ACCOUNTING FOR INFRASTRUCTURE

ASSET MANAGEMENT
Natural assets and green infrastructure must be accounted for and
valued when making decisions regarding infrastructure projects
ACCOUNTING FOR INFRASTRUCTURE
Long-term financial planning for municipal governments
by Arshad Akhtar
OTHING HAPPENS until it’s funded. Long-term 昀椀nancial planning is increasingly becoming one of
the most important components underpinning a
successful asset management program. Municipalities must address competing priorities, making responsible and e昀케cient long-term 昀椀nancial
planning more important.
When communities establish a long-term 昀椀nancial
vision, it empowers them to progress with con昀椀dence,
providing a strategic roadmap for managing resources
over an extended period, while ensuring sustainability
and enhancing transparency. This article explores the
bene昀椀ts of long-term 昀椀nancial planning for infrastructure
asset management and provides examples of best practices
from across Canada. It examines lifecycle costing practices,
long-term funding strategies and accounting for natural
assets and climate change. It also shares ways communities can leverage 昀椀nancial planning to:
• Optimize the service delivery and performance of
their assets.
• Make informed and cost-e昀昀ective decisions for the
long term.
• Address the maintenance and capital renewal
backlog.
• Promote intergenerational funding equity and capital
service equity.
• Protect and enhance natural assets and prepare for the
impacts of climate change.
The case studies in this article are exactly the type of
work the Federation of Canadian Municipalities (FCM)
has been supporting through its Municipal Asset Management Program, funded by the Government of Canada.
Numerous local governments have reported that municipal grants or training activities have given them the ability
to demonstrate the gap between forecasted infrastructure
needs and current spending levels. With funding from the
Municipal Asset Management Program, over 300 Canadian local governments have worked on projects or received
training that helped them progress in budgeting and
昀椀nancial planning with respect to asset management.
Municipalities are responsible for providing essential
N
Arshad Akhtar is sector
lead for the Federation of
Canadian Municipalities’
(FCM) Municipal Asset
Management Program.
16 RENEW CANADA – MARCH/APRIL 2024
services to their communities, such as water, wastewater,
and transportation. These services are considered “non-discretionary” and often account for more than 90 per cent of a
municipality’s core infrastructure services. It is uncommon
for municipalities to reduce capital services, which makes
long-term 昀椀nancial planning a critical component of their
operations. Communities, therefore, need to understand the
full lifecycle cost before building new infrastructure.
In March 2022, the Prince George Community Foundation and Rotary approached the City of Prince George,
B.C., with a proposal to build a mega-destination park.
The park would include a pump track, junior and teen
adventure parks, a senior-friendly outdoor 昀椀tness station
and a splash pad and would be inclusive and accessible
while promoting economic development. The Foundation
indicated that they had secured funding for much of the
design and construction, while the city would contribute
the land and other park amenities such as landscaping,
site servicing and parking, as well as cover operating and
maintenance costs such as mowing and equipment repair
for the life of the park. The question the City faced was the
proposal’s long-term 昀椀nancial implications. How could
they ensure it was in the community’s best interests both
functionally and 昀椀nancially?
Financial planning and equity
Long-term 昀椀nancial planning and lifecycle costing are
proving to be useful tools to minimize future costs and
catalyze infrastructure renewal and intergenerational
funding equity. Establishing sustainable funding has
spurred capital renewal, ensuring all generations have
equitable access to functioning infrastructure.
The District of Saanich, B.C., shows how long-term
昀椀nancial planning can help improve intergenerational
funding equity and secure long-term funding. In 2007,
they estimated that actual annual infrastructure funding
was only 30.5 per cent of the amount required to fund
long-term infrastructure renewal, meaning that future
generations would have to pay signi昀椀cantly more to enjoy
similar infrastructure. From 2007 through 2019, Saanich
gradually built up to 47.7 per cent of sustainable funding
RENEWCANADA.NET

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