County Of Peterborough Asset Management Capital Plan and Financial Strategy January 16, 2019

1 Introductions

• – Trena DeBruijn (Director of Finance/Treasurer) – Dan Sutherland (Asset Management Analyst) – Doug Saccoccia (Assistant Manager, Engineering & Design) • Consultants – David Munford (BASc Civil Engineering) – Ron Awde (Architect) – Tammy Carruthers (CEO, WSCS Consulting, BA CPA, CGA CFE CICA PMP CLSSBB CCA MCITP CISA)

2 Meeting Objectives

• Asset Management Policy and Plan Project (AMPP) – Current status and upcoming activities • Needs Analysis and Options, by Asset Type • Financial Analysis • Next Steps

3 AMPP Project Status

Current Status & Upcoming Activities

Phase % done Target Date Notes

Strategic Policy 95% 30-Jan-19 Draft policy completed

System Setup/Config 100%

Data collection/QA 100%

Needs Analysis 100%

Financial Analysis 100%

Council Orientation 100%

Council Consultation 0% 16-Jan-19

Council Approval 0% 6-Feb-19

AMP Document 7% 30-Jan-19 4 Summary of County Assets

Asset Type Records Quantity Replacement Cost

Bridge 127 24,145.11 M2 (Deck Area) $123,249,841

Cros s Cul vert 1,200 22,642.19 M (Length) $34,450,000

Cul vert 26 691.50 M (Length) $22,342,364

Equipment 106 106.00 Each $11,321,152

Facility 34 194,455.00 Sq Ft (Floor Area) $35,569,080

Forest 3 2,130.80 Hectar $0

Landfill 1 158.00 Hectar (Area) $0

Road 225 709.86 Km (Length) $744,783,954

Signals 10 10.00 Each $741,000

Trails 1 5.35 Km (Length) $0

$ 972,457,391 5 Project and Presentation Scope and Assumptions

• Asset preservation and capacity needs • Assuming operating activities that affect capital are performed as needed e.g. oil change

6 Needs Analysis

• Goals – as prescribed by legislation 1. Maintain existing condition/service level 2. Activity level 3. 10 year plan 4. Cost Effective • No Inflation, all values in 2018

7 Roads (Preservation)

• County road inspections 2013, 2015, 2017 using Pavement Condition Index (PCI) • Three forms of analysis 1. Best Practices 2. Performance Modelling 3. Manual workplan

8 Roads – Asset Class Example Class B Rural Hot Mix (CLB_R_HCB)

Year Condition Description Affect 5 96 Crackseal ($2,530) Hold for 2 yrs 14 86 Microsurface ($55,424) Hold for 5 yrs 22 80 Resurface ($300,679) Increase by 17

24 96 Crackseal ($2,530) Hold for 2 yrs 33 86 Microsurface ($55,424) Hold for 5 yrs 49 63 Rehab ($438,760) Restore To 100

54 96 Crackseal ($2,530) Hold for 2 yrs 63 86 Microsurface ($55,424) Hold for 5 yrs 91 39 Reconstruct ($983,911) Restore To 100

9 Roads – Asset Class Example Benefits of Recommended Maintenance

• Every time you miss a rehabilitation activity you shift towards “Do Nothing”. Lifecycle costs increase and average condition decreases. Do Nothing Recommended

Missed Preservation Activity

10 Roads – Best Practices

• Description – Based on asset class lifecycle activities • Most cost effective approach to managing each class of road – Assumptions • System is in an average overall condition • All activities completed on time • Only preservation – No growth factors or other influences – Output: Average Annual Cost = $13.33M

11 Roads – Performance Modelling

• Scenarios for discussion: – Optimal. Do all activities at the recommended time. – Maintain. Cost to maintain current average condition. • Generated scenarios will still require human adjustments – Safety – Operations – Work scheduling

12 Scenario: Optimal • All activities, when needed • Average Annual Cost = $12.5M

13 Maintain Scenario: Activity Prioritization

• There are many options to achieve the target average condition. How does the analysis choose the activities to fund? • Return on Investment (ROI) • Worst First

14 Comparison of Prioritization Methods

• Blue – $5M/Year prioritized by ROI • Green – $10M/Year prioritized by worst first

15 Scenario: Maintain Current Average Condition

• Use ROI to prioritize funded activities • Set minimum tolerable condition • Does reconstruction ever get funded? – Triggered by minimum policy values – Maintenance activities

16 Scenario: Maintain Current Condition

• Lowest cost to maintain current average condition • Average Annual Cost = $11.6M

17 Roads – Manual Workplan

• Manual 10 year workplan maintained by County staff and shared annually with senior leadership team and Council • Many factors including ROI, safety, operations • Plan identifies $13M/Year in needs over next 10 years • Details at end of roads analysis

18 Recap – Assessing Target Annual Spending

Analysis Description Result (M/year) Best Practices Best Practices $13.33 M/year Optimal All activities done when needed $12.50 M/year Maintain Cost to Maintain current condition $11.61 M/year Manual Manual Workplan, considers additional $13.00 M/year factors such as safety, maintenance • All forms analysis support an annual budget of between $11.6 and $13M • $13M accepted as average annual cost

19 10 Year Forecast Manual Workplan - Format

Scope Local Asset Projected Estimated Total of Work Township ID Timeline Funded Amount

Estimated Carry Project Cost Over Description 20 Proposed Proposed2019 Construction2019 ConstructionProgram Program

21 22 23 24 Bridges and Culverts – Needs by recommended timing

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Average/Yr $4,715,000 $2,875,000 $3,947,000 $3,373,000 $4,354,500 $3,848,500 $3,440,335 $4,332,800 $4,622,000 $4,506,500 $40,014,635 $4,001,464

• Total needs over next 10 years = $40,014,635

25 Transportation Plan – Summary

Transportation Plan 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Funded (Planned) $1,885,000 $6,360,000 $2,697,284 $360,000 $260,000 $260,000 $260,000 $260,000 $310,000 $760,000 $13,412,284 Unfunded (unplanned) $2,532,219 $2,532,219 $2,532,219 $2,532,219 $2,532,219 $2,532,219 $2,532,219 $17,725,530 Total $1,885,000 $6,360,000 $2,697,284 $2,892,219 $2,792,219 $2,792,219 $2,792,219 $2,792,219 $2,842,219 $3,292,219 $31,137,814

• Update to Transportation Master Plan in 2019 $57,645,000 Transportation Plan, remaining projects - $1,185,000 Funded in 2018 - $13,412,284 Planned 2019-2028______$43,047,716 Unplanned (Unfunded) $ 2,532,219 Per year over next 17 years

