jwo l5 Item No. THE CORPORATION OF THE CITY OF WINDSOR Of?ce of the City Treasurer - Asset Planning eon-m MISSION STA ?Our City is built on relationships between citizens and their government, businesses and public institutions, city and region alt interconnected mutually supportive, and focused on the brightest ?tmre we can create together. LiveLin?k REPORT it: 17609 Report Date: March 19, 2015 Author?s Name: Melissa Osborne Mark Winterton Date to Council: March 23, 2015 - Author?s Phone: 519 255-6100 ext. 6111 1519 255-6415 Classi?cation it: Author?s E?mail: mosborne@city.winLdsor.on.ca, I mwintertoanindsonomca NIGEL AGENDA I COM unpleaj?jion 0; Mayor and Members of City Council 5 Subject: Response to CQS-2015-Roads Capital Levy a 5 . NO. 1. RECOMMENDATION: City Wide: Ward(s): THAT Council RECEIVE FOR INFORMATION the administrative report in response to Council Question CITY OF I 11.. ..INDson COUN EXECUTIVE SUMMARY: . MAR 2'0 2015 2. BACKGROUND: - RECEIVED On February 2, 2015 Councillor Payne asked the following question, a report from the City Treasurer and City Engineer (in preparation for the upcoming Council Strategic Planning Session) as to how much funding a 1% incremental Roads Capital Levy- (rising to a cumulative 4% by the fourth year) and to be used initially to upgrade existing roads, would generate each year over four years, and ongoing annually thereafter as part of the budget base. And, as well, what would be the cost to the average taxpayer of such an initiative and the total length of de?cient roads that could be reconstructed or milled and paved with this new funding source that could come into effect in 2016? 3. DISCUSSION: The City has approximately 1,034 km of roadways (centreline measurement, or 2,500 lan_e km). There are currently approximately 385 km of roads (centreline measurement) which require reconstruction or rehabilitation (mill and pave), to improve the condition of the road. The average cost to mill and pave" or reconstruct one typical residential'block is $100,000 and - $500,000 respectively. It is estimated that to? address the current road needs for the 385 would cost approximately $391 million. It should also be noted that there are an additional 107 lOfS km which, based on historical deterioration trends, are likely to require mill and paving in the next 5 years at a cost of approximately $3 5Million. - The Public Works division has a de?ned pavement management program in place to visually inspect each road segment at least once every 5 years. Annually they review the 5 year road maintenance program to determine if any significant changes have occurred which would warrant changes in the plan. These signi?cant events include consideration of the assets beneath the roads such as sewers and water mains, as well other factors including but not limited to . further deterioration of the road, impact of road closures on traf?c and business owners, traf?c volume and vehicle type, adjoining assets such as sidewalks, curbs and gutters. This information is then used to recommend the optimal distribution of available funding to maximize the results of rehabilitation (mill and pave) or reconstruction projects. New maintenance programs (such as sewer lining) have also been recently adepted which. extend the life of below-surface assets allowing there to be an increase in the mill and pave opportunities "for-the City. Considering the cost differential between mill and pave and reconstruction is approximately ($400,000 on a typical 300 block of a local road) the ability to mill and pave a road segment avoids the need for the signi?cant additional funding required for a full reconstruction. The City of Windsor has doubled the annual capital funding, going from an annual average of approximately $50 million to $100 million over the last dozen years. The 2015 ?ve year capital budget has allocated the maj ority of available funds of the total to the Road and Sewer categories. - Historically the Roads category has included capital projects Which related to work on both existing roads,'as well as the expansion of existing roads or creation of new roads (growth related projects). It has also traditionally included projects for other assets which are closely associated with roads such as sidewalks, railway crossings, andlocal improvements for curb and gutter work. The Sewer category has traditionally included capital projects which related to work on both existing sewers, as well as the expansion of existing sewers or creation of new sewers (growth related projects). In some cases sewer projects will also include the reconstruction of the roadway above the sewer. The Sewer category has also traditionally included projects such as CCTV (camera) inspections, municipal drains, ?ood prevention programs and development cf sewer master plans. The foregoing explanation is necessary in order to put into perspective the existing funding which is aimed at mill and pave/recenstruction of existing roads (the aspects referenced by the noted Council question), but is also used to ?lnd road network expansion (attributable to growth, and only partially funded by development charges based on current rates) and roadway related ancillary components. - Over the last decade, the percentage of roads in need of repair has remained fairly stable. That is to say, the use of available road maintenance funding has been balanced such that there has not - been an increase in the number of kilometres of roads that require reconstruction or mill and pave work. Conversely, however, we have not been able, based on current ?lnding levels, to reduce the number of kilometres which require some sort of rehabilitation ANSWER An incremental dedicated capital levy of 1% each year over 4 years would result in an annual funding increase of approximately $4 million or $40 million