Mattawan 2021 Asset Management Plan
Mattawan, Ontario
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Corporate Asset Management Program
Municipality of Mattawan |
2021
Asset
Management
Plan
Municipality of Mattawan
2021
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© 2021, Corporation of the Municipality of Mattawan. All Rights Reserved.
The preparation of this plan was carried out with assistance from the Government
of Canada and the Federation of Canadian Municipalities. Notwithstanding this
support, the views expressed are the personal views of the authors, and the
Federation of Canadian Municipalities and the Government of Canada accept no
responsibility for them.
This Asset Management Program was prepared by:
Empowering your organization through advanced
asset management, budgeting & GIS solutions
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Key Statistics
Replacement cost of
asset portfolio
$5.1 million
Replacement cost of
infrastructure per household
$49,000 (2016)
Percentage of assets in fair or
better condition
56%
Percentage of assets with
assessed condition data
84%
Annual capital
infrastructure deficit
$123,000
Recommended timeframe
for eliminating annual
infrastructure deficit
20 Years
Target reinvestment
rate
2.4%
Actual reinvestment
rate
0%
1
Table of Contents
Executive Summary ................................................................................................... 3
Scope ............................................................................................................................ 3
Findings ......................................................................................................................... 4
Recommendations .......................................................................................................... 5
1
Introduction & Context ........................................................................................ 6
An Overview of Asset Management ........................................................................ 7
Key Concepts in Asset Management ......................................................................10
Ontario Regulation 588/17 ....................................................................................13
2
Scope and Methodology .................................................................................... 15
Assets categories included in this AMP ...................................................................16
Deriving Replacement Costs ..................................................................................16
Estimated Useful Life and Service Life Remaining....................................................17
Reinvestment Rate ...............................................................................................17
Deriving Asset Condition .......................................................................................18
3
Portfolio Overview .......................................................................................... 19
Total Replacement Cost of Asset Portfolio ..............................................................20
Target vs. Actual Reinvestment Rate .....................................................................20
Condition of Asset Portfolio ...................................................................................21
Service Life Remaining .........................................................................................22
Forecasted Capital Requirements...........................................................................22
4
Analysis of Tax-funded Assets ............................................................................ 23
Road Network ......................................................................................................24
Bridges & Culverts ...............................................................................................33
Buildings .............................................................................................................40
Machinery & Equipment ........................................................................................44
5
Impacts of Growth .......................................................................................... 48
Description of Growth Assumptions .......................................................................49
Impact of Growth on Lifecycle Activities .................................................................50
6
Financial Strategy ............................................................................................. 51
Financial Strategy Overview ..................................................................................52
Funding Objective ................................................................................................54
2
Financial Profile: Tax Funded Assets ......................................................................55
Use of Debt .........................................................................................................58
Use of Reserves ...................................................................................................60
7
Appendices ..................................................................................................... 61
Appendix A: 10-Year Capital Requirements ......................................................................62
Appendix B: Level of Service Maps ..................................................................................64
Appendix C: Condition Assessment Guidelines ..................................................................67
3
Executive Summary
Municipal infrastructure provides the foundation for the economic, social, and
environmental health and growth of a community through the delivery of critical
services. The goal of asset management is to deliver an adequate level of service in the
most cost-effective manner. This involves the development and implementation of asset
management strategies and long-term financial planning.
Scope
This AMP identifies the current practices and strategies that are in place to manage
public infrastructure and makes recommendations where they can be further refined.
Through the implementation of sound asset management strategies, the Municipality
can ensure that public infrastructure is managed to support the sustainable delivery of
municipal services.
This AMP includes the following asset categories:
Asset Category
Bridges & Culverts
Buildings
Road Network
Machinery & Equipment
4
Findings
The overall replacement cost of the asset categories included in this AMP totals $5.1
million. 56% of all assets analyzed in this AMP are in fair or better condition and
assessed condition data was available for 84% of assets. For the remaining 16% of
assets, assessed condition data was unavailable, and asset age was used to
approximate condition - a data gap that persists in most municipalities. Generally, age
misstates the true condition of assets, making assessments essential to accurate asset
management planning.
The development of a long-term, sustainable financial plan requires an analysis of
whole lifecycle costs. This AMP uses a replacement-only strategy to determine the costs
required to maintain the current level of service.
To meet capital replacement and rehabilitation needs for existing infrastructure, prevent
infrastructure backlogs, and achieve long-term sustainability, the Municipality's average
annual capital requirement totals $123,000. Based on a historical analysis of sustainable
capital funding sources, the Municipality is committing $0 towards capital projects or
reserves per year as all funds are used for operational activities. As a result, there is
currently an annual funding gap of approximately $123,000.
It is important to note that this AMP represents a snapshot in time and is based on the
best available processes, data, and information at the Municipality. Strategic asset
management planning is an ongoing and dynamic process that requires continuous
improvement and dedicated resources.
With the development of this AMP the Municipality has achieved
compliance with O. Reg. 588/17 to the extent of the requirements
that must be completed by July 1, 2022. There are additional
requirements concerning proposed levels of service and growth that
must be met by July 1, 2024 and 2025.
5
Recommendations
A financial strategy was developed to address the annual capital funding gap. The
following graphic shows the annual tax change required to eliminate the Municipality's
infrastructure deficit based on a 20-year plan:
Recommendations to guide continuous refinement of the Municipality's asset
management program include:
- Continue to refine and update asset information as made available
- Undertake CityWide inventory training and asset management training for staff
- Operationalize existing database and develop short- and long-term capital
projections
- Evaluate the efficacy of the Municipality's lifecycle management strategies at
regular intervals to determine the impact on cost, condition, and risk.
- Continue to measure current levels of service and work towards compliance for
O. Reg 588/17 2024 and 2025 requirements
- Consider the development of a dedicated capital budget
Tax-Funded
ASSETS
Average Annual Rate
Change
1.6%
Annual Increase
Per Household
$1,710
6
Key Insights
1 Introduction & Context
- The goal of asset management is to minimize the lifecycle costs of
delivering infrastructure services, manage the associated risks while
maximizing the value ratepayers receive from the asset portfolio
- The Municipality's asset management policy provides clear direction to staff
on their roles and responsibilities regarding asset management
- An asset management plan is a living document that should be updated
regularly to inform long-term planning
- Ontario Regulation 588/17 outlines several key milestones and
requirements for asset management plans in Ontario between July 1, 2022
and 2025
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An Overview of Asset Management
Municipalities are responsible for managing and maintaining a broad portfolio of infrastructure
assets to deliver services to the community. The goal of asset management is to minimize the
lifecycle costs of delivering infrastructure services, manage the associated risks while
maximizing the value ratepayers receive from the asset portfolio.
The acquisition of capital assets accounts for only 10-20% of their total cost of ownership. The
remaining 80-90% is derived from operations and maintenance. This asset management plan
(AMP) focuses its analysis on the capital costs to maintain, rehabilitate and replace existing
municipal infrastructure assets.
These costs can span decades, requiring planning and foresight to ensure financial responsibility
is spread equitably across generations. An asset management plan is critical to this planning,
and an essential element of a broader asset management program. The industry-standard
approach to developing a practical asset management program begins with a Strategic Plan,
followed by an Asset Management Policy and an Asset Management Strategy, concluding with
an Asset Management Plan.
This industry-standard, defined by the Institute of Asset Management (IAM), emphasizes the
alignment between the corporate strategic plan and various asset management documents. The
strategic plan has a direct, and cascading impact on asset management planning and reporting.
Build
20%
Operate, Maintain, and Dispose
80%
Total Cost of Ownership
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1.1.1 Asset Management Policy
An asset management policy represents a statement of the principles guiding the municipality's
approach to asset management activities. It aligns with the organizational strategic plan and
provides clear direction to municipal staff on their roles and responsibilities as part of the asset
management program.
The Municipality adopted By-law No. 2019-11 which included a "Strategic Asset Management
Policy" and "State of Maturity Report" on June 13th, 2019 in accordance with Ontario Regulation
588/17.
