REPORT Meeting Date: 2017-10-12

Regional Council

DATE: October 4, 2017

REPORT TITLE: THE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE

FROM: Stephen VanOfwegen, Commissioner of Finance and Chief Financial

Officer

RECOMMENDATION That the amendments to the asset classes and asset levels of service outlined in Appendix IV of the report from the Commissioner of Finance and Chief Financial Officer, titled “The Region of Peel 2017 Infrastructure Update” be approved. REPORT HIGHLIGHTS

The Region of Peel’s infrastructure is a public investment worth over $26.2 billion (not including Peel Living properties, Police and land assets).

Peel’s asset management program supports the Long Term Financial Planning Strategy objectives 1.2 – “Ensure the Capital Plan is sustainable” and 1.3 – “Maintain assets”.

The Region of Peel’s infrastructure rating has steadily improved to 92 per cent of the portfolio being rated as ‘Good’ to ‘Very Good’ since initial reporting.

Council has adopted a balanced approach for infrastructure, selecting a “moderate” appetite for infrastructure risk which prefers safe service delivery with limited tolerance for uncertainty. Having 92 per cent of the asset portfolio rated as ‘Good’ to ‘Very Good’ is compatible with Council’s risk appetite.

Despite the robust nature of Peel’s infrastructure, there are a number of challenges and unknown conditions underlying Region’s huge asset portfolio that creates infrastructure risks for which the organization must be prepared. Peel’s positive status with respect to its infrastructure positions the organization with the capacity and flexibility to manage the risks.

Regional Council’s proactive policy of ensuring adequate revenues to support Peel’s long term infrastructure needs coupled with Peel’s municipal sector leading Enterprise Asset Management Program has positioned the Region to manage the risks and challenges of the future.

DISCUSSION 1. Background

The Region of Peel’s infrastructure is a public investment worth over $26.2 billion (not including Peel Living properties, Police and land assets). Good infrastructure supports good

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services to the public; therefore, the public has a stake in knowing the state of the infrastructure and how the Region of Peel is managing the assets. Peel’s Enterprise Asset Managemet Program assesses the current and future state of the existing capital assets to promote informed and proactive decision-making on the organization’s infrastructure investments and capital financing strategies in order to maintain sustainable assets and services. Peel’s asset management program supports the Long Term Financial Planning Strategy objectives 1.2 – “Ensure the Capital Plan is sustainable” and 1.3 – “Maintain assets”. Over the next year, work will begin on incorporating PAMA assets into the Region of Peel’s Enterprise Asset Management Program. Additionally, Peel Living and the Credit Valley Conservation Authority have retained the Region’s assistance to apply the Enterprise Asset Management Strategy to their assets in order to be consistent with the Region of Peel.

2. 2017 Infrastructure Status and Outlook Report

The 2017 Infrastructure Status and Outlook Report attached as Appendix I, provides an assessment of the current state of the Region’s infrastructure and describes some of the major actions being taken to maintain or improve the infrastructure. a) Rating the Infrastructure

The Region of Peel’s infrastructure ratings are a measure of the adequacy of the assets to manage the risks to the service levels approved by Council. The asset levels of service approved by Council are targets to keep the assets at minimum acceptable conditions to manage customer service risks and maintain Peel’s high quality services. The greater the number of assets meeting or exceeding their condition and performance levels of service targets, the lower the risks to public services and the higher the infrastructure rating. There will be a disbursement assets within Peel’s overall infrastructure base with varying conditions of ‘Fair’, ‘Good’ or ‘Very Good’; but when rolled up, the overall portfolio score may be ‘Good’ or ‘Very Good’. Additional explanation of the scores and how they relate to the Region’s assets are described in Appendices II and III.

b) Target Rating for the Region of Peel’s Infrastructure

Finding the balance between providing reliable, efficient and safe service delivery and doing so at the lowest practical cost is a challenge for any organization. Setting a long-term target of ‘Very Good’ for all infrastructure would not provide a good return on investment because the Region would need to maintain high levels of reinvestments in the infrastructure yet would not gain a noticeable improvement in public services or reduction of risks. A long-term target of ‘Fair’ would lower the costs to maintain the infrastructure but would increase the risk of impairing or reducing current service levels to the public.

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c) The Region of Peel’s Current Infrastructure Rating

The Region of Peel’s infrastructure rating has steadily improved to 92 per cent of the portfolio being rated as ‘Good’ to ‘Very Good’ since initial reporting. This is due to a number of positive factors:

Implementation of a comprehensive asset management policy and strategy for proactive long range, strategic planning of the Region’s infrastructure requirements.