in cumulative'funding over the 4- 20f5 year period. This additional cumulative total funding would allow the City to mill and pave . approximately 400 additional residentialblocks or to completely reconstruct 80. residential blocks (300m long by 8.6m wide). The tax increase to a homeowner with a home valued at the average. ($150,000) would be $27 each year, resulting in an approximate increase above current taxes of $108 by the fourth year. If the levy were to remain in the base after the fourth year, but not increase, it would raise an additional annually (compared to current levels) for road work on an ongoing basis; this would allow an additional 160 residential blocks of mill and pave or 32 residential blocks of reconstructions annually of residential blocks compared to current funding levels (subject to normal in?ationary impacts as time goes by). The impact to the taxpayer would not increase above the noted $108 per year as there would no longer be an incremental factor to the levy. It should be noted that the amount of read workthis proposed tax levy would facilitate is based on administration?s generalized approximations. The estimations assume the referenced road segments are typical residential streets, 300m long, and two lanes 8.5m wide, and asphalt. This is not the case for many roads such as main arterial roads Dougall, Huron Line, E.C. Row expressway and others), which are 4 lanes or more wide and may be concrete not asphalt. Therefore, the noted estimates should be considered with this additional information in mind. Additional Related Information. Administration is currently working on a study which aims to provide Council with a report later this year that will serve as the basis for making long term (20 year) strategic funding decisions relative to the City?s roadway network. The study will deal with road segments in a detailed fashion looking at road classi?cations, expected levels of service, corresponding risks, various related maintenance programs-and appropriate timing of work to improve cOnditions and extend the useful life. This will provide greater clarity for the decision making process and result in de?ned expectations for the roads network that can then be measured and reported periodically. The results of this will provide council With a much clearer understanding of what level of service and associated risk can be expected over the next 20 years based the various funding levels approved. 4. - RISK ANALYSIS: The development of detailed 20-year road projection models will increase the level of understanding relative to the condition ratings and service levels that can be achieved at current or enhanced funding levels. It will also quantify the levels of risks associated with those funding levels. FINANCIAL MATTERS: The ?nanCial impacts Of a potential 1% Capital levy is discussed throughout this report. If Council wishes to increase infrastructure spending, the use of an incremental approach (such as with an incremental capital levy) is preferable to a an immediate increase in funding (by way of borrowing, etc.) as construction costs could. increase signi?cantly if there is an immediate signi?cant increase to the annual expenditure (which would also negatively impact traf?c patterns). 3of5 'It should be noted that, as per the City?s asset management plan, the City?s assets have a replacement value of approximately $5.2 Billion dollars. The following chart shows the percentage and value breakdown of all City Assets: Business Solutions EnvironmentaI Development 8: protection parks! Support $118,654,611 $17,423,021 2.27% 0.33% Corporate Fleet Management, $18,220,422 Transportation Services (which includes roads, sidewalk and trails) is the largest component and represents 46.5 of the total Value of Replacement of all assets. However, the remaining 53.5% of assets garealso in need of ongOing sustainable funding based on a balanced approach to the allocation of available resources. The infrastructure de?cit is a very signi?cant challenge Canada- wide; the City of Windsor is not unique in its requirement for additional funding for infrastructure. In 2014, The Federation of Canadian municipalities noted as follows on the issue of Infrastructure: ?Municipalities own over 60% of the country's in?astructure but collect just eight cents of every'taxdollar paid in Canada, with the other 92 cents going to federal, provincial and territorial governments. - On their own, municipalities don 't have the revenue tools to rebuild in?astructure, especially while they are expected to meet growing needs for policing, housing, the environment and immigrant settlement, including many responsibilities downlOadecl?om other governments.? 6. CONSULTATIONS: 4of5 7. CONCLUSION: Signi?cant funding is currently directed towards the capital budget in general and towards roadways in particular. The introduction of a capital levy dedicated to roads would allow additional. funding to be earmarked towards this important compone network. It is noted that other asset classes are also in need of additional funding, and it is therefore prudent to adopt a balanced approach to the allocation of available funding. nt of the City?s infrastructure Administration has been working with consultants to develop a report to council for later this year aimed at facilitating long term strategic decisions relative to roads service levels and related 7194/ Wrton - - ity Engineer, Corporate Leader for issues. Transportation Mpi ir mental Protection and ga l- hief A lnistrative Of?cer Environmental Protection and Transportation @4 I Onorio Colucci Chief Financial Officer/City Treasurer and Corporate der Finance and Technology Melissa Osborne Senior Manager of Asset Planning APPENDICES: ICONSULTED: Name: Phone 519 ext. NOTIFICATION: Name Address Email Address Telephone FAX _50f5i