Outcomes-based Focus for Provincial Regulation of Municipal Infrastructure
IT IS THEREFORE RESOLVED THAT AUMA advocate for the Government of Alberta to engage AUMA and its members in reviewing and amending regulations and policies related to municipal infrastructure to shift the focus from prescriptive requirements to an outcomes-based system that considers economic, environmental and social factors.
FURTHER BE IT RESOLVED THAT AUMA, the Government of Alberta, and other partners develop further capacity building tools to help municipalities effectively build and maintain infrastructure.
WHEREAS AUMA’s vision is that Alberta’s municipalities have an enduring partnership with the Government of Alberta that recognizes the shared responsibility to fund the infrastructure that Albertans rely on to maintain economically, environmentally and socially resilient communities;
WHEREAS small municipalities with limited property tax bases and borrowing capacity rely upon adequate and predictable infrastructure funding from the federal and provincial governments, particularly in the areas of water and sewer infrastructure;
WHEREAS provincial policies and processes implemented by Alberta Transportation, Infrastructure, and Environment and Parks can have the unintended consequence of municipalities building infrastructure that place an unviable financial burden on local rate payers;
WHEREAS community economic growth relies upon reasonable levels of municipal taxation and user fees combined with a high standard of public municipal infrastructure and services that meet the expectations of residents, investors and developers; and
WHEREAS municipalities rely on tools and resources developed by AUMA, the Government of Alberta and other partners, such as AUMA and RMA’s current Asset Management Initiative, to support building and maintaining local infrastructure, but these programs are often oversubscribed.
In late 2014, the Town of Nanton’s aging Rotating Biological Contactor (RBC) wastewater treatment plant was facing an unexpected critical failure. An $11 million federal/provincial infrastructure capital grant package was ultimately made available for a new membrane bioreactor (MBR) mechanical wastewater treatment plant, beginning operation in 2017. With few alternatives provided to the Town in stakeholder meetings with the province and engineers, this recommended option was green lit. A more typical lagoon wastewater treatment solution had previously been favoured by the Town for its more dependable operational costs, Level 1 EOCP operational requirements and longevity.
There is no doubt that an MBR facility is an environmental leader in wastewater treatment. Fiscal considerations at the municipal level should, however, be something that the provincial policies and regulations consider when providing regulatory and funding approval for new infrastructure.
To avoid an operating deficit under the new system, the average annual wastewater fees for each resident are estimated to increase by 70% by 2020, compared to the costs to operate the former system in 2015.
| Former System | New System | % Change |
|---|---|---|
| Annual wastewater user fee revenue for operations (2015) | Estimated annual wastewater user fee revenue for operations (2020) | |
| $434,000 | $750,000 | 73% |
| Average annual wastewater fee for a resident in 2015 | Estimated average annual wastewater fee for a resident in 2020 | |
| $421 | $714 | 70% |
The scale of user fees increases to cover the operation, maintenance and staffing of this facility, in tough economic times, is unexpectedly high and, with hindsight, required far greater analysis from the financial impact angle by all parties involved before the MBR option was greenlit. For example, a community with a population of 2,200 faces an insurmountable objective of building adequate capital reserves to replace an $11 million facility with a 20-year useful life.
For small communities with major cumulative needs in infrastructure and operational activities, the capital, operation and maintenance cost impact consideration of a specific investment to the tax base must be considered and discussed thoroughly by all parties, even in a critical situation. The Government of Alberta should engage AUMA and its members in reviewing and amending provincial policies and regulations to:
- Remove prescriptive requirements for a particular type of infrastructure (e.g. type of wastewater treatment plant) and replace them with outcomes-based requirements (e.g. water quality)
- Incent asset management and full cost accounting practices and, where possible, greater cost recovery from infrastructure users.
In some cases, work with the federal government may be required to address national standards.
AUMA, the Government of Alberta and other partners such as the Rural Municipalities of Alberta and the Federation of Canadian Municipalities should develop further capacity building tools to support effective management of local infrastructure. This could include:
- Templates and guidance regarding the effective management structure options for a major infrastructure project;
- Compiling and sharing success stories from communities of all sizes with a variety of infrastructure issues; and
- Supporting development and review of asset management and fiscal implication reports.
Summary of response received from Alberta Municipal Affairs, January 3, 2020:
Municipal Affairs highlighted their support for asset management as a means to ensure informed decision-making regarding municipal infrastructure. The response also referenced that Municipal Affairs monitors asset management practices related to municipal infrastructure and the role that grant programs such as the Federal Gas Tax Fund and Municipal Sustainability Initiative play in supporting local decision making regarding community infrastructure.
Alberta Municipalities is encouraged by recent innovative pilot projects that have been undertaken in the area of water and wastewater technology. Some of these projects are municipal-led, and some have been led by Alberta Innovates in partnership with municipalities. Overall, this speaks to a willingness to deploy innovative solutions in municipalities. Alberta Municipalities has also been a strong advocate for asset management as a means to ensure informed decision making for municipal infrastructure. In partnership with Rural Municipalities of Alberta and Infrastructure Asset Management Alberta we have secured grant funding from the Federation of Canadian Municipalities that has allowed us to provide asset management training to dozens of communities.