The City of Nanaimo will have to pony up more cash if it wants to keep pace with skyrocketing costs of maintaining and renewing critical infrastructure.
At a finance committee meeting Wednesday, May 21, council members received word from staff that the city won’t be able to properly maintain some of its infrastructure without, in some cases, nearly doubling project funding to cover rising prices for repair and replacement work.
At the meeting, Poul Rosen, city director of engineering, provided an infrastructure asset management forecast. To provide examples, he compared the planned funding for traffic signals and road paving and maintenance in the 2026-30 draft project plan versus the funding that will actually be needed.
“Traffic signals are like a mission critical type of asset,” Rosen said. “It’s not like asphalt where we can let it slide and slide and it gets worse. Traffic signals … you have to make sure that you’re maintaining them.”
Money currently earmarked for traffic signals within the five-year project plan is $2.1 million per year, but the actual amount needed has climbed to $3.8 million annually, staff calculates. For road paving and maintenance, funding needs to rise from $2.5 million annually to approximately $4.8 million.
It's a similar story for underground infrastructure. Nanaimo has 560 kilometres of water mains, 600km of sanitary sewers and 450km of storm sewers, all of which need replacing over time. Currently, 5km of water main are replaced annually, 2-3km of sanitary sewer and less than 2km of storm sewer.
“The replacement of them is quite a bit less than what we need to be able to be sustainable,” Rosen said.
As is the funding, which stands at 75 per cent of what's needed for water distribution, 40 per cent for sewer and 30 per cent for storm sewer.
“What this means is that there’s significant shortfall in the funding that we need for these asset management type projects,” Rosen said. “These projects are put in the plan, but they’re put in the plan beyond the funded five years of the plan, so we have this backlog of projects … in years six to 10.”
Rosen said staff triage the most important, critical and urgent projects and bring them before council, but the backlog of projects for infrastructure at or nearing their end-of-service life is growing and with it the potential for sudden failures.
“It’s an important issue and I think it would be good for the city to correct course on this, but obviously there are some funding challenges to do that,” Rosen said.
Coun. Erin Hemmens noted that the city maintains a one-per cent property tax increase annually to fund asset management and asked if that should be raised to help cover the additional funding.
“I think the solution is probably an increase from one per cent to something a little more than that,” Rosen said. “But what that number is and setting that decision up for council in a way that makes sense will take staff a bit of time and we’ll have to rebuild the asset management models and so on, and that’s probably a couple of years out.”
He said when workloads increase beyond staff capacity, the city can hire contractors and consultants to balance that work, but he cautioned there are limits within the local construction market. Scaling up and putting too much work on the market at once can lead to unfavourable pricing for contracts.
“This is one of those things where it’s difficult to do a lot of change in a short period of time,” he said. “It’s better to just slowly increase the funding that builds the capacity within the industry.”
Bill Sims, general manager of engineering and public works, said the asset management funding levels the city is currently working with were set in 2023 and based on the 2021 values of assets.
“That’s probably one of the greatest frustrations to asset replacement for all of our infrastructure … is this rampant increase in costs is creating, probably, the greatest pinch…" he said. "Just to see this receding horizon purely for costs is one of the most challenging things."
