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HomeMy WebLinkAboutFND-039-20Clarington Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: November 9, 2020 Report Number: FND-039-20 Submitted By: Trevor Pinn, Director of Financial Services Reviewed By: File Number: Andrew C. Allison, CAO By-law Number: Resolution#: GG-405-20 Report Subject: Request of Extension for Asset Management Regulation Implementation Recommendation: 1. That Report FND-039-20 be received; 2. That the letter dated October 22, 2020, from the Municipal Finance Officers Association of Ontario attached to report FND-039-20, as attachment 1, be received for information; 3. That the draft resolution attached to report FND-039-20, as attachment 2, be approved; and 4. That all interested parties listed in Report FND-039-20 and any delegations be advised of Council's decision. Municipality of Clarington Report FND-039-20 Report Overview Page 2 The Municipality of Clarington is required to meet certain legislated requirements for the establishment of asset management plans by July 1, 2021. The current COVID-19 pandemic has had an impact on all municipalities ability to meet these requirements. The uncertainty of what current levels of service will be, the ability to fund current Iifecycle activities, and staffing resources being focused on pandemic response make it difficult to complete these requirements by July 1, 2021. While the Municipality will fulfill these requirements however necessary, it is felt that a delay in the reporting would provide for better information collection which will facilitate decision making into the future. 1. Background Asset Management Regulations 1.1 On January 1, 2018, the Province of Ontario enacted O.Reg. 588/17 Asset Management Planning for Municipal Infrastructure under the Infrastructure for Jobs and Prosperity Act, 2015. 1.2 The regulations outlined several requirements for the improvement of municipal asset management planning over a phased period of time starting with July 1, 2019 and ending July 1, 2024. Thereafter, there are requirements for regular review of the enhanced asset management plans. Strategic Asset Management Policy 1.3 The first requirement was the adoption of a strategic asset management policy on or before July 1, 2019. This policy must be reviewed and updated as necessary at least every five years. 1.4 The Municipality passed this policy in on April 29, 2019 through the adoption of report FND-010-19 and is in compliance with the regulations. Asset Management Plans, Current Levels of Service 1.5 The regulations require that every municipality shall prepare an asset management plan in respect of its core municipal infrastructure assets by July 1, 2021 and in respect of all its other municipal infrastructure assets by July 1, 2023. 1.6 The regulations have specified specific information that must be included in the asset management plans. These requirements provide more information than in prior versions of asset management plans, in an effort to improve the overall reporting of municipalities in the Province of Ontario. Municipality of Clarington Report FND-039-20 1.7 Required information includes, but is not limited to: Page 3 a. For each asset category, the current levels of service being provided, determined in accordance with the qualitative descriptions and technical metrics outlined by the regulations; b. The current performance of each asset category, determined in accordance with the performance measures established by the municipality and based on data over the preceding two calendar years; c. For each asset category, the summary of assets in the category, replacement cost of the assets, average ages of the assets in the category, information on the condition of the assets, and a description of the municipality's approach to assets the condition of the assets; d. The lifecycle activities needed to be undertaken to maintain the current levels of service for the ten years following the current year; and e. Certain growth criteria and expected capital expenditures as outlined in the regulations. Asset Management Plans, Proposed Levels of Service 1.8 By July 1, 2024, municipalities are required to have additional information included in their asset management plans for all of their assets. The additional information includes: a. For each asset category the proposed levels of service for each of the following ten years; b. An explanation of why the proposed levels of service are appropriate for the municipality based on specific assessments; c. The proposed performance of each asset category for ten years as determined in accordance with the performance indicators adopted in Phase II (above); d. A lifecycle and financial strategy for each asset category over the ten year period including the lifecycle activities to be undertaken, the annual costs required over the period, the funding over the period and how the municipality will overcome the funding shortfall; and e. Growth -related information on the impact of growth on the existing assets of the municipality over the ten-year period. Municipality of Clarington Page 4 Report FND-039-20 2. Request for Extension Due to COVID-19 2.1 On October 22, 2020, the Municipal Finance Officers' Association of Ontario (MFOA) wrote a letter (attachment #1) to the Honourable Laurie Scott, Minister of Infrastructure advocating for a one-year extension to the deadlines outlined in O.Reg.588/17 2.2 The MFOA has also prepared a draft resolution for member municipalities to consider adopting to indicate their support for this extension (attachment #2). 2.3 With municipal resources being used to respond to the pandemic, the uncertainty of long-term impacts on services and infrastructure needs, a one-year pause to these deadlines will provide more realistic asset management plans. 2.4 Staff feel that a one-year delay will allow for better information to be included in the asset management plans. Decisions are best made when the information is timely, accurate and realistic; with the current pandemic it is hard to determine what changes to the lifecycle costs and levels of service may occur. 3. Concurrence Not Applicable. 