According to Brampton’s 2016-2018 Capital Budget Overview (on page 69) the City of Brampton has approximately $4.7 billion of assets in operation, excluding land. As assets are used and age, their useful life declines, which leads to the need for replacement. This decline is known as depreciation expense and is considered to be the minimum amount of funding that should be set aside each year to ensure that the assets can be repaired and/or replaced in the future.
Any gap between depreciation and the amount set aside for repair and replacement is called the annual infrastructure gap. Additionally, there is an accumulated infrastructure gap that is the sum of all the prior annual infrastructure gaps.
Take a look at this chart that was included (on page 56) of the 2015 Budget.
According to the preamble to this chart, on page 55, Brampton has an accumulated infrastructure gap of $1.2 billion, yes, BILLION.
To address this gap, council has passed an infrastructure levy of 2% on property taxes which is represented by the orange on the chart.
Even with this infrastructure levy, they are not beginning to address the accumulated debt, nor are they even eliminating future annual gaps, they are only reducing future annual gaps to the point, in 2024, when they will put aside 93% of that year’s replacement cost. By 2024, they predict they will have added another $322M to the infrastructure debt for a total of $1.5B.
But it gets worse!
Fast forward to the 2016-2018 Budget document with an updated infrastructure gap projection.
The accumulated infrastructure gap is now $1.3B according to the preamble. Now compare 2024 in the first chart (last column) to 2024 in the second chart (second column from the right), prepared one year later.
They are now projecting that the gap will only close to 79% by 2024 vs the 93% predicted last year. That is a huge difference. And now the projected annual additions to the infrastructure debt over the next 10 years are $504M vs the $322M predicted last year. If the City was actually closing the infrastructure gap with the 2% levy, with each passing year, the projected annual additions should be falling, not rising.
Clearly something terrible is going on. How do the predictions change that much in one year? Perhaps one might argue it is difficult to project out 10 years. Well, let’s look at the gap predicted for 2016 in the 2015 document versus the 2016 document. 66% versus 53%. How could they have gotten it so wrong when projecting only one year out?
No wonder squirrels are falling from the roof of the Balmoral Recreation Centre and the pool is closed at Howden.
Yet, despite all the foregoing, six of our councillors thought it was a good idea to turn down a fully funded surface LRT route on Main Street and gamble on the provincial and federal levels of government providing additional funding in the future for a more expensive alternative.
They asked staff to come up with a recommendation for three alternative routes. Staff have now come back with two alternatives, both options detail a tunnel under Main Street. The only difference is the number of stops. The price tag is $570M, not including contingency, for the tunnel piece only, which would begin at Elgin Street. There would also be the cost from Steeles Avenue to Elgin.
The province has been clear that there will be no funding for any route other than the surface route that was extensively studied and planned, but ultimately rejected.
Brampton cannot afford to build a tunnel given the infrastructure debt we already have; a tunnel that would itself become an asset that would depreciate and have to be maintained in future, adding to the annual infrastructure gap. On top of that there is the opportunity cost of building an expensive tunnel where a surface route would suffice.
Opportunity Cost is defined as “the loss of potential gain from other alternatives when one alternative is chosen.”
Money spent on a tunnel is money not spent on repairing all those deteriorating assets we already own. Money spent on a tunnel is money not spent on assets Brampton lacks that other cities, many much smaller than Brampton, already have.
For $570M we could have:
- A third hospital (a priority for many who opposed the surface LRT), or
- A central library (Brampton doesn’t have one and ranks 40/41 when compared to cities across Canada for library infrastructure), or
- An indoor, year round, Farmers’ Market, or
- A national level art gallery, or
- No additional annual infrastructure gap, in other words, fix what we have
Even if, and its a huge if, funding could be secured from the provincial and federal levels of government, there is only so much they will invest in Brampton. If they invest in a tunnel, will they be willing to invest in Riverwalk, which would flood proof downtown Brampton, and allow for future development and protection of our heritage buildings? Will they invest in a hospital, or art gallery? I think not.
Brampton should not build an LRT tunnel. The opportunity cost is too high.