26 Cross Culverts

• 2018 Inspection • Analysis using Performance Modelling

27 Cross Culverts Asset Classes

• Lining only cost Class Lifespan Count Year Activity

effective on CSP - Shallow 50 1017 50 Replacement $25k deep culverts and must be CSP - Deep 75 90 40 Lining $50k 115 Replacement $75k done before Plastic - Shallow 75 56 75 Replacement $25k corrosion sets in Plastic - Deep 75 5 75 Replacement $75k

Concrete 75 32 75 Replacement $40k

28 Cross Culverts

• Average Annual Cost = $679,100

29 Facilities

• Inspections on all buildings 2017-2018 – Public and staff health and safety – Preserve structural integrity – Preserve building envelope – Maintain optimally functional mechanical and electrical systems – Replace other components and elements at end of life for safety, functionality and appearance – Reduce energy and realize operational savings • Approximately 975 needs identified on 34 facilities

30 Facilities – Facility Condition Index

• Facility Condition Index (FCI) (FCI) = (Replacement Cost – 4 Year Repair Cost) Replacement Cost

FCI Range Description >95 Good 90-95 Fair <90 Poor

31 Recommendation Highlights

• Near Term – Repairs to extend life of existing building elements for 5 to 10 years, e.g. roofing, paving, masonry repairs etc. – Structural investigations for Court House exterior walls, Sand Domes, Armour Road Base, etc. – Green energy replacements – Replace vs repair assessment for aging facilities • Mid Term – Design work for more complex projects – Structure remediation work • Long Term – Scheduled component replacement schedule – Facility evaluation – Green energy

32 Facilities – 10 Year Needs, Summarized by Class Asset Class 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Average/Yr

EMS $17,100 $5,380 $750 $900 $5,600 $1,150 $12,800 $10,000 $ 53,680 $ 5,368 Garage $50,200 $ 50,200 $ 5,020 Office $138,100 $409,330 $572,060 $433,550 $424,240 $722,250 $577,810 $791,410 $754,700 $1,147,070 $ 5,970,520 $ 597,052 Quonset $15,000 $800 $ 15,800 $ 1,580 Salt Shed $11,300 $42,400 $28,200 $16,621 $70,600 $36,960 $27,250 $20,020 $60,251 $29,190 $ 342,793 $ 34,279 Sand Dome $27,380 $26,670 $20,100 $9,450 $42,520 $18,000 $93,060 $80,300 $87,050 $258,960 $ 663,490 $ 66,349 Storage Garage $1,500 $1,800 $10,700 $211,170 $42,800 $5,000 $35,800 $17,600 $ 326,370 $ 32,637 Tourism $18,400 $13,960 $3,400 $4,800 $1,430 $640 $15,950 $31,000 $53,890 $ 143,470 $ 14,347 $213,780 $499,540 $634,460 $460,371 $593,260 $1,010,410 $741,560 $913,830 $981,601 $1,517,510 $ 7,566,322 $ 756,632 • Total Needs = $7.57M, $757,000/Year • High risk, obligations in first 3 years • Spending ramp up to allow for budgeting and planning

33 Facilities – 10 Year Outlook

Major Repairs and/or replacement

Safety, Regulatory, Critical ROI, Planning

34 Facilities – Best Practices Assessment • 2% of replacement cost for repair/replacement per year • $711,400/year • Slightly lower than current average annual needs as there is a backlog

35 Facility Options – Co-location

• Examine potential of consolidating facilities/operations with Township sites in close proximity to County facilities – i.e. Selwyn and Cavan-Monaghan

36 Equipment

• Plan covers all equipment – Public Works, PCCP, LPV, Corp Services, and IT • All equipment assessed by mechanics, IT Manager. Recommended replacement year set considering the following: – Industry standards – Past performance – Type of use – Risk of failure – Impact of failure – Mileage threshold

37 Equipment Replacement Plan

Department 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total CORP $63,725 $164,444 $203,332 $431,502 ENV $31,351 $31,351 EM $39,409 $39,409 PCCP $627,429 $640,827 $290,305 $509,212 $590,841 $460,693 $559,714 $269,479 $472,681 $443,617 $4,864,799 PW $841,512 $535,287 $415,524 $658,743 $996,031 $826,905 $758,831 $624,074 $906,945 $944,486 $7,508,339 Total $1,572,075 $1,176,114 $705,829 $1,332,400 $1,586,872 $1,287,599 $1,349,897 $893,553 $1,582,958 $1,388,104 $12,875,400

• $5k and over • All equipment covered by reserve funds • Includes inflation (1.5-2%) • PCCP Needs do not include costs for potential service expansion due to approval and timing uncertainty

38 Remaining Assets

• Traffic Signals • Signal replacement every 75 years @120,000/intersection • Controller replacement every 10 years @ $10,000/intersection • 10 intersections = $26,000/year • Forest (3 blocks) • No capital works planned • Trails (Scenic River Road Trail) • No capital works planned • Landfill • No capital works planned • Reserve for site closure

39 Consolidated Needs

Asset Type 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Average/Yr Bridges/Culverts $4,818,665 $2,951,829 $4,037,104 $3,446,606 $4,457,388 $3,938,850 $3,516,989 $4,437,342 $4,736,566 $4,624,202 $40,965,541 $4,096,554 Cross Culvert $694,031 $697,248 $694,603 $693,919 $695,146 $695,043 $694,231 $695,485 $695,933 $696,837 $6,952,476 $695,248 Equipment $1,572,075 $1,176,114 $705,829 $1,332,400 $1,586,872 $1,287,599 $1,349,897 $893,553 $1,582,958 $1,388,104 $12,875,400 $1,287,540 Facility $218,480 $512,889 $648,944 $470,418 $607,278 $1,034,131 $758,083 $935,879 $1,005,932 $1,557,145 $7,749,178 $774,918 Road $13,285,821 $13,347,399 $13,296,771 $13,283,688 $13,307,164 $13,305,197 $13,289,653 $13,313,663 $13,322,231 $13,339,539 $133,091,127 $13,309,113 Signals $26,572 $26,695 $26,594 $26,567 $26,614 $26,610 $26,579 $26,627 $26,644 $26,679 $266,182 $26,618 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 $3,189,145 Total $22,542,088 $25,242,132 $22,168,704 $22,208,931 $23,538,655 $23,145,201 $22,489,863 $23,162,139 $24,282,933 $25,010,712 $233,791,358 $23,379,136

• All costs adjusted to 2018 values • Includes allowance for increased staffing for Infrastructure & Facilities

