ADMINISTRATIVE REPORT

Date: June 8, 1999
Author/Local: D Klimchuk/7283
RTS No. 00773
CC File No. 3253

Council: June 22, 1999

TO: Vancouver City Council

FROM: General Manager of Engineering Services

SUBJECT: FCM Proposal - New Municipal Infrastructure Program

RECOMMENDATION

THAT the Mayor write the federal and provincial governments, informing them that Council approved the following resolution calling for a new municipal infrastructure program in the federal Millennium Budget:

WHEREAS the FCM-inspired $8.3 billion, six year Canada Infrastructure Works Program (CIWP) -- described by Prime Minister Jean Chretien at the FCM 1998 Annual Conference, as “... one of the proudest achievements of our government” -- exceeded original projections, funding 17,000 projects that created assets of lasting value and generated more than 130,000 short term jobs, and set a new standard for intergovernmental cooperation in Canada;

WHEREAS the CIWP could not fully address Canada’s long term infrastructure needs given the extent of the program revealed in various FCM studies completed between 1985 and 1996;

WHEREAS the City of Vancouver has benefitted from the CIWP but still has a number of outstanding infrastructure projects which it cannot finance out of municipal revenues alone;

WHEREAS the FCM is dedicated to improving the quality of life in all communities;

WHEREAS the Millennium Budget offers an opportunity for achieving an improved quality of life and ensuring sustainable communities;

WHEREAS the FCM National Board of Directors has endorsed a new long-term national infrastructure program with environmental benefits as a component of a sustainable communities strategy;

WHEREAS such investments will create jobs, reduce pollution, save taxpayers money resulting from reduced health and environmental damage, improve the efficiency of the economy and make Canada more competitive, productive and innovative; and

WHEREAS Canada is a leader in environmental technologies;

BE IT RESOLVED that the City of Vancouver endorses the Federation of Canadian Municipalities (FCM) call for a long-term national core municipal infrastructure program highlighting environmental benefits, in the federal Millennium Budget;

BE IT FURTHER RESOLVED that the City of Vancouver will urge local members of Parliament to support FCM’s Millennium Budget proposal and to communicate their support to the Minister of Finance;

BE IT FURTHER RESOLVED that the City of Vancouver will urge the Prime Minister and the Minister of Finance and local members of the British Columbia Legislature to support FCM’s Millennium Budget proposal; and

BE IT FURTHER RESOLVED that the City of Vancouver will communicate to local media and the public our support to the FCM’s Millennium Budget proposal.

COUNCIL POLICY

In 1985, Council endorsed the Federation of Canadian Municipalities (FCM) initiative to take steps to halt the significant decline in the condition of infrastructure in urban areas, placing emphasis on maintenance and reconstruction as opposed to new construction, in partnership with senior governments.

In 1993 and 1994, Council reiterated this position to the Federal and Provincial governments, and noted the need for municipal involvement in the Management Committee reviewing projects for the Infrastructure Works Program.

In 1995, Council again informed the Federal and Provincial governments of the City’s views regarding the Infrastructure Program, including a request to place more emphasis on municipal infrastructure and provide more timely project approvals.

In January 1997, Council endorsed extending the Canada Infrastructure Works Program, reiterated that there should be municipal representation on the Management Committee and noted that the only priority should be for projects that replace existing, deteriorating municipal infrastructure.

PURPOSE

This report requests Council’s endorsement of a resolution suggested by the Federation of Canadian Municipalities regarding a new core municipal infrastructure program. This program would focus on environmental benefits and is proposed for inclusion in the Year 2000 federal budget (Millennium Budget).

BACKGROUND

A memorandum to Federation of Canadian Municipalities (FCM) Member Councils from the FCM Executive Director, dated May 11, 1999, was circulated to members of Council by the Mayor’s Office on May 19, 1999. Attachments included a Template Resolution for City Councils and background information on a federal Finance Committee Roundtable on Infrastructure Investment and Productivity. The memorandum requests that to help ensure that this initiative is successful, Council endorse the FCM’s call for a new municipal infrastructure program focused on environmental benefits. It also requests that the City communicate their support to the federal and provincial governments.

FCM proposes that this new program be established as part of the federal Millennium Budget. They note that the Finance Minister has expressed interest in working with FCM to address both environmental concerns and Canada’s municipal infrastructure deficit in a single program. Representatives from the FCM have appeared before the House of Commons Finance Committee Round Table on Infrastructure Investment and Productivity in May of this year. The FCM also advises that there will be cross-Canada Finance Committee hearings on the Millennium Budget that the City could participate in.