The asset management plan satisfies the policy statement 4 section 4
"The Municipality will develop an asset management plan that incorporates all
infrastructure categories and municipal infrastructure assets that meet the
capitalization threshold outlined in the organization's Tangible Capital Asset
Policy. It will be updated at least every five years following 2024 in accordance
with O. Reg. 588/17 requirements, to promote, document and communicate
continuous improvement of the asset management program."
1.1.2 Asset Management Strategy
An asset management strategy outlines the translation of organizational objectives into asset
management objectives and provides a strategic overview of the activities required to meet
these objectives. It provides greater detail than the policy on how the municipality plans to
achieve asset management objectives through planned activities and decision-making criteria.
The Municipality's Asset Management Policy contains many of the key components of an asset
management strategy and may be expanded on in future revisions or as part of a separate
strategic document.
1.1.3 Asset Management Plan
The asset management plan (AMP) presents the outcomes of the municipality's asset
management program and identifies the resource requirements needed to achieve a defined
level of service. The AMP typically includes the following content:
-
State of Infrastructure
-
Asset Management Strategies
-
Levels of Service
-
Financial Strategies
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The AMP is a living document that should be updated regularly as additional asset and financial
data becomes available. This will allow the municipality to re-evaluate the state of infrastructure
and identify how the organization's asset management and financial strategies are progressing.
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Key Concepts in Asset Management
Effective asset management integrates several key components, including lifecycle
management, risk management, and levels of service. These concepts are applied throughout
this asset management plan and are described below in greater detail.
1.2.1 Lifecycle Management Strategies
The condition or performance of most assets will deteriorate over time. This process is affected
by a range of factors including an asset's characteristics, location, utilization, maintenance
history and environment. Asset deterioration has a negative effect on the ability of an asset to
fulfill its intended function, and may be characterized by increased cost, risk and even service
disruption.
To ensure that municipal assets are performing as expected and meeting the needs of
customers, it is important to establish a lifecycle management strategy to proactively manage
asset deterioration.
There are several field intervention activities that are available to extend the life of an asset.
These activities can be generally placed into one of three categories: maintenance,
rehabilitation and replacement. The following table provides a description of each type of
activity and the general difference in cost.
Lifecycle
Activity
Description
Example
(Roads)
Cost
Maintenance
Activities that prevent defects or
deteriorations from occurring
Crack Seal
$
Rehabilitation/
Renewal
Activities that rectify defects or
deficiencies that are already present and
may be affecting asset performance
Mill & Re-surface
$$
Replacement/
Reconstruction
Asset end-of-life activities that often
involve the complete replacement of
assets
Full
Reconstruction
$$$
Depending on initial lifecycle management strategies, asset performance can be sustained
through a combination of maintenance and rehabilitation, but at some point, replacement is
required. Understanding what effect these activities will have on the lifecycle of an asset, and
their cost, will enable staff to make better recommendations.
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The Municipality's approach to lifecycle management is described within each asset category
outlined in this AMP. Developing and implementing a proactive lifecycle strategy will help staff
to determine which activities to perform on an asset and when they should be performed to
maximize useful life at the lowest total cost of ownership.
1.2.2 Risk Management Strategies
Municipalities generally take a 'worst-first' approach to infrastructure spending. Rather than
prioritizing assets based on their importance to service delivery, assets in the worst condition
are fixed first, regardless of their criticality. However, not all assets are created equal. Some are
more important than others, and their failure or disrepair poses more risk to the community
than that of others. For example, a road with a high volume of traffic that provides access to
critical services poses a higher risk than a low volume rural road. These high-value assets
should receive funding before others.
By identifying the various impacts of asset failure and the likelihood that it will fail, risk
management strategies can identify critical assets, and determine where maintenance efforts,
and spending, should be focused.
Potential risks that affect the Municipality's service delivery should be captured. This AMP
includes a high-level identification of the risks posed by undertaking the current lifecycle
activities to achieve the current levels of service. The risks reflect the key challenges and trends
that the Municipality may face when delivering the expected services.
1.2.3 Levels of Service
A level of service (LOS) is a measure of what the Municipality is providing to the community and
the nature and quality of that service. Within each asset category in this AMP, technical metrics
and qualitative descriptions that measure both technical and community levels of service have
been established and measured as data is available.
These measures include a combination of those that have been outlined in O. Reg. 588/17 in
addition to performance measures identified by the Municipality as worth measuring and
evaluating. The Municipality measures the level of service provided at two levels: Community
Levels of Service, and Technical Levels of Service.
Community Levels of Service
Community levels of service are a simple, plain language description or measure of the service
that the community receives. For core asset categories (Roads, Bridges & Culverts, Water,
Wastewater, Stormwater) the Province, through O. Reg. 588/17, has provided qualitative
descriptions that are required to be included in this AMP. For non-core asset categories, the
Municipality has determined the qualitative descriptions that will be used to determine the
community level of service provided. These descriptions can be found in the Levels of Service
subsection within each asset category.
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Technical Levels of Service
Technical levels of service are a measure of key technical attributes of the service being
provided to the community. These include mostly quantitative measures and tend to reflect the
impact of the municipality's asset management strategies on the physical condition of assets or
the quality/capacity of the services they provide.
For core asset categories (Roads, Bridges & Culverts, Water, Wastewater, Stormwater) the
Province, through O. Reg. 588/17, has provided technical metrics that are required to be
included in this AMP.
Current and Proposed Levels of Service
This AMP focuses on measuring the current level of service provided to the community. Once
current levels of service have been measured, the Municipality plans to establish proposed
levels of service over a 10-year period, in accordance with O. Reg. 588/17.
Proposed levels of service should be realistic and achievable within the timeframe outlined by
the Municipality. They should also be determined with consideration of community expectations,
fiscal capacity, regulatory requirements, corporate goals, and long-term sustainability. Once
proposed levels of service have been established, and before July 2025, the Municipality must
identify a lifecycle management and financial strategy which allows these targets to be
achieved.
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Ontario Regulation 588/17
As part of the Infrastructure for Jobs and Prosperity Act, 2015, the Ontario government
introduced Regulation 588/17 - Asset Management Planning for Municipal Infrastructure (O.
Reg 588/17). Along with creating better performing organizations, more liveable and
sustainable communities, the regulation is a key, mandated driver of asset management
planning and reporting. It places substantial emphasis on current and proposed levels of service
and the lifecycle costs incurred in delivering them.
The diagram below outlines key reporting requirements under O. Reg 588/17 and the
associated timelines.
2019
2022
2024
2025
Strategic Asset Management Policy
Asset Management Plan for Core Assets
with the following components:
1. Current levels of service
2. Inventory analysis
3. Lifecycle activities to sustain LOS
4. Cost of lifecycle activities
5. Population and employment
forecasts
6. Discussion of growth impacts
Asset Management Policy Update and an
Asset Management Plan for All Assets with
the following additional components:
1. Proposed levels of service for next
10 years
2. Updated inventory analysis
3. Lifecycle management strategy
4. Financial strategy and addressing
shortfalls
5. Discussion of how growth
assumptions impacted lifecycle and
financial
Asset Management Plan for Core and
Non-Core Assets (same components as
2022)
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1.3.1 O. Reg. 588/17 Compliance Review
The following table identifies the requirements outlined in Ontario Regulation 588/17 for
municipalities to meet by July 1, 2022. Next to each requirement, a page or section reference is
included in addition to any necessary commentary.
