Proposed municipal asset management planning regulation

Description of policy

Overview

Asset management planning is essential for the future resilience of Ontario communities. Municipalities need effective plans to take care of their infrastructure over the long term. In addition, it is important to better understand infrastructure needs throughout Ontario, so that the province, municipalities, and the federal government can work together to address challenges posed by ageing infrastructure and increasing renewal pressures. Improved municipal asset management planning is a vital step in Ontario’s Municipal Infrastructure Strategy and will provide the foundation to improving the long-term sustainability of infrastructure throughout the province.

The Infrastructure for Jobs and Prosperity Act, 2015, was proclaimed on May 1, 2016 and includes an authority for the province to regulate municipal asset management planning.
The purpose of the proposed regulation is to implement best practices throughout the municipal sector and provide a degree of consistency to support collaboration between municipalities, and among municipalities and the province. The regulation would balance valuable consistency with appropriate flexibility, and would include phased implementation. The regulation would provide certainty around future provincial asset management planning requirements, and would be supported by the collection of selected data to capture the key aspects of municipal asset management: resilience and sustainability.

This regulation would aim to help municipalities more clearly identify what their infrastructure needs are, and therefore help them work towards a more sustainable position regarding the funding of their infrastructure.

Building on the province’s 2012 Building Together: Guide for Municipal Asset Management Plans, the regulation would set out requirements to improve asset management planning. This would include the content for municipal asset management plans and the phases of preparation. Municipalities would be required to adopt strategic asset management policies that would promote best practices and link asset management planning with budgeting, operations, maintenance and associated other municipal planning activities. Municipalities would also be required to report on implementation annually.

Definitions

For the purpose of this posting, the following terms are defined:

Infrastructure Assets are tangible capital assets directly owned by a municipality or consolidated on the financial statements of a municipality and may include green infrastructure as part of these assets, but does not include these assets where they are managed by a joint municipal water board.

Core Infrastructure Assets are the following Infrastructure Assets: roads; bridges; culverts; any assets, used in the collection, conveyance/distribution, treatment or disposal of wastewater/water; and stormwater management systems.

Application

This Environmental Registry posting proposes that municipalities would be prescribed as a broader public sector body which must prepare asset management plans meeting the requirements of the proposed regulation.

Regulation proposal

Strategic asset management policy

All municipalities would be required to develop and adopt a strategic asset management policy by January 1, 2019. At least every five years from that date the municipality would be required to review the policy and if necessary update it.

The policy would include:

• Which municipal goals, plans (e.g., official plan, strategic plan, master plans) or policies the municipality’s asset management plan would support
• A process for how the asset management plan would affect the development of the municipal budget and any applicable long-term financial plans
• The municipality’s approach to continuous improvement and adoption of best practices regarding asset management planning
• The principles that would guide asset management planning in the municipality, which would be required to include the principles in section 3 of the Infrastructure for Jobs and Prosperity Act, 2015
• A commitment to consider in asset management planning:
  • the actions that may be required to address the risks and vulnerabilities that may be caused by climate change to the municipality’s infrastructure assets, including to: operations requirements (e.g. increased maintenance schedules); levels of service (e.g. raising or lowering levels of service); and lifecycle management; and the anticipated costs that could arise from these impacts, and adaptation opportunities that may be undertaken to manage these potential risks
  • mitigation approaches to climate change, such as greenhouse gas emission (GHG) reduction goals and targets
  • disaster planning and any required contingency funding.
• A process to ensure that asset management planning would be aligned with Ontario’s land-use planning framework, including any relevant policy statements issued under section 3(1) of the Planning Act; provincial plans as defined in the Planning Act; and, municipal official plans
• A discussion of capitalization thresholds used to determine which assets are to be included in the asset management plan and how this compares to the municipality’s Tangible Capital Asset policy, if one is in place
• A commitment to coordinate planning between interrelated infrastructure assets with separate ownership structures by pursuing collaborative opportunities with neighbouring municipalities and jointly-owned municipal bodies
• Identification of who would be responsible for asset management planning, including an executive lead and how council will be involved; and
• A commitment to provide opportunities for municipal residents and other interested parties to provide input into asset management planning.

