Whistling through the Grave Yard of Broken Fantasies
Ron Bolin: Feb. 17, 2013
Imagine that you are going down life’s highway without a care in the world. You are paying your monthly bills, even if you are borrowing a bit to do so. You can handle it. And then… the bottom falls out: Your car breaks down and you need a new one; you find that your condo is leaking and the money set aside to handle repairs is hugely overwhelmed; and you have committed all your current funds to paying your helpers, repaying debt on the extras you have acquired along with the usual expenses of eating, medicine, electricity, municipal taxes and fees, etc. Your savings are committed, your borrowing limit is stretched, and most of the assets which you hold can only be sold if you are prepared to virtually give them away.
While I hope this scenario doesn’t describe your personal situation, it does, as recently revealed by the release of a preliminary report on Nanaimo’s “Asset Management” condition, describe the situation of our Municipal finances. As we go down life’s highway it is easy for us as individuals to forget that all that stuff that we have acquired needs repair, eventual replacement or elimination and that we should plan for these circumstances. We often plan for catastrophic occurrences by purchasing insurance. But routine wear and tear, the long term destroyers of value, are too often overlooked by individuals and have, until recently, been almost entirely overlooked by government agencies, the very ones who should be paying attention because their life, unlike ours, goes on forever. While we eventually die and leave this cycle, governments are bound by them and the bills eventually come due. Governments, however, can afford to overlook these difficulties for a long time as they are comprised of individuals who are easily satisfied to let it devolve on those who come after them to take care of the mess. It is easy to forget responsibility if it going to fall on someone else’s shoulders.
Recent requirements have led to examinations of the extent of these problems as governments at all levels find themselves approaching the abyss of major infrastructure maintenance with some already off the edge. While certainly not among the worst in these areas, Nanaimo still finds itself with a serious case of the shorts, as described in the City of Nanaimo 2012 Asset Management update which can be found at:
This report identifies six steps in the Asset Management process:
- What do we own and where is it?
- What is it worth?
- How do we operate?
- What condition is it in?
- What do we need to do and when?
- How much will it cost and how will we pay for it?
The preliminary results are presented in the report which identifies some $2.214 billion (with a b) dollars in infrastructure assets which is described in eight categories:
|Infrastructure||Description||Current Value – $M||% of Total|
|Water Utility||Dams, reservoirs, mains, control stations||719||33%|
|Sewer Utility||Mains, lift stations||402||18%|
|Transportation||Roads, bridges, sidewalks, traffic signals, street lighting||386||18%|
|Parks Amenities||Playfields, playgrounds, trails, recreational dams||30||1%|
|Facilities||Civic offices, public works yards, fire and police buildings, parkades, recreation and cultural buildings||245||11%|
|IT Equipment||Hardware, communication equipment||8||0%|
|Fleet||Cars, pickups, heavy equipment, sanitation equipment, fire apparatus, zambonis||19||1%|
Total 2,214 100%
City Infrastructure – Average Age and Expected Useful LifeWater Utility 36 80 Sewer Utility 35 80 Drainage 21 80 Roads 19 39 Bridges 21 75 Traffic Signals 12 40 Street Lighting 18 50 Sidewalks 14 60 Park Amenities 19 25 Recreational Dams 88 100 Facilities 24 52 Technology Equipment 5 10 Fleet 7 16
Getting down to the nitty-gritty, an examination of the figures shown in the report leads to some startling and disturbing conclusions:
- Between 2013 and 2032 unless things change, Nanaimo will fall behind in maintaining our assets by $8.3 million dollars each year.
- We will be short $2.5 million each year in our water and sanitary infrastructure which is funded from grants, user fees, and development cost charges which are not within the City’s control; and
- We will be short $5.8 million dollars each year in other asset areas which must be recovered from general taxation and grants.
- If we look at the long run, given that many if not most of our infrastructure assets are fairly new, the shortfall after 2032 increases dramatically.
- While we face these shortfalls, Council continues to add new infrastructure with a planned cost over the coming years of some $150-200 million dollars.
Nanaimo does not have the worst problems in the province or the country in these areas, but the problem is serious. Especially for the young if we simply, as we have been doing, ignore the problem and pass it on to the next Council, and the next, and the next. Instead of planning new projects, we had best put our efforts to managing better those that we already have. The attitude that every expense is an investment is a dangerous mirage.