Requirement
O. Reg.
Section
AMP Section
Reference
Status
Summary of assets in each category
S.5(2), 3(i)
4.1.1 - 4.4.1
Complete
Replacement cost of assets in each
category
S.5(2), 3(ii)
4.1.1 - 4.4.1
Complete
Average age of assets in each category
S.5(2), 3(iii)
4.1.3 - 4.4.3
Complete
Condition of core assets in each
category
S.5(2), 3(iv)
4.1.2 - 4.4.2
Complete
Description of municipality's approach
to assessing the condition of assets in
each category
S.5(2), 3(v)
4.1.2 - 4.2.2
Complete for
Core Assets Only
Current levels of service in each
category
S.5(2), 1(i-ii)
4.1.6 - 4.2.6
Complete for
Core Assets Only
Current performance measures in each
category
S.5(2), 2
4.1.6 - 4.2.6
Complete for
Core Assets Only
Lifecycle activities needed to maintain
current levels of service for 10 years
S.5(2), 4
4.1.4 - 4.2.4
Complete for
Core Assets Only
Costs of providing lifecycle activities for
10 years
S.5(2), 4
Appendix A
Complete
Growth assumptions
S.5(2), 5(i-ii)
S.5(2), 6(i-vi)
5.1 - 5.2
Complete
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Key Insights
2 Scope and Methodology
- This asset management plan includes 4 asset categories and consists of
tax-funded categories
- The source and recency of replacement costs impact the accuracy and
reliability of asset portfolio valuation
- Accurate and reliable condition data helps to prevent premature and costly
rehabilitation or replacement and ensures that lifecycle activities occur at
the right time to maximize asset value and useful life
16
Assets categories included in this AMP
This asset management plan for the Municipality of Mattawan is produced in compliance with
Ontario Regulation 588/17. The July 2022 deadline under the regulation--the first of three
AMPs--requires analysis of only core assets (roads, bridges & culverts, water, wastewater, and
stormwater).
The AMP summarizes the state of the infrastructure for the Municipality's asset portfolio,
establishes current levels of service and the associated technical and customer-oriented key
performance indicators (KPIs), outlines lifecycle strategies for optimal asset management and
performance, and provides financial strategies to reach sustainability for the asset categories
listed below.
Asset Category
Source of Funding
Road Network
Tax Levy
Bridges & Culverts
Buildings
Machinery & Equipment
Deriving Replacement Costs
There is a range of methods to determine the replacement cost of an asset, and some are more
accurate and reliable than others. This AMP relies on two methodologies:
-
User-Defined Cost and Cost/Unit: Based on costs provided by municipal staff which
could include average costs from recent contracts; data from engineering reports and
assessments; staff estimates based on knowledge and experience
-
Cost Inflation/CPI Tables: Historical cost of the asset is inflated based on Consumer
Price Index or Non-Residential Building Construction Price Index
User-defined costs based on reliable sources are a reasonably accurate and reliable way to
determine asset replacement costs. Cost inflation is typically used in the absence of reliable
replacement cost data. It is a reliable method for recently purchased and/or constructed assets
where the total cost is reflective of the actual costs that the Municipality incurred. As assets age
and new products and technologies become available, cost inflation becomes a less reliable
method.
17
Estimated Useful Life and Service Life
Remaining
The estimated useful life (EUL) of an asset is the period over which the Municipality expects the
asset to be available for use and remain in service before requiring replacement or disposal.
The EUL for each asset in this AMP was assigned according to the knowledge and expertise of
municipal staff and supplemented by existing industry standards when necessary.
By using an asset's in-service data and its EUL, the Municipality can determine the service life
remaining (SLR) for each asset. Using condition data and the asset's SLR, the Municipality can
more accurately forecast when it will require replacement. The SLR is calculated as follows:
𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐿𝑖𝑓𝑒 𝑅𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 (𝑆𝐿𝑅) = 𝐼𝑛 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐷𝑎𝑡𝑒+ 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑈𝑠𝑒𝑓𝑢𝑙 𝐿𝑖𝑓𝑒(𝐸𝑈𝐿) −𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟
Reinvestment Rate
As assets age and deteriorate they require additional investment to maintain a state of good
repair. The reinvestment of capital funds, through asset renewal or replacement, is necessary to
sustain an adequate level of service. The reinvestment rate is a measurement of available or
required funding relative to the total replacement cost.
By comparing the actual vs. target reinvestment rate the Municipality can determine the extent
of any existing funding gap. The reinvestment rate is calculated as follows:
𝑇𝑎𝑟𝑔𝑒𝑡 𝑅𝑒𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒= 𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝐶𝑜𝑠𝑡
𝐴𝑐𝑡𝑢𝑎𝑙 𝑅𝑒𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒= 𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐹𝑢𝑛𝑑𝑖𝑛𝑔
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝐶𝑜𝑠𝑡
18
Deriving Asset Condition
An incomplete or limited understanding of asset conditions can mislead long-term planning and
decision-making. Accurate and reliable condition data helps to prevent premature and costly
rehabilitation or replacement and ensures that lifecycle activities occur at the right time to
maximize asset value and useful life.
A condition assessment rating system provides a standardized descriptive framework that allows
comparative benchmarking across the Municipality's asset portfolio. The table below outlines
the condition rating system used in this AMP to determine asset conditions. This rating system
is aligned with the Canadian Core Public Infrastructure Survey which is used to develop the
Canadian Infrastructure Report Card. When assessed condition data is not available, the service
life remaining is used to approximate asset condition.
Condition
Description
Criteria
Service Life
Remaining
(%)
Very Good
Fit for the future
Well maintained, good condition, new or
recently rehabilitated
80-100
Good
Adequate for
now
Acceptable, generally approaching mid-
stage of expected service life
60-80
Fair
Requires
attention
Signs of deterioration, some elements
exhibit significant deficiencies
40-60
Poor
Increasing
potential of
affecting service
Approaching the end of service life,
condition below standard, a large portion
of the system exhibits significant
deterioration
20-40
Very Poor
Unfit for
sustained
service
Near or beyond expected service life,
widespread signs of advanced
deterioration, some assets may be
unusable
0-20
The analysis in this AMP is based on assessed condition data only as available. In the absence
of assessed condition data, asset age is used as a proxy to determine asset condition. Appendix
C includes additional information on the role of asset condition data and provides basic
guidelines for the development of a condition assessment program.
19
Key Insights
3 Portfolio Overview
- The total replacement cost of the Municipality's asset portfolio is $5.1
million
- The Municipality's target re-investment rate is 2.4%, and the actual
reinvestment rate is 0%, contributing to an expanding infrastructure deficit
- 56% of all assets are in fair or better condition
- 22% of assets are projected to require replacement in the next 10 years
- Average annual capital requirements total approximately $123,000 per year
across all assets
20
Total Replacement Cost of Asset
Portfolio
The asset categories analyzed in this AMP have a total replacement cost of $5.1 million based
on inventory data from 2020. This total was determined based on a combination of user-defined
costs and historical cost inflation. This estimate reflects the replacement of historical assets with
similar, not necessarily identical, assets available for procurement today.
Target vs. Actual Reinvestment Rate
The graph below depicts funding gaps or surpluses by comparing target vs actual reinvestment
rates. To meet the long-term replacement needs, the Municipality should be allocating
approximately $123,000 annually, for a target reinvestment rate of 2.41%. Actual annual capital
spending on infrastructure totals approximately $0, for an actual reinvestment rate of 0%1.
1 The Municipality currently funds its assets through an operating budget.
21
Condition of Asset Portfolio
The current condition of the assets is central to all asset management planning. Collectively,
56% of assets in Mattawan are in fair or better condition. This estimate relies on both age-
based and field condition data.
This AMP relies on assessed condition data for 84% of assets; for the remaining portfolio, age is
used as an approximation of condition. Assessed condition data is invaluable in asset
management planning as it reflects the true condition of the asset and its ability to perform its
functions. The table below identifies the source of condition data used throughout this AMP.
Asset Category
Asset
Segment
% of Assets with
Assessed
Condition
Source of Condition Data
Road Network
All
38%
Staff Assessments
Bridges & Culverts
Bridges
100%
2019 OSIM Report
Buildings
All
97%
Staff Assessments
Machinery & Equipment
All
25%
Staff Assessments
22
Service Life Remaining
Based on asset age, available assessed condition data, and estimated useful life, 22% of the
Municipality's assets will require replacement within the next 10 years. Capital requirements
over the next 10 years are identified in Appendix A.
Forecasted Capital Requirements
The development of a long-term capital forecast should include both asset rehabilitation and
replacement requirements. With the development of asset-specific lifecycle strategies that
include the timing and cost of future capital events, the Municipality can produce an accurate
long-term capital forecast. The following graph identifies capital requirements over the next 50
years.
23
Key Insights
4 Analysis of Tax-funded Assets
- Tax-funded assets are valued at $5.1 million
- 56% of tax-funded assets are in fair or better condition
- The average annual capital requirement to sustain the current level of
service for tax-funded assets is approximately $123 thousand
24
Road Network
The Road Network is a critical component of the provision of safe and efficient transportation
services and represents a significant value asset category in the Municipality's asset portfolio. It
includes all municipally owned and maintained roadways in addition to supporting roadside
infrastructure, such as culverts with a span of under 3 meters. The Municipality's roads are
maintained by the Contracted Road Staff.