Steady and prudent levels of reinvestments to maintain state of good repair.

A robust capital program of growth and non-growth infrastructure that has added and replaced many outdated and deficient assets with new, modernized infrastructure.

Council’s priority to maintain the Region’s assets in a state of good repair without incurring long term debt.

While this is a positive sign that Peel’s asset management program is working well in the short term, over the long term as the assets age and the size of the portfolio increases, the infrastructure rating will continue be managed to a sustainable target of ‘Good’ as Program asset management plans are more fully developed and reinvestment needs are better defined. Staff monitors the levels of reinvestments in the Region’s annual capital budget and forecast to ensure that the asset management investments and projects are appropriate to achieve the minimum overall target level of ‘Good’, that services and critical assets are not put at undue risk and that the Region continues to maintain the optimum balance between sufficient reinvestments in infrastructure, managing risks and providing affordable high quality services to the public.

d) Emerging Pressures

Despite the currently robust nature of the Peel’s infrastructure, there are a number of challenges and unknown conditions underlying Region’s huge asset portfolio that creates infrastructure risks for which the organization must be prepared. The Region’s positive status with respect to its infrastructure positions the organization with the capacity and flexibility to manage the risks.

In order to improve information and forecasting on the state of the Region’s infrastructure, a number of studies and condition assessments are underway or recently completed on a broad portfolio of assets that will reveal substantial new information on the risks ahead and the required actions to manage the risks. As the new information is accounted for, the current rating of the Region’s infrastructure and the infrastructure outlook may be adjusted and further capital works and financing added to future capital budgets and forecasts. Some examples of what may change the Region of Peel’s infrastructure outlook include new information from condition assessments and preliminary design studies of water, wastewater and storm water linear assets, recently completed building condition assessments for Peel Living and external housing providers, identification of new works to reduce risks of basement flooding and mitigate the impacts of climate change, new infrastructure to meet the Region’s waste diversion

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targets and the escalating costs to construct new infrastructure in Peel’s increasingly urbanized areas.

e) Interpreting the Infrastructure Status and Outlook Report

Council can use the 2017 Infrastructure Status and Outlook Report as a guide to interpret how the proposed expenditures in the proposed 2018 Capital Budget and Forecast address the Region’s asset management needs. For example:

Portfolios having higher scores (‘Very Good’ or ‘Good’) generally indicates that less capital works and expenditures will be required in the capital plan as a

proportion of the total infrastructure value Portfolios having lower scores (‘Fair’ or ‘Poor’) may have more capital works and

expenditures in the capital plan as a proportion of the infrastructure value and that the expenditures may be identified earlier in the capital plan due to greater urgency.

f) General Conclusions

1. Overall, 92 per cent of the Region of Peel’s asset portfolio is rated ‘Good’ to ‘Very Good’. The rating is due to Council’s endorsement of a progressive asset management philosophy, and extensive capital improvement program that replaces and adds new and modernized assets to Peel infrastructure portfolio such as Council’s approval to replace significant assets like Peel Manor.

2. The long term objective is to maintain Peel’s infrastructure at an overall rating of

‘Good’. Improvements to asset information and Program asset management plans will validate appropriate levels of long range investments to maintain a ‘Good’ state.

3. Staff are undertaking many technical studies and condition assessments to improve staff’s knowledge of the Region’s infrastructure conditions, improve investment forecasting and to manage risks to Regional services. As newer updated information is made available, Peel’s overall rating may be adjusted and the findings will result in additional infrastructure improvements that will be introduced to Council in future reporting.

4. The strong state of Peel’s infrastructure gives the organization capacity to meet the

emerging challenges and risks.

5. In order to sustain Peel’s assets at desired targets with revenues that are affordable to Peel’s citizens and businesses, staff will continue to monitor the condition and performance of the assets and utilize the findings of studies and condition assessments to proactively plan and implement optimal asset management actions.

