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The Town of Blue Mountains

Asset Management Plan

Assessing the State of Our Infrastructure

Background

Assets Depreciate

For a number of years, the BMRA has had concerns about the condition of our Town’s current infrastructure. This stemmed from the fact that for most of the decade of the 2010s, the Town had been spending less on infrastructure renewal and rehabilitation than its reported rate of depreciation. It was for this reason that we took such interest in the Town conducting an Asset Management Plan (AMP).

To help our members understand its importance, we will provide a bit of background.

The Town’s Assets

The Town’s most valuable assets are roads, representing approximately 60% of our asset value, followed by water and wastewater systems. The Town’s landfill site is not included, because it could not be replaced within Town boundaries.

As reported in the 2022 financial statements, the original cost of the Town’s assets was $360 million. The net value after depreciation is $236 million. In today’s dollars, it would cost approximately $500 million to replace those assets.

What is an Asset Management Plan?

An Asset Management Plan evaluates “Replaceable Assets”, determing what assets will need to be replaced, and the projected remaining lifespan of those assets. It also attempts to estimate the cost of replacing those assets, to assist in long term Town budget development. It is entirely focused on current infrastructure, and does not encompass growth-driven infrastructure requirements.

The Process

Why Was the AMP Conducted?

The Province mandates that all Ontario municipalities must conduct an AMP study every 5 years. Our Town’s analysis, led by Acting Director of Finance and Treasury Sam Dinsmore, was completed a year ahead of the Province’s deadline. It was developed and led in house by Town staff. Most other Grey municipalities contracted the study to external consultants.

What are the Benefits of an AMP?

A clear understanding of the state of our infrastructure allows the Town to prioritize investment in its reconstruction. This guides the funds needed to be put into reserves, and that helps minimize the use of long-term debt. It also helps to position the Town for receiving Provincial grants to support our spending. Over the past few years, Provincial grants to TBM have increased from $300,000 to $1.8 million.

How was the AMP Conducted?

The Town’s AMP study projects the remaining lifespan by focusing on the condition of assets, not on their age. These types of analyses include:

• calculating a Pavement Condition Index through evaluation of Town roads,

• using Closed Circuit TV through an external resource to ascertain the condition of our Wastewater and Storm Water systems, and

• calculating the types of materials and number of connections used in our Fresh Water system.

The Results

So What Did the AMP Reveal?

The overall conclusion is that our Town’s infrastructure has a longer projected life span than the depreciation rates would have suggested. This is based on “Engineering Useful Life” standards, and this may reflect the typically conservative nature of engineering mindsets and practices. This is of course positive because it can reduce future demands on the Town’s capital reserves.

Issues and Considerations Going Forward

A few thoughts that must be stressed to ensure a positive outcome from this work;

• Town Council must not view this as an opportunity to cut back on the funds directed to our capital reserves. If current construction & inflation rates continue into the future, the adequacy of our reserves could be challenged. That is why the estimates for asset replacement costs must be kept current.

  
  

• Effective management of our current infrastructure is not a one time event. The Town must remain disciplined in how it measures and addresses infrastructure degradation. The fact that the Province mandates municipalities to update their AMP every five years should help to keep the Town focused on this task.

  
  

• The BMRA will be pushing for greater clarity on how the Town accounts for and manages its capital reserves through the 2024 Town Budget development process. The current TBM budget document does not provide a clear enough picture on these issues, which are critical for TBM’s long term financial health.

  
  

• We reiterate that the AMP focused on current infrastructure, not future needs. The requirements for new infrastructure development based on TBM growth are not incorporated. The BMRA will continue to monitor the progress the Town makes on the build-out of new infrastructure, and the related capital budget management.

In Closing

Whenever the BMRA observes positive effort conducted by Town Staff and Council, we give credit where due. The AMP represents important work which benefits all TBM residents. We’d like to thank Acting Town Finance Director Dinsmore for leading this initiative, and for making the time available to share this information with us.