4.1.1 Asset Inventory & Replacement Cost
The table below includes the quantity, replacement cost method, and total replacement cost of
each asset segment in the Municipality's Road Network inventory.
Asset Segment
Quantity
Replacement
Cost Method
Total Replacement
Cost
Culverts < 3 meter span
129
49% CPI Tables,
51% Cost/Unit
$723,278
Unpaved Roads
25.4 km
Cost/Unit
$469,900
$1,193,178
25
4.1.2 Asset Condition
The table below identifies the current average condition and source of available condition data
for each asset segment. The Average Condition (%) is a weighted value based on replacement
cost.
Asset Segment
Average Condition
(%)
Average
Condition Rating
Condition
Source
Culverts < 3 meter span
56%
Fair
100% Age-Based
Unpaved Roads
60%
Good
96% Assessed
58%
Fair
38% Assessed
Current Approach to Condition Assessment
Accurate and reliable condition data allows staff to more confidently determine the remaining
service life of assets and identify the most cost-effective approach to managing assets. The
following describes the municipality's current approach:
-
Road patrols are completed weekly for all roads by Road Supervisor
-
Older roadside culvert (under 3m span) pipes are inspected on an annual basis
-
While roadside culverts are checked less often, they are expected to be part of an
inspection program
26
4.1.3 Estimated Useful Life & Average Age
The Estimated Useful Life for Road Network assets has been assigned according to a
combination of established industry standards and staff knowledge. The Average Age of each
asset is based on the number of years each asset has been in service. Finally, the Average
Service Life Remaining represents the difference between the Estimated Useful Life and the
Average Age, except when an asset has been assigned an assessed condition rating. The
assessed condition may increase or decrease the average service life remaining.
Asset Segment
Estimated Useful
Life (Years)
Average Age
(Years)
Average Service
Life Remaining
(Years)
Culverts < 3 meter span
20 - 50 Years
14.1
15.5
Unpaved Roads
45 Years
63.8
27.5
18.7
16.5
Each asset's Estimated Useful Life should be reviewed periodically to determine whether
adjustments need to be made to better align with the observed length of service life for each
asset type.
27
4.1.4 Lifecycle Management Strategy
The condition or performance of most assets will deteriorate over time. This process is affected
by a range of factors including an asset's characteristics, location, utilization, maintenance
history, and environment.
The following lifecycle strategies have been developed as a proactive approach to managing the
lifecycle of gravel roads.
Activity Type
Description of Current Strategy
Maintenance,
Rehabilitation,
and Replacement
Grading is completed throughout the year to maintain the roads
Dust suppressant is applied on an annual basis
Gravel is reapplied to the roads on an as-needed basis according to Road
Supervisor recommendations based on field observations
Ditching is completed periodically
A backhoe and sod are utilized to level and remedy roadside culverts that
have lost cover due to erosion; staff prioritize based on criticality and
condition of culverts
Gravel roads are perpetually maintained and are generally not replaced
unless there is an underlying structural issue
28
Forecasted Capital Requirements
Based on the lifecycle strategies identified previously, and assuming the end-of-life replacement
of all other assets in this category, the following graph forecasts capital requirements for the
Road Network.
The annual capital requirement represents the average amount per year that the Municipality
should allocate towards funding rehabilitation and replacement needs to meet future capital
needs.
The projected cost of lifecycle activities that will need to be undertaken over the next 10 years
to maintain the current level of service can be found in Appendix A.
29
4.1.5 Risks to Current Asset Management Strategies
The following section summarizes key trends, challenges, and risks to service delivery that the
Municipality is currently facing:
Climate Change & Extreme Weather Events
An increase in freeze/thaw cycles causes roads to heave and settle. This can
cause accelerated deterioration. When the ditches are filled with water,
freeze/thaw makes the terrain conditions more difficult to maintain. Additional
sanding is required. The uncertainty surrounding the impact of extreme
weather events can make changing conditions difficult to plan for.
Capital Funding
There is some uncertainty on the ability to adequately fund lifecycle
requirements from available revenues. Given the small tax base of the
municipality, additional tax revenue can mean a larger tax increase for a single
household compared to that of larger municipalities.
30
4.1.6 Levels of Service
The following tables identify the Municipality's current level of service for the Road Network.
These metrics include the technical and community level of service metrics that are required as
part of O. Reg. 588/17 as well as any additional performance measures that the Municipality
has selected for this AMP.
Community Levels of Service
The following table outlines the qualitative descriptions that determine the community levels of
service provided by the Road Network.
Service
Attribute
Qualitative Description
Current LOS (2020)
Scope
Description, which may
include maps, of the road
network in the municipality
and its level of connectivity
See Appendix B
Quality
Description or images that
illustrate the different levels
of road class pavement
condition
Routine road patrols identify 8 different types of
deficiencies including potholes, soft shoulders,
debris on the road, drainage, warning/hazard on
road, regulatory issue for signs, road on bridge
issue, and information signs.
Roads that do not exhibit any of these deficiencies
are considered to be in Very Good condition.
Depending on the severity and extent of the 8
deficiency types, roads will receive a Good, Fair,
Poor, or Very Poor rating.
31
Technical Levels of Service
The following table outlines the quantitative metrics that determine the technical level of service
provided by the Road Network.
Service
Attribute
Technical Metric
Current LOS
(2020)
Scope
Lane-km of arterial roads (MMS classes 1 and 2) per
land area (km/km2)
0/201
Lane-km of collector roads (MMS classes 3 and 4) per
land area (km/km2)
0/201
Lane-km of local roads (MMS classes 5 and 6) per land
area (km/km2)
50.8/2012
Quality
Average pavement condition index for paved roads in
the municipality
N/A3
Average surface condition for unpaved roads in the
municipality (e.g. excellent, good, fair, poor)
Good
2 Where the number of lanes was not specified, it was assumed that the road had 2 lanes.
3 The Municipality of Mattawan does not currently own any paved roads.
32
4.1.7 Recommendations
Asset Inventory
-
Review roadside culvert inventory and update attribute information (e.g. quantity and
unit of measure) to ensure standardization of all asset segments.
-
Staff should undertake CityWide inventory training to gain knowledge on uploading and
updating assets and utilize tools available to run capital projections.
-
Collect and track inventory of roadside ditches, capturing important attribute information
so that it can be included in the asset management program.
Condition Assessment Strategies
-
Develop an internal condition assessment for road and culvert assets to capture
consistent and reliable information.
-
Capture internal condition ratings on assets and input this information into the inventory
on a regular basis (e.g. yearly).
Lifecycle Management Strategies
-
Evaluate the efficacy of the Municipality's lifecycle management strategies at regular
intervals to determine the impact on cost, condition, and risk.
Risk Management Strategies
-
Consider procuring extra supplies (e.g. sand) when there are deals for emergency
preparedness, subject to budgetary and space constraints.
Levels of Service
-
Re-evaluate the value of each culvert and consider whether to dispose or replace them
based on performance, budgetary constraints, and levels of service expected.
-
Work towards identifying proposed levels of service as per O. Reg. 588/17 and identify
the strategies that are required to close any gaps between current and proposed levels
of service.
33
Bridges & Culverts
Bridges & Culverts represent a critical portion of the transportation services provided to the
community. Public Works staff is responsible for the maintenance of all bridges located across
municipal roads to keep structures in an adequate state of repair and minimize service
disruptions. There are two bridges at the Municipality of Mattawan - Murphy Bridge and Burke
Bridge. The Municipality does not own any structural (greater than 3-meter span) culverts.
4.2.1 Asset Inventory & Replacement Cost
The table below includes the quantity, replacement cost method, and total replacement cost of
each asset segment in the Municipality's Bridges & Culverts inventory.
Asset Segment
Quantity
Replacement Cost
Method
Total Replacement
Cost
Bridges
2
User-Defined Cost
$3,000,000
$3,000,000
34
4.2.2 Asset Condition
The table below identifies the current average condition and source of available condition data
for each asset segment. The Average Condition (%) is a weighted value based on replacement
cost.