40 Consolidated Needs – Totals, with history

• Historic values for reference Asset Type Average/Yr Historic Gap only, not an indication of A current or future budgets Bridges/Culverts $4,096,554 $2,137,275 $1,959,279 • In yellow indicates no specific reserve. Funding Cross Culvert $695,248 $184,000 $511,248 part of maintenance budget Equipment $1,287,540 $1,123,500 $164,040 Facility $774,918 $216,416 $558,502 Road $13,309,113 $4,388,936 $8,920,177 Signals $26,618 $10,000 $16,618 Transportation $3,189,145 $961,963 $2,227,182 TotalPl $23,379,136 $9,022,090 $14,357,046 41 Financial Strategy

• Strategy Guidelines • Financial Health • Funding Source Evaluation • Peer Comparisons

42 •Financial Sustainability and Asset Management 15 Dramatic shift in responsibility for infrastructure

The municipal share of asset ownership in has significantly increased since the 1960’s

•Source: StatsCan, From Roads to Rinks, Table A, Feb. 2008 43 •Financial Sustainability and Asset Management •25 Asset Management Plans are linked to Master Plans & Capital Plans

•Master Plans •Asset Management Plans Establish desired service levels •Track existing assets, assess and identify infrastructure needed their condition, and plan life cycle to get there rehabilitation & replacement needs

•Capital Plans Allocate budgetary resources to deliver on plans

•To be effective, planning and policy documents must align with budgetary policy and fiscal goals Source: Bill Hughes – Presentation to LAS/MFOA – March 2015 44 • Financial Sustainability and Asset Management 11 The Elements of Fiscal Strategy

• Fiscal strategy refers to the interaction between the capital plan, debt management, reserve management and the budget (tax levy and rate supported) • Municipality’s ability to deliver on its asset management plan commonly depends on the quality of its fiscal strategy

Source: Bill Hughes – Presentation to LAS/MFOA – March 2015 45 •Financial Sustainability and Asset Management 27 Effective asset management lowers costs over time

• Condition •$50m •$50m •Poor Asset Management

•Smart Asset Management

•Year •Source: Based on a chart in the Ontario Ministry of Infrastructure’s Guide for Municipal Asset Management Plans

Timely life cycle investments can provide higher service levels and lower the total cost of managing an asset. The asset management strategy is the set of actions that, taken together, has the lowest total cost — not the set of actions that each has the lowest cost individually. 46 •Financial Sustainability and Asset Management 27 But what is the Right Amount?

Source: Adapted from Toward Financially Sustainable Drinking- Water and Wastewater Systems, Ministry of the Environment, August 2007 47 •Financial Sustainability and Asset Management 27 Peterborough’s Funding Requirement

48 •Financial Sustainability and Asset Management 27 Peterborough’s Historic Funding Shortfall

49 •Financial Sustainability and Asset Management 28 Financial Strategy for Asset Management

• The National Research Council recommends that about 2% of the value of assets should be spent on repairs and normal rehabilitation and 2% contributed to reserves each year

Asset Management

Pay-as-you-go Capital Reserves (non-DC) DC Reserves Debt

•Repairs • Major life-cycle •Major life-cycle replacement where and normal rehabilitation delay will result in rehabilitation •Asset replacement New capital significant cost increases •Portfolio- •Growth capital not needs for • Infrastructure covered by DCs growth based lifecycle Deficit – Catch up investments when rates low

50 “…infrastructure investment is fundamentally different.

Over time, infrastructure investment does not drain public resources: it contributes directly to the ability of the economy to replenish public revenues.”

Source: RCCAO – 2014: Unlocking Ontario’s Advantages: Building new infrastructure on the foundation of existing public assets. 51 TEN “KEY CRITERIA” FOR MAKING INFRASTRUCTURE INVESTMENT DECISIONS

1. Return on Investment - Does it pay a return on investment, to the government and to taxpayers? 2. Fiscal impact - Does the infrastructure investment make a contribution to fiscal health our government? 3. Productivity improvement - Will the investment improve productivity, both in the public asset or enterprise, and in the local economy? 4. Sustained employment - Will the capacity added by new, refurbished or expanded infrastructure create more sustained employment? 5. County efficiency and sustainability - Will the infrastructure investment add to county sustainability and efficiency? Source: Adapted from RCCAO – 2014: Unlocking Ontario’s Advantages: Building new infrastructure on the foundation of existing public assets. 52 TEN “KEY CRITERIA” FOR MAKING INFRASTRUCTURE INVESTMENT DECISIONS cont’d

6. Leveraging expertise and past investments- Will the infrastructure investment “leverage” past and current infrastructure investments and expertise? 7. Building the right infrastructure for the future: - Are we building the right things? Are we anticipating future risks: economic, societal and infrastructure needs? 8. Managing the “politics of infrastructure” - Are doing what’s right not just popular? 9. Priority-setting based on public policy, not just accounting policy – Do we have priority setting process and criteria to support objective decision making? 10. Identifying and adopting “best practices” – Are we incorporating “best practices” in our decision-making processes? Are we promoting asset recycling and municipal sharing to reduce cost and improve services that will lead to comprehensive infrastructure investment program?

Source: Adapted from RCCAO – 2014: Unlocking Ontario’s Advantages: Building new infrastructure on the foundation of existing public assets. 53 Regardless of OPTION….Sensitivities exist:

• Inflation • Interest Rate Volatility • Currency Rate Volatility • Change in Direction of Other Governments • Tax rate changes – Including other Governments • Economic and Trade Factors • Grant funding levels • Unanticipated or emergent capital requirements: Projections reflect current services with limited risk • Changes in Technology = Opportunities and Challenges • Changes to the cost estimates beyond inflation • Changes to the utility rate models • Capital requirements outside of the 10 year window • Changes in demographics/mega trends = Changes in Service demands

54 Financing Strategy - Options • Own Source Revenues – Property Tax • General Levy • Infrastructure Levy – Rate Supported – Reserves • Grants • Debt • Capital Leases • Development Charges – Growth • Private Public Partnerships (3Ps) or Alternative Funding • Government business enterprises (GBEs)

55 •Financial Sustainability and Asset Management 43 Intergenerational equity

• Good planning means that the people who benefit from an asset are also the ones who pay for it

• Sources suggest that the children of baby boomers will be the first to have lower life-time income than their parents

• Suggests a need to save more today for future asset management needs

56 Financing Strategy – Own Source Revenues

• Own Source Revenues – Property Tax • General Levy • Infrastructure Levy – Rate Supported – Reserves