3. Reserve Adequacy

Council continues to maintain a prudent and proactive policy of fully financing the Region of Peel’s state of good repair needs from the capital reserves thus mitigating the use of long term debt. To ensure adequate capital reserve financing and to avoid sudden unaffordable

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increases to the tax and utility rates, it is preferred to estimate Peel’s asset management investment requirements over 20 years. In order to confidently assess the adequacy of contributions to the capital reserves to meet the Region of Peel’s 20-year capital investment needs, it is necessary to have and a good understanding of the condition and expected lifespans of each asset type. The Water and Wastewater Programs have sufficient data upon which to reasonably forecast the reinvestments in infrastructure to maintain state of good repair. Therefore, staff has been able to report annually on the adequacy of the Utility Rate supported reserves and the incremental contributions that are needed to maintain reserve sustainably over a 20-year period. A review of the linear wastewater collection assets over the last year has revealed that increases to the capital works program are required to address deficiencies in the trunk sewer system. The trunk sewer rehabilitations are being timed to leverage available spare capacity in the system while it is still available in order to avoid the extra costs and complications of by-pass pumping that would be necessary if the upgrades were made at a later date. Furthermore, additional works to mitigate the effects of climate change have also been identified and added to the capital program. Studies are still underway to further refine the scope of the trunk sewer capital improvements and cost estimates; however, available information suggests that an increase to the annual capital reserve contributions should be considered. Staff will be providing Council with an update on the status of the capital reserves in the report to Council on October 12, 2017 titled, “Overview and Update on the Status of Reserves” from the Chief Financial Officer and Commissioner of Finance. Condition assessments and/or master planning of storm sewers, retaining walls, noise attenuation walls, affordable housing stock and Waste Management assets are underway or nearing completion which will provide the required level of information to determine with increased accuracy the reserve needs to finance Peel’s tax-supported infrastructure requirements. As this information comes available in the coming years, staff will transition the tax-supported infrastructure investment outlook from 10 to 20 years.

4. New and Amended Asset Levels of Service and Asset Classes

The Region of Peel’s asset categorizations and levels of service require amendments from time to time to respond to changes in the Region’s services, infrastructure, management practices and regulations, and to mitigate service and/or asset risks. Redefining the asset classes and asset levels of service to suit changes in the Region’s infrastructure and servicing environment improves staff’s ability to evaluate and quantify asset needs and to prioritize asset management actions. Staff have identified a number of amendments to the Region’s asset classes and asset levels of service which have been reflected in the infrastructure requirements and financing recommendations of the proposed 2018 Capital Budget and Forecast. It is therefore proposed that the Region of Peel’s Asset Management Policy be amended per the revisions outlined in Appendix IV. Approval of the amendments to the asset levels of service and asset classes will not alter the proposed 2018 Capital Budget and Forecast.

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RISK ASSESSMENT

Council has adopted a balanced approach for infrastructure, selecting a “moderate” appetite for infrastructure risk which prefers safe service delivery with limited tolerance for uncertainty. Having 92 per cent of the asset portfolio rated as ‘Good’ to ‘Very Good’ is compatible with Council’s risk appetite. Furthermore, the current state of the Region of Peel’s infrastructure provides the organization with the capacity and flexibility to manage possible risks that may be revealed through the ongoing condition assessments and changing infrastructure conditions across Peel’s broad and complex range of infrastructure. Such risks include outdated or incomplete information on the state of some assets, unforeseen major asset failures, the potential impacts of climate change and new regulations. Staff have plans and are developing new plans to collect and manage the information needed for Peel’s assets. CONCLUSION

Overall, 92 per cent of the Region of Peel’s asset portfolio is rated ‘Good’ to ‘Very Good’. Regional Council’s proactive policy of ensuring adequate revenues to support Peel’s long term infrastructure needs coupled with Peel’s municipal sector leading Enterprise Asset Management Program has positioned the Region to manage the risks and challenges of the future.

Stephen VanOfwegen, Commissioner of Finance and Chief Financial Officer Approved for Submission:

D. Szwarc, Chief Administrative Officer APPENDICES

Appendix I – The 2017 Infrastructure Status and Outlook Report Appendix II – Infrastructure Scoring Descriptions Appendix III – Comparing the Conditions for Each Infrastructure Score Appendix IV – New/Revised Asset Classes and Asset Levels of Service For further information regarding this report, please contact Troy Mander, Manager, Corporate Asset Management, at extension 4483, or by email at troy.mander@peelregion.ca Authored By: Troy Mander

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2017 Infrastructure Status and Outlook Report

Infrastructure Status Action

The Region of Peel

The Region owns and operates roads, bridges, buildings, pipes, fleet and equipment to support services in affordable housing, child care centres, homeless shelters, long term care, paramedics, transportation, waste management, wastewater and water.

Infrastructure owned by Peel Living and private providers is not included.

