Local governments continue to face challenges resulting from the onset of the pandemic in March 2020. These challenges have not only impacted municipal operations and decision-making but have also increased feelings of uncertainty surrounding capital investment plans.
When faced with years of unprecedented challenges, it’s natural to have a risk-averse response. Even in current conditions, many local governments are delaying capital works – including those to repair or construct new infrastructure – which only amplifies pressing community needs, such as affordable housing.
For many municipalities, capital investment burn rates fall below 50 percent of approved budgets. As priorities shift and investment plans are put on hold, reserve accounts and surpluses are growing – which is drawing the attention of provincial authorities and local developers.
Heading into the 2024 budget cycle and construction season, municipal project teams are continuing to navigate significant spikes in inflation, challenges surrounding high interest rates and changing climate change priorities. With so many obstacles, how can you effectively deliver your capital program?
Colliers Project Leaders was proud to lead a session on this topic at this year’s Good Roads Conference, held April 21-24 in Toronto. I was joined by my colleague Mike Parks, Senior Project Advisor, who moderated the discussion, and fellow panelists John Severino, CAO with the City of North Bay and Inderjit Hans, Commissioner of Public Works with the City of Brantford. Together we shared lessons learned from our lived experiences, including creative procurement approaches and program delivery strategies that have helped municipalities improve collaboration and ultimately deliver more capital projects for their communities.
Below are some of the main takeaways from our panel session.
Finding collaborative solutions to move projects forward
Throughout the discussion, we touched on key concerns that affect all municipalities both large and small. These include inadequate funding, pent-up capital reserves, stalled investments, shortfalls in operating budgets, housing challenges, a lagging state of good repair, and significant property tax increases. Many municipal leaders are feeling pressure internally and from their constituents to move projects forward.
An audience member from North Middlesex, Ontario noted that they were hearing talk about a lot of money being in reserves along with projects that weren’t getting done.
“But we’re a rural municipality, and a lot of rural municipalities don’t have that reserve money to go ahead with housing projects, wastewater treatment plant expansions, wastewater plants or other capital projects,” they said. “So, we have a roadblock, and we can’t make these projects happen. What can be done?”
One answer to that question was also one of the biggest themes across the panel – collaboration. From trying collaborative delivery models, to reaching out to third-party partners for support, collaboration isn’t just an approach to making the most of capital budgets, but a solution that lends itself to municipal challenges across the board.
Another audience member jumped in to share their experience.
“Progressive Design-Build andIntegrated Project Delivery (IPD) are designed to increase transparency at the start of a project, so you can get schedule and cost certainty at the end. They sound a lot harder than they are and they’re being delivered very effectively across the province. They’re also not specific to large or small municipalities. They’re agnostic to budget size and are nicely scalable across the broad spectrum of projects and municipal problems.”
My colleague, Mike Parks, built on this observation, adding, “You can use the same delivery models on roadways, wastewater treatment plants, fire halls and more. So, I think the actual theoretical approach could simply be sitting down with contractors. And there are designers that are interested in participating in work through that Progressive Design-Build approach, so that’s a solution we’re seeing in the market.”
The value of marketing sounding
In North Bay, our team discussed various project delivery models and completed amarket sounding to help inform the city’s expectations – both for theCommunity and Recreation Centre project and the marketplace. This exercise provided the city with credible information that it could share with its council, who ultimatelyapproved additional funding in the form of a $2.6 million contract.
“A third-party can reach out to the marketplace and confirm or gather information that we weren't completely privy to or that we wouldn't have had otherwise,” explained North Bay’s John Severino “The market information helped our council feel much more confident. It also gave us a higher-level confidence trying out a Progressive Design-Build model and selecting a proponent not just for their technical capabilities, but also for their collaborative character and willingness to talk about things, which is going to be very important for our project success.”
Adapting to change to address housing targets
When it comes to affordable housing initiatives, the panelists agreed that many municipalities are facing even more challenges. From changing bylaws to push back from established communities, delivering affordable housing agendas can be difficult.
The City of Brantford’s Inderjit Hans shared his experience.
“We’re finding issues to support the growth targets for housing needs, but we’re definitely reviewing every legislative change that comes through the province, and there’s quite a few that have come through, which impacts our planning.”
“We keep changing our plans,” added John Severino. “We’ve practically turned our 10-year capital plan upside down this past year because of legislative changes – it’s partly policies, deferrals and cost escalations.”
Many of the audience members indicated by a show of hands that they could relate to these issues. When it comes to housing projects, seeking out partnerships can be beneficial. Conducting a land assessment ormarket sounding can offer the information you need to bundle capital projects and potentially attract more interest from contractors. Where it makes sense, partnering with other municipalities to bundle projects can also result in more favourable pricing.
“We’re hoping to build an elevated water tank to feed the growth for the housing targets, but we’ve run into an issue where nobody’s bidding,” said Inderjit Hans. “When we asked consultants why, we found that there was a big issue in resourcing – not just on the municipal side – but on the consultant side. So, you may get to a point where you have the tools to fund a project, but you need to make sure you have the connections to also deliver it.”
Tax incremental funding (TIF) was another topic panelists touched on during the session. Available to Ontario municipalities, TIF enables municipalities to divert future property tax revenue increases from a defined area toward an economic development or public improvement project.
“If you look into theBrantford Sports Entertainment Centre project,” said Inderjit Hans, “you’ll see that we’re exploring tax increment funding. We’re reviewing proposals and looking into an option to fund an arena. It’s very interesting, so if you’re looking for other ways to fund a project, it’s agood report to look up.”
Whether you’re seeking collaboration with a third-party consultant, a neighboring municipality or region, or your community, there are resources available to support municipalities as they face new challenges, adapt to change and find new pathways to achieve capital goals. My fellow panelists and I were pleased to be part of an engaging conversation at the Good Roads Conference. It’s through these open conversations, that we’re able to share lessons learned from municipalities across Canada and explore solutions to support Canadian communities as they grow.
Reach out to our team to learn more about collaborative delivery methods, market soundings, tax incremental funding, or simply how our municipal experts can collaborate with you.