57 Property Tax

• General Levy - 2% increase = $823,416 Year over Year – Pros: All taxpayers pay based upon assessment Monthly Year Peterborough Co Monthly change – Cons: Revenues part of “general revenues” FY 2009 Actual $ 880.49 $ 73.37 FY 2010 Actual $ 912.59 $ 76.05 $ 2.67 • Infrastructure Levy - 2% FY 2011 Actual $ 971.59 $ 80.97 $ 4.92 FY 2012 Actual $ 998.73 $ 83.23 $ 2.26 – Pros: Specific Purpose – Easier to explain, ensures FY 2013 Actual $ 1,023.00 $ 85.25 $ 2.02 that increases are allocated for special purpose – FY 2014 Actual $ 1,051.42 $ 87.62 $ 2.37 FY 2015 Actual $ 1,097.09 $ 91.42 $ 3.81 Any unused revenues earned, allocated to FY 2016 Actual $ 1,154.13 $ 96.18 $ 4.75 FY 2017 Actual $ 1,109.48 $ 92.46 -$ 3.72 reserves FY 2018 Budget $ 1,152.20 $ 96.02 $ 3.56 • Limits need for debt financing FY 2019 (2%) $ 1,175.24 $ 97.94 $ 1.92 FY 2020 (2%) $ 1,198.75 $ 99.90 $ 1.96 FY 2021 (2%) $ 1,222.72 $ 101.89 $ 2.00 FY 2022 (2%) $ 1,247.18 $ 103.93 $ 2.04 – Cons: Additional administration and management FY 2023 (2%) $ 1,272.12 $ 106.01 $ 2.08 FY 2024 (2%) $ 1,297.56 $ 108.13 $ 2.12 as well as communications FY 2025 (2%) $ 1,323.51 $ 110.29 $ 2.16 FY 2026 (2%) $ 1,349.98 $ 112.50 $ 2.21 FY 2027 (2%) $ 1,376.98 $ 114.75 $ 2.25 *Based on Total tax levy requirement/# of households FY 2028 (2%) $ 1,404.52 $ 117.04 $ 2.29 58 Peterborough County is mostly Residential – Any Levy Increases are borne by Residents

59 •Financial Sustainability and Asset Management 32 Reserve management strategy is key to achieving financial sustainability

• Long-term financial sustainability will require: • Saving for future capital asset life cycle and replacement investments • Using reserves judiciously to manage debt • Benefits of reserves are: • Adequate reserves reduce the need to issue debt • Credit rating agencies consider reserves when evaluating liquidity • Contributions to and draws from reserves can be ‘smoothed’ to provide a predictable impact on the tax levy • Reserves also protect municipalities against non-capital long-term liabilities and external shocks

60 •Financial Sustainability and Asset Management 32 Peterborough County’s Reserve management strategy lacks commitment

• Reserve Policy in place • Reserves are generally “healthy” • No specific targets or commitments • Individual reserves do not have ‘terms’ or council endorsement

61 Peterborough County - Reserve levels

62 Financing Strategy – Grants

• Pros: Gas tax provides for ongoing funding with some limitations – Other grant programs (provincial) provide for additional funding on an application basis • Cons: Over-reliance on grants leads to poor decision making (may proceed with a project that is not greatest priority based upon grant criteria) – Grants skew the true infrastructure requirements – spreads cost over many non- related taxpayers – Susceptible to political change – Should not be relied on for the long term (should be considered a bonus) • Peterborough County has been denied grants in the past – County has been told that taxes can be raised – Province assesses housing costs, incomes and taxation levels

63 •Financial Sustainability and Asset Management 37 Debt Management

Debt will remain a financing source for many municipalities • Pros: Debt financing spreads the cost of assets over a longer portion of their useful lives – Matching principle may be maintained – Effective when rates are low • Cons: Debt servicing payments reduce fiscal room and crowd out other spending – Interest rate volatility can cause issues – Not recommended for preservation unless unique circumstance such as grant matching • Debt room should be preserved to maintain flexibility in financing long-term capital asset needs • Debt should not be the primary source for repair and replacement projects

64 •Financial Sustainability and Asset Management 38 Many municipalities have little or no debt

•Approximately 60 per cent of municipalities have little or no debt servicing costs, meaning they have little or no debt •Data source: FIR (2013) 65 Annual Repayment Limit (ARL) – Definition and Calculation • Ontario Regulation 403/02

• Limits the amount paid annually towards principal and interest on long-term debt

• ARL = 25% of annual own source revenues less debt charges

• Calculated annually and sent to each municipality

• The ARL does not reflect the ability to repay debt

• ARL not a credit rating

• Municipalities can appeal to exceed their ARL 66 ARL is calculated based upon the FIR information - 2 years prior 67 Financing Strategy – Capital Leases A long-term contract that utilizes private sector resources to finance utilization of a capital asset Pros: Ongoing cost emulates amortization • Reduced administration and maintenance. • New asset when useful life nears expiry • Works well for equipment, particularly vehicles and IT Cons: Generally higher cost of ownership • Asset is still a ‘capital’ asset on municipal books if meets the leased capital asset definition • Additional accounting

68 •Financial Sustainability and Asset Management 35 Financing Strategy – Development Charges Growth-related investment impinges on asset management investment

• Development charge revenues do not cover the full cost of growth

• The remainder must be covered through tax levy or subsidies

• The need to divert funding to pay for growth-related infrastructure compromises funding for asset management

69 •Financial Sustainability and Asset Management 35 Peterborough’s Development Charge Policy provides flexibility

• Recent review indicates that the rates are in line with growth requirements • Policy may need to be reviewed as demographics change • Improved tracking of costs would provide better indicators and support for DCs

70 71 Municipal Comparison

Population Municipality 2011 2016 % Change Land area (km²) Population Density Peterborough County 54,786 55,783 1.8% 3,769 14.8/km2 56,881 61,735 8.5% 1,486 41.5/km2 49,556 50,069 1.0% 1,845 27.1/km2 Huron County 59,100 59,297 0.3% 3,399 17.4/km2 56,689 59,918 5.7% 3,026 19.8/km2 Leeds & Grenville Uco 68,030 69,819 2.6% 3,350 20.8/km2 Northumberland County 81,657 85,103 4.2% 1,893 45.0/km2 Stormont, Dundas & Glengarry Uco 64,824 65,353 0.8% 3,236 20.2/km2

