Norfolk County will take on significant debt over the next 10 years to pay for critical infrastructure upgrades.
A staff report that was to come to council on Oct. 27 says Norfolk’s debt obligations will more than triple by 2030.
However, county staff believes Norfolk can finesse this situation while easily remaining within provincial parameters for municipal debt.
Ontario law forbids municipalities from assuming debt that requires annual payments of more than 25 per cent of “own-source revenue.” The latter includes taxes, water and wastewater charges, and revenue generated from water and wastewater services.
In the report, staff expects the county’s annual debt payments to peak at 12.5 per cent of own-source revenue in 2028. By 2030 – assuming no major surprises — this should drop slightly to about 11.9 percent.
As further good news, staff says there is light at the end of the tunnel regarding Norfolk’s bleak reserve-fund predicament. Previous councils have drawn down reserves to keep annual tax increases at tolerable levels.
However, this council has been told this has come at the expense of prudent infrastructure management and planning. Confronted with a rapidly increasing infrastructure gap, council has been warned that the chickens have come home to roost for the short-range thinking of the past.
“It is important to highlight that this is the first year in recent history that there has been a net increase to the reserves as part of the proposed budget,” Megan Soles, Norfolk’s acting manager of financial planning and reporting, and Kathryn Fanning, acting supervisor of financial planning, say in a report that council will consider at its annual capital budget meeting Oct. 27.
“This net increase is the compound effect from council’s direction to increase reserve contributions last year as well as the budget guidance this year to include the two per cent special capital levies for both rate- and levy-supported operating budgets.”
Norfolk County expects to contribute $35 million to reserves next year. As it does so, it will spend $34.1 million from the same accounts, leaving a net surplus of about $930,000.
Norfolk County expects to spend $580 million on capital projects between now and 2030. The 10-year capital plan includes $49.1 million in 2021. In their report, treasury staff notes there are challenges in this area as well.
“At present, there is over $40 million of additional rehabilitation and replacement work related to `core assets’ anticipated within the 10-year forecast period that has not been included in the capital plan,” the 12-page report says.
In the areas of roads, bridges, water and wastewater, facilities, vehicles, equipment, and assorted other assets, staff cites a replacement value in Norfolk of nearly $970 million dollars. Drivers of this year’s $49.1 million in capital spending include:
- $14.7 million in infrastructure reconstruction.
- $9.7 million in asphalt resurfacing.
- $3.2 million in vehicle and heavy equipment replacement.
- $2.9 million in bridge rehabilitation.
- $2.3 million to reconfigure arena dressing rooms to accommodate co-ed hockey.
- $2.2 million for engineering related to Norfolk’s long-range goal of an “inter-urban water supply.”
- $1 million for additional rehabilitation of contaminated soil at the county garage on the Queensway West in Simcoe. The multi-year clean-up dates back nearly 10 years and could cost as much as $10 million before it is finished.
- $1 million in drainage engineering and construction.
- $700,000 to facilitate Norfolk’s shift to a work-at-home model for nearly 200 county employees.
- $400,000 for meters to regulate parking in congested urban areas.
The Oct. 27 meeting is the first step toward Norfolk’s consolidated levy-supported budget deliberations in January. Norfolk council will discuss proposed, serious increases in its rate-supported water and wastewater budget Nov. 24.