The City has been a strong supporter of a national program for replacing deteriorating municipal infrastructure. This includes playing a lead role in the FCM’s 1983 and 1985 studies of infrastructure needs across Canada. More recently, Council has approved submissions and awards for City projects in the Canada/B.C. Infrastructure Works Program, and requested that the provincial and federal governments establish an ongoing program for the replacement of deteriorating municipal infrastructure.

DISCUSSION

Vancouver like most cities has a capital program for replacing deteriorating municipal infrastructure and addressing related environmental issues. However the amount of work that can be carried out is limited by the City’s ability to pay for these and the other valuable programs and services that the City provides. Although Vancouver is not in an infrastructure crisis like some North American cities, in successive Capital Plans, there has always more funding requested than the funds that are available. A similar situation exists in most municipalities across Canada, and collectively this makes up a national “infrastructure deficit” of several billions of dollars.

Municipal infrastructure such as transportation, sewer and water facilities, play a key role in both our provincial and national economies. Renewal of this infrastructure is necessary for maintaining and enhancing our standard of living and the environment. The FCM concludes that most industrialized countries such as Germany, Japan, the U.S. and Sweden recognize this and are making enormous commitments to rehabilitate their infrastructure. Accordingly, if Canada is to remain competitive in international markets, and maintain its economic productivity, efficiency and public health, a similar ongoing cost-sharing with senior governments is required.

The Canada Infrastructure Works Program is widely recognized as helping to reduce the backlog of municipal infrastructure projects, as well as stimulating the economy and creating jobs. However this was initially only a three year program, and the three year extension that was made to it has been fully utilized. In British Columbia, the provincial government announced earlier this year that they would be renewing their Local Government Grants program for sewer, water and transportation infrastructure. Funding of $50 million annually will be available for a period of three years, starting in 2000. Although this program will be of assistance, its funding is limited mostly to sewer and water projects, and there is no commitment from the Province to extend it beyond its current three year mandate. Annual funding is also significantly less than the levels the Province provided in the early 1990's, which ranged between $77 million and $90 million annually.

The FCM’s initiative to establish a new core municipal infrastructure program through funding in the federal Millennium Budget offers a long-term solution for the infrastructure replacement needs of Canadian municipalities. This is part of an overall strategic plan, which also includes development of the National Research Council’s best practices guide for municipal infrastructure, and the examination of other funding mechanisms such as public/private partnerships, revolving funds and targeting of a fixed portion of the federal government’s gas tax to sustainable transportation projects. Regarding federal gas tax funding, the FCM notes that agencies such as the Greater Vancouver Transportation Authority (now TransLink) could be a model as to how this funding could be administered at a local level.

The scope of the new infrastructure program being proposed by the FCM is somewhat broader than what was covered by the previous Canada Infrastructure Works Programs. For example, it is proposed to include projects that respond to general environmental issues, such as solid waste management, alternative water treatment methods such as settling ponds and wetlands, and energy efficiency in municipal buildings. The FCM also proposes a main-street and urban core renewal component. Some of these areas are outside of Council’s stated preference of the only priority for an extended Canada Infrastructure Works Program being projects that replace existing, deteriorating municipal infrastructure.

However, this proposal is preliminary, and adopting a wider scope may be necessary to secure senior government contributions. Accordingly, staff recommend supporting this initiative of the FCM, and working with them, senior governments and other stakeholdersto develop a new infrastructure program. As further details become available, staff can report back to Council if there are any areas where comments from the City might be appropriate.

ENVIRONMENTAL IMPLICATIONS

The inclusion of an environmental theme with the new long-term infrastructure program being proposed by the FCM offers the opportunity to address more local environmental issues than what the City might otherwise be able to fund.

FINANCIAL IMPLICATIONS

The proposed new infrastructure program would allow the City to apply for additional funding for infrastructure and environmental projects. Since this is a new proposal which is uncertain to proceed, there have not been any funding contributions from this source assumed in the 2000-2002 Capital Plan submissions. Also, at this stage it is not known whether there would be a requirement for the City share of funding to be incremental, such as was the case in the Canada Infrastructure Works Program(CIWP). Under the CIWP, to maximize the number of new jobs created and stimulate the economy, municipal funding had to be in addition to what was approved for existing capital projects (e.g., totally new capital funding). As further details become available staff will report back to Council.

CONCLUSION

The new infrastructure program being proposed by the FCM for inclusion in the federal Millennium Budget could be a timely and effective way of securing needed long-term financial commitments from the senior governments. Accordingly, staff recommend that Council provide the endorsement requested by the FCM Executive Director.

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(c) 1998 City of Vancouver