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“In order to keep these assets safe and functional, it is prudent to leverage debt funding in the early years to avoid a funding gap and slowly build up the base budget over time,” said Susan Johns, the city’s director of asset management.
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“This is the most financially sustainable way to renew these assets. These are long-lived assets, and asking today’s ratepayer to fund an asset that will last, in some cases, hundreds of years, would not make sense.
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“It is better to spread that cost of that asset over its useful life in the form of debt financing and ensuring that future rate-payers that will benefit from that asset are the ones paying for it.”
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Is the city being too optimistic?
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Several public delegations spoke at the June 3 committee meeting to express concerns over the funding deficit and the city’s aging infrastructure.
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Carolyn Mackenzie, planning chair with the Glebe Community Association and a member of the city’s planning advisory committee, asked whether staff acknowledged the “sense of urgency with council, this committee and the public about the enormous infrastructure deficit we’re facing.”
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“The report says that the infrastructure backlog we face is not unique to Ottawa and this is certainly true, but I’m concerned that this characterization seriously downplays the risk to Ottawa’s long-term financial sustainability, giving little sense of the very large base of aging infrastructure requiring renewal in the next decade,” Mackenzie said.
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“When (the report) uses language like ‘a measured backlog is expected in a large and established municipal portfolio…’ Are we really describing a backlog of almost 11 billion as measured?”
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James Murchison of the community group Strong Towns Ottawa presented councillors with graphics illustrating the city’s network of aging water pipes. He said 180 kilometres of pipe was between 75 and 150 years old, while 1,800 kilometres of pipe was 55 to 75 years old.
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“The current 10-year long-range plan doesn’t really touch on this infrastructure — this is what’s coming maybe 20 to 30 years down the road,” Murchison told the committee.
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“The decisions we’re making on the small area of infrastructure — this 1.7 billion in debt and $4 billion in spending — is a very small piece of a much bigger problem that’s coming down the road.”
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So what does the infrastructure gap tell us?
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The asset management plans presented to the finance committee “are not a request for new capital funding,” staff said. “Rather, they are a strategic tool to help council and staff understand the current state of infrastructure, forecast future needs, and make informed decisions that balance cost, risk, and service delivery.”
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The AMPs quantify the total needs for each asset by comparing the forecast investment and the forecast needs over a 10-year period. The $10.8 billion gap represents the needs for all 12 AMPs combined.
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Each plan presents a summary of the inventory and condition of city-owned assets, including current service levels and Council-approved targets for the next 10 years; forecasted lifecycle costs for renewal, growth, and enhancement; risks to service delivery if needs exceed funding; and mitigation strategies to help manage those risks.
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