Asset Segment
Average Condition
(%)
Average
Condition Rating
Condition
Source
Bridges
42%
Fair
100% Assessed
42%
Fair
100% Assessed
To ensure that the Municipality's Bridges & Culverts continue to provide an acceptable level of
service, the Municipality should monitor the average condition of all assets. If the average
condition declines, staff should re-evaluate their lifecycle management strategy to determine
what combination of maintenance, rehabilitation, and replacement activities is required to
increase the overall condition of the Bridges & Culverts.
Currently, Murphy's Bridge is closed as it is structurally unsafe. The bridge is expected to be
replaced and reopened by the end of 2021.
Current Approach to Condition Assessment
Accurate and reliable condition data allows staff to more confidently determine the remaining
service life of assets and identify the most cost-effective approach to managing assets. The
following describes the municipality's current approach:
-
Condition assessments of all bridges are completed every 2 years per the Ontario
Structure Inspection Manual (OSIM). The most recent inspection report was completed
in 2019 by K. Smart Associates Ltd.
-
These findings are verified by Public Works Staff through visual inspections, such as
looking at the bridges' underside for cracking or any other indicators of issues
35
4.2.3 Estimated Useful Life & Average Age
The Estimated Useful Life for Bridges & Culverts assets has been assigned according to a
combination of established industry standards and staff knowledge. The Average Age of each
asset is based on the number of years each asset has been in service. Finally, the Average
Service Life Remaining represents the difference between the Estimated Useful Life and the
Average Age, except when an asset has been assigned an assessed condition rating. The
assessed condition may increase or decrease the average service life remaining.
Asset Segment
Estimated Useful
Life (Years)
Average Age
(Years)
Average Service
Life Remaining
(Years)
Bridges
50 Years
48.7
23.9
48.7
23.9
Each asset's Estimated Useful Life should be reviewed periodically to determine whether
adjustments need to be made to better align with the observed length of service life for each
asset type.
36
4.2.4 Lifecycle Management Strategy
The condition or performance of most assets will deteriorate over time. To ensure that
municipal assets are performing as expected and meeting the needs of customers, it is
important to establish a lifecycle management strategy to proactively manage asset
deterioration.
The following table outlines the Municipality's current lifecycle management strategy.
Activity Type
Description of Current Strategy
Maintenance,
Rehabilitation,
and Replacement
All lifecycle activities are driven by the results of mandated structural
inspections completed according to the Ontario Structure Inspection
Manual
In-house maintenance activities are completed periodically such as
regular cleaning, maintaining guide rails, applying sealant, etc.
Forecasted Capital Requirements
The following graph forecasts long-term capital requirements. The annual capital requirement
represents the average amount per year that the Municipality should allocate towards funding
rehabilitation and replacement needs.
The projected cost of lifecycle activities that will need to be undertaken over the next 10 years
to maintain the current level of service can be found in Appendix A.
37
4.2.5 Risks to Current Asset Management Strategies
The following section summarizes key trends, challenges, and risks to service delivery that the
Municipality is currently facing:
Capital Funding
The rehabilitation and/or replacement of bridges is heavily dependent on the
availability of grant funding for capital projects. Capital costs for bridges can be
substantial, and when grant funding is unavailable it can be challenging to fund
necessary capital works through sustainable revenue sources. Necessary
repairs can be deferred, but this affects the Levels of Service provided.
Climate Change & Extreme Weather Events
The changing climate can lead to more rain and freezing temperature events,
increasing freeze/thaw cycles. Moisture seeps into the depths of the foundation
and freezing temperatures have heaved parts of the structure e.g. guide rails.
This can cause accelerated deterioration and increase the level of maintenance
required.
38
4.2.6 Levels of Service
The following tables identify the Municipality's current level of service for Bridges & Culverts.
These metrics include the technical and community level of service metrics that are required as
part of O. Reg. 588/17 as well as any additional performance measures that the Municipality
has selected for this AMP.
Community Levels of Service
The following table outlines the qualitative descriptions that determine the community levels of
service provided by Bridges & Culverts.
Service
Attribute
Qualitative Description
Current LOS (2020)
Scope
Description of the traffic that is
supported by municipal bridges
(e.g. heavy transport vehicles,
motor vehicles, emergency
vehicles, pedestrians, cyclists)
The bridges support regular vehicular and
truck traffic. Snowplows traverse over them
during snowfall. With the logging operations
in the area, transport trucks are common and
may carry excavators.
Quality
Description or images of the
condition of bridges & culverts
and how this would affect use of
the bridges & culverts
See Appendix B
Technical Levels of Service
The following table outlines the quantitative metrics that determine the technical level of service
provided by Bridges & Culverts.
Service
Attribute
Technical Metric
Current LOS (2020)
Scope
% of bridges in the Municipality with loading or
dimensional restrictions
0
Quality
Average bridge condition index value for bridges in
the Municipality
42
Average bridge condition index value for structural
culverts in the Municipality
N/A4
4 The Municipality of Mattawan does not currently own any structural (greater than 3 meters) culverts.
39
4.2.7 Recommendations
Data Review/Validation
-
Continue to review and validate inventory data, assessed condition data, and
replacement costs for all bridges and structural culverts upon the completion of OSIM
inspections every 2 years.
-
Staff should undertake CityWide inventory training to gain knowledge on uploading and
updating assets and utilize tools available to run capital projections.
Lifecycle Management Strategies
-
This AMP only includes capital costs associated with the reconstruction of bridges and
culverts. The Municipality should work towards identifying projected capital rehabilitation
and renewal costs for bridges and culverts and integrating these costs into long-term
planning.
Levels of Service
-
Continue to measure current levels of service in accordance with the metrics identified in
O. Reg. 588/17.
-
Work towards identifying proposed levels of service as per O. Reg. 588/17 and identify
the strategies that are required to close any gaps between current and proposed levels
of service.
40
Buildings
This AMP primarily focuses on core asset categories as defined in O. Reg. 588/17. Buildings are
not considered a core municipal infrastructure.
The Municipality of Mattawan owns and maintains an office and a garage. A high-level analysis
of this category is provided.
The Municipality will work towards improving data quality and meeting all requirements
required prior to July 1, 2024.
4.3.1 Asset Inventory & Replacement Cost
The table below includes the quantity, replacement cost method, and total replacement cost of
each asset segment in the Municipality's Buildings inventory.
Asset Segment
Quantity
(components)
Replacement Cost
Method
Total
Replacement
Cost
Garage
1
User-Defined Cost
$25,000
Office
1 (2)
User-Defined Cost
$815,912
$840,912
41
4.3.2 Asset Condition
The table below identifies the current average condition and source of available condition data
for each asset segment. The Average Condition (%) is a weighted value based on replacement
cost.
Asset Segment
Average Condition
(%)
Average
Condition Rating
Condition Source
Garage
60%
Good
Age-based
Office
58%
Fair
99.6% Assessed
59%
Fair
96.5% Assessed
To ensure that the Municipality's Buildings continues to provide an acceptable level of service,
the Municipality should monitor the average condition of all assets. If the average condition
declines, staff should re-evaluate their lifecycle management strategy to determine what
combination of maintenance, rehabilitation, and replacement activities is required to increase
the overall condition of the Buildings.
A potential renovation plan is being considered for the office building. Should it be completed,
the Estimated Useful Life is expected to increase, and the condition rating would improve.
Consideration is also being given to replacing the garage roof.
42
4.3.3 Estimated Useful Life & Average Age
The Estimated Useful Life for Buildings assets has been assigned according to a combination of
established industry standards and staff knowledge. The Average Age of each asset is based on
the number of years each asset has been in service. Finally, the Average Service Life Remaining
represents the difference between the Estimated Useful Life and the Average Age, except when
an asset has been assigned an assessed condition rating. The assessed condition may increase
or decrease the average service life remaining.
Asset Segment
Estimated Useful
Life (Years)
Average Age
(Years)
Average Service
Life Remaining
(Years)
Garage
50 Years
20.0
30.0
Office
25 - 60 Years
32.0
10.5
28.0
17.0
Each asset's Estimated Useful Life should be reviewed periodically to determine whether
adjustments need to be made to better align with the observed length of service life for each
asset type.
