The City of Duncan should begin setting aside more money soon for infrastructure replacement if the municipality is to remain sustainable, council heard at its meeting on Oct. 7.
Christopher Paine, from FIT Local Government Consulting, a firm specializing in local government finance and asset management, gave a presentation about the city’s infrastructure needs based on a sustainability study it developed in cooperation with city staff.
The study, which calculated sustainable funding levels by modelling estimated replacement infrastructure costs over a 100-year timeframe, determined that much of Duncan’s water and sewer systems, as well as other infrastructure, are currently 65 per cent through their useful life, on average, and the replacement costs of these assets are estimated to be approximately $524.5 million.
Paine said the annual sustainable funding required to replace the city’s infrastructure is estimated to be between $8.3 million and $9 million, but current funding is approximately $4.1 million, leaving an annual funding gap of between approximately $4.2 million and $4.9 million.
“Left unchanged, this may lead to a 100-year funding gap totalling approximately $490.4 million,” he said.
Paine said some of the recommendations that came from the study are to implement an annual tax increase of 1.75 per cent over a 15-year period dedicated to general infrastructure replacement; introduce 15 years of 1.75 per cent water-user fee increases; implement 10 years of one per cent increases of sewer-user fees for existing infrastructure, and to continue to increase sewer user fees by at least three per cent annually in anticipation of the costs of the Joint Utility Board Outfall Relocation Project.
The JUB project, a joint effort of the Municipality of North Cowichan and the City of Duncan which will see a new pipe laid from the JUB’s sewage treatment plant near Duncan to a proposed new outfall location outside of Cowichan Bay, was estimated to cost approximately $42-million in 2021.
Paine said increasing funding in the short-term to address the financial shortfall would allow costs to be spread out as evenly as possible over the life of the city’s infrastructure assets.
He said the city could decide to defer increased funding to a later date, but that would only delay the inevitability of the required infrastructure work, or not to fund them at all.
“But the city does not have many options to reduce or abandon capital services as most are essential,” Paine said. “However, the city can choose to accept a higher level of risk or reduced quality of capital service.”
Mayor Michelle Staples said many local governments in B.C. have not invested much in their infrastructure since the communities were constructed between 60 and 100 years ago, and now they are facing huge increases in infrastructure costs.
Paine said some communities don’t approve of their reserve balances growing.
“But the issue with infrastructure is if you’re deferring the funding, you’re not deferring the costs because the costs will come to fruition,” he said.
Staples added that saving for the future has come up in past councils in the city, but it’s difficult for council members to have people pay taxes now for infrastructure that probably won’t be needed in their lifetimes.
“But this [study] demonstrates the reason why we need to do just that because, otherwise, someone is going to inherit a worse problem than if this had been invested in right from the beginning,” she said.
Council directed that the study be part of the discussions during the upcoming budget building deliberations for 2025.