72 Municipal Comparison – Debt Per Household

Peterborough Debt below average of comparators since 2009 but some are debt free

73 Municipal Comparison – Property Tax Per Household

Peterborough Property

Stormont, Taxes below average of Leeds and Northumberland Peterborough Dundas and Average of Peterborough comparators since 2009 Year Dufferin Co Elgin Co Huron Co Lanark Co Grenville UCo Co Co Glengarry UCo Comparators vs Average FY 2009 $1,247 $1,168 $1,133 $941 $852 $1,055 $880 $1,144 $1,052 -16% FY 2010 $1,261 $1,288 $1,224 $977 $870 $22 $913 $1,176 $966 -6% FY 2011 $1,310 $1,281 $1,260 $1,006 $906 $1,114 $972 $1,290 $1,143 -15% FY 2012 $1,312 $1,343 $1,277 $1,029 $945 $1,136 $999 $1,347 $1,174 -15% FY 2013 $1,392 $1,423 $1,299 $1,061 $980 $1,172 $1,023 $1,429 $1,222 -16% FY 2014 $1,416 $1,492 $1,325 $1,064 $987 $1,192 $1,051 $1,462 $1,249 -16% FY 2015 $1,442 $3,131 $1,348 $1,071 $1,021 $1,226 $1,097 $1,522 $1,483 -26% FY 2016 $1,478 $1,597 $1,338 $1,087 $1,049 $1,260 $1,154 $1,566 $1,316 -12% FY 2017 $1,597 $1,675 $1,397 $1,102 $1,085 $1,462 $1,109 $1,594 $1,378 -19% 74 Municipal Comparison – Discretionary Reserves Per Household Upper Tier Total Reserves Per Household $1,800

$1,600

$1,400

Dufferin Co $1,200 Elgin Co Huron Co $1,000 Lanark Co

Leeds and Grenville UCo $800 Northumberland Co Peterborough Co $600 Stormont, Dundas and Glengarry UCo

$400

$200 Peterborough Reserves per

$0 household is higher than FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 the average comparators Leeds and Northumberland Stormont, Average of Peterborough vs but have been declining Year Dufferin Co Elgin Co Huron Co Lanark Co Grenville UCo Co Peterborough Co Dundas and Comparators Average FY 2009 $402 $398 $882 $621 $591 $252 $555 $441 $518 7% over the past two years. FY 2010 $483 $442 $1,037 $563 $616 $305 $642 $410 $562 14% FY 2011 $529 $367 $1,302 $563 $606 $523 $747 $406 $631 19% FY 2012 $559 $480 $1,503 $567 $612 $658 $842 $342 $695 21% FY 2013 $609 $354 $1,620 $554 $543 $834 $908 $383 $726 25% FY 2014 $571 $389 $1,654 $628 $562 $925 $967 $391 $761 27% FY 2015 $723 $339 $1,713 $582 $617 $1,049 $1,028 $513 $821 25% FY 2016 $872 $538 $1,607 $604 $677 $1,205 $942 $527 $872 8% FY 2017 $1,054 $838 $1,631 $638 $789 $1,318 $914 $603 $973 -6% 75 Municipal Comparison – Asset Consumption Ratio

Peterborough Asset Consumption Ratio is below average (Moderately New) of comparators since 2009

ASSET CONSUMPTION RATIO (expressed as a percentage) measures the age of a municipality's physical assets. It measures the extent to which depreciable assets have been consumed by comparing the amount of the assets that have been used up and their cost. ( < 25% - Relatively NEW infrastructure, 26% to 50% - Moderately NEW infrastructure, 51% to 75% - Moderately OLD infrastructure, >75% - OLD infrastructure) 76 Municipal Comparison – Asset Sustainability Ratio

Peterborough Asset Sustainability Ratio is above target in most years but below average in 4 years since 2009

ASSET SUSTAINABILITY RATIO (expressed as a percentage) is an approximation of the extent to which a municipality is replacing, renewing or acquiring new assets as the existing infrastructure being managed by the municipality are reaching the end of their useful lives. The target ratio is > 90% per year.

If target not met, municipality is not sufficiently maintaining, replacing or renewing their existing infrastructure. This may result in a reduction in service levels and/or useful lives previously expected and will likely create a burden on future ratepayers. 77 Municipal Comparison – Net Book Value of Tangible Capital Assets per household

Peterborough Net Book Value per household well below average indicating the age of assets is higher than others (or TCA policy differences) Leeds and Northumberlan Peterborough Stormont, Average of Peterborough Year Dufferin Co Elgin Co Huron Co Lanark Co Grenville UCo d Co Co Dundas and Comparators vs Average FY 2009 $4,076 $9,083 $5,208 $3,650 $5,064 $3,769 $2,752 $2,525 $4,516 -39% FY 2010 $4,542 $9,908 $5,556 $3,595 $5,224 $3,874 $2,904 $2,793 $4,800 -39% FY 2011 $4,712 $9,535 $5,649 $3,511 $5,149 $3,814 $2,986 $2,865 $4,778 -37% FY 2012 $5,100 $9,467 $5,777 $3,399 $5,013 $3,840 $2,955 $2,963 $4,814 -39% FY 2013 $5,128 $9,382 $5,771 $3,281 $5,044 $3,733 $3,163 $3,107 $4,826 -34% FY 2014 $5,273 $9,489 $5,755 $3,291 $4,888 $3,688 $3,197 $3,241 $4,853 -34% FY 2015 $5,322 $9,490 $5,834 $3,283 $4,735 $3,755 $3,201 $3,403 $4,878 -34% FY 2016 $5,398 $9,109 $5,668 $3,295 $4,622 $3,719 $3,218 $3,600 $4,829 -33% FY 2017 $5,787 $9,256 $5,649 $3,758 $4,467 $4,218 $3,135 $3,565 $4,979 -37% 78 Municipal Comparison – Capital Expenses per household

Peterborough Capital Expenses per household are well below average with the exception of 2013.

Stormont, Leeds and Northumberland Dundas and Average of Peterborough vs Year Dufferin Co Elgin Co Huron Co Lanark Co Grenville UCo Co Peterborough Co Glengarry UCo Comparators Average FY 2009 $262 $837 $548 $263 $333 $198 $226 $388 $382 -41% FY 2010 $817 $770 $398 $208 $541 $435 $337 $508 $502 -33% FY 2011 $361 $408 $464 $185 $305 $111 $234 $343 $302 -22% FY 2012 $821 $518 $463 $135 $300 $311 $189 $362 $387 -51% FY 2013 $448 $429 $378 $132 $400 $179 $462 $361 $349 32% FY 2014 $555 $644 $355 $244 $364 $198 $259 $433 $382 -32% FY 2015 $475 $579 $474 $235 $303 $296 $232 $471 $383 -39% FY 2016 $480 $420 $426 $256 $340 $252 $236 $544 $369 -36% FY 2017 $327 $720 $367 $762 $282 $344 $356 $420 $447 -20% 79 Municipal Comparison – Operating Expenses per household

Peterborough Operating Expenses per household are also well below average.

