Investing in Infrastructure – Part 2: Data on Growth
Balancing investment choices between infrastructure renewal and growth presents a significant challenge, especially when our city grows and ages at the same time. The gap between what is needed and what the City can afford continues to grow; therefore, obtaining and prioritizing funding remains a key concern.
Renewal vs. Growth
Renewal is investment in existing infrastructure to restore to its former condition and is meant to extend its service life. Capital investment in renewal extends the period of service potential but does not change the replacement value and so does not increase the size of the infrastructure asset portfolio. Renewal includes rehabilitation and replacement.
Growth includes investment in new assets as well as investment in projects that add to or enhance components of existing infrastructure assets to improve the type of service provided and/or improve functionality and/or capacity. As an example, the reconstruction of 178th Street in the west end included the addition of a multi-use trail along the west side of the newly built road.
The 10-year Capital Investment Agenda (2012-21) reported that the average age of the City's infrastructure assets is 30 years, and the average expected life of all City assets is 50 years. Rapid growth also strains existing infrastructure maintenance and increases the demand for new infrastructure services to meet the needs of all Edmontonians.
Renewal challenges include:
Aging Neighbourhoods: As mentioned in the last blog, aging neighbourhoods require maintenance and reinvestment. The neighbourhood renewal program has been implemented to balance the need to rebuild completely or preventative maintenance through different neighborhoods.
Aging Infrastructure: increasing maintenance and rehabilitation is needed to ensure that aging infrastructure is performing well and continuing to meet the needs of citizens. Tough decisions have to be made to ensure that investment is targeted to where it is needed most. Edmonton's Risk-based Infrastructure Management System is used to assist in ranking the rehabilitation needs of the City's assets, and to optimize the allocation of renewal funds across the varied infrastructure to ensure long-term value.
Renewal Targets: an analysis completed in 2011 indicated that an average annual reinvestment of $400 million-$450 million (without inflation) would be needed over a 10-year period to achieve a reasonable state of repair of Edmonton’s infrastructure. Targeting renewal funding based on an amount that is averaged over several years does not allow enough funding to be allocated to all infrastructure areas that need reinvestment. For example, one large project may take up a significant portion of the annual allocation, which can have adverse effects on other infrastructure also requiring reinvestment at the same time. This issue needs to be factored into recommended funding levels, with variations in funding levels adjusted between the years.
Growth Challenges include:
Limited growth money: While there is funding committed to specific projects, allocation for renewal needs, and constrained funding (funding that must be used for a specific purpose that is unable to be reallocated), it is difficult to achieve a reasonable state of repair toward our existing assets without looking for more funding streams.
Operating costs: Operating costs can end up being as much or more than initial capital investment over the lifetime of the infrastructure asset. This means operating costs are ongoing and need to be considered more while we look to decision making when funding growth projects. The City's Integrated Infrastructure Management Planning Framework helps decision makers determine how growth can be achieved in the most effective and sustainable way, taking future operating costs (among other factors) into consideration.
Rising costs: We are facing more rightfully stringent environmental regulations that lead to larger investments to properly meet building costs and comply with regulations.
Now that we’ve looked into the challenges and opportunities when it comes to infrastructure renewal and growth we can look at where we’ve invested in the past two budget cycles (2015-2018 and 2019-2022). In the graphs below, we can see how we invested in specific items including roads, sidewalks, transit and bike lanes with this information split into Renewal and Growth.
In Part 1 of this blog series, I referenced the last of investment made over the course of a few decades. One example of this is our Arterial Road Renewal Program. This program operates similar to our Neighbourhood Renewal Program. During the 2013 municipal election campaign, I remember many people raising concerns about the conditions or our main roads. While I didn’t have any specific data at the time, it certainly felt like the roads in our city had been getting progressively worse.
In late 2014, City Council was presented with a report that confirmed what we were all witnessing. Our arterial roads were getting worse each year. In fact, at the time of the report, 18% of our entire arterial road network was rated in poor condition (D & F). If we continued down the same investment path of $25 million/year, that percentage would have continued to increase.
Instead of allowing our arterial roadway network to get worse, City Council made a decision to increase that budget from $25 million/year to $55 million/year. That new amount was determined by the Risk-based Infrastructure Management System (RIMS). Similar to the Neighbourhood Renewal Program, this increased investment would not immediately fix decades of a lack of investment, but it would start us down the right path to catch up on work that should have never been neglected.
One other item that I would like to expand on is the investment into other modes of transportation. As you can see in the sections Results and Asset Information, we see that from 2015-2018, $12 Million in Growth is spent on bike lanes, in 2019-2022, $7 Million is spent on bike lanes.
When comparing that to the respective budget cycles, the budget for the Capital Budget in 2015-2018 was $4.3 Billion. From 2019-2022 the budget is around the same at a Capital Budget of $4.8 Billion.
If we look at the percentage that we spent on bike lanes for 2015-2018 in relation to the rest of the growth and renewal budget, we spent 0.54% of our budget on bike lanes. For the 2019-2022 growth and renewal budget, it was even less at0.16% of our total Capital Budget being spent on bike lanes.
When combining those two budget cycles and comparing them to roadways over the 8 years we will have spent $19 Million on bike lanes compared to the $2.4 Billion on roadways. That is 0.79% of our roadways budget.
We know that Edmonton is a car-centric city with infrastructure that mostly supports car travel. Our expenditures clearly reflect that reality. While we heavily invest in our roads, we have also started making investments in other transportation choices because we recognize that different people have different needs. I believe that the expenditures listed above make it clear that Edmonton City Council has taken the need for renewal and growth in our roads quite seriously, while recognizing the need to expand our options because relying on a single mode of transportation is poor planning and does not set our city up for long-term success.
In the next part of this series, I will be providing a breakdown of some of the operating costs for the infrastructure that we have been discussing in this part.
