Overwrought infrastructure will likely lead Oak Bay to borrow money at some point according to the district’s draft sustainable infrastructure replacement plan.
During its Sept. 27 meeting, council approved the draft and opted to include questions about it while seeking public input on future budget decisions.
Faced with a 100-year funding gap, council increased infrastructure funding in 2018. Oak Bay isn’t alone – with much municipal infrastructure dating to the 1920s to 1950s, many cities in Canada face dealing with century-old pipes and such.
Oak Bay has more than $900 million in public assets, including 76 hectares of land, 106 km of roadway, more than 30 buildings, more than 100 pieces of equipment and vehicles, 14 pump stations, 141 km of storm drain, 100 km of sanitary sewer, and 116 km of water main. The district is also responsible for care of natural assets such as 13 km of coastline, about 10,000 boulevard trees and 1.3 km of creeks.
About $273.9 million of the district’s water, sanitary sewer, storm and road assets are past their recommended useful life while others are beyond their useful life and due for replacement.
The report finds even if the district increases reserve contributions to sustainable levels starting in 2022, debt would still be required between 2026 and 2069. At current funding levels, the district would need to borrow $855 million and incur an interest expense of approximately $395 million to fund infrastructure replacement.
The report outlines several options to increase reserve contributions alongside debt financing. Modelling shows a more rapid pace for replacing overdue infrastructure would not be feasible because of forecasted debt levels.
Replacing assets over a longer period could result in “unacceptable infrastructure condition risk levels.”
Questions about infrastructure service levels and the pace of tax and utility rate increases will be included in the 2022 to 2026 financial plan budget questionnaire.
Read the 82-page infrastructure plan at oakbay.ca/municipal-hall/plans-and-reports.
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