Stormont, Leeds and Northumberland Dundas and Average of Peterborough vs Year Dufferin Co Elgin Co Huron Co Lanark Co Grenville UCo Co Peterborough Co Glengarry UCo Comparators Average FY 2009 $2,346 $2,816 $2,917 $2,449 $2,724 $2,177 $1,362 $1,601 $2,299 -41% FY 2010 $2,377 $3,159 $3,048 $2,504 $2,716 $2,404 $1,294 $1,560 $2,383 -46% FY 2011 $2,567 $3,296 $2,789 $2,540 $2,400 $2,114 $1,444 $1,570 $2,340 -38% FY 2012 $2,539 $3,290 $2,784 $2,413 $2,488 $2,158 $1,477 $1,674 $2,353 -37% FY 2013 $2,698 $3,296 $2,823 $2,415 $2,554 $2,167 $1,497 $1,668 $2,390 -37% FY 2014 $2,807 $3,357 $2,962 $2,400 $2,621 $2,264 $1,570 $1,681 $2,458 -36% FY 2015 $2,779 $3,440 $3,047 $2,499 $2,647 $2,305 $1,608 $1,736 $2,507 -36% FY 2016 $2,856 $3,370 $2,990 $2,495 $2,715 $2,262 $1,808 $1,708 $2,525 -28% FY 2017 $3,299 $3,437 $3,040 $2,474 $2,855 $2,637 $1,627 $1,678 $2,631 -38% 80 Municipal Comparison – Capital Funding Sources

Peterborough had the HIGHEST reliance on Grants as a funding source (over 50%) of all comparators over 8 years.

81 Peterborough County– Capital Funding Sources

Peterborough has reduced reliance on Grants over last 5 years.

82 Peterborough has reduced reliance on Grants over last 5 years but total investments are below comparators

83 Summary

• County is in relatively good financial condition. • County has lower than average property tax and debt. • Debt room is available. • Assets are older than other comparators. • Asset Investments are lower than comparators. • County needs to “catch up”.

84 Financing Strategy Recommendations

• Implement an Infrastructure Levy • Update Reserve and Debt Policies to provide commitments based upon asset management plan • Debt Financing – Bridge the Gap in Short Term

85 Funding Gap Analysis

Spending Needs Funding Sources

86 Revenue Assumptions

• Reserve Fund data from 2019 Plan Review 11-21-2018 • Higher than anticipated Development Charges factored in • All values in 2018 dollars – expenditures and revenue • Baseline funding for Signals, Entrance Culverts, Facilities based on current spending from operating

87 Equipment Reserves

Opening + Levy - 10 Year Needs = Forecast - Reserve Target = Over(Under)

(Levy) Corp Eq $112,017 $446,544 ($431,502) $127,060 $36,723 $90,336 (Levy) Env Eq $40,000 $59,070 ($31,351) $67,719 $40,000 $27,719 (Levy) PCCP Eq $1,587,829 $10,456,495 ($4,864,799) $7,179,525 $3,727,017 $3,452,508 (Levy) EM Eq $30,000 $160,294 ($39,409) $150,886 $60,000 $90,886 (Levy) PW Eq $3,476,516 $6,621,129 ($7,508,339) $2,589,306 $2,950,776 ($361,470) + Opening Reserve Balance  + Planned Levy No Issues forecast – 10 Year Replacement = Forecast Reserve – Reserve Target Note: PCCP Needs do not include costs = Gap, Over(under) for potential service expansion

88 Needs and Funding – Excluding Equipment Asset Type Fund Source(s) Need Levy-R&B Levy-CC Levy-Signals Levy-Fac Gas Tax OCIF DC TOTAL Bridges/Culverts Levy, Gas Tax, OCIF $40,965,541 $40,965,541 $40,965,541 Cross Culvert Levy $6,952,476 $6,952,476 $6,952,476 Facility Levy $7,749,178 $7,749,178 $7,749,178 Road Levy, Gas Tax, OCIF, DC $133,091,127 $110,653,783 $17,227,596 $5,209,748 $133,091,127 Signals Levy, Gas Tax $266,182 $266,182 $266,182 Transportation Plan Levy, Gas Tax, OCIF, DC $31,891,454 $17,191,454 $14,700,000 $31,891,454 Total Needs $220,915,958 $168,810,778 $6,952,476 $266,182 $7,749,178 $17,227,596 $5,209,748 $14,700,000 $220,915,958 Baseline Funding $126,691,082 $1,840,000 $100,000 $2,164,160 $17,227,596 $5,209,748 $14,700,000 $167,932,586 Funding Shortfall $42,119,696 $5,112,476 $166,182 $5,585,018 $52,983,372

• Assumptions/Comments – All DC used for Transportation Plan – Unfunded Transportation Plan from Levy – All OCIF, Gas Tax towards road preservation – Baseline Road/Bridge funding includes a 2% levy increase every year 2019-2028

89 Needs and Funding - Simplified

Need Funding Shortfall Transportation-Preservation $181,275,326 $151,068,426 $30,206,900 Transportation Plan $31,891,454 $14,700,000 $17,191,454 Subtotal - Transportation $213,166,780 $165,768,426 $47,398,354 Facilities $7,749,178 $2,164,160 $5,585,018 Total $220,915,958 $167,932,586 $52,983,372

• Roads, bridges, cross culverts, signals grouped into “Transportation Preservation” • Transportation plan has no baseline levy funding, funded by DC

90 Baseline Funding Gap– By Year

• Current (baseline) Funding Gap plan for $9,000,000 transportation $8,000,000 preservation $7,000,000 would get to $6,000,000 annual funding $5,000,000 needs by 2028 $4,000,000 • But – likely to $3,000,000 have either a $2,000,000

reserve deficit or $1,000,000 needs deficit. 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 ($1,000,000)

($2,000,000)

Roads/Bridges-Preservation Transportation Plan Facilities 91 Closing the Gap • How quickly to close the gap? – Immediate, to reach required funding levels – Incremental increases. In later years will exceed annual funding needs in order to “catch up” and meet 10 year needs

Ending Annual Illustration: Home Renovation costs are $30,000 over a typical 10 Year timeframe Saving Rate

$3,000/Year $3,000/Year

$1,000/ Year (2 Years) $2,000/ Year (2 Years) $4,000/Year (6 Years) $4,000/Year

92 Closing the Gap – Facilities A

Facilities - Fully Funded A 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Needs $218,480 $512,889 $648,944 $470,418 $607,278 $1,034,131 $758,083 $935,879 $1,005,932 $1,557,145 $7,749,178 Baseline Funding $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $2,164,160 Shortfall (Surplus) $2,064 $296,473 $432,528 $254,002 $390,862 $817,715 $541,667 $719,463 $789,516 $1,340,729 $5,585,018 Yearly Levy Adjustment $617,562 Cumulative Levy Adjustment $617,562 $617,562 $617,562 $617,562 $617,562 $617,562 $617,562 $617,562 $617,562 $5,558,058 Levy increase - year over year 1.50% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.50% Adjusted Funding $216,416 $833,978 $833,978 $833,978 $833,978 $833,978 $833,978 $833,978 $833,978 $833,978 $7,722,218 Adjusted Shortfall (Surplus) $2,064 ($321,089) ($185,034) ($363,560) ($226,700) $200,153 ($75,895) $101,901 $171,954 $723,167 $26,960

