Asset Management - Financial Strategy
It is estimated that the replacement cost of existing Town’s assets averages $15.5 million per year as per the asset management study that was completed by GHD Inc in 2012.
The Town utilizes following sources of funding for replacement of Capital Projects:
- Federal Gas Tax
- Special Capital Replacement Property Tax Levy
- General Purposes Property Tax Levy
- User Fees (Water and Wastewater fees)
Federal Gas Tax funding has been a stable source of funding for a variety of projects including roads resurfacing and facilities rehabilitations. It is assumed that the Federal Gas Tax will be a steady contribution for the duration of this financial plan. The Town will receive approximately $812,890 in Federal Gas Tax for the years 2014 and 2015.
A 1% Special Capital Replacement Property Tax Levy was approved in 2013 to provide additional capital asset replacement funding and this was increased to 2% through the 2014 Tax Levy Budget approval process. Additional 1% increases are proposed to be implemented in subsequent budgets in support of the capital asset replacement funding strategy.
The estimated Special Capital Replacement Property Tax Levy amounts for the next five years are as follows:
|2015 – 3% Capital Levy||$1,508,300|
|2016 – 4% Capital Levy||$2,011,020|
|2017 – 5% Capital Levy||$2,513,780|
|2018 – 6% Capital Levy||$3,016,530|
|2019 – 7% Capital Levy||$3,519,300|
The Town also provides funding for the replacement of its Fleet, Information Technology and Other assets through the annual Property Tax Levy Budget. The 2014 Property Tax Levy Budget raised $898,350 for replacement of these assets and the proposed 2015 Property Tax Levy Budget includes an allowance of $888,350 for these purposes.
Under the Safe Drinking Water Act (SDWA) regulation 453/07 the Town must provide to the Ministry of Municipal Affairs and Housing a six year financial plan for Water. The consolidated six year water financial statement projected contributions from water user fees to Reserves from $1.3M in 2010 to $3.2M in 2016. Reserves and reserve funds are a critical component of long term financial planning and used to maintain a stable financial position, minimize fluctuations in the tax rate and to support future cash requirements. For 2014 and 2015, total contribution from Water and Wastewater Budgets to Reserves is and is proposed to be $3,434,760 (approximately 38% of Water and Wastewater billings).
In total Bradford West Gwillimbury raised approximately $7.147 million from these combined revenue sources in 2014 and proposes to raise this to $7.633 million in 2015towards reserves for replacement of existing assets.