Long-range financial plan could burden future Ottawa councils, critics say

The City of Ottawa has more than 130 facilities that will reach their "theoretical end-of-life" by 2035, a staff report states. Photo by TONY CALDWELL /POSTMEDIA

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Mayoral and council candidates were among the delegates who lined up to caution committee members about a long-range financial plan to fund aging infrastructure that could be “kicking the can down the road” for future council terms to manage.

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City of Ottawa staff asked the finance and corporate services committee to approve a long-range plan to address a multi-million gap in funding for infrastructure, including road maintenance, parks and aging arenas and recreation facilities that are expected to reach or exceed their useful life cycle in the next 10 years.

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Committee members asked city staff a stream of pointed questions about the long-range financial plan before approving the recommendations by a 9-2 vote.

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The city’s treasury staff highlighted an infrastructure funding gap of $229 million per year and recommended several methods for closing that gap, including a proposal to double the existing contribution from property tax increases from $6 million to $12 million in 2027 and 2028.

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The city would also allocate 0.15 per cent of growth in property tax revenue to the capital growth budget envelope each year, which is estimated at $3.5 million. The staff recommendation would also include a one-time “draw-down” of $32 million from the citywide capital reserve fund, and the city would take on $60 million in additional debt over the next two years.

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“A dedicated infrastructure levy could help address the City of Ottawa’s identified priority infrastructure needs and funding backlog,” the staff report said.

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The city’s tax-supported assets have an estimated replacement value of more than $39 billion, staff said, and a “dedicated, predictable source of funds to supplement a long-term funding strategy would be beneficial for preserving service levels for residents.”

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Staff said a one per cent property tax levy would equate to an additional $46 each year for the average homeowner.

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The city could also generate revenue by “retiring” and selling high-maintenance facilities that are “no longer suitable,” staff said.

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The city has more than 130 facilities that will reach their “theoretical end-of-life” by 2035, the report states. Those facilities carry an estimated replacement value of $541 million to rebuild with equivalent capacity at current market rates.

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That includes 99 facilities rated in “fair” or lower condition. Staff say there are 40 facilities at the top of the priority list that “demonstrate sufficient merit to justify full replacement.”

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The priority list of facilities amounts to $231 million in replacement value and will be finalized and presented to councillors in 2027, according to chief financial officer Cyril Rogers.

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“With current market conditions and modern design requirements, it is not feasible to replace all 40 facilities,” staff said. “Likewise, it is important to recognize that the financial burden of maintaining facilities dedicated to only one service has become unsustainable. Greater efficiencies and cost savings can be realized through the consolidation and co-location of services within shared facilities.”