• Levy increase 1.5% in 2020 – Average residential tax bill would increase by $12.52. * Based on 2018 Median Value of a Single Family Home ($249,500)

93 Closing the Gap – Facilities B

Facilities - Fully Funded B 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Needs $218,480 $512,889 $648,944 $470,418 $607,278 $1,034,131 $758,083 $935,879 $1,005,932 $1,557,145 $7,749,178 Baseline Funding $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $216,416 $2,164,160 Shortfall $2,064 $296,473 $432,528 $254,002 $390,862 $817,715 $541,667 $719,463 $789,516 $1,340,729 $5,585,018 Yearly Levy Adjustment $205,854 $206,883 $207,918 $104,479 Cumulative Levy Adjustment $205,854 $412,737 $620,655 $725,134 $725,134 $725,134 $725,134 $725,134 $725,134 $5,590,048 Levy increase - year over year 0.50% 0.50% 0.50% 0.25% 0.00% 0.00% 0.00% 0.00% 0.00% 1.75% Adjusted Funding $216,416 $422,270 $629,153 $837,071 $941,550 $941,550 $941,550 $941,550 $941,550 $941,550 $7,754,208 Adjusted Shortfall (Surplus) $2,064 $90,619 $19,791 ($366,653) ($334,272) $92,581 ($183,467) ($5,671) $64,383 $615,595 ($5,030)

• Levy increase 0.5% in 2020-2023 – Average residential tax bill would increase by $4.18.

* Based on 2018 Median Value of a Single Family Home ($249,500)

94 Risks

• Potential danger to health and safety of occupants • Acceleration of component replacements (i.e. roofing and paving) • Catastrophic repairs & associated premiums • Interruption or loss of operations • Loss of operating savings • Increasing capital costs resulting from inflation • Deterioration of facilities to the point of loss of use and/or requirement for replacement

95 Closing the Gap – Transportation A

Transportation - Fully Funded A 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Subtotal - Needs $20,751,533 $23,553,129 $20,813,931 $20,406,114 $21,344,506 $20,823,471 $20,381,884 $21,332,707 $21,694,043 $22,065,463 $213,166,780 Baseline Funding $12,564,224 $17,930,581 $14,064,183 $14,937,999 $15,506,212 $16,260,980 $17,188,281 $18,134,127 $19,098,890 $20,082,949 $165,768,426 Shortfall (Surplus) $8,187,309 $5,622,548 $6,749,748 $5,468,115 $5,838,294 $4,562,491 $3,193,603 $3,198,580 $2,595,153 $1,982,514 $47,398,354 Yearly Levy Adjustment $5,265,745 Cumulative Levy Adjustment $5,265,745 $5,265,745 $5,265,745 $5,265,745 $5,265,745 $5,265,745 $5,265,745 $5,265,745 $5,265,745 $47,391,708 Levy increase - year over year 12.79% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 12.79% Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Adjusted Funding $12,564,224 $23,196,326 $19,329,928 $20,203,744 $20,771,957 $21,526,725 $22,454,026 $23,399,872 $24,364,635 $25,348,694 $213,160,134 Adjusted Shortfall (Surplus) $8,187,309 $356,803 $1,484,003 $202,369 $572,548 ($703,254) ($2,072,143) ($2,067,166) ($2,670,593) ($3,283,231) $6,646 • Note: Baseline Funding already includes a 2% increase in every year starting from 2019 • 12.8% Levy increase in 2020 – Average residential tax bill would increase by $106.81.

* Based on 2018 Median Value of a Single Family Home ($249,500) 96 Closing the Gap – Transportation B

Transportation - Fully Funded B 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Subtotal - Transportation Needs $20,751,533 $23,553,129 $20,813,931 $20,406,114 $21,344,506 $20,823,471 $20,381,884 $21,332,707 $21,694,043 $22,065,463 $213,166,780 Baseline Funding $12,564,224 $17,930,581 $14,064,183 $14,937,999 $15,506,212 $16,260,980 $17,188,281 $18,134,127 $19,098,890 $20,082,949 $165,768,426 Shortfall (Surplus) $8,187,309 $5,622,548 $6,749,748 $5,468,115 $5,838,294 $4,562,491 $3,193,603 $3,198,580 $2,595,153 $1,982,514 $47,398,354 Yearly Levy Adjustment $940,639 $980,522 $1,021,676 $1,064,135 $1,107,936 $1,153,118 $1,199,720 $1,247,780 $1,297,341 Cumulative Levy Adjustment $940,639 $1,921,161 $2,942,837 $4,006,972 $5,114,908 $6,268,027 $7,467,747 $8,715,527 $10,012,868 $47,390,686 Levy increase - year over year 2.24% 2.24% 2.24% 2.24% 2.24% 2.24% 2.24% 2.24% 2.24% 20.16% Adjusted Funding $12,564,224 $18,871,220 $15,985,344 $17,880,836 $19,513,184 $21,375,888 $23,456,308 $25,601,874 $27,814,417 $30,095,817 $213,159,112 Adjusted Shortfall (Surplus) $8,187,309 $4,681,909 $4,828,587 $2,525,278 $1,831,322 ($552,417) ($3,074,424) ($4,269,167) ($6,120,374) ($8,030,354) $7,668 • 2.24% Levy increase in 2020 to 2028 – Average residential tax bill would increase by $18.69.