4. Conclusion It is respectfully recommended that Council support the request from the MFOA for a one-year extension to O.Reg 588/17 and adopt the attached resolution. Staff Contact: Trevor Pinn, CPA, CA, Director of Financial Services/Treasurer, 905-623-3379 ext.2602 or tpinn@clarington.net. Attachments: Attachment 1 — Letter dated October 22, 2020 from MFOA President Trevor Pinn requesting a one-year extension to the deadlines under O.Reg. 588/17 Attachment 2 — Draft resolution of support for a one-year extension Interested Parties: The following interested parties will be notified of Council's decision: a. Municipal Finance Officers' Association of Ontario b. Ontario Ministry of Infrastructure c. Ontario Ministry of Municipal Affairs and Housing d. Lindsay Park, MPP Durham Attachment 1 to Report FND-039-20 INFOA Hon. Laurie Scott Minister of Infrastructure 5th Floor 777 Bay St. Toronto, ON M7A 2J3 Dear Minister Scott, MUNICIPAL FINANCE OFFICERS' ASSOCIATION OF ONTARIO October 22, 2020 RE: One-year extension of deadlines in O. Reg. 588/17: Asset Management Planning for Municipal Infrastructure under the Infrastructure for Jobs and Prosperity Act, 2015 am writing on behalf of the Municipal Finance Officers' Association of Ontario, and the municipalities it serves, to request a one-year extension of all upcoming deadlines in O. Reg. 588/17: Asset Management Planning for Municipal Infrastructure under the Infrastructure for Jobs and Prosperity Act, 2015 (O. Reg. 588/17). The Municipal Finance Officers' Association of Ontario (MFOA) is the professional association of municipal finance officers with more than 2,300 individual members. We represent individuals who are responsible for handling the financial affairs of municipalities and who are key advisors to councils. MFOA is a strong advocate for best practices that encourage long-term fiscal sustainability, including long term financial planning and asset management planning. In recent years, MFOA and the Province have worked together to support municipalities on their asset management (AM) journeys. Our collaboration has resulted in a range of useful resources, including tip sheets, a strategic AM planning policy development toolkit, a guide on creating AM communities of practice, an AM framework, a self assessment tool, training, and the provision of professional one-on-one AM consulting, among other supports. MFOA, like the Province, believes in the fundamental importance of AM planning. But we have also heard our members. As noted in your statement to the Standing Committee on Finance and Economic Affairs on July 30, 2020, municipalities were "among the hardest hit" by the economic shutdown necessitated by the COVID-19 pandemic. This hit has and continues to be both financial and operational in nature. Since March, municipalities have declared states of emergency, redeployed resources, contained costs (including hiring freezes), and rightly prioritized the immediate needs of stakeholders. Given these pressures, municipalities have not had the capacity to work on meeting the 2021 deadline in O. Reg. 588/17 and as we are in a second wave and a return to a modified stage 2 in some parts of the Province with no end in sight and the possibility of extended restrictions elsewhere, it is unlikely that current capacity challenges will be resolved in the short-term. 2169 Queen Street East, 2nd Floor, Toronto, Ontario M4L 1.11 T: 416-362-9001 F: 416-362-9226 www.mfoa.on.ca www.oneinvestment.ca We are also concerned that revenue losses in some municipalities will result in re- evaluations of capital plans, including AM plans. AM planning completed during a period of high revenue uncertainty is unlikely to be very reliable. Plans done after a revenue re- evaluation post COVID provides confidence that AM plans have taken into account the COVID impacts and that they are more up to date and robust. Similar to the Public Sector Accounting Board's one-year deferral of the effective date of upcoming standards, MFOA recommends a one-year extension of all upcoming deadlines in O. Reg. 588/17. In the short-term, an extension will help municipalities focus on pandemic management. In the long-term, extending timelines will ensure municipalities can produce meaningful work that embodies the spirit of AM that reflects new post COVID realities. Throughout the pandemic, we have seen how much can be achieved when municipalities and the provincial government work together to achieve a common goal. Should you wish to follow up on this letter, please contact MFOA Executive Director, Donna Herridge (donna@mfoa.on.ca). Sincerely, Trevor Pinn, CPA, CA President cc. Hon. Steve Clark, Minister of Municipal Affairs and Housing Municipal Finance Officers' Association of Ontario 2 Attachment 2 to Report FND-039-20 MUNICIPAL FINANCE FOA OFFICERS' ASSOCIATION OF ONTARIO MFOA Request for One Year Extension of Deadlines in O. Reg. 588/17 - Sample Resolution WHEREAS the COVID-19 pandemic has had significant financial and operational impacts on Ontario municipalities; AND WHEREAS municipalities have had to divert resources towards addressing the immediate needs of the pandemic and maintaining service delivery standards despite evolving restrictions and limited funds; AND WHEREAS the Government of Ontario has delayed timelines with respect to several pieces of legislation; AND WHEREAS the Government of Ontario has regulated municipal asset management through O. Reg. 588/17: Asset Management Planning for Municipal Infrastructure under the Infrastructure for Jobs and Prosperity Act, 2015; AND WHEREAS O. Reg. 588/17 mandates that every municipality shall prepare an asset management plan in respect of its core municipal infrastructure assets by July 1, 2021, and in respect of all of its other municipal infrastructure assets by July 1, 2023; AND WHEREAS the key components of an asset management plan as required by the regulation are: 1. Infrastructure asset inventory 2. Levels of service 3. Lifecycle management and financial strategy AND WHEREAS there is a concern amongst Municipal Finance Officers' Association of Ontario (MFOA) members and their municipalities that current capacity challenges (redeployment of staff, and lack of available resources) will result in limitations for purposeful asset management planning; AND WHEREAS Ontario municipalities do not anticipate the current capacity challenges to be resolved in the short-term; NOW THEREFORE BE IT RESOLVED that THE MUNICIPALITY OF supports MFOA's letter to the Ministry of Infrastructure requesting a one-year extension of deadlines in O. Reg. 588/17: Asset Management Planning for Municipal Infrastructure under the Infrastructure for Jobs and Prosperity Act, 2015; so that all municipalities can focus on the immediate needs of the pandemic and engage in municipal asset management planning when capacity challenges are resolved.