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Long-term Financial Plan

Prioritizing Waterloo infrastructure funding to support long-term growth and prosperity

On Monday, April 16, 2018, staff provided an update on the public engagement process undertaken in January, 2018 and received council's approval for reserve policy and financial policy changes that will assist in addressing long-term funding for both growth and rehabilitation of the city's assets.

Staff also received approval for changes to reserve contribution levels to ensure that sustainable funding is available when needed without having to rely on contingency reserves. These policy changes will also address the desire to minimize pressure to the tax levy that may result from contribution level changes.

Highlights of these approved recommendations include:

  • ongoing operating contributions will be added to the winter control budget and four reserve and reserve funds;
  • reserve and reserve fund policies will be updated with an eye on how to best manage funding needs over the next 25 years; and
  • changes to three existing financial control policies will be made to better align reserve contributions with identified needs and reflect changes previously approved by council.

Documents presented at the Monday April 16 meeting include:

Next steps

The potential funding strategies associated with the long-term financial plan will be referred to the 2020-2022 budget process. At that time, the identified funding opportunities will be considered as well as grants, tax increases and efficiencies. Council will not be approving any funding strategies at this time. Decisions regarding funding opportunities will be tabled with the incoming council as part of that council's 2020-2022 budget planning exercise.

During the 2020 - 2022 budget process, staff and council will look at ways to balance costs associated with owning and operating infrastructure assets with levels of service expected by residents. The city's budget is complex and requires finding the right balance between keeping the tax levy affordable for residents while continuing to offer or expand on the services they have come to expect. As well as examining funding mechanisms, the city continues to utilize a stringent budget process looking for efficiencies to help offset new or expanding expenses.

Additional background

On March 19, 2018, council received a report with an update of work done to date regarding a long-term financial plan. As a precursor to the long-term financial plan, staff identified an annual $20 to $23 million shortfall over the next 25 years between the spending required to achieve an acceptable performance level from the city's infrastructure and the current capital forecast. The long-term financial plan will be a complementary 25-year plan to the asset management plan and will address planning for operating and capital expenditures and revenues. It will also include strategies to address the city's infrastructure needs as identified in the city's asset management plan.

Through the development of the long-term financial plan, a unique and dynamic financial model has been created that will enable staff to adjust variable factors and assess the financial impact to the city. This model will link the asset management plan to the city's long-term financial needs and allow the city to develop financing options (e.g., debt, grants, tax increases) to provide sustainable funding for services, programs and infrastructure desired by residents and businesses. This approach will help to align short-term actions with long-term financial strategies. The consultant report outlines a target scenario to determine funding needs to address both the cumulative and the annual infrastructure gap identified in the asset management plan for tax-based assets. None of the consultant's recommendations are binding on council and are based solely on addressing infrastructure needs versus the breadth of Council and community interests.

Balancing infrastructure costs

Ontario municipalities - including the City of Waterloo - are looking at ways to balance costs associated with owning and operating infrastructure assets with the level of service expected by residents. To manage this challenge, the City of Waterloo is developing a long-term financial plan to accompany the asset management plan approved in 2016.

  • The  long-term financial plan  is a financial strategy to manage operating costs associated with delivering service and to plan for anticipated needs in infrastructure funding. 
  • Asset Management is "the set of planned actions that will enable the assets to provide the desired level of service in a sustainable way, while managing risk, at the lowest lifecycle cost," according to the Municipal Finance Officers' Association of Ontario.

The City of Waterloo has invested significant effort into building infrastructure to support community growth. This same dedication is necessary to sustain existing and planned infrastructure. 

Public engagement

The city reached out to the community for input that will inform the long-term financial plan and asset management plan to help create a sustainable service delivery framework. During the month of January, 2018, residents had several opportunities to get informed and have their say on the future of Waterloo's infrastructure through the OUR CITY I OUR WAY engagement campaign.The city collected input on four asset categories:

  • road infrastructure: Pavement quality and "shave and pave" projects (scraping vs. rebuild the road)
  • parks and trails: Playground equipment and surface replacement
  • water infrastructure: Service reliability and mitigating the effects of climate change (e.g. storm water)
  • city-owned facilities:Maintenance of walls/basic aesthetics, energy efficiency, equipment to deliver the same quality of service (e.g.: ice re-surfacer)

Information boards used at the public information centres are provided here and include information about the deficits in each of the above four categories and the impact over the next 25 years. For residents not able to attend one of the five public information centres, they were able to share their thoughts with us by using our online forum, engageWaterloo

More information