The City of Hamilton, Ontario, Canada, is facing an infrastructure gap of $195.9 million of annual investment needed for ten years to close the difference, a finding from the Auditors General’s review of Hamilton’s roads.
The long-anticipated Auditor’s report released in July 2021 shows that Hamilton’s residents are not getting value for their money.
The Hamilton Spectator reports that the audit found that there was no process used in making strategic investment decisions for roads, pavement conditions were inconsistent, ways to extend the life of roads had been underemphasized, and contractors had not been held to account for low-quality road work (Moro, 2022).
The decision of elected officials not to spend on the maintenance of its assets also contributes to the problem. The council opted for “zero dollars” for capital needs in 2014 and a “zero per cent levy contribution” in 2021 (Wilson, 2022).
Municipal infrastructure deficits are a common problem across Canada due mainly to limitations in revenue collection and “stagnant resources” from upper levels of government, such as the federal and provincial, said Mayor Fred Eisenberger (Moro, 2022).
Moro (2022) mentions that when it comes to investing in their infrastructure, the mayor says he couldn’t recall a councillor “advocating for a 20 per cent increase” in taxes during 2022’s budget talk.
He adds that the reality is more assistance from senior levels of government is needed, or local taxpayers could take a 20 per cent hit “Not just for a year, but multiple years, to try and get ahead of this infrastructure” (Moro, 2022).
Mike Zegarac, general manager of finance, also notes that closing the infrastructure gap will require a 20% increase in property tax or roughly $850 for each household.
For many years, insufficient funding for maintaining the city’s infrastructure has created an enormous deficit. To maintain infrastructures, most municipalities in Ontario reinvest 15 to 25% of their asset’s value so they won’t fall into disrepair. But since the early 2000s, this figure dropped to 9%.
Apart from critical infrastructure, Hamilton’s provincially mandated asset management plan requires that other assets, such as fire halls, museums, and parks, must be evaluated and proposed a service level for all by 2025.
The infrastructure gap faced by the municipality poses a considerable challenge. Patricia Leishman, director of corporate asset management, says, “This is a Mount Everest amount of work that we have in front of us”.
Before the work can start, the council needs to be confident with the figures. Dated or poor data will be a “roadblock in making an accurate assessment of the city’s assets”, Leishman notes.
To help maintain their infrastructure assets and avoid the enormous cost of fixing them, the Ontario government in 2018 required all municipalities, including the city of Hamilton, to adopt Asset Management Plans to care for their aging and crumbling infrastructure.
In The Hamilton Spectator, Maureen Wilson, Ward 1 Councillor, writes, “Asset management is a strategy that guides how and when a city reinvests in an existing capital asset like a road. Just like your own home, the goal is to avoid letting things go to such an extent that you face huge bills to repair major damage. The other goal is to ensure that future generations of taxpayers do not face enormous bills for repairing deteriorated assets that are being used by the current generation”.
Among the 25 recommendations from the Auditor’s review, seven focused on “poor asset-management practices.” Leishman says that she and her staff aim to improve the life-cycle data of city assets to help “more informed choices” and better define the funding gap over the next three years (Moro, 2022).
As infrastructure assets have long life cycles, councils must reinvest in their critical assets to reduce depreciation and maintain the required level of service.
Continued underinvestment heightens asset failure risk and reduces service levels, which can adversely impact community well-being.
The preferable alternative is sustained, long-term investment at appropriate levels, which ensures the community continues to receive the required services.
Moro, R. (2022, June 15). Sticker shock: Hamilton faces $195.9M infrastructure gap. The Hamilton Spectator. Retrieved from https://www.thespec.com/news/council/2022/06/15/sticker-shock-hamilton-faces-1959-infrastructure-gap.html
Wilson, M. (2022, April 23). Hamilton needs a new plan for our bumpy roads. The Hamilton Spectator. Retrieved from https://www.thespec.com/opinion/contributors/2022/04/23/hamilton-needs-a-new-plan-for-our-bumpy-roads.html