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Aug 2017 | Technology Issue

ONTARIO AT THE FOREFRONT OF MUNICIPAL ASSET MANAGEMENT CAPACITY BUILDING
TYLER SUTTON, EDITOR-IN-CHIEF, PSD RESEARCH

Infrastructure asset management is front of mind for municipal governments across Canada, with Federal Gas Tax agreements requiring the development of asset management capacity at the local level. While each provincial jurisdiction is taking its own approach to meeting Federal Gas Tax requirements, the Ontario Government is a clear leader in driving progress in asset management.

With the launch of the Municipal Infrastructure Investment Initiative (MIII) in 2012, Ontario was the first province to require its municipalities to complete an Asset Management Plan (AMP) and to provide funding to assist with the process. In 2013, Ontario launched the Small Rural Northern Municipal Infrastructure Fund (SRNMIF), asking municipalities to identify a critical infrastructure project in their AMP for provincial funding. Then in 2014, SRNMIF was replaced by the now permanent Ontario Community Infrastructure Fund (OCIF), which provides small and northern communities with guaranteed annual formula-based funding for asset management capacity building activities and infrastructure projects. Another stream of funding – the OCIF Top-up Fund – provides small and northern communities with the opportunity to apply for a “top-up” to their formula-based funding for specific infrastructure projects.

In 2016, Ontario introduced a requirement for municipalities to complete an Asset Management Plan that includes all asset categories covered by the Gas Tax Fund – previous provincial programs only required core asset categories to be included in municipal AMPs (roads, bridges, water and wastewater). While some communities are still working on completing their comprehensive AMPs, nearly every municipality in Ontario now has a plan with at least core assets included.

Most recently, the Ontario Government has moved from incentivizing proper asset management planning – through the provision of resources like the Building Together Guide and asset management capacity building funding – to regulating proper asset management planning. Asset management has evolved from what began as an accounting exercise via PSAB 3150 to a holistic informed approach to infrastructure management. Recognizing the progress that has been made to date, the Ontario Government passed the Infrastructure for Jobs and Prosperity Act (Bill 6) in 2015, launching the process of regulating asset management planning at the local level. As with any effort to regulate, it was important to the province to standardize planning processes while taking into consideration the differences in capacity and asset management maturity across municipalities. Bill 6 consultations took place over the summer months of 2016, with the province collecting feedback on its proposed regulation from municipalities of all shapes and sizes. 

Timeline: Municipal Asset Management in Ontario

 

In 2017, the province released its draft Bill 6 regulation, allowing for additional comments until July 24th. According to the proposed regulation, Ontario municipalities will need to complete a strategic asset management policy by January 1st 2019, to be updated at least every five years moving forward. AMP requirements are broken into three phases, with phase 1 requiring just core infrastructure assets to be included in AMPs by January 1st 2020. Phase 2 would then require AMPs to include all infrastructure assets by January 1st 2021, followed by additional AMP requirements for all assets in Phase 3 with a January 1st 2022 deadline. The proposed Bill 6 regulation outlines the following as necessary components of an AMP by Phase:

For Phase I (January 1, 2020) & Phase II (January 1, 2021):

  1. Current Levels of Service
  2. Inventory Analysis              
  3. Estimated Costs to Sustain Current Levels of Service
  4. Municipalities with population over 25,000: Estimated Costs to Service Growth

For Phase III (January 1, 2022):

  1. Proposed Levels of Service
  2. Inventory Analysis (updated from Phase I and II)
  3. Lifecycle Management Strategy
  4. Financial Strategy
  5. Addressing Shortfalls
  6. Population over 25,000: Financial Strategy to Service Growth
  7. Population over 25,000: Risk Analysis

The Ontario Government is ambitious in its efforts to streamline municipal asset management activities and continue to push for advancement. Several industry associations in Ontario submitted comments to the province indicating that the timeline and expectations may be too onerous for many municipalities, with asset management often landing as an additional responsibility for a single staff member already working at maximum capacity on his or her regular duties.

Others have pointed to the requirement that a P. Eng must sign off on AMPs as a potential major challenge for municipalities that lack a P. Eng on staff and would be required to expend additional limited financial resources to obtain a consultant’s signature. Despite these concerns, there is significant support for the government’s work to continue the momentum of asset management capacity building in Ontario. The implementation of the final Bill 6 regulation in the coming months will usher in another period of concerted asset management planning in Ontario.

“While other parts of the world lead when it comes to advancement in industry/private sector asset management and national/utility asset management, Ontario has emerged as an authority in municipal asset management planning.”

The launch of the Federation of Canadian Municipalities’ (FCM) Municipal Asset Management Program (MAMP) could not have come at a more opportune time. FCM’s new program, supported by the federal government, will provide $50 million in asset management capacity building funds over five years to Canadian municipalities of all sizes. FCM’s program will fund 80 percent of eligible project costs, with the remaining 20 percent to be covered by the municipal recipient. Municipalities can submit applications for up to three asset management related activities, including asset management training, asset management program development, the completion of an asset management plan, and the procurement of asset management software. As Ontario’s Bill 6 regulation comes into effect, municipalities will be able to access an additional source of funding to support compliance.

While senior levels of government continue their planning, funding and regulating exercises to drive advancement in asset management, Ontario’s municipal governments themselves are working together to share best practices and innovate. Asset Management Ontario (AM Ontario), a multi-disciplinary community of practice for public infrastructure stewards in Ontario, gathered this June for its Annual General Meeting and to host an Asset Management Readiness Workshop.

With the City of Brampton playing host for the event, Mayor Linda Jeffrey described the importance of asset management in supporting strategic decision making. Having hired a new Manager of Corporate Asset Management, the City of Brampton was able to refer to a brand new AMP at budget time to support the decision to approve a two percent infrastructure levy. At the time, Brampton faced a mounting $1.2 billion infrastructure deficit.

In addition to presentations from leading municipal asset managers in Ontario, including Leanne Brannigan from the Region of Peel and Daryush Esmaili from the City of Guelph, AM Ontario’s Readiness Workshop featured the President of the UK-based Institute of Asset Management, Richard Edwards. According to Richard, Ontario is now an international leader in municipal asset management. While other parts of the world lead when it comes to advancement in industry/private sector asset management and national/utility asset management (see Scottish Water), Ontario has emerged as an authority in municipal asset management planning.

With most local governments in Ontario now having an AMP in place with at least core assets included, the sector is mobilizing to not only prepare to meet the requirements associated with Bill 6, but also to continue building asset management skills, awareness and capacity for improved outcomes. The City of Brampton is taking a central role in these efforts having launched the Asset Management Training and Innovation Centre following the AM Ontario AGM. In partnership with the Institute of Asset Management, Brampton will offer certified IAM training and examinations for municipal and industry practitioners looking to hone their asset management skills.

In the months and years ahead, Ontario’s municipalities will begin the process of complying with a newly finalized Bill 6 regulation. With municipal and provincial elections also on the horizon in Ontario, local governments will have to contend with change while pushing to meet regulatory deadlines. Those responsible for asset management in their respective organizations will need to reach out to colleagues, neighbours and asset management leaders in Ontario to supplement capacity. While sound asset management is no simple feat, Ontarians will reap the benefits of today’s planning for years to come. PSD

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