Despite concerns from some councillors about potential tax hikes to cover the town’s rising infrastructure maintenance costs, an updated asset management plan received initial approval at last night's committee of the whole meeting.
The new plan identifies infrastructure deficits, based on the recommended level of service.
The average annual capital costs are estimated to be more than $25.4 million for tax levy-funded assets and nearly $18.4 million for rate-funded assets.
Currently, Aurora has about $10.5 million available from the tax levy and $5.6 million available from user rates, leaving funding gaps of nearly $14.9 million and $12.7 million respectively.
To cover the shortfall, the plan recommends hikes in taxes and user rates.
The increase to the tax levy would occur over a 15-year phase-in period, translating to an increase to the existing dedicated annual tax of 1.63 per cent.
The forecasted tax rate for 2025, outlined in council’s previous multi-year budget, was 3.5 per cent, with 0.8 per cent for capital projects.
The asset management plan proposes:
- A tax levy increase of 1.63 per cent over 15 years;
- An annual increase to the water network use rate of 1.92 per cent over 15 years;
- An annual increase to the sanitary network use rate of 1.67 per cent over 10 years;
- An annual increase to the storm network use rate of 4.92 per cent over 20 years.
But the tax increase could yet be avoided.
Rachel Wainwright-van Kessel, the town's director of finance, said staff expected to meet the previously budgeted tax increase for 2025, 3.5 per cent, and 2026, 2.9 per cent, while meeting the recommendations in the asset management plan.
“Our goal is to be able to meet what the requirements are in the asset management plan, but without increasing the tax levy that was presented in the multi-year budget, and we think we have a path forward that we could present, that will provide that option for council,” said Wainwright-van Kessel.
"At that point in time, we're going to have turn our attention to do a bit more longer term look how we handle that going forward after 2027, and we're looking at some other options at how we balance that overall."
Councillor Michael Thompson asked if staff could look at how the town assesses service levels to roads to “blunt the impact of this deficit.”
“This is one of numerous items on the agenda tonight that are calling for budgetary impacts, and we have seen across the board, costs continue to escalate,” he said. “And I don’t think that just raising taxes should always be the first option, I think there needs to be other work that needs to be done, to ensure we’re making every effort to try and minimize the impact to residents.”
Councillor Ron Weese echoed Thompson’s comments, saying, “I’m concerned about our spending patterns, and the revenue side of it, as well.”
Wainwright-van Kessel noted that levels of service are a long-term target, which would take time to work toward.
They are set to be reviewed annually and could be changed if needed.
Costs up despite showing town’s infrastructure 'more than 85 per cent fair condition or better'
The total estimated replacement cost for all the town’s infrastructure assets has grown from $1.5 billion to $2.35 billion over the past few years, according to the updated plan.
Wainwright-van Kessel said costs have increased due to inflation, the addition of new subdivision assets the town has to maintain, and identifying assets the town hadn’t previously factored in.
Chris Vanderheyden, a consultant from London-based PSD Citywide who worked on the plan, said new data put the town’s infrastructure at more than 85 per cent above fair condition.
About 14 per cent of the town’s infrastructure is in poor or very poor condition.
“With the asset management plan, it is a prediction model, it’s a communication tool. It’s not your project plan, it gives you a high-level view of where your needs are,” he said.
“We don’t simply replace the worst first, we look at where there’s opportunity to co-ordinate. Sometimes you have to let the worse get worse, and spend some money on assets, if we do something to them now, we’re going to save far more money in the long run, if we utilize that funding somewhere else.”
Plan also calls for user rates to increase
The updated asset management plan also recommends increasing the annual user rates for water, sanitary sewer and stormwater services using a phased-in approach.
“It is recommended that the town adopt phase-in periods of 15 (years) for water, 10 for sanitary and 20 years for stormwater networks resulting in dedicated annual rate increases of 1.92, 1.67 and 4.92 per cent for water, sanitary and stormwater, respectively,” the town staff report reads.
Vanderheyden said new data resulted in a lower increase to maintain the water network than previously recommended, dropping from 2.2 per cent to 1.92 per cent over a 15-year time frame.
The rate hike needed to maintain the stormwater network also dropped compared with previous asset management plan forecasts. Overall, the total change is 161.4 per cent.
“Now that seems like it’s very bad news, but if we look at the context from the last asset management plan to now, it’s actually very good news considering,” said Vanderheyden.
Spread over 20 years, that represents an annual increase of 4.92 per cent, versus the previously estimated 11 per cent increase.
Vanderheyden added stormwater servicing is generally the underfunded "forgotten child" when it comes to infrastructure funding in many municipalities.
He added that there is not a lot of data on the condition of stormwater infrastructure. The asset management plan recommends a "formal condition assessment program, "to get better data on the condition of the town's assets."
Staff will review the plan further and take a look at the timing for the investments and how to meet the service levels outlined.
Ultimately councillors, sitting as a committee of the whole, recommended the asset management plan be approved, and the targets and levels of service in the plan be approved.
Staff will come back to council with another report in September examining the financial impacts of the plan.
