Huntsville $10 million short for asset management
Huntsville staff announced the Town doesn’t have the funds necessary to manage the Town’s assets, in the June 24, 2024, meeting.
In her report for the Draft Asset Management Plan (AMP), Director of Corporate and Community Strategy, Reva Frame, advised, “The Town should be saving towards existing infrastructure. The average annual requirement for the Town is $18M, and in 2024 the Town budgeted infrastructure funding of $8.1M. This means that there is an annual infrastructure funding gap of $9.9M.”
She recommended that Council adopt the Draft AMP, which is an ongoing tool that provides strategies for managing the costs associated with repairing and replacing the Town’s assets.
For instance, according to Frame, the Town saved $21 million on roads with the Plan. She advised that it was a 45% savings “by implementing strategies of regular maintenance.”
Consequences of not maintaining assets leads to an impact to functions and services to the community, which also increases liability risks to the Town.
Frame indicated that 63% of the Town’s assets “are fair or better condition.” This is an increase from the previous 58%, so, the Town is improving with maintaining it’s aging infrastructure.
She added that it would cost the Town $500,000 million if it replaced all of its assets now, up $200 million from the $300 million reported in the 2020 AMP. Apparently, high costs are the reason for the higher asset value, as the Town hasn’t accumulated new assets since 2020.
Asset management is an ongoing strategy, advised Frame, as is the plan for generating the funding for it.
Frame advised that filling the gap would require a 44.9%, increase to the levy, which isn’t feasible, so she recommended that Council would have to consider a long-term strategy moving forward to fill the gap.
“A financial strategy will be needed to close the gap over time,” said Frame. She recommends that Council consider a 15-year period to gradually reduce the 2024 gap.
According to the report, “The financial strategy only includes closing the gap on existing infrastructure and does not include funding for new assets.”
It adds, “This type of financial strategy will allow the Town to transition from a reactive capital planning approach to more proactive decision making.”
The report continues that the financial strategy to correct the issue includes “an overall levy increase of $602,000 annually,” starting in 2025, which means “a 2.7% levy increase.”
Other recommendations include “improvements to data completeness and accuracy, and AMP again in 2025 to meet the July 1, 2025, deadline for proposed levels of service and financial strategy,” said Frame.
Councillor, Helena Renwick, said “It’s like a shell game that we constantly move around.” She suggested Council have a special meeting for a deeper investigation of the matter.
Mayor, Nancy Alcock, concurred with Renwick. She said, “it’s continuously changing.”
She added, “The numbers need to be updated,” and suggested they consider various funding models for replacing assets.
Frame advised, “It’s making sure we have enough saved to be able to do the replacements when we need to do them.”
Councillor, Cory Clarke, suggested that this is a good reason why the Town “be so careful with spending… It’s not going away… We’re already still in the hole before we even do our budget.”
Upon Council adopting the plan, Alcock reassured that there won’t be a 45% increase to the levy. Council will have further discussion regarding strategies before moving ahead with decisions about the matter.
