to Capital 27,500 3,232,285 1,985,135 1,285,243 530,739 469,912 (51,218) 1,243,867 1,691,906 695,478 Closing Balance 4,744,536 2,865,044 2,163,921 2,336,904 3,351,263 4,533,540 6,351,089 7,003,924 7,319,677 8,740,023 Interest 94,891 57,301 43,278 46,738 67,025 90,671 127,022 140,078 146,394 174,800 Table A-3 Water and Wastewater Capital Reserve Funds Description 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Opening Balance 899,178 1,074,706 1,240,912 1,416,231 1,601,076 1,795,878 2,001,088 2,217,174 2,444,625 2,683,948 Transfer from Operating 154,455 141,874 147,549 153,451 159,589 165,973 172,612 179,516 186,697 194,165 Transfer to Capital - - - - - - - - - - Closing Balance 1,053,633 1,216,580 1,388,462 1,569,682 1,760,665 1,961,851 2,173,700 2,396,691 2,631,322 2,878,113 Interest 21,073 24,332 27,769 31,394 35,213 39,237 43,474 47,934 52,626 57,562 Table A-4 Canada Community-Building Fund (CCBF) Obligatory Reserve Fund Description 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Opening Balance 472,272 237,208 - - - - - - - - CCBF Grant 94,828 96,700 98,700 100,600 102,600 104,700 106,800 108,900 111,100 113,300 Transfer to Capital 334,543 333,908 98,700 100,600 102,600 104,700 106,800 108,900 111,100 113,300 Closing Balance 232,557 - - - - - - - - - Interest 4,651 - - - - - - - - - Table A-5 Ontario Community Infrastructure Fund (OCIF) Obligatory Reserve Fund Description 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Opening Balance 17,824 36,468 - - - - - - - - OCIF Grant 193,101 197,000 200,900 204,900 209,000 99,300 101,300 103,300 105,300 107,500 Transfer to Capital 175,172 233,468 200,900 204,900 209,000 99,300 101,300 103,300 105,300 107,500 Closing Balance 35,753 - - - - - - - - - Interest 715 - - - - - - - - - Watson & Associates Economists Ltd. PAGE A-3 H:\Adelaide Metcalfe\2022 AMP\Reports\Adelaide Metcalfe AMP - Final R3.docx Table A-6 Operating Budget Forecast (Inflated $) Description 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Expenditures Operating Expenditures Tax Supported General Government 1,183,829 1,148,200 1,171,200 1,194,600 1,218,500 1,242,900 1,267,700 1,293,100 1,319,000 1,345,300 Protection to Persons and Property 913,246 908,600 926,700 945,300 964,200 983,500 1,003,100 1,023,200 1,043,700 1,064,500 Public Works 1,931,019 1,937,500 1,976,300 2,015,800 2,056,100 2,097,200 2,139,200 2,182,000 2,225,600 2,270,100 Health Services 11,968 12,200 12,500 12,700 13,000 13,200 13,500 13,700 14,000 14,300 Parks & Recreastion 25,786 26,300 26,800 27,400 27,900 28,500 29,000 29,600 30,200 30,800 Planning & Development 26,000 26,500 27,100 27,600 28,100 28,700 29,300 29,900 30,500 31,100 Drainage 102,836 104,900 107,000 109,100 111,300 113,500 115,800 118,100 120,500 122,900 Transfer to Water and Wastewater 340,455 137,374 143,149 149,151 155,389 161,899 168,638 175,642 182,923 190,491 Water and Wastewater 292,475 104,000 106,100 108,200 110,400 112,600 114,900 117,200 119,500 121,900 Capital-related Expenditures Tax Supported Transfers to Capital Res./R.F.s 243,991 1,257,903 1,226,710 1,414,948 1,498,360 1,585,163 1,675,660 1,769,680 1,867,582 1,969,430 Transfer to Capital 656,385 - 108,200 - - - - - - - Water and Wastewater Transfers to Capital Res./R.F.s 154,455 141,874 147,549 153,451 159,589 165,973 172,612 179,516 186,697 194,165 Repayment of Existing Debt 142,975 143,000 143,000 143,000 143,000 38,085 38,085 38,085 38,085 38,085 Total Expenditures 6,025,420 5,948,352 6,122,309 6,301,251 6,485,839 6,571,220 6,767,495 6,969,724 7,178,287 7,393,071 Revenues Tax Supported General Government 628,405 641,000 653,800 666,900 680,200 693,800 707,700 721,800 736,300 751,000 Protection to Persons and Property 110,320 112,500 114,800 117,100 119,400 121,800 124,200 126,700 129,300 131,800 Public Works 184,445 188,100 191,900 195,700 199,600 203,600 207,700 211,900 216,100 220,400 Health Services - - - - - - - - - - Parks & Recreastion 4,800 4,900 5,000 5,100 5,200 5,300 5,400 5,500 5,600 5,700 Planning & Development 46,400 47,300 48,300 49,200 50,200 51,200 52,300 53,300 54,400 55,500 Drainage 65,036 66,300 67,700 69,000 70,400 71,800 73,200 74,700 76,200 77,700 Transfer from CCBF Obligatory Reserve Fund 37,000 Water and Wastewater Transfer From Tax Levy 340,455 137,374 143,149 149,151 155,389 161,899 168,638 175,642 182,923 190,491 Debt Servicing Cost Recovery 151,350 151,400 151,400 151,400 151,400 46,459 46,459 46,459 46,459 46,459 Rate Revenue 98,100 100,100 102,100 104,100 106,200 108,300 110,500 112,700 114,900 117,200 Total Revenues 1,666,311 1,448,974 1,478,149 1,507,651 1,537,989 1,464,158 1,496,097 1,528,701 1,562,182 1,596,250 Tax Levy Analysis Tax Revenues Required 4,359,109 4,499,377 4,644,159 4,793,600 4,947,849 5,107,062 5,271,398 5,441,022 5,616,105 5,796,821 Prior Year Tax Levy 4,359,109 4,499,377 4,644,159 4,793,600 4,947,849 5,107,062 5,271,398 5,441,022 5,616,105 Add: Tax Revenues from Incremental Assessment 28,075 28,978 29,911 30,873 31,867 32,892 33,951 35,043 36,171 Tax Revenues at 0% Tax Rate Increase 4,387,184 4,528,356 4,674,070 4,824,473 4,979,716 5,139,954 5,305,349 5,476,065 5,652,275 Additional Increase in Tax Levy 112,193 115,803 119,530 123,376 127,346 131,444 135,673 140,039 144,545 Total Tax Revenues 4,499,377 4,644,159 4,793,600 4,947,849 5,107,062 5,271,398 5,441,022 5,616,105 5,796,821 Estimated Impact on Tax Bills 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6%