Unfunded Infrastructure of Canadian Municipalities Term Paper

Excerpt from Term Paper :

(Vander Ploeg, 2003)

Key findings stated in the report of Vander Ploeg include the following:

Unlike the overall indications of municipal infrastructure needs, which identify water and wastewater infrastructure as having the greatest investment needs, western cities biggest needs exist in the transportation sector. In each of the cities except Vancouver, roads, bridges, interchanges, sidewalks and public transit make up at least half of the annual infrastructure deficit;

This may be related to the relative youth of western Canadian cities with respect to their eastern counterparts, and suggests that maintenance and repair of existing systems should remain a priority in order to prolong the useful lifespan of water delivery systems and sewers;

Also, environmental services in most western cities are self-financed through user fees, which makes it much easier to finance infrastructure improvements to municipal utilities as opposed to general infrastructure which relies on the tax base for funding. Western cities are also subjected to stringent provincial regulations and standards for water and waste water infrastructure, which mitigates against foregoing maintenance of these systems. (Vander Ploeg, 2003)

It is reported in the work entitled: "The National Highway System: Condition and Investment Needs Update 1997" a study conducted by the Council of Ministers Responsible for Transportation and Highway Safety is for the purpose of measuring the total deficiencies in the National Highway System against benchmark criteria. It is stated that the study utilizes "four specific minimum design or operational standards, which should be met by all routes on the National Highway System and that these standards provide a basis for describing deficiencies in the condition of the NHS, and also serve as guiding objectives for jurisdictions in choosing appropriate remedial measures to correct the identified deficiencies. In 1988 it was agreed that the minimum standard which should be met by all routes on the National Highway System should be a two lane paved road with partially paved shoulders, with a design speed of 100 km/h. It should be noted that the $17.4 billion estimate includes only the costs of correcting existing deficiencies as new deficiencies are expected to arise each year." (Council of Ministers Responsible for Transportation and Highway Safety, 1998; paraphrased) Infrastructure is described in this report as "roads and shoulders, bridges, and viaducts that make up the National Highway System." (Council of Ministers Responsible for Transportation and Highway Safety, 1998) Key findings of the report are stated to be those as follows:

1) Report estimates that implementing the $17.4 billion investment that it recommends "would generate an estimated $30 billion in economic benefits over 25 years through savings in travel time, increased safety, and reduced vehicle operating costs."

2) Although it is also noted that upgrades will necessitate increased maintenance costs, lead to higher greenhouse gas emissions, and in the long-term may simply lead to higher use/consumption of highway infrastructure and do little to reduce congestion over time. (Council of Ministers Responsible for Transportation and Highway Safety, 1998)

The work entitled: "Thinking Outside the Gap" states that municipal infrastructure is a critical component to achieving economic prosperity, creating vibrant neighborhoods and culturally rich communities, and committing to conscientious and responsible environmental stewardship." (City of Edmondton Infrastructure Strategy Report, 2004) This report relates that the municipality's infrastructure and the infrastructural state of a city "defines a city's capacity to deliver services to its citizens and provide a desirable quality of life." (City of Edmondton Infrastructure Strategy Report, 2004) Managing infrastructure is a challenging endeavor and the challenge is only increasing according to the report, which states that it examines "methods of generating new revenue for long-term infrastructure investments and reinvestment strategies." (City of Edmondton Infrastructure Strategy Report, 2004) This report comes from the City of Edmondton in Canada, which states that it has anticipated revenue opportunities as follows in terms of anticipated revenue and possible resource opportunities:

Anticipated Revenue Opportunities:

Municipal Rural Infrastructure Fund (MRIF - federal / provincial): Through this program, Edmonton could receive up to a total of $12 million from the other two orders of government to apply to infrastructure projects;

GST rebate (federal): Over the next 10 years, up to $80 million may be available through this rebate to fund infrastructure projects;

Gasoline tax rebate (federal): The City of Edmonton could receive about $300 million through this rebate over the next ten years;

Possible Resource Opportunities from the Province:

Education tax: Capping the education tax may provide an additional $370 million over the next decade to fund infrastructure;

Legislative changes to allow cities to impose taxes: With greater authority to generate tax revenues the City could increase revenues for essential infrastructure projects;

Matching responsibilities with resources: The provincial government could significantly reduce the fiscal burden on cities by taking back responsibility for services such as emergency medical services and affordable housing;

Revenue sharing with municipal governments: This policy could provide a stable, sustainable source of funding to municipalities; and Provincial infrastructure funding: This proposed provincial funding of up to $1 billion would be significant in addressing Edmonton's infrastructure issues. (City of Edmondton Infrastructure Strategy Report, 2004)