43
4.3.4 Forecasted Capital Requirements
The following graph forecasts long-term capital requirements. The annual capital requirement
represents the average amount per year that the Municipality should allocate towards funding
rehabilitation and replacement needs.
The projected cost of lifecycle activities that will need to be undertaken over the next 10 years
to maintain the current level of service can be found in Appendix A.
44
Machinery & Equipment
This AMP primarily focuses on core asset categories as defined in O. Reg. 588/17. Machinery &
Equipment are not considered a core municipal infrastructure.
The Municipality of Mattawan owns and uses equipment that provides key services to the
community. These include:
-
Office equipment
-
IT equipment
-
Chainsaws, brush saw
-
Fire pump with hoses, generator
-
Signs and safety equipment
A high-level analysis of this category is provided. For most of these assets, the Municipality
does not currently have assessed condition data.
The Municipality will work towards improving data quality and meeting all requirements
required prior to July 1, 2024.
4.4.1 Asset Inventory & Replacement Cost
The table below includes the quantity, replacement cost method and total replacement cost of
each asset segment in the Municipality's Machinery & Equipment inventory.
Asset Segment
Quantity
Replacement Cost
Method
Total
Replacement
Cost
Office Equipment
2
21% CPI Tables, 79%
User-Defined
$18,949
Machinery
6
62% CPI Tables, 38%
User-Defined
$23,130
IT Equipment
4
100% User-Defined
$8,000
Signage
1
100% User-Defined
$1,500
$51,579
45
4.4.2 Asset Condition
The table below identifies the current average condition and source of available condition data
for each asset segment. The Average Condition (%) is a weighted value based on replacement
cost.
Asset Segment
Average Condition
(%)
Average
Condition Rating
Condition
Source
IT Equipment
80%
Very Good
Age-Based
Machinery
71%
Good
57% Assessed
Office Equipment
48%
Fair
Age-Based
Signage
87%
Very Good
Age-Based
64%
Good
25% Assessed
To ensure that the Municipality's Machinery & Equipment continues to provide an acceptable
level of service, the Municipality should monitor the average condition of all assets. If the
average condition declines, staff should re-evaluate their lifecycle management strategy to
determine what combination of maintenance, rehabilitation, and replacement activities is
required to increase the overall condition of the Machinery & Equipment.
46
4.4.3 Estimated Useful Life & Average Age
The Estimated Useful Life for Machinery & Equipment assets has been assigned according to a
combination of established industry standards and staff knowledge. The Average Age of each
asset is based on the number of years each asset has been in service. Finally, the Average
Service Life Remaining represents the difference between the Estimated Useful Life and the
Average Age, except when an asset has been assigned an assessed condition rating. The
assessed condition may increase or decrease the average service life remaining.
Asset Segment
Estimated Useful
Life (Years)
Average Age
(Years)
Average Service
Life Remaining
(Years)
IT Equipment
5 Years
1.0
4.0
Machinery
10 - 25 Years
11.4
8.9
Office Equipment
10 - 15 Years
10.0
2.5
Signage
15 Years
2.0
13.0
8.1
7.1
Each asset's Estimated Useful Life should be reviewed periodically to determine whether
adjustments need to be made to better align with the observed length of service life for each
asset type.
47
4.4.4 Forecasted Capital Requirements
The following graph forecasts long-term capital requirements. The annual capital requirement
represents the average amount per year that the Municipality should allocate towards funding
rehabilitation and replacement needs.
The projected cost of lifecycle activities that will need to be undertaken over the next 10 years
to maintain the current level of service can be found in Appendix A.
48
Key Insights
5 Impacts of Growth
- Understanding the key drivers of growth and demand will allow the
Municipality to more effectively plan for new infrastructure, and the
upgrade or disposal of existing infrastructure
- Minimal changes to population and employment are expected
- The costs of growth should be considered in long-term funding strategies
that are designed to maintain the current level of service
49
Description of Growth Assumptions
The demand for infrastructure and services will change over time based on a combination of
internal and external factors. Understanding the key drivers of growth and demand will allow
the Municipality to more effectively plan for new infrastructure, and the upgrade or disposal of
existing infrastructure. Increases or decreases in demand can affect what assets are needed
and what level of service meets the needs of the community.
5.1.1 East Nipissing Official Plan (January 2021)
The East Nipissing Planning Board covers the areas of Mattawan, Calvin, and Papineau-
Cameron.
The Official Plan has been enacted and passed by the Corporation of the Municipality of
Mattawan as of February 11th, 2021. The Official Plan spans a 25-year time horizon (2021-2046)
and will be revised no less frequently than 10 years after it has come into effect and every five
years thereafter. The Official Plan has been prepared based on four key components including
community development, environmental stewardship, community health and safety, and
resource management. The overall goal is to attain a healthy economic base that supports
sustainable and orderly community development while conserving the attributes and resources
of the rural area.
Mattawan makes up two-thirds of the Rural Lands endowed with natural resources whose
extraction or development, including value-added land-use activities, support the economic
base of East Nipissing. Resource-based uses include mineral aggregate extraction, forestry, and
agriculture.
Servicing of development will be principally through individual on-site water and sewage
systems. No new municipal water or sewer services are anticipated over the life of the Official
Plan (2021-2046).
The following table summarizes the historical population, employment, and household statistics
for the Municipality of Mattawan from the StatsCan Census. There may be changes in the
distribution of full-time and part-time labour. Overall, minimal changes to population and
employment are expected in the short term.
Year
2006
2011
2016
Population
147
162
161
Employment
95
Not Available
55
Households
65
75
75
50
Impact of Growth on Lifecycle Activities
By July 1, 2025, the Municipality's asset management plan must include a discussion of how the
assumptions regarding future changes in population and economic activity informed the
preparation of the lifecycle management and financial strategy.
Planning for forecasted population growth may require the expansion of existing infrastructure
and services. As growth-related assets are constructed or acquired, they should be integrated
into the Municipality's AMP. While the addition of residential units may add to the existing
assessment base and offset some of the costs associated with growth, the Municipality will need
to review the lifecycle costs of growth-related infrastructure. These costs should be considered
in long-term funding strategies that are designed to, at a minimum, maintain the current level
of service.
51
Key Insights
6 Financial Strategy
- The Municipality is committing $0 towards capital projects per year from
sustainable revenue sources
- Given the annual capital requirement of $123,000, there is currently a
funding gap of $123,000 annually
- For tax-funded assets, we recommend increasing tax revenues by 1.6%
each year for the next 20 years to achieve a sustainable level of funding
52
Financial Strategy Overview
For an asset management plan to be effective and meaningful, it must be integrated with a
long-term financial plan (LTFP). The development of a comprehensive financial plan will allow
the Municipality of Mattawan to identify the financial resources required for sustainable asset
management based on existing asset inventories, desired levels of service, and projected
growth requirements.
This report develops such a financial plan by presenting several scenarios for consideration and
culminating with final recommendations. As outlined below, the scenarios presented model
different combinations of the following components:
1. The financial requirements for:
a. Existing assets
b. Existing service levels
c. Requirements of contemplated changes in service levels (none identified for this
plan)
d. Requirements of anticipated growth (none identified for this plan)
2. Use of traditional sources of municipal funds:
a. Tax levies
b. User fees
c. Reserves
d. Debt
3. Use of non-traditional sources of municipal funds:
a. Reallocated budgets
b. Partnerships
c. Procurement methods
4. Use of Senior Government Funds:
a. Gas tax
b. Annual grants
Note: Periodic grants are normally not included due to Provincial requirements for firm
commitments. However, if moving a specific project forward is wholly dependent on receiving a
one-time grant, the replacement cost included in the financial strategy is the net of such grant
being received.
If the financial plan component results in a funding shortfall, the Province requires the inclusion
of a specific plan as to how the impact of the shortfall will be managed. In determining the
legitimacy of a funding shortfall, the Province may evaluate a Municipality's approach to the
following:
1. In order to reduce financial requirements, consideration has been given to revising
service levels downward.
