City of Hamilton infrastructure deficit is somewhere between $3 billion and $8 billion

The City of Hamilton could be short $5.2 billion needed to replace and repair existing infrastructure over the next 10 years – but that number could also be as low as $3.18 billion or as high as $7.42 billion.

City officials don't really know.

"We're focused on improving data confidence," Amber Dewar, a senior program analyst in corporate asset management, told city councillors at Wednesday's General Issues Committee meeting. 

"Our data confidence is low-to-medium, indicating these values could change," she added, noting they could swing up to 40 per cent in either direction.

According to Dewar's presentation to councillors, "the 10-year infrastructure funding gap represents the difference between the total available budget and the estimated lifecycle forecast needs over 10 years to maintain current levels of service targets. If the forecasted lifecycle needs exceed the available budget, it indicates there is a funding shortfall between what is required and what is available to fund service levels."

Deficit estimate increased due to new data and inflation: analyst

City infrastructure includes water and wastewater systems, roads and city-owned buildings and properties, among numerous other categories. The total replacement value for the assets in question is valued at $39.4 billion. The biggest gaps are in CityHousing Hamilton, roads, water and Hamilton Police.

Dewar said there are other ways to move forward than jumping immediately to hiking residential taxes, noting that making up the gap all at once would require a significant jump. 

"We can prioritize different projects differently," she said. "We can consider reducing expected levels of service where we are not seeing value… We are going to have to increase funding allocations but if we do all this work first, we know what areas we have to be targeting."

Dewar said the infrastructure deficit jumped from the city's previous estimate of $3.8 billion because of data improvements that helped assessors better understand the situation, but also because of inflation. She added that there are areas where the gap has decreased since the last update, also due to access to more precise data from some departments, as well as budget allocations from council that reduced the gap between what was needed and what was allocated.

The update was included in a report on the city's asset management plans, part of a process mandated by the provincial government. Councillors were presented with multiple, dense documents as well as several recommendations. Ward 4 Coun. Tammy Hwang noted that the information isn't presented in a way that helps her know how to apply it to city budgeting and decision-making, something other councillors appeared to concur with.

"Is there a way to make this a little more legible to me, and also to members of the public" she asked. "How would we understand how to adjust levels of service given these recommendations?"

Earlier this year, the city earned a failing grade in a think-tank report on budget transparency, partially because its reporting was difficult to understand for the average person.

Dewar told councillors that the latest reports and updated numbers are just one step along a longer-term journey to create a financial plan that addresses the shortfall. Mike Zegarac, the city's general manager of finance and corporate services, noted that council directed staff to begin to address this funding gap last year, a practice that had not taken place with past councils. He said that about 20 per cent of this year's residential tax increase is going toward addressing these needs.

Councillors voted Wednesday to have a special, full-day GIC session solely focused on asset management, service levels, and the city's financial plans. That will be scheduled sometime before July 1, when the province requires all municipalities to submit their proposed levels of service and a financial strategy.

Ward 1 Coun. Maureen Wilson noted that needs such as road repairs are much greater in the lower city. She said there is a "narrative on social media that this council doesn't have its head on straight and is not tethered to reality," and that "the city is falling apart and is neglecting its core assets," but council should in fact be recognized for making plans to tackle the problem.

"It is this term of council that has made the adult decision, based on evidence, that we are not going to ignore this reality anymore," she said.