In a recent presentation to Hamilton City Council, an analysis of the city’s infrastructure shows a potential funding gap of $5.2 billion over the next 10 years.
However, there is also a variable of as much as 40 per cent, as city staff work to improve the reliability of the data that measures the condition of infrastructure assets in 26 service areas.
In a Proposed Levels of Service Asset Management Plans report from Hamilton’s Public Works corporate asset management staff, it states, “The 10-year infrastructure gap currently has low to medium data confidence indicating this gap could change by (plus or minus) 40 per cent. As the City of Hamilton continues to enhance its asset management practices, this is expected to evolve significantly.”
The report identifies the 10-year infrastructure funding gap as the difference between the total available budget and the estimated lifecycle forecast needs over 10 years to maintain current levels of service targets. It summarizes that 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.
“Currently, a large portion of the infrastructure funding gap is based on asset age and estimated service life rather than condition data. Completing condition assessments on these assets will give us more accurate asset replacement forecasts,” said Ann Thomas, (acting) director, corporate asset management, in an explanation of condition of assets.
“We may find that some assets that are estimated to need replacement based on age are actually in physically good condition and do not require immediate replacement, and we could remove these assets from the infrastructure funding gap calculation.”
With the possible gap, the gross estimated replacement value as calculated in 2024 is $39.4 billion, with the five most costly areas identified as:
- CityHousing Hamilton
- Road Linear
- Wastewater
- Hamilton Police Service
- Water
All of these have a significant funding gap increase compared to the previous year, when the city reported a total estimated replacement cost for all assets of $31.2 billion. This amounts to an increase of $8.2 billion.
However, it is stated in the report, “this increase reflects data improvements rather than a sudden rise in asset acquisitions.”
Nonetheless, the colossal estimate suggests the extent of the city’s capital needs, as officials plan to catch up on what they describe as a decades-long funding backlog.
According to Brian McMullen, director of financial planning administration and policy, since the publication of the report, corporate finance has allocated additional annual tax levy funds in the budget for:
- Transportation assets (over a 10-year period, starting in 2023).
- Non-core assets (over a 25-year period, starting in 2025).
- Hamilton Water assets (via rate-supported funding,starting in 2023 over a 10-year period).
These funds have been allocated to the individual service areas to fund identified service or asset needs.
“The 2025 Tax Budget incorporates a 1.14 per cent levy increase in support of a multi-year financing strategy to address the city’s core and non-core annual infrastructure gaps of $196 million and $187 million, respectively. The multi-year forecast for 2026-2028 includes anticipated levy increases of 1.47 per cent to address infrastructure gap needs,” said McMullen.
Council started addressing its core assets in 2024 and non-core services in 2025.
When questioned about the approximate 20 per cent 2025 tax increase being dedicated to reducing the backlog McMullen said, “Historically, the city’s capital levy increase has been between 0.5 per cent and one per cent annually. Once the capital infrastructure deficit has been closed, we anticipate that the additional annual allocation will no longer be needed.”
The next step is staff planning to bring a 2026 Budget Outlook report to committee and council in September.
