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Home My WebLink About2025 - Asset Management Plan Annual Review – ONTARIO REGULATION 588/17 �AYHA jt REPORT TREASURY DEPARTMENT �c rtunity Io�o�► TO: Mayor& Members of Council FROM: Lorne James CPA, CA, Treasurer DATE: June 25, 2026 REPORT: TR-13/26 FILE NO. SUBJECT: ASSET MANAGEMENT PLAN ANNUAL REVIEW— ONTARIO REGULATION 588/17 BACKGROUND Ontario Regulation (O.Reg) 588/17 sets out a phased-in approach for municipalities to establish asset management plans and financing strategies for all core and non-core assets. Under O.Reg 588/17, core assets were required to be identified by July 1, 2022; non-core assets were required to be included by July 1, 2024; and, a financial strategy for the proposed level of service for all asset classes was required by July 1, 2025. Bayham adopted its current Asset Management Plan (AMP) in 2020 to cover all core and non- core assets. Staff have been working with Watson and Associates on a proposed level of service financing strategy to satisfy the final requirement of the O.Reg. At its September 4, 2025 meeting, Council received Report CAO-36/25 re Ontario Regulation 588/17 —Asset Management Plan Financial Strategy. The Financial Strategy presented an option whereby Council can fully funded the Municipality's capital asset portfolio over a 25-year period. The Report also identified the need for annual reviews of the AMP to ensure municipalities are working towards their own goals, stating that: "[O]n or before July 1 in each calendar year after 2025, the Municipality must undertake an annual review of the approved Asset Management Plan. The annual review must include: (a) the municipality's progress in implementing its asset management plan; (b) any factors impeding the municipality's ability to implement its asset management plan; and (c) a strategy to address the factors described in clause (b)." Council passed the following motion: Moved by: Councillor Emerson Seconded by: Councillor Froese THAT Report CAO-36/25 re Ontario Regulation 588/17—Asset Management Plan Financial Strategy be received for information; AND THAT Council approves the Asset Management Plan Financial Strategy to fund the municipality's core and non-core assets; AND THAT the Asset Management Plan Financial Strategy be posted to the municipal website and provided to the Ministry to satisfy the 2025 requirements of O.Reg 588/17; AND THAT consideration be made as part of the annual budgeting process to ensure sufficient capital funding is available to implement the Financial Strategy. This Report identifies the progress made on the AMP's Financial Strategy to date. DISCUSSION The Municipality of Bayham owns and manages a diverse infrastructure portfolio that supports the delivery of essential municipal services to residents, businesses, and visitors. This portfolio includes transportation assets, facilities, fleet and equipment, parks, water and wastewater system assets, and stormwater infrastructure. The total replacement cost of this infrastructure (i.e., what it would cost to replace or rebuild it) is currently estimated at $254.7 million, up from $249.2 million in 2025. This report, which has been developed to highlight progress the Municipality is making in implementing the 2025 AMP, fulfils the annual asset management progress review requirement under Ontario Regulation 588/17 for 2026. The report is intended to provide a strong foundation to support informed decision-making with respect to municipal infrastructure. Overall, the Municipality is making measurable progress in implementing the 2025 AMP. Asset data quality has improved, key infrastructure performance targets are generally being met or are trending in the right direction, and Council has taken steps to align funding decisions with the 2025 AMP's long-term financial strategy. Continued Council commitment to implementing the 2025 AMP will be essential to sustain this progress, particularly with respect to funding decisions, managing growth-related pressures, and adapting to changing asset information and costs. State of Infrastructure The increase in replacement cost valuation between 2025 and 2026 is primarily driven by inflation and partially offset by data quality improvements and minor asset disposals. Asset additions in 2026 were limited and mostly reflect inventory refinements rather than significant expansion of the infrastructure portfolio. Across all asset categories, infrastructure condition remains stable and generally consistent with long-term performance targets. Notable progress includes: - Planned conversion of gravel roads to paved surface - Lifecycle replacement of fire and pubic works rolling stock in 2026 through 2035 - Bridges and structural culverts maintaining condition ratings above established targets - Linear water, and wastewater remaining in good overall condition based on useful life analysis and; - Establishing a revised plan for the Port Burwell Storm Water Infrastructure— including completing a Climate Risk Assessment and additional Pre-Engineering and making application to the Building Strong Canada Fund — Phase 1 c and other of the works. While short-term year-to-year fluctuations in some performance metrics are observed, these are expected and do not indicate systemic decline. However, continued monitoring is recommended to ensure these variations do not develop into longer-term risks. Levels of Service The levels of service framework established in the 2025 AMP provides a strong basis for tracking asset performance and service outcomes. Most performance metrics demonstrate stable or improving trends, and current performance remains generally aligned with Council-approved targets. The Municipality is committed to completing the Port Burwell Storm Sewer phases over the 10-year capital budget target. However, the timing will depend on available funding. A significant portion of costs is expected to be funded from owned source revenues, federal and provincial grants, the pace of construction will be influenced by the timing of these revenues. Financial Strategy and Funding Outlook The updated state of infrastructure has resulted in an increase in the Municipality's annual lifecycle funding targets: - For tax-funded assets, the 2026 annual lifecycle funding target increased to $2.48 million, resulting in an estimated funding gap of$0.52 million. Closing this gap will require continued increases in annual capital funding over time. - Water and wastewater assets remain fully funded, and no immediate changes to the financial strategy for these assets are required - Further data refinement and financial analyses for stormwater assets are underway, with an updated financial strategy to be brought forward to Council in late 2026. Continued Council commitment to implementing the AMP will be essential to maintaining progress, particularly as external funding sources (such as annual OCIF funding) decline and property tax affordability increase. Council needs to stay the course with utilizing OCIF and CCBF on annual basis. Recommendations It is recommended that Council approve the 2026 Asset Management Progress Report and continue supporting implementation of the 2025 AMP through upcoming budget decisions. Specifically, it is recommended that sufficient capital funding be included in the 2027 budget to sustain progress, including $3.36 million for tax-funded assets and $0.95 million for water and wastewater assets. It is also recommended that the stormwater portion of the 2025 AMP be updated using revised asset data and financial information and revising engineering estimates, with the goal of developing a comprehensive long-term financial strategy to address the Municipality's stormwater infrastructure needs. STRATEGIC PLAN 1.1: Quality of Life > Initiative(s): 3.2: Quality of Governance > To continually demonstrate financial responsibility to the community. Initiative(s): Not applicable. RECOMMENDATION 1. THAT Report TR-13/26 re Asset Management Plan Annual Review— Ontario Regulation 588/17 be received for information. Respectfully submitted: Lorne James, CPA, CA Treasurer