City addresses infrastructure underfunding
Nanaimo's municipally-owned assets are in good shape for the most part according to a recent report, but prudent planning will be required to avoid any unwanted surprises in the future.
According to an asset management update provided by the city's engineering and public works department, of the almost $2.2 billion in city infrastructure assets, $2 billion is considered in good or very good condition, $72 million is in fair condition and $86 million is in poor condition and nearing the end of its serviceable life.
Of the infrastructure in need of immediate attention, $30 million is in water services, $18 million in sewers, $13 million in transportation, $11 million in recreational dams and $6 million is in drainage systems.
The city's facilities, however, are mostly sound. Of the $231 million in building assets, only $2 million is needed to replace the Departure Bay Kin Hut and Nanaimo Centre Stage on Victoria Crescent.
Brian Clemens, the city's director of finance, said for all categories of infrastructure there is annual underfunding of about $19 million.
"That sounds like an insurmountable problem to resolve," said Clemens, noting that the 2013 total budget is $175 million. "It's hard to believe you can resolve that problem with relatively small incremental increases which is what we're trying to do. But we're going at it from a number of different angles because we can't close the gap just through taxation."
Clemens said that increasing taxes and user fees is one part of the solution – city council approved an increase in sewer, water and waste collection user rates on Monday – while receiving grants from senior levels of government is another way to close the funding gap. He also noted that as debt retires, such as paying off the Nanaimo Aquatic Centre and Vancouver Island Conference Centre, that money can be used to fund infrastructure, and so can interest made off of an increasing amount of reserves.
For the current five-year financial plan, council is considering a recommendation by staff to add one per cent a year to property taxes to help offset infrastructure maintenance and replacement.
The asset management plan does not include new buildings, like a multiplex, that the city might approve in the future.
Coun. Fred Pattje called the issue the "least sexy" but most important pillar of the city's corporate strategic plan.
Tom Hickey, the city's general manager of community services, said the city has to act now if it wants to be prepared for major infrastructure spending down the road.
"We're looking as far out as 80 years, which is the life expectancy of most new infrastructure," he said. "But things like drainage and sanitary sewers will be big investments 30 to 50 years out, and roads and sidewalk repair and replacement will need attention around 2025. There are some big questions to consider long term."
Infrastructure underfunding is a concern nationwide. It is estimated that collectively, Canadian municipalities are almost $130 billion behind on repairing and maintaining roads, pipes, buildings, ports and bridges.
"This is not a problem unique to Nanaimo," said Wally Wells, executive director of Asset management B.C. "We have 4,000 municipalities in Canada and we have 4,000 problems when it comes to infrastructure, but in B.C. we are well ahead of the equation, our infrastructure is younger in many cases."
He added that municipal responsibilities are only part of the concern, and that a dialogue with taxpayers on how money should be spent will become increasingly important.
"The regional district has assets, there are schools, hospital, utilities. There is an ever increasing demand for services and a decreasing pot of money. The issue is very complex," he said.
Hickey said that linking the current and upcoming financial plans to infrastructure repair and replacement will be increasingly important in the future, and that now is the time to develop a renewed asset management policy.
"We need to see the big picture," he said. "But we'll need to review these numbers every year to ensure we're on track."
A complete breakdown of the city's assets and funding gaps are available at www.nanaimo.ca.