Municipal asset management plans

Municipalities would be required to prepare an asset management plan in three phases:

1. Phase I would address core infrastructure assets, and would be required to be completed by January 1, 2020.
2. Phase II would expand on Phase I by including all infrastructure assets in the plan by January 1, 2021.
3. Phase III would require further details to be provided for all infrastructure assets by January 1, 2022.

Proposed requirements to be included in Phase I (by January 1, 2020) and Phase II (by January 1, 2021)

Current levels of service

A plain language explanation of the current levels of service being provided by each category of infrastructure asset would be required. For core infrastructure assets, municipalities would measure current levels of service according to the information defined in the following two columns found in the Proposed Levels of Service tables (see Additional Information):

• the community levels of service column; and
• the technical levels of service column.

Municipalities would also be required to monitor performance measures relevant to their municipality that address service delivery and asset operation, such as energy usage and cost.

Inventory analysis

Municipal infrastructure assets would be summarized by asset class, including type and quantity, total replacement value, and average age. The inventory analysis would also discuss the municipality’s approach to assessing asset condition using industry-accepted engineering practices, and summarize the information available on the condition of the assets.

Estimated cost to sustain current levels of service

An estimate of the capital expenditures (i.e., total cost of maintenance, renewal, rehabilitation, replacement, disposal, upgrades, new construction) needed each year, as well as any significant operating costs, including energy costs, for the ten years following the year that the current levels of service are established, to maintain the current levels of service over the long term.

The approach to developing the estimate would be documented and based on the lifecycle management activities expected. Assumptions regarding anticipated future changes in population and economic activity would be included.

Municipalities with populations over 25,000: Estimated costs to service growth

Municipalities with a 2016 Statistics Canada census population of 25,000 or greater would be required to identify which estimated capital expenditures and significant operating costs, including energy costs, would be related to new construction and upgraded capacity of existing assets, including the extension of services to previously unserved areas and expansion of services to meet growth demands. In the Greater Golden Horseshoe, growth demands must conform to forecasted growth for the municipality as set out in the Growth Plan for the Greater Golden Horseshoe and reflected in municipal plans.

This requirement is necessary to ensure that large municipalities analyze the links between providing levels of service, costs and the impacts of growth. It has not been included as a requirement for small municipalities as the province understands that these municipalities lack the capacity to undertake the level of analysis required to support this work. Though this section would apply to municipalities with populations of 25,000 or greater, the province would encourage all municipalities to consider the costs related to growth as outlined in this section.

Proposed requirements to be included in Phase III (by January 1, 2022)

Proposed levels of service

A plain language explanation of the proposed levels of service for each category of infrastructure asset would be required. For core infrastructure assets, this would be measured according to the information defined in the following two columns of the Proposed Levels of Service tables (see Additional Information):

• the community levels of service column; and
• the technical levels of service column.

The proposed levels of service would need to be outlined each year, for a ten year period that follows the most recent year where current levels of service have been measured.

The asset management plan would also discuss why the proposed levels of service are appropriate for the municipality, how they differ from the current levels of service set out in Phase I and II, when they would be achieved, and how they would take affordability and sustainability into account.

Similar to requirements in Phases I and II, municipalities would also be required to continue to track service delivery and asset operation through performance measures established by the municipality, such as energy usage and cost.

Inventory analysis

The asset inventory provided in Phase I and II would be updated.

Lifecycle management strategy

Municipalities would be required to document a lifecycle management strategy that would outline the lifecycle management activities the municipality would undertake to maintain the proposed levels of service and manage risk (e.g. climate change impacts), with consideration to the full lifecycle costs of the assets, including energy costs. Lifecycle activities would be based on options examined by the municipality to reduce the overall lifecycle costs, including through green infrastructure and non-infrastructure solutions such as demand management and conservation measures.

The asset management plan would be required to contain a summary of the lifecycle activities that would be undertaken for all assets, for the ten year period aligned with the proposed levels of service section of the asset management plan. Assumptions regarding anticipated future changes in population and economic activity would be included.

