1. S USTAINABLE I NFRASTRUCTURE AND F INANCING by InfraCycle Fiscal Solutions for the 2013 FOF Conference InfraCycle Fiscal Solutions – Dedicated to improving your municipality’s fiscal performance Ray Essiambre President and Founder Craig Davidson CAO Hastings Highlands Senior Associate

2. Sustainable Infrastructure and Financing Issues and Solutions Our Topic

3. External influences you do not control Populations are generally declining Residents have greater expectations – want more Housing stock is aging and lower assessments Assets are aging and they cost more Defining the Problem

4. Internal influences and things you can change Council’s Fiscal Theme The decision making process Access to tools and new techniques Defining the Problem

5. Changes in land use trigger future lifecycle costs and revenues in perpetuity.............. Decisions at planning committee and council Roll the dice - a good financial decision or a bad one? Deal with fiscal implications after-the-fact at budget time Treasurer is left out the process The disconnect in decision making Defining the Problem

6. Business Park $2million net gain over 10 years or $200,000/yr Residential $(-50million net loss) over 10 years or (- $5million) net loss /yr Net Loss ($4.8million/yr) Solutions Improve Decision Making

7. Quantifying Land Use Options Un-serviced Industrial $350,000 /1,000 acres Agricultural $1,000 /1,000 acres General Industrial $5,500,000 /1,000 acres Premium Mixed Use $16,000,000 /1,000 acres Predicting Success – Employment Areas

8. Defining the Problem – Waiting Too Long

9. Solutions Best Practice for Asset Management

10. Using new technologies Dam Road Bridge Mink Lake Hastings Highlands Solutions Trends

11. Old Versus New Construct in place Total project from concept to completion estimated to be over 12 months Road closure for many months Increase need for detours Cost estimated at $1,000,000 Prefabricated Total project from concept to finish 6 month Road closed for 10 days No detours Alternative plans available Cost - $500,000 Solutions Trends

12. Solutions Out with the Old

13. Solutions In with the New

14. Solutions On the Road Again

15. Community engagement Communication strategies Compromise Cooperation between work forces Cooperation with residents Cooperation with business community A success? Solutions Other Lessons Learned

16. Directions What should be charged by use? Subsidized operations? At what level? Communicating the change Solutions Other Lessons Learned

17. Summary

19. External influences you do not control Services like libraries, community centres etc. may not be able to handle development without increased financial contribution Defining the Problem Historic underfunding of municipal operations for both operating and capital

20. External influences you do not control As property taxes make up more of the household budget – more scrutiny about the value for money Defining the Problem Most municipalities derive most of their revenues from property taxes – 75% in rural Ontario on average

21. Defining the Problem Short-term thinking and solutions don’t work Municipal finance is more complex Solutions need to extend beyond 1 or 2 terms of council The current operating and capital budget processes are not enough

22. External influences you do not control Less ability to develop smartly to increase revenues outside growth areas Defining the Problem Limited ability to create new sources of funding Provincial downloading

23. External influences you do not control Defining the Problem Grant programs support start-up costs Little support for ongoing costs outside municipal structure No support for soft costs to keep programs running

24. External influences you do not control Defining the Problem Property Taxes increase over previous years Little to reflect shrinking Provincial support for increasing operating costs Little to reflect the increasing responsibilities of Municipalities

25. Defining the Problem – Waiting Too Long

26. 1975 Defining the Problem – Waiting Too Long

27. Solutions and Examples

28. Avoid Risk and the Slippery Slope Municipality in Balance Reluctance to increase taxes and user fees Reduce reserves Increase borrowing Municipal crisis Solutions - Avoid Risk Longer-term Financial Planning Steep increase in taxes and user fees

29. Link land use to fiscal outcomes Solutions Fiscal Impact Analysis

30. Capital Replacement Maintenance Operating All inclusive calculation of the following Time Solutions Lifecycle Costing and Think Long-term

31. Life cycle costCapital Building Capital Books & Equipment FinancingReplacement Building Replacement Books & Equipment ResaleWaterEnergyStaff Salary 43,950,000 10,000,000 1,200,000 250,000 3,000,000 2,400,0000 2,500,000 4,000,000 17,600,000 Solutions Understand the True Cost

32. $(5,982,000) Unfunded Liabilities ($22,982,000) $(422,982,000) Solutions Lifecycle costing of ALL municipal assets

33. Solutions Trends Roads were constructed Roads were used Minor maintenance  Potholes filled  Lines painted Road deteriorated Road was reconstructed Historically

34. Historical Factors Level of funding We all like new! More emphasis on capital programing rather than ongoing maintenance Solutions Trends

35. Shift in Priorities Less funding Looking for efficiencies Looking for new way of operating Focus on the asset Solutions Trends

36. Life Cycle Approach Regular maintenance Major projects at life cycle significant points Keep asset in good condition Extends life of asset Cost to maintain is less than cost to rehabilitate once the asset has deteriorated Solutions Trends

37. Taxation vs User Charges Factors for change  Council focus on tax rates  Walkerton – full recovery from rates  Change in approach from a cost shared by assessment to a cost based on use Solutions Trends

38. Ray Essiambre, President InfraCycle Fiscal Solutions ray@infracycle.com 613-836-7541 How may we help you? Craig Davidson, CAO Hastings Highlands Senior Associate craig@infracycle.com Questions ?

39. Three primary topics Session Format Questions and Answers How to get started Defining the problem – how did it come to this? Solutions and examples

40. FAR - 0.13 FAR - 0.60 Economic Development Strategy Solutions Increase Revenues – Better Choices