Fire, EMS, library face $418M funding gap: city report

That assessment is the latest in an ongoing provincially mandated exercise for municipalities to draft asset management plans for everything that’s on their books.

In 2022, staff pegged the 10-year funding gulf for “core assets” — roads, bridges, water, wastewater and stormwater pipes and plants — at $1.95 billion.

“Without attention to that gap and without a strategy of how to close the gap, it will just get worse and we could find ourselves in quite a situation,” Patricia Leishman, director of corporate asset management, told council Wednesday.

The infrastructure hole has deepened over decades of underspending, due, in part, to a lack of funding from upper levels of government, but also big jumps in population, a staff report explained.

“Throwing money at it is obviously the easiest way to go,” Leishman said. But not the only way, she added, pointing to other strategies.

“Are we providing a level of service that’s maybe too high? … Are we over-maintaining our assets? Are we giving too much in areas where maybe we don’t need to?

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• Dec 31, 1969
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• Dec 31, 1969
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“So that funding gap is not necessarily 100 per cent looked at from the need for dollars. It can be looked at in terms of the need to reassess what level we’re providing.”

Understanding life-cycle costs is also crucial, senior program analyst Amber Dewar emphasized.

It’s often the case that the acquisition represents 10 to 20 per cent of the overall cost of an asset, Dewar said.

“But actually, 70 to 80 per cent of the cost of an asset’s whole life are the operations and maintenance phase.”

So while the purchase might be steeper for one model, it could end up costing less to maintain down the road, and last longer than the cheaper model.

“If we don’t understand the whole list cost of assets when we acquire them, how can we budget to maintain levels of service?”

Here’s what the latest phase of analysis found:

• In particular, the HSR faces a $163-million gap over 10 years, driven mostly by the cost of new shelters and roughly 15 buses added to the fleet annually, as well as the facility costs, Leishman noted.
• The fire department faces a narrower gap of $37 million, which is primarily rooted in facility needs, Leishman said.
• For paramedics, the gulf is $118 million, with the renewal of Station 30 on Victoria Avenue North and additional staffing costs to keep up with population growth the main factors.
• Two end-of-life Bookmobiles, facility maintenance work and future acquisitions are behind the public library’s $100-million shortfall, Leishman noted.

Corporate real estate was also included in the latest phase of study, but the division doesn’t have a funding gap, a distinction related to the fact that it owns municipal land, like the airport property, but not necessarily the assets on it.

The quality of data used to study the state of assets is a weak point, which can greatly influence the analysis of funding gaps, Leishman advised.

Transit, for instance, has “pockets of reasonable data” but also significant voids, notably when it comes to the purchase price of tools in its maintenance shop, she said.

“It’s hard to go back historically and gather that information for previous assets at times.”

The funding-gap discussion follows budget talks that saw city officials reduce a preliminary 14.2 per cent tax hike to 7.9 per cent and eventually 5.8 per cent, in part, by relying more heavily on reserves.

As of late, the city has been “left holding the bag” to pay for future growth, thanks to the provincial government’s breaks on development charges, Coun. Brad Clark remarked Wednesday.

“What’s going to happen to the lowly resident who’s paying taxes, either in their rent or their home ownership?”

Provincial legislation, Bill 23, in particular, has reduced the city’s proceeds from development charges, which are used to pay for growth-related infrastructure to the tune of $34 million, noted Mike Zegarac, general manager of finance and corporate services.

Premier Doug Ford recently announced $17.5 million for Hamilton from the Ontario Building Faster Fund for meeting housing targets, but there’s still a gap of about 50 per cent when it comes to development charge revenue, Zegarac noted.

Meanwhile, the problem of mounting costs is the product of years of inaction, Coun. Maureen Wilson suggested.

To illustrate this, Wilson alluded to the housing and climate crises.

“The solutions were there decades ago, and the cumulative impact of not acting and not thinking about future generations has created the place where we are now.”