Very Good

Over the next 10 years, the Region plans to reinvest approximately $2.4 billion to maintain the assets at current conditions and continue to provide high quality Regional services, contributing to a Community for Life in Peel.

Affordable Housing

Seven affordable housing buildings provide safe, accessible accommodations geared to lower income families and individuals.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-year Capital Plan to maintain affordable housing.

Reasonable and affordable rental fees ensure we can maintain the good condition of our housing stock over the life of the assets.

Child Care Centres

Three child care centres host private child care services for children between 18 months and five years of age and provide a range of family-centred services.

Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain the marketability of child care centres for private operators.

Homeless Shelters and Transitional Housing

Three homeless shelters provide 24-hour access to safe, secure, temporary living for families and individuals in distress.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to adequately maintain the shelters.

We will continue exploring opportunities to increase financially sustainable shelter capacity.

Regular, proactive maintenance is required to maintain good condition.

Long Term Care Centres

Five long term care centres provide long term care services and day programs to seniors, promoting quality of life, dignity, independence and community connections.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain and expand the centres to further improve senior care services.

Peel Manor is being replaced with a new facility that will provide more complete senior care services and promote opportunities for seniors to experience greater independence and more community integration.

Building new infrastructure and maintaining the existing assets in a state of good repair is critical to the success of the Region of Peel. The goal for the Region is to have most of the assets achieve their condition and performance targets in order to provide efficient and reliable services at affordable rates to the taxpayer. The Region of Peel is committed to strong stewardship of the public’s assets.

The Region’s infrastructure is a public investment with a replacement value of approximately $26.2 Billion. This report outlines the current state of the Region of Peel’s infrastructure and highlights some of the organization’s major improvement priorities.

What do the symbols mean?

Very Good State

Almost all assets in the portfolio are achieving the desired targets

Good State

Most assets in the portfolio are achieving the desired targets

Fair State

Many assets in the portfolio are not achieving the desired targets

Poor State

Most assets in the portfolio are not achieving the desired targets

Very Poor State

Almost all assets in the portfolio are not achieving the desired targets

Continued

92%of the portfolio

meets or exceeds the asset requirements

set by Council

Overall

APPENDIX ITHE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE Items Related to Enterprise Programs

and Services - Item 7.2

REVISED APPENDIX

Infrastructure Status Action

Paramedic Services

11 Regional paramedic stations, 140 paramedic vehicles and 617 paramedic equipment assets efficiently deploy emergency medical services from strategically located hubs throughout Peel.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain and modernize the stations, fleet and equipment.

We will continue to adapt and improve emergency services with the addition of new stations, fleet and equipment to meet the medical needs of a growing and aging community.

Regional Offices

Two Regional office complexes, centralize many operations and services and provide public access to Regional services and Council.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain and modernize Regional office buildings.

Suite A of 10 Peel Centre Drive is 38 years old and requires extensive work to modernize and efficiently use space to remain viable to meet growing service needs.

Transportation

1,635 km of Regional roads, 175 bridges and large culverts, 63 TransHelp vehicles, four Public Works yards, 444 vehicles and 183 vehicle equipment assets support the movement of goods and people through an essential transportation hub for Ontario.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain the transportation assets.

New condition assessments of our storm sewers and roadside retaining walls are underway which may result in new capital projects in the 10-Year Capital Plan.

Waste Management

Six community recycling centres, one composting and curing facility and one material recycling facility support the safe removal of solid waste from the community and advance the achievement of our waste diversion goals.

Good

Sufficient financing is proposed in the 2018 Budget and Forecast to continue service until the new assets are operational.

Additions and improvements to the Waste Management infrastructure portfolio are required to support Peel’s Waste Reduction and Resource Recovery Strategy.

Existing infrastructure is being maintained and is operating to meet service requirements until new buildings and equipment are commissioned to meet the targets of Peel’s Waste Reduction and Resource Recovery Strategy.

Wastewater

Two treatment plants, 31 sewage pumping stations and 3,626 km of sanitary sewer pipes provide safe and reliable collection and treatment of wastewater.

Very Good

The levels of capital investments will address identified infrastructure needs. Planning is underway to identify where additional capital works are required to increase system capacity to manage the risks of more frequent high rainfall events.

Expansions and rehabilitations are planned for the G.E. Booth Treatment Plant, many old pumping stations and several trunk sewers to improve the condition and capacity and increase operational efficiency.

Water

Two treatment plants, 14 wells, 13 pumping stations, 23 water storage facilities and 4,556 km of water pipes provide safe, reliable, high quality drinking water.

