New provincial legislation aimed at encouraging municipalities to manage their infrastructure assets in a sustainable manner set a July 2025 deadline for the creation of an Asset Management Plan that includes clearly defined proposed levels of service, the activities required to achieve those service levels and a comprehensive financial strategy illustrating how the plan will be funded. Municipalities will be required to conduct an annual review of their plans and update them every five years.
The idea is to understand the services the municipality provides and to ensure transparency and accountability to residents about the services they receive and their cost. It begins with an assessment of the inventory of assets on hand, forecasts their life expectancy and estimates the costs required to achieve and sustain the proposed level of service established by the municipality, and assesses the municipality’s financial capacity to deliver those service levels.
Asset management is the activity of acquiring, maintaining and uses them to deliver a sustainable and desirable level of service to residents. The exercise is designed to ensure that the investment in those assets is generating an appropriate and sustainable return to the community.
Cavan Monaghan’s updated Asset Management Plan was presented at the September 15th meeting. Township staff was assisted in the development of the AMP by psdcitywide consultants. The report indicated that the municipality manages a port-folio tax- funded infrastructure assets with a replacement cost of $155.2 million based on 2024 estimates. These assets include municipal roads, buildings and facilities, vehicles, equipment and storm water systems. In its assessment of the condition of those assets, the report concluded that 86% of them are in fair or better condition.
Other municipal infrastructure assets support the municipal water and wastewater services and are financed by water service users. This group of assets was rated as 80-76% in fair or better condition, with the wastewater pump station singled out as in rough shape.
To assess the sustainability of these assets, the annual capital expenditure required to maintain them was compared to the funding that has been made avail-able through the annual budget process. This includes tax levy revenue, ongoing intergovernmental transfers, grants and user fees. Since 2010, Council has allocated funding to sustain its infrastructure to the Asset Replacement Reserve (ARR).Each year in the budgeting process Council establishes a value for a transfer to that fund which is based on the previous year’s amortization value. Last year the transfer was $1.9 million. As assets are replaced or upgraded, funds are removed to fund these expenditures. The current balance in that fund is now $19 million.
The consultant indicated that based on experience with other municipalities, Cavan Monaghan’s capital assets were in good condition. The report indicates that to fully fund the capital requirements of tax-funded assets would require an additional annual contribution of $1.5 mil-lion to the ARR representing a 2.6% annual tax increase.
Water and Wastewater assets are funded by users and there is a study underway to establish the water rates required to sustain these assets.
This report provides useful information to help Council and staff in capital planning, grant applications, long-term infrastructure strategies and the annual budget development.
The full report is included in the September15th Council agenda which is available atwww.cavanmonaghan.net under local government.