Financial strategy

An asset management plan would include a financial strategy that contains the following items, each year for the ten year period aligned with the proposed levels of service section of the asset management plan:

• estimated capital expenditure forecasts (i.e., total cost of maintenance, renewal, rehabilitation, replacement, disposal, new construction and capacity upgrade activities), and significant operating costs, including energy costs, related to lifecycle activities
• revenue dedicated to capital financing
• estimated capital reserve contributions and withdrawals; and
• estimated debt service payments.

Municipalities would be required to outline key assumptions made to develop the financial strategy, and other alternative funding options that were considered (e.g. increasing debt, property taxes, user-fees, etc.).

Addressing shortfalls

Municipalities would also be required to outline any ongoing funding shortfall that exists between investments required to fund the activities in the lifecycle management strategy and the ability of the municipality to fund these activities, and how the municipality intends to address this shortfall.

Where municipalities cannot conduct all of the activities required to provide proposed levels of service, municipalities would discuss how they would manage the risks associated with not undertaking these activities.

Municipalities with populations over 25,000: Financial strategy to service growth

Municipalities with a 2016 Statistics Canada census population of 25,000 or greater would be required to identify the estimated costs that are related to new construction and upgraded capacity, including the extension of services to previously unserved areas and expansion of services to meet growth demands. These municipalities would also identify the subset of forecasted revenue, by source, that is projected to come from increased population and economic activity. Though this section would apply to municipalities with populations of 25,000 or greater, the province would encourage all municipalities to examine the revenues and expenditures related to growth, as outlined in this section.

Municipalities with populations over 25,000: Risk analysis

Municipalities with a 2016 Statistics Canada census population of 25,000 or greater would also include an overview of the risks associated with the asset management plan (i.e., ways the plan could fail to generate the proposed levels of service) and any actions that would be proposed in response. Though this section would apply to municipalities with populations of 25,000 or greater, the province would encourage all municipalities to analyze risks as outlined in this section.

Updates, approvals and public availability

Updating

Municipalities would be required to update the asset management plan, aligned with the requirements identified in Phase III, at least every 5 years after January 1, 2022.

Approval

The asset management plan would be required to be approved in writing by a licensed engineering practitioner representing the municipality, and the executive lead of the municipality prior to it being presented to the municipal council for approval.

Annual progress update

Municipalities would be required to provide council with an annual update on asset management planning progress, starting in 2021, that would include:

• any factors affecting the ability of the municipality to meet its commitments set out in the asset management plan and strategic asset management policy
• a strategy to address these factors; and
• progress on ongoing efforts to implement the asset management plan.

Public posting and provision of plans

Municipalities would be required to post their strategic asset management policy and asset management plan on the municipality’s website, if one exists, and make copies of these documents available to the public, if requested.

Data collection

The province proposes to collect two sets of asset management planning data from municipalities – Actuals Reporting, which would be reported to the province every year, and Projections Reporting, which would be reported to the province as the municipality obtains the relevant data at least every 5 years as they update their asset management plan.

Table 1 (see Additional Information) outlines the Actuals data that the province would collect annually, starting by May 31, 2021 for core infrastructure assets, and by May 31, 2022 for all remaining infrastructure assets. Although this data would be collected annually, municipalities would not be required to update their asset management plan annually to reflect this data.

Table 2 (see Additional Information) outlines the data requirements that the province would collect from municipalities as they obtain the relevant data with each update of their asset management plan. Municipalities would be required to meet their first set of reporting requirements for this data by May 31, 2023 (for all assets).

Provincial policy alignment

Safe drinking water act, 2002

The province is aware of the linkages between requirements in the Safe Drinking Water Act, 2002 and the proposed regulation included in this Environmental Registry posting. The Ministry of Infrastructure is currently exploring options, in collaboration with the Ministry of the Environment and Climate Change, to create efficiencies for municipalities that would be required to meet both requirements.

Development Charges Act, 1997

The province recognizes the importance of development charges as a tool to help municipalities fund the capital-costs for infrastructure needed to service growth. Municipalities continue to be expected to comply with the asset management plan requirements within the Development Charges Act, 1997 and its regulations in order to be able to levy a development charge.