Very Good

Adequate levels of capital reinvestments are proposed in the 10-Year Capital Plan to maintain the water assets.

Master planning is underway to ensure long term sustainability of our linear water assets and the rehabilitation of assets at the water treatment plants.

Proactive pipe replacement programs are in place to keep the water system safe and reliable for homes and industries.

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2017 Infrastructure Status and Outlook Report

APPENDIX ITHE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE 7.2-8

The Region of Peel Infrastructure Scores

Very Good

Almost all assets in the portfolio are achieving the desired targets

Good Most assets in the portfolio are achieving the desired targets

Fair Many assets in the portfolio are not achieving the targets

Poor Most assets in the portfolio are not achieving the targets

Very Poor

Almost all assets in the portfolio are not achieving the targets

APPENDIX IITHE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE

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Comparing the Condition for Each Infrastructure Score

Rating Buildings Roads Feedermains

Very Good

New facilities with no or very few and minor deficiencies, e.g.7120 Hurontario Street, new paramedic stations and Region of Peel affordable housing buildings

Paved within the last few years and having no or almost no pavement cracking

New mains having no break history and no signs of internal wear on the pipe wall

Good

Facilities less than halfway through their expected lifespan and/or having some non-serious deficiencies, e.g. Battleford Community Recycling Centre

Minor pavement cracking but still providing a smooth riding surface

Mains less than halfway through their expected lifespan having no break history and no, or very minor, internal wear on the pipe wall

Fair

Facilities over halfway through their expected lifespan and/or having several deficiencies, e.g. Waste Management Material Recovery Facility

Areas of pavement having significant cracking and some roughness in the ride but the pavement base is still sound

Mains over halfway through their expected lifespan; may have noticeable signs of internal wear on the pipe wall and/or a pipe break may have occurred

Poor

Facilities nearing the end of their expected lifespan and/or having many significant deficiencies, e.g. Victoria Yard

Extensive pavement cracking, rutting and settlements; the ride is noticeably rough and the pavement base is failing

Mains nearing or at the end of their expected lifespan; noticeable signs of internal wear and/or some pipe breaks

Very Poor

Facilities at, or exceeding their expected lifespan and/or having many major deficiencies. Difficulties in providing services may become apparent. e.g. Peel Manor Long Term Care Centre

Severe pavement cracking, rutting and settlements; the ride is very rough and traffic and/or load restrictions may be required

Mains at or beyond the end of their expected lifespan. A very high amount of internal wear on the pipe wall and/or a history of many pipe breaks; immediate shut down may be required

APPENDIX IIITHE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE

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New/Revised Asset Classes and Asset Levels of Service

Program Asset ClassCurrent Asset Level of Service

(If applicable)Proposed Change Reason

New Asset Level of Service

(if applicable)

Transportation Stormwater Pumping Stations N/A Add ALOSTo be consistent with

Wastewater Pumping Stations

Required hours of wet well storage

according to station type as per ROP

design standards

Transportation Transportation Facilities Site

ElementsNA New ALOS New Asset Class Building Site Condition = B (Good)

Waste ManagementWaste Management HI Facilities

Site Elements NA New ALOS New Asset Class Building Site Condition = B (Good)

Waste ManagementWaste Management CRC

Facilities Site Elements NA New ALOS New Asset Class Building Site Condition = B (Good)

Water Water Transmission Facilities Site

Elements NA New ALOS New Asset Class Building Site Condition = B (Good)

Wastewater Wastewater Pumping Stations N/A Add ALOSTo be consistent with design

standards.

Required hours of wet well storage

according to station type as per ROP

design standards

Wastewater ForcemainsSecondary forcemain or storage

capacity.Remove ALOS

Risk is mitigated and measured

in the Wastewater Pumping

Stations asset class

N/A

WastewaterWastewater Collection Facilities

Site Elements

Building Site Condition = B

(Good)Adjust ALOS Target

To provide an equal level of

service to the customer at a

lower cost

Building Site Condition = C (Fair)

Wastewater Sub Trunk Sewers Easement access to sewers Adjust ALOS Wording

Risk is related to physical

accessibility regardless of

easement status

Access to sewers

Wastewater Trunk Sewers Easement access to sewers Adjust ALOS Wording

Risk is related to physical

accessibility regardless of

easement status

Access to sewers

APPENDIX IVTHE REGION OF PEEL 2017 INFRASTRUCTURE UPDATE

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