Dear Mr. McCann,…

Dear Mr. McCann,

The City of Kitchener is pleased to provide comments on the proposed municipal asset management planning regulations that support the Infrastructure for Jobs and Prosperity Act of 2015. In the sections below, comments and questions will cover each component of the proposed regulation and how it may relate to the current policies and practices within our municipality.

Overall, we believe that this regulation will support the strengthening of an asset management governance framework within the City of Kitchener (“the City”) and provide clear accountabilities to address aging infrastructure. The development and implementation of service levels related to municipal asset categories is a vital cornerstone to understanding asset performance expectations. In addition, the City’s ability to maintain resilient infrastructure in the face of growth, climate change and community expectations all require a robust and effective asset management framework.

Overview Section

To better understanding infrastructure needs throughout Ontario and address challenges posed by aging infrastructure and increasing renewal pressures, we believe that there is a growing challenge to the expectations of meeting established service levels across asset categories. As all levels of government work together to address and introduce standards and processes, a vital component needing to be highlighted is the linkage between service level expectations and the activities supporting the performance and health of the assets.

The last paragraph states; “Municipalities would also be required to report on implementation annually”. In the City’s experience, depending on the asset category, reporting annually on implementation may not result in any additional information due to the rate of change and/or degradation of the assets within the category. We feel that reporting requirements should be classified by asset category and/or criticality.

Strategic Asset Management Policy

The proposed regulation states that the municipality’s strategic asset management policy would include: “A process for how the asset management plan would affect the development of the municipal budget and any applicable long-term financial plans.” Clarification is required as to whether approval of an asset management plan commits the municipality to the financial and lifecycle management plan requirements that are outlined in the plan. The City’s current process for integrating asset management into the financial planning process includes a comprehensive and collaborative approach between stakeholders.

This suggested approach strengthens the need for on-going partnership and a data-driven approach to prioritizing budget, however the suggestion of using a best practice approach regarding asset management planning may be a bit premature as the processes amongst asset management practitioners is still developing the various requirements across differing asset categories (e.g. linear assets, vertical assets, etc.). Would the Province please provide examples regarding best practices outside of pre-existing legislative standards that would prove helpful in developing consistent approaches to asset planning?

The commitment to consider several non-traditional aspects within asset management planning is a welcome step towards strengthening the integration between core business functions and external forces that influence the levels and types of services within the municipality. Contingency funding related to climate mitigation and disaster planning will allow municipalities to look more holistically at the true total cost of ownership and lifecycle influences across the city’s investments as well as investing in resilient infrastructure. Moving away from standalone strategies and creating linkages will create alignment and support amongst the most important aspects of providing services and maintaining resiliency.

With the wording around ‘capitalization thresholds’, is the Province going to provide any industry standards across asset categories, or is this discussion going to be left up to the municipality to follow existing tangible capital asset processes already in place?

Municipal Asset Management Plans

Establishing, maintaining and reporting on agreed upon levels of service is a key component in balancing the condition of the asset to the provision or performance of the services being provided. Within the reporting requirements, there are several instances where energy usage and costs are expected along with performance measures related to service levels. Is there a targeted metric or approach suggested in capturing and reporting this data? The challenge may be in aggregating data across many different asset components and providing the summary information in such a way that can be comparable amongst like benchmarks. Similarly, within the Inventory Analysis paragraph, the regulation speaks to the “municipality’s approach to assessing asset condition using industry-accepted engineering practices” – when addressing asset management plans for Phase 2 assets, there may not be industry standards for assessing condition. Our approach thus far has been a combination of priority activities that directly affect the ability to provide services to the level expected by stakeholders. This in turn allows the condition of that asset to be linked back to the performance of service level expectations. As we progress in developing asset inspection programs directly focused on condition data, the level of mature data will support the development of industry-accepted practices.

Within the Estimated Cost to Sustain Current Service Levels section, all costs both operating and capital must be collected to realize the total cost of ownership. Typically, capital expenditures do not include the total cost of maintenance and operations for assets. A suggested wording to include these costs could be;

“…an estimate of the total expenditure including both capital and operating (i.e., total costs of maintenance, renewal, rehabilitation, replacement, disposal, upgrades, new construction) should be collected each year. Other recurring operating costs such as energy costs also need to be included for the 10 years following the year that the current levels of service are established and agreed upon, to maintain the current levels of service over the long term.”

In keeping with the discussion surrounding costs, clarification is required within the section speaking to the Estimated Costs to Service Growth. Within the paragraph it states that municipalities are required to identify which estimated capital expenditures and significant operating costs would be related to new construction and upgraded capacity of existing assets. Does this requirement include costs to the private sector or just the municipality? With respect to new construction, the private sector finances and builds most new construction of road, bridge and utility assets that are ultimate transitioned to the municipality, within the city’s boundaries.

Within the Phase 3 implementation of asset management plans, a statement is needed surrounding why proposed levels of service are appropriate for the municipality and how they differ from current levels. A suggestion is that service levels for core infrastructure components are for the most part bound by legislative standards for performance, hence might not change except when the regulations/legislation changes. Otherwise for other asset categories not considered “core infrastructure assets”, these components have a more significant financial influence for change. To develop a plan for ‘proposed changes’ to service levels may result in little or no change based on the different drivers related to the categories.

Lifecycle management strategies must be balanced with maintaining the expected level of service for that asset category. In addition to lifecycle activities being based on reducing overall costs, it would be suggested to also ensure that activities support adhering to established levels of service as well. Similarly, when addressing shortfalls that exist between investments required to fund the activities in the lifecycle management strategy, a statement to also include addressing funding shortfalls to sustain expected levels of service across the 10-year forecast should be included.

Updates, Approvals and Public Availability

Understandably, most core infrastructure components are engineered assets and as such would have involvement from the City’s chief engineer. However, as the categories expand into areas that include other assets such as parks and open spaces, city-owned facilities and enterprises; it makes less sense to have the approval, in writing by a licensed engineering practitioner. The City of Kitchener has a formal Asset Management division led by a Director of Asset Management who oversees and approves all activities and plans resulting from the analysis and reporting within the Division. These approved reports and plans would then be consolidated into a summary report and presented to Municipal Council for approval. The City of Kitchener recommends that approval authority be extended to an Engineer or Senior Asset Management Practitioner.

An important step in the overall success of the asset management strategy is educating community stakeholders on the importance of creating and maintaining asset and lifecycle management plans across the city’s investments. Ongoing information will be a key ingredient in establishing an understanding of the need for established service levels and the total costs of operating and maintain assets to the expected levels of service. Is there a timeline for publishing asset management plans on the city’s website?

Conclusion

The City of Kitchener is supportive of establishing a standard expectation for developing, maintaining and reporting on asset management plans across the city’s asset categories. There is a true need to understand and balance the costs and effort associated to maintaining the health of the asset to providing an expected and/or approved levels of service. Aside from legislated standards already in place for some core infrastructure, our experience is that most maintenance plans will be influenced by the expected performance and service levels by tax or rate payers. Community engagement and simplified reporting will be key elements in the success moving forward as well as the development of internal processes amongst operating divisions that integrate the need for additional data required for analysis and asset management planning. We would suggest that the Province develop a guide to ensure consistency for community engagement and information management frameworks across municipalities. This would support the overall success of asset management strategies across the Province.

[Original Comment ID: 210060]