Asset management planning guidance, tools and support

The province understands the importance of ensuring that municipalities would have the capacity to meet the requirements of the proposed asset management planning regulation. In response to feedback received during consultations in summer 2016, and to support implementation, the province is considering proposing a number of potential supports, including:

• In-person training
• Provincial support team
• Licenced resources
• Staff training courses
• Sample documents.

Other information

Please refer to the following postings on related documents:

Consultation – potential municipal asset management planning regulation

• This document provides a summary report on the feedback the province received as a result of consultations held on the proposed regulation in summer 2016. It provides the basis for the proposed regulation set out in this Environmental Registry posting and incorporates input from over 330 individuals representing over 220 municipalities and other organizations.

Discussion paper – potential municipal asset management planning regulation

• This discussion paper outlines the proposed content for a possible regulation that was consulted on in summer 2016. It was used as the basis of discussions held online and throughout Ontario with municipalities and municipal sector stakeholders.

Building Together: Guide for Municipal Asset Management Plans

• This guide was developed in 2012 and has been used as the provincial standard for municipal asset management planning since that time. It served as the foundation for the discussion paper and consultation undertaken regarding the proposed regulation.

Purpose of policy

Since the launch of the Municipal Infrastructure Strategy in 2012, the province has required municipalities requesting infrastructure funding to demonstrate a progressively greater commitment to asset management.

While municipalities have made excellent progress in asset management planning, significant differences exist among municipalities in the completeness, level of detail, and methodology and assumptions used to develop the plans. The plans also vary widely in the degree to which they are being used to inform decision making.

Building on the progress municipalities have made to date, the purpose of this proposed regulation is to introduce new requirements in order to provide greater standardization and consistency to municipal asset management planning, while continuing to provide appropriate flexibility for municipalities to plan according to their own unique circumstances. Requirements would help to improve the comprehensiveness of plans that lack robust information, which could help strengthen the use of asset management plans as a tool to gain support from council and the public in addressing infrastructure challenges.

Municipal asset management planning is also beneficial for establishing important information that can be used by the province, municipalities, and the federal government to work together to address infrastructure challenges.

The Municipal Infrastructure Strategy is a long-term, collaborative initiative. While finalizing the proposed regulation is an important step, practices will continue to improve on an ongoing basis. For example, in the future, as provincial and municipal capacity increases, the GHG emissions impacts of lifecycle management options could be measured and incorporated. In addition, the province will review its infrastructure funding models with the goal of bringing more emphasis to supporting proactive practices in addition to urgent health and safety issues.

Public consultation

This proposal was posted for a 60 day public review and comment period starting May 25, 2017. Comments were to be received by July 24, 2017.

All comments received during the comment period are being considered as part of the decision-making process by the Ministry.

Please Note: All comments and submissions received have become part of the public record.

Other public consultation opportunities

The Ministry of Infrastructure is now seeking comments on this posting, including the possible tools and support that would be desired to assist municipal implementation.

To help guide the development of the proposed regulation, the province consulted the municipal sector throughout the summer of 2016. These consultations focused on what should be included in a regulation to best help advance progress in municipal asset management planning. The province also sought input on how good asset management practices could be promoted more generally, and what is needed to engage municipalities and promote a broader culture of asset management planning.

By the end of the consultations, over 330 individuals representing over 220 municipalities and other organization provided more than 1600 comments. A summary report detailing this feedback can be found under the additional information section of this Environment Registry proposal.

The feedback received during the summer 2016 consultations has informed changes to the proposed regulation, and will be used further in exploring potential tools and resources that may be helpful to municipalities to implement the regulation, if approved.

Regulatory impact statement

The proposed municipal asset management planning regulation is intended to build upon the asset management work that municipalities are already undertaking. It is unlikely that most municipalities would incur significant financial impacts complying with the regulation, if approved.

Smaller municipalities may face some capacity challenges and may require some assistance to meet the requirements of the regulation, if approved. This posting discusses some of the proposed tools and supports that the province would consider as part of the implementation of the proposed regulation. Such tools could help to reduce the potential financial burden that small municipalities may face. Additionally, small, rural and northern municipalities may be supported in part by the Ontario Community Infrastructure Fund, which includes asset management planning activities as an eligible funding category.