Opportunities Requiring Action by the City:

Smart Debt: Incorporate sustainable borrowing tools through:

Tax-supported debt for next 3 years (2005, 2006, 2007) -- " generates an additional $150 million;

Arterial road levy: Approximately $60 million in savings over the next decade could be realized if developers fund the full four-lane arterials to service new developments;

User pay -- " development/improvement fees:

Property owners are less hesitant to pay user fees when the actual improvements are visible and reflect the true cost of providing the service; and User pay -- " self-financing utilities: A self-financing utility can sustain the actual costs to deliver services. (City of Edmondton Infrastructure Strategy Report, 2004)

Managing the gap is stated to involve the "...identification and implementation of strategies, processes and tools" needed in planning investments and making decisions all of which are "long-term plans [which] will "play a role in managing the factors affecting infrastructure demand." (City of Edmondton Infrastructure Strategy Report, 2004004) Included are:

Maximization of existing infrastructure;

Comprehensive asset management system: inclusive of risk assessment and life cycle analysis to optimize decision-making and investment planning;

Sustainable levels of service: relating to determining the levels of service that meet financial, social and environmental standards;

Shared services: in relation to making an examination of cost effective and cost sharing strategies among communities for optimization of investment in infrastructures and to generate synergies; and Other opportunities link property tax increases with specific investment;

Public-private partnerships (P3); and Alternate service delivery. (City of Edmondton Infrastructure Strategy Report, 2004)

The Edmonton infrastructure strategy report states that infrastructure is defined as "all the physical assets developed and used by the City to support the community's social and economic activities." (Infrastructure Strategy Report, 2004) the infrastructure listed in this report is stated to be as follows:

Drainage: includes sanitary, storm and combined sewers (including manholes, catchbasins) and wastewater treatment.

Road Right-of-Way: including roads (arterials, collectors, local; and curb and gutter), sidewalks, bridges, and auxiliary structures (such as gates, streetscapes and others)

Parkland: includes horticulture, trails, hardsurfaces, playgrounds, sportsfields, park infrastructure and parks;

Transit facilities and equipment: including Light Rail Transit (LRT)system facilities and equipment (including cars), transit centers, bus equipment and systems, trolley system;

Fleet: Includes transit buses, city vehicles, and shop equipment;

Buildings: including civic offices, public works and operation facilities (e.g. yards) emergency response buildings, police buildings and libraries.

Traffic Control and Street lighting: Including traffic signals, signs, markings, street lighting, and parking meters;

Recreation facilities: includes all major recreational facilities (e.g. arenas, leisure centers, Fort Edmonton) and amenities;

Affordable housing: includes non-profit housing, community housing and seniors lodges/cabins;

Waste Management Facilities: includes operation and administration facilities, transfer stations and public facilities, processing facilities and operating landfills and appurtenances;

Technology Equipment: includes servers, network, all communication equipment; and Others: includes emergency response and policy equipment and library contents and materials. (City of Edmondton Infrastructure Strategy Report, 2004)

The infrastructure gap is defined as "the difference between the City's capital needs and funding available to address the City's infrastructure rehabilitation and growth requirements." (Infrastructure Strategy Report, 2004) the City of Edmonton's infrastructure is stated to have grown "from $1.8 billion in 1990 to the current estimate (in 2004) of $4.1 billion." (Infrastructure Strategy Report, 2004) the growth of the gap is attributed to two primary factors: (1) aging infrastructure; and (2) demand for new infrastructure. (City of Edmondton Infrastructure Strategy Report, 2004) the City of Edmondton reports several measures that have been found effective in minimizing the gaps in the infrastructure including the following:

1) Corporate infrastructure asset management approach: a comprehensive infrastructure inventory, which captures the value and state of the City's…

Sources Used in Document:


AMO Welcomes Joint Review of Municipal Fiscal and Service Delivery in Ontario (2006) Association of Municipalities of Ontario. 14 Aug 2006.

Mirza, Saeed M. & Haider, Murtaza (2003) the State of Infrastructure in Canada: Implications for Infrastructure Planning and Policy," a study prepared for Infrastructure Canada, 2003

TD Bank Financial Group (2003) a Choice Between Investing in Canada's Cities and Disinvesting in Canada's Future April 2002.

L'union des Municipalites du Quebec and the Conference Board of Canada (2003) La situation fiscale des municipalities du Quebec," May 2003.

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