53
2. All asset management and financial strategies have been considered. For example:
a. If a zero-debt policy is in place, is it warranted? If not, the use of debt should be
considered.
b. Do user fees reflect the cost of the applicable service? If not, increased user fees
should be considered.
6.1.1 Annual Requirements & Capital Funding
Annual Requirements
The annual requirements represent the amount the Municipality should allocate annually to
each asset category to meet replacement needs as they arise, prevent infrastructure backlogs,
and achieve long-term sustainability. In total, the Municipality must allocate approximately
$123k annually to address capital requirements for the assets included in this AMP.
For all asset categories, the annual requirement has been calculated based on a "replacement
only" scenario, in which capital costs are only incurred at the construction and replacement of
each asset. Although the Municipality relies on a replacement-only scenario, a lifecycle strategy
scenario is also described below should the Municipality incorporate measures that yield
benefits through preventative maintenance or rehabilitation activities in the future.
1. Replacement Only Scenario: Based on the assumption that assets deteriorate and -
without regularly scheduled maintenance and rehabilitation - are replaced at the end of
their service life.
2. Lifecycle Strategy Scenario: Based on the assumption that lifecycle activities are
performed at strategic intervals to extend the service life of assets until a replacement is
required.
The implementation of a proactive lifecycle strategy for assets can lead to potential annual cost
avoidance. As the Replacement scenario represents the most cost-effective option available to
the Municipality, we have used these annual requirements in the development of the financial
strategy.
54
Annual Funding Available
Based on a historical analysis of sustainable capital funding sources, the Municipality is
committing $0 towards capital projects per year. Given the annual capital requirement of
$123,000, there is currently a funding gap of $123,000 annually.
Funding Objective
We have developed a scenario that would enable Mattawan to achieve full funding within 1 to
20 years for the following assets:
1. Tax Funded Assets: Road Network, Bridges & Culverts, Buildings, Machinery &
Equipment
For each scenario developed we have included strategies, where applicable, regarding the use
of cost containment and funding opportunities.
55
Financial Profile: Tax Funded Assets
6.3.1 Current Funding Position
The following tables show, by asset category, Mattawan's average annual capital expenditure
(CapEx) requirements, current funding positions, and funding increases required to achieve full
funding on assets funded by taxes.
Asset Category
Avg. Annual
Requirement
Annual Funding Available
Annual
Deficit
Taxes
Gas Tax
OCIF
Total
Available
Road Network
44,000
Bridges & Culverts
60,000
Buildings
14,000
Machinery & Equipment
5,000
123,000
0
05
05
0
123,000
The average annual CapEx requirement for the above categories is $123k. Annual revenue
currently allocated to these asset categories for CapEx is $0 leaving an annual deficit of $123k.
Put differently, these asset categories are currently funded at 0% of their long-term
requirements.
6.3.2 Full Funding Requirements
In 2020, the Municipality of Mattawan had annual tax revenues of $364k. As illustrated in the
following table, without consideration of any other sources of revenue or cost containment
strategies, full funding would require the following tax change over time:
Asset Category
Tax Change Required for Full Funding
Road Network
12.1%
Bridges & Culverts
16.5%
Buildings
3.8%
Machinery & Equipment
1.4%
33.8%
5 Currently, all sustainable grants and transfers are being allocated towards Operating expenditures
56
The following changes in costs and/or revenues over the next number of years should also be
considered in the financial strategy:
a) Mattawan's formula-based OCIF grant is scheduled to remain at $50k in 2020 for their
operating expenditure (OPEX).
b) Mattawan's debt payments for these asset categories will be decreasing by $8k over the
next 5 years.
Our recommendations include capturing the above changes and allocating them to the
infrastructure deficit outlined above. The table below outlines this concept and presents several
options6:
Without Capturing Changes
With Capturing Changes
5 Years
10 Years 15 Years 20 Years
5 Years
10 Years 15 Years 20 Years
Infrastructure
Deficit
123,000
123,000
123,000
123,000
123,000
123,000
123,000
123,000
Change in
Debt Costs
N/A
N/A
N/A
N/A
-8,000
-8,000
-8,000
-8,000
Change in
OCIF Grants
N/A
N/A
N/A
N/A
0
0
0
0
Resulting
Infrastructu
re Deficit
123,000
123,000
123,000
123,000
115,000
115,000
115,000
115,000
Tax Increase
Required
33.8%
33.8%
33.8%
33.8%
31.6%
31.6%
31.6%
31.6%
Annually
6.8%
3.4%
2.3%
1.7%
6.3%
3.2%
2.1%
1.6%
6 The capturing changes options assume no new debt is issued to allow for changes in debt costs to
offset a portion of the tax increases required.
57
6.3.3 Financial Strategy Recommendations
At present time, Mattawan's CapEx funding strategy has been as capital project needs arise, to
look to grants, debt, and/or cash on hand. Considering this and all the above information, we
are recommending that Mattawan consider the 20-year option. This involves full funding being
achieved over 20 years by:
a) creating a capital budget to direct funds towards CapEx projects.
b) when realized, reallocating the debt cost reductions of $8k to the infrastructure deficit as
outlined above.
c) increasing tax revenues by 1.6% each year for the next 20 years solely to phase in full
funding to the asset categories covered in this section of the AMP.
d) allocating the current gas tax and OCIF revenue as outlined previously.
e) allocating the scheduled OCIF grant increases to the infrastructure deficit as they occur.
f) reallocating appropriate revenue from categories in a surplus position to those in a
deficit position.
g) increasing existing and future infrastructure budgets by the applicable inflation index on
an annual basis in addition to the deficit phase-in.
Notes:
1. As in the past, periodic senior government infrastructure funding will most likely be
available during the phase-in period. By Provincial AMP rules, this periodic funding
cannot be incorporated into an AMP unless there are firm commitments in place. We
have included OCIF formula-based funding, if applicable, since this funding is a multi-
year commitment7.
2. We realize that raising tax revenues by the amounts recommended above for
infrastructure purposes will be very difficult to do. However, considering a longer phase-
in window may have even greater consequences in terms of infrastructure failure.
Although this option achieves full CapEx funding on an annual basis in 20 years and provides
financial sustainability over the period modeled, the recommendations do require prioritizing
capital projects to fit the resulting annual funding available. Current data shows a pent-up
investment demand of $45k for the Road Network, & $4k for Machinery & Equipment.
Prioritizing future projects will require the current data to be replaced by condition-based data.
Although our recommendations include no further use of debt, the results of the condition-
based analysis may require otherwise.
7 The Municipality should take advantage of all available grant funding programs and transfers from other
levels of government. While OCIF has historically been considered a sustainable source of funding, the
program is currently undergoing review by the provincial government. This review may result in changes that
impact its availability.
58
Use of Debt
For reference purposes, the following table outlines the premium paid on a project if financed
by debt. For example, a $100k project financed at 3.0%8 over 15 years would result in a 26%
premium or $26k of increased costs due to interest payments. For simplicity, the table does not
consider the time value of money or the effect of inflation on delayed projects.
Interest Rate
Number of Years Financed
5
10
15
20
25
30
7.0%
22%
42%
65%
89%
115%
142%
6.5%
20%
39%
60%
82%
105%
130%
6.0%
19%
36%
54%
74%
96%
118%
5.5%
17%
33%
49%
67%
86%
106%
5.0%
15%
30%
45%
60%
77%
95%
4.5%
14%
26%
40%
54%
69%
84%
4.0%
12%
23%
35%
47%
60%
73%
3.5%
11%
20%
30%
41%
52%
63%
3.0%
9%
17%
26%
34%
44%
53%
2.5%
8%
14%
21%
28%
36%
43%
2.0%
6%
11%
17%
22%
28%
34%
1.5%
5%
8%
12%
16%
21%
25%
1.0%
3%
6%
8%
11%
14%
16%
0.5%
2%
3%
4%
5%
7%
8%
0.0%
0%
0%
0%
0%
0%
0%
It should be noted that current interest rates are near all-time lows. Sustainable funding models
that include debt need to incorporate the risk of rising interest rates. The following graph shows
where historical lending rates have been:
8 Current municipal Infrastructure Ontario rates for 15-year money is 3.2%.
0.00%
5.00%
10.00%
15.00%
Historical Prime Business Interest Rate
59
A change in 15-year rates from 3% to 6% would change the premium from 26% to 54%. Such
a change would have a significant impact on a financial plan.
