York Region's asset replacement costs increase by $6.3B

Region identifies $70 million more needed in annual contributions to maintain infrastructure in long term

Newmarkettoday.ca
Oct. 6, 2023
Joseph Quigley

The cost to replace York Region’s assets has ballooned by more than $6 billion year over year as municipalities face continued pressures from high inflation.

The region’s corporate infrastructure report released last month showed the estimated replacement cost for regional assets has gone from $19 billion in 2022 to $25.3 billion in 2023. This has been brought about largely due to a spike in inflation in recent years and means it will cost more to address these assets over time as they need to be replaced .

Still, the region noted 92 per cent of assets rate between “fair” and “very good” in their 2022 condition assessment.

“York Region continues to be a leader in driving asset management best practices by maintaining a portfolio in good repair and in a financially sustainable way,” transportation services chair and Aurora Mayor Tom Mrakas said in an Oct. 4 news release. “The same way you perform routine home maintenance to prevent significant issues later, we focus on spending the appropriate amount of dollars to lower the risk of service disruption and decrease the cost of sustaining regional infrastructure.”

Municipalities have been challenged by a more than 20 per cent spike in inflation in the construction sector over the course of the pandemic, driving up the cost of infrastructure in all areas.

Although assets remain in fine condition in the York Region, a staff report said the region will need to add to its long-term asset replacement reserves to maintain assets in a state of good repair.

“Over the longer-term as our assets age and our asset base expands, additional contributions to tax levy-funded capital reserves are required to meet long-term needs,” the report said. “ As assets age and costs for rehabilitation and replacement rise over time, the region would need to increase contributions to asset replacement reserves to address this gap.”

That is something Newmarket has also wrestled with in recent weeks. Newmarket staff are asking for an annualized 0.5 per cent tax rate increase for asset replacement, bringing Newmarket’s total for that up to 1.5 per cent. Town council has also directed staff to quickly increase stormwater bills to address a funding gap for that infrastructure.

The region has identified an annual contribution gap of $70 million.

“Closing this gap is required to ensure fairness for today’s community and future generations,” the region said. “As assets age and costs for rehabilitation and replacement rise over time, York Region will need to increase contributions to asset replacement reserves to address this gap.”