* Based on 2018 Median Value of a Single Family Home ($249,500) 97 Closing the Gap – Transportation C

Transportation - Fully funded C 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Subtotal - Transportation Needs $20,751,533 $23,553,129 $20,813,931 $20,406,114 $21,344,506 $20,823,471 $20,381,884 $21,332,707 $21,694,043 $22,065,463 $213,166,780 Baseline Funding $12,564,224 $17,930,581 $14,064,183 $14,937,999 $15,506,212 $16,260,980 $16,260,980 $16,260,980 $16,260,980 $16,260,980 $156,308,099 Shortfall (Surplus) $8,187,309 $5,622,548 $6,749,748 $5,468,115 $5,838,294 $4,562,491 $4,120,904 $5,071,727 $5,433,063 $5,804,483 $56,858,681 Yearly Levy Adjustment $1,478,147 $1,559,741 $1,644,799 $1,733,455 $1,825,846 $0 $0 $0 $0 Cumulative Levy Adjustment $1,478,147 $3,037,888 $4,682,687 $6,416,142 $8,241,988 $8,241,988 $8,241,988 $8,241,988 $8,241,988 $56,824,801 Levy increase - year over year 3.52% 3.52% 3.52% 3.52% 3.52% 0.00% 0.00% 0.00% 0.00% 17.60% Adjusted Funding $12,564,224 $19,408,728 $17,102,071 $19,620,686 $21,922,354 $24,502,968 $24,502,968 $24,502,968 $24,502,968 $24,502,968 $213,132,900 Adjusted Shortfall (Surplus) $8,187,309 $4,144,402 $3,711,860 $785,427 ($577,848) ($3,679,496) ($4,121,084) ($3,170,261) ($2,808,925) ($2,437,504) $33,880

• Note: Higher incremental Levy change in 2020 to 2024 and eliminate baseline 2% increase after 2024 – Average residential tax bill would increase by $29.38. * Based on 2018 Median Value of a Single Family Home ($249,500) 98 Option D – Cover unfunded TP with Debt

Transportation - D (A, with TP Debt) 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total

Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Subtotal - Needs $20,751,533 $23,553,129 $20,813,931 $20,406,114 $21,344,506 $20,823,471 $20,381,884 $21,332,707 $21,694,043 $22,065,463 $213,166,780 Baseline Funding $12,564,224 $17,930,581 $14,064,183 $14,937,999 $15,506,212 $16,260,980 $17,188,281 $18,134,127 $19,098,890 $20,082,949 $165,768,426 Shortfall (Surplus) $8,187,309 $5,622,548 $6,749,748 $5,468,115 $5,838,294 $4,562,491 $3,193,603 $3,198,580 $2,595,153 $1,982,514 $47,398,354

Borrowing, for TP $426,444 $529,959 $1,558,859 $1,755,333 $2,058,193 $2,057,771 $2,054,432 $2,059,589 $2,112,669 $2,578,206 $17,191,454 Interest ($13,522) ($29,101) ($75,740) ($124,033) ($176,635) ($222,880) ($262,465) ($295,450) ($323,112) ($1,522,938) Principle repayment ($83,317) ($83,317) ($219,909) ($377,942) ($567,264) ($762,893) ($964,790) ($1,173,894) ($1,394,559) ($5,627,885) Current Debt $426,444 $873,086 $2,348,628 $3,884,052 $5,564,304 $7,054,810 $8,346,349 $9,441,148 $10,379,923 $11,563,570 Yearly Levy Adjustment $4,150,017 Cumulative Levy Adjustment $4,150,017 $4,150,017 $4,150,017 $4,150,017 $4,150,017 $4,150,017 $4,150,017 $4,150,017 $4,150,017 $37,350,150 Levy increase - year over year 10.08% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 10.08% Transportation Preservation $18,825,089 $17,023,171 $18,055,072 $17,450,781 $18,486,313 $17,965,701 $17,527,452 $18,473,118 $18,781,374 $18,687,257 $181,275,326 Transportation Plan $1,926,444 $6,529,959 $2,758,859 $2,955,333 $2,858,193 $2,857,771 $2,854,432 $2,859,589 $2,912,669 $3,378,206 $31,891,454 Adjusted Funding $12,990,668 $22,513,717 $19,660,641 $20,547,700 $21,212,447 $21,724,869 $22,406,956 $23,116,477 $23,892,232 $25,093,500 $203,118,576 Adjusted Shortfall (Surplus) $7,760,865 $1,039,412 $1,153,290 ($141,586) $132,058 ($901,397) ($2,025,073) ($1,783,771) ($2,198,189) ($3,028,037) $7,573 • Cover unfunded Transportation Plan by borrowing – Average residential tax bill would increase by $84.11. * Based on 2018 Median Value of a Single Family Home ($249,500) 99 Option D – Cover unfunded TP with Debt • Assumptions – 17M in unfunded Transportation Plan paid for County A County D by debt No Debt With Debt – Interest cost 3.3% annually – 10 year payback period 2029+ Annual Program Spending $22,065,463 $22,065,463 – Goal is level, sustainable/flatline funding in Annual Debt repayment $1,310,308 2029+ Subtotal - Spending $22,065,463 $23,375,771 • County A: – Increased levy by 12.8% in 2020. In 2028 the Baseline Funding $25,348,694 $24,232,966 funding backlog has been covered and levy can Shorfall (Surplus) ($3,283,231) ($857,194) be reduced by 7% • County D: Levy Change -7.07% -1.89% – Starts 2029 with 11.6 M debt. Repaid at Additional Information $1,5M/year 12.79% 10.08% – Increased levy by 10.08% in 2020. In 2028 the 2020 Levy Increase levy reduced by 1.89%. Total Borrowed $17,191,454 • Levy increase change in 2020 was 2.7% less for Interest Paid ($1,522,938) County C • Levy increase change in 2029 is 5.2% less for Debt end of 2028 $11,563,570 County A 100 Summary – Asset Funding Options

Year over Year Levy Increase Combined 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Levy Change From 2019 Funding Option A - Immediate 2.00% 16.29% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% -7.07% 27.22% Funding Option B - Incremental 2.00% 4.74% 4.74% 4.74% 4.49% 4.24% 4.24% 4.24% 4.24% 4.24% -13.87% 28.04% Funding Option C - Incremental 2 2.00% 7.02% 5.52% 5.52% 5.52% 5.52% 0.00% 0.00% 0.00% 0.00% -4.54% 26.56% Funding Option D - Immediate+Debt 2.00% 13.58% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% -1.89% 29.69%

2020 Household Tax Increase • Baseline 2% Transportation included Option Tax Incr • Goal is that in 2029 revenue = annual needs Option A $135.92 • Longer levy ramp up results in larger adjustment in 2029 Option B $39.55 • Debt option is most expensive due to borrowing costs Option C $58.57 Option D $113.31 101 Risks

• Reduced Value = 110% Underspend • Increased backlog • Higher risk of failure – bridges, culverts • Inability to address safety concerns • Higher travel times at certain locations

102 Countywide Asset Management

• Encourage knowledge sharing across all agencies – upper tier, lower tier – Consistency in analysis – Shared best practices – Reduced overall effort – Get it done

103 Next Steps

• Feb 6, 2019 – Staff Report – Asset Management Plan Approval – Strategic Asset Management Policy Approval – Future Public Consultation • Feb 20, 2019 – If required

104