There's no practical way – and it may not even be a good idea – for Greater Sudbury to completely catch up on its multi-billion infrastructure deficit, city councillors were told earlier this month.
Oscar Poloni, office managing partner at KPMG Canada, told councillors Dec. 13 that the city has $7.2 billion in assets, including roads, water/sewer infrastructure, buildings and vehicles. Of that total, $1.8 billion is already beyond its useful life, and another $1.3 billion will need replacing by 2026.
In contrast, the city spent $106 million in capital projects in 2016, of which $61 million was raised through property taxes and user fees.
“The reality is this: You are never going to close the gap,” Poloni said. “Even if you had all the money ... it would likely outstrip the capacity of contractors. And you would never be able to drive because everything would be under construction.”
And raising enough money to pay for it would mean a big hike in taxes – about five per cent – every year for the next 10 years just for infrastructure.
Poloni's presentation was outlined a plan for the city to manage its assets. With the population spread out over 3,600 square km of land, even the $1 billion in capital spending over the last 10 years hasn't put a dent in the gap, he said.
The good news for the city is the pay-as-you-go policy has left them in good fiscal position. That means the city is in a position to take advantage of alternative financing arrangements, such P3 projects or debt financing.
“Most municipalities your size ... are taking advantage of the fact that debt is affordable,” he said, cautioning against using too much debt financing for roads.
Councillors will also have to accept the fact that a lot of infrastructure will be in service long past the date when it should be replaced. Some cities are turning lightly used roads from asphalt to gravel, Poloni said, because it's cheaper to maintain.
While these types of decisions can be controversial, in practice, by not maintaining city infrastructure, it's already happening.
“You can accept a lower level of service and save money,” Poloni said. “I know these are difficult decisions to deal with. You're already making these types of decisions. With respect, this is already happening.”
“We have too many assets,” agreed Ward 7 Coun. Mike Jakubo, who added that fire and EMS and building rationalization processes are already underway.
Ward 2 Coun. Michael Vagnini said Poloni's presentation was further proof for him that the city shouldn't be considering a new events centre or other large projects when we can't afford what we already have.
“We should look at what we've got going on at home first,” Vagnini said.
Mayor Brian Bigger said that, as most people do, the city keeps using certain assets longer than forecast.
“You don't necessarily replace a TV when its engineering design is at an end,” Bigger said.
As part of an asset management plan, they need a comprehensive list of the condition of all city assets, how the assets are being used and what level of service is really needed.
“We're continually looking at ways to rationalize and optimize the use of the assets we have,” he said.
Working in the city's favour is the fact both the federal and provincial governments have set aside billions for infrastructure. The city received almost $130 million more for 2017 alone.
“And we're optimistic we'll receive similar levels of funding in future years,” Bigger said.
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