The following tables outline how Mattawan has historically used debt for investing in the asset
categories as listed. There is currently $8,000 of debt outstanding for the assets covered by this
AMP with corresponding principal and interest payments of $8,000. well within its provincially
prescribed maximum of $5,366,000.
Asset Category
Current Debt
Outstanding
Use of Debt in the Last Five Years
2016
2017
2018
2019
2020
Road Network
8,000
35,000
Bridges & Culverts
Buildings
Machinery &
Equipment
Total Tax Funded:
8,000
35,000
0
0
0
0
Asset Category
Principal & Interest Payments in the Next Ten Years
2020
2021
2022
2023
2024
2025
2030
Road Network
8,000
8,000
Bridges & Culverts
Buildings
Machinery & Equipment
Total Tax Funded:
8,000
8,000
0
0
0
0
0
The revenue options outlined in this plan allow Mattawan to fully fund its long-term
infrastructure requirements without further use of debt.
60
Use of Reserves
6.5.1 Available Reserves
Reserves play a critical role in long-term financial planning. The benefits of having reserves
available for infrastructure planning include:
a) the ability to stabilize tax rates when dealing with variable and sometimes uncontrollable
factors
b) financing one-time or short-term investments
c) accumulating the funding for significant future infrastructure investments
d) managing the use of debt
e) normalizing infrastructure funding requirement
At present time, the Municipality of Mattawan does not have formally defined reserves. The
Municipality had net financial assets totalling $227k as of December 31, 2020. Put differently,
this means this is how much cash the Municipality would theoretically have if all financial assets
were liquidated to cash, and all liabilities were settled.
There is considerable debate in the municipal sector as to the appropriate level of reserves that
a Municipality should have on hand. There is no clear guideline that has gained wide
acceptance. Factors that municipalities should consider when determining their capital reserve
requirements include:
a) breadth of services provided
b) age and condition of infrastructure
c) use and level of debt
d) economic conditions and outlook
e) internal reserve and debt policies.
These reserves are available for use by applicable asset categories during the phase-in period
to full funding. This coupled with Mattawan's judicious use of debt in the past, allows the
scenarios to assume that, if required, available reserves and debt capacity can be used for high
priority and emergency infrastructure investments in the short- to medium-term.
6.5.2 Recommendation
In 2025, Ontario Regulation 588/17 will require Mattawan to integrate proposed levels of
service for all asset categories in its asset management plan update. We recommend that future
planning should reflect adjustments to service levels and their impacts on reserve balances.
61
Key Insights
7 Appendices
- Appendix A identifies projected 10-year capital requirements for each asset
category
- Appendix B includes several maps that have been used to visualize the
current level of service
- Appendix C provides additional guidance on the development of a condition
assessment program
62
Appendix A: 10-Year Capital Requirements
The following tables identify the capital cost requirements for each of the next 10 years in order to meet projected capital
requirements and maintain the current level of service.
Road Network
Asset Segment
Backlog
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Culverts - <3 meter
span
$45,412
$38,526
$31,992
$44,513
$9,107
$7,896
$37,527
$10,447
$0
$0
$13,134
Unpaved Roads
$75,850
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$121,262
$38,526
$31,992
$44,513
$9,107
$7,896
$37,527
$10,447
$0
$0
$13,134
Bridges & Culverts
Asset Segment
Backlog
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Bridges
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Buildings
Asset Segment
Backlog
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Garage
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Office
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
63
Machinery & Equipment
Asset Segment
Backlog
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Machinery
$0
$0
$0
$0
$0
$0
$13,130
$0
$0
$0
$0
Office Equipment
$3,949
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Signage
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
IT Equipment
$0
$0
$0
$0
$0
$0
$8,000
$0
$0
$0
$0
$3,949
$0
$0
$0
$0
$0
$21,130
$0
$0
$0
$0
All Asset Categories
Asset Segment
Backlog
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Road Network
$121,262
$38,526
$31,992
$44,513
$9,107
$7,896
$37,527
$10,447
$0
$0
$13,134
Bridges & Culverts
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Buildings
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Machinery & Equipment
$3,949
$0
$0
$0
$0
$0
$21,130
$0
$0
$0
$0
$125,211
$38,526
$31,992
$44,513
$9,107
$7,896
$58,657
$10,447
$0
$0
$13,134
64
Appendix B: Level of Service Maps
Road Network Map 1
65
Road Network Map 2
66
Images of Bridge in Good Condition
Burke Drive Bridge
Inspected: October 4th, 2019
Images of Bridge in Poor Condition
Murphy Road Bridge
Inspected: October 4th, 2019
South Approach Looking North
Deck Looking Northeast
South Abutment Wall, East Elv
East Elevation Looking NW
Post to Beam Connection
Soffit of East Space
South Approach Looking North
West Fascia South End Cracks
North Abutment with Crack
South Pier - Looking SE
South Span Connection - cracks
South Pier - Top Portion
67
Appendix C: Condition Assessment
Guidelines
The foundation of good asset management practice is accurate and reliable data on the current
condition of infrastructure. Assessing the condition of an asset at a single point in time allows
staff to have a better understanding of the probability of asset failure due to deteriorating
conditions.
Condition data is vital to the development of data-driven asset management strategies. Without
accurate and reliable asset data, there may be little confidence in asset management decision-
making which can lead to premature asset failure, service disruption, and suboptimal
investment strategies. To prevent these outcomes, the Municipality's condition assessment
strategy should outline several key considerations, including:
-
The role of asset condition data in decision-making
-
Guidelines for the collection of asset condition data
-
A schedule for how regularly asset condition data should be collected
Role of Asset Condition Data
The goal of collecting asset condition data is to ensure that data is available to inform
maintenance and renewal programs required to meet the desired level of service. Accurate and
reliable condition data allows municipal staff to determine the remaining service life of assets,
and identify the most cost-effective approach to deterioration, whether it involves extending the
life of the asset through remedial efforts or determining that replacement is required to avoid
asset failure.
In addition to the optimization of lifecycle management strategies, asset condition data also
impacts the Municipality's risk management and financial strategies. Assessed condition is a key
variable in the determination of an asset's probability of failure. With a strong understanding of
the probability of failure across the entire asset portfolio, the Municipality can develop strategies
to mitigate both the probability and consequences of asset failure and service disruption.
Furthermore, with condition-based determinations of future capital expenditures, the
Municipality can develop long-term financial strategies with higher accuracy and reliability.
Guidelines for Condition Assessment
Whether completed by external consultants or internal staff, condition assessments should be
completed in a structured and repeatable fashion, according to consistent and objective
assessment criteria. Without proper guidelines for the completion of condition assessments
there can be little confidence in the validity of condition data and asset management strategies
based on this data.
68
Condition assessments must include a quantitative or qualitative assessment of the current
condition of the asset, collected according to specified condition rating criteria, in a format that
can be used for asset management decision-making. As a result, it is important that staff
adequately define the condition rating criteria that should be used and the assets that require a
discrete condition rating. When engaging with external consultants to complete condition
assessments, it is critical that these details are communicated as part of the contractual terms
of the project.
There are many options available to the Municipality to complete condition assessments. In
some cases, external consultants may need to be engaged to complete detailed technical
assessments of infrastructure. In other cases, internal staff may have sufficient expertise or
training to complete condition assessments.
Developing a Condition Assessment Schedule
Condition assessments and general data collection can be both time-consuming and resource-
intensive. It is not necessarily an effective strategy to collect assessed condition data across the
entire asset inventory. Instead, the Municipality should prioritize the collection of assessed
condition data based on the anticipated value of this data in decision-making. The International
Infrastructure Management Manual (IIMM) identifies four key criteria to consider when making
this determination:
1. Relevance: every data item must have a direct influence on the output that is required
2. Appropriateness: the volume of data and the frequency of updating should align with
the stage in the assets life and the service being provided
3. Reliability: the data should be sufficiently accurate, have sufficient spatial coverage,
and be appropriately complete and current
4. Affordability: the data should be affordable to collect and maintain