Council approved updating current replacement values for core assets in the City of Timmins’ Asset Management Plan during Tuesday’s meeting.
“We had originally planned to bring this forward in the form of a whole new asset management plan in June in order to be compliant with O. Reg 588/17, but we recently found out the Ministry of Infrastructure intends to use what they have on file by June 1 to making funding allocations for the OCIF (Ontario Community Infrastructure Fund),” said Greg Paquette, the City of Timmins’ deputy treasurer.
“So, basically in our 2014 Asset Management Plan (prepared by Watson & Associates) the estimates utilized were developed by consultants and a lot of the costing they used was based on Southern Ontario construction costs, which we have seen as we have gone through, those aren’t in line with the actuals we have received to date.
“One example would be the Kraft Creek bridge, which was reconstructed in 2018.
“Our Asset Management Plan had a 2014 estimate when inflated to 2018 dollars of about $2.1 million and the actual cost was about $4.7 million, so greatly undervalued.
“Again, we kind of took that same kind of value with our Bruce Avenue tender for this year and we came within five per cent of that value when we applied the same factor to the Kraft Creek bridge.
“So, clearly the estimates we used were grossly undervalued and this could have a fairly significant effect on our funding allocation for the OCIF the city receives.
“We also used recent estimates from water/storm (sewer)/road construction, as well, to update those values.”
Ward 3 Coun. Joe Campbell wasn’t convinced, however, that updating the values is the proper course of action.
“We know there have been a couple of projects that have been way over,” he said. “Now, are we recording those as replacement costs or are we recording a different number and taking an immediate write down of the overage, because the replacement cost of a couple of those projects is not what we spent on them?
“So, how are we dealing with that with respect to the Asset Management Plan?”
Paquette said, “The Asset Management Plan is going to use the replacement cost, not the accounting cost.”
Campbell continued, “Yeah, but what number are you putting in there, because, for example, the waste water plant, now are you suggesting to me the replacement cost is what we have actually spent on that right now?
“I would challenge that number, based on the original estimate, to finish that place.”
Paquette said, “We are utilizing what was invested in it for the — are you speaking to the secondary treatment upgrade?”
Campbell said, “Yes.”
Paquette said, “Yes, we are utilizing the figures that came in, actually.”
Campbell said, “OK, then does that not overstate your actual asset replacement cost?”
Paquette said, “I don’t believe so, because, I think what we are confusing here is the original estimate of that project was grossly undervalued versus what it actually cost.”
Campbell continued, “But when we prepared the Asset Management Plan we guesstimated on some of the replacement costs because some of the assets went back 50 years, 100 years.
“We know what the original estimate was and we know some of the issues for the overrun.
“Those were basically delays and so on, like this, some engineering issues and so on, like this, and geotechnical issues, going forward.
“Now, if you were to build a new plant, you wouldn’t have those same issues to add to the cost.
“So, I am basically stating you are overestimating the replacement cost here for an asset, that subsequently overestimates your Asset Management Plan.
“It is just a point here because there are two ways of handling this.
“You put down a realistic cost of what to replace it is and you take the one-time hit, or you put the whole cost down there and amortize it over a period of time.
“What you are saying to me is you are putting the whole cost in there and you are amortizing the cost over the life of the asset.
“I would question that number.”
Wrapping up discussion, Deputy Mayor Michelle Boileau said, “I definitely agree it is time we do this exercise, before June 1, and I look forward to the finalized report.”