Presentation To Canada Study Tour: Models of City Management A workshop hosted by Cities Centre and The Institute for Municipal Finance and Governance, University of Toronto

1. RURAL MUNICIPAL GOVERNANCE
AND FINANCING IN ONTARIO
Presentation To
Canada Study Tour: Models of City Management
A workshop hosted by Cities Centre and
The Institute for Municipal Finance
and Governance, University of Toronto
Russell Mathew and Craig Binning
HEMSON Consulting Ltd.
June 8, 2010

2.  Russell Mathew will speak to the geography of
rural Ontario and its government structure
 Craig Binning will speak to municipal fiscal
issues in the rural areas, including infrastructure
financing
1
Today’s Presentation Is in Two Parts

3. A. Four Distinct Parts of Rural Ontario
B. How Are Rural Areas Governed?
C. What Municipal Government Does in the Rural
Area?
2
Part 1: Geography of Rural Ontario and Its
Governance Structure

4. 3
A: There Are Four Different Parts of Rural
Ontario

5. 4
A: There Are Four Different Parts of Rural
Ontario

6. 5
A: There Are Four Different Parts of Rural
Ontario
1) Urban Fringe
 Essentially urban populations and an urban
government set within a rural landscape
 Typically overlays a historic agriculture-based
economy
2) Agriculture-Based Areas
 Mainly the Southern Ontario agricultural areas whose
populations and municipal governments are tied to
the rural economy

7. 6
A: There Are Four Different Parts of Rural
Ontario
3) Amenity-Based Rural Areas
 Tourism, recreation and retirement are the primary
activities
 Typically overlays an historic, more remote resource-
based economy
4) Remote Rural Areas
 Most of Northern Ontario is very sparsely populated
 A series of mainly mining and forestry
 A largely separate series of aboriginal communities

8. 7
A: There Are Four Different Parts of Rural
Ontario

9. 8
B: How Are Rural Areas Governed?
1) Southern Ontario
 Some of the urban fringe areas are under a full urban
government structure
 Two-tier Regional governments or single-tier
 The rest of the urban fringe, agriculture areas and
most of the amenity areas are under the historic
county system
 A lighter version of a two-tier structure

10. 9
B: How Are Rural Areas Governed?
2) Northern Ontario
 Most of the non-aboriginal settlements in the north
are under a single-tier municipal system
 These cover a very small part of the land area
 Most of the north is “unorganized territory” with no
elected municipal government
 Limited municipal-type services are provided through local
associations
 Mainly the limited municipal services are the responsibility of
the Province

11. 10
B: How Are Rural Areas Governed?
3) Aboriginal Communities

12. 11
B: How Are Rural Areas Governed?
3) Aboriginal Communities
 Most First Nations communities operate under an
entirely separate system under the Federal
government
 Most communities are very small and face extremely
challenging social problems
 Most Band Council operate similar services to
municipalities
 Funding is primarily direct from senior government, with some
local –based income or taxation

13. 12
B: How Are Rural Areas Governed?
4) Southern Ontario Municipalities
Restructured to Meet Changing Needs
 Need for economies of scale and increased
technical capabilities
 Major restructuring occurs about once every
generation
 Regional government system in 1970s was largely urban and
fringe related
 1990s restructuring amalgamated hundreds of municipalities in
rural southern Ontario

14. 13
B: How Are Rural Areas Governed?
 This scale of change in governance structure is
unique to Ontario within North America
 Reasons for public acceptance of change is unclear
 Generally Ontario is more accepting of all types of top—down
state-led reforms than other places

15. 14
C: What Do Rural Municipal Government's
Do?
 Agricultural-based rural areas and the remote areas
have common purposes:
 Little growth means few challenges related to planning and
new infrastructure
 Mainly quite basic services are provided such as some
municipal water, roads and limited human services
 Maintenance of systems is an increasing challenge
 Little role for these communities in social service and rural
development
 A lighter version of a two-tier structure

16. 15
C: What Do Rural Municipal Government’s
Do?
 Urban fringe rural areas are essentially urban
governments with urban services
 Amenity-based areas largely have the basic system
of the agriculture based areas, but with the
challenges similar to that or the urban fringe layered
on top

17. 16
D: Conclusion
 Most helpful lessons from Ontario municipal
governance are:
 Different systems to meet different needs
 Willingness to change the system and boundaries to meet
changing needs
 Two-tier structures have proven to be particularly effective in
managing both capabilities and costs

18. Part 2: Rural Municipalities
Infrastructure Financing
Town of
New Tecumseth
Township of
Russell

19. 18
Changes in Municipal Finance
 Until the late 1980s the Federal and Provincial
governments made a significant contribution
 Unconditional and Conditional Grants
 Post 1990 level of upper government transfers
declined
 Realignment of service delivery responsibility in
Ontario starting in 1995
 Was intended to be revenue neutral

20. 19
Rural Municipalities Impacted by
Changes
 Loss of annual road “grants” directly impact
road maintenance programs and annual
budgets
 Large geographic areas with extensive road networks
 Increased competition for budget dollars
 Limited grants available for water and sewer
infrastructure needs
 Shift towards funding infrastructure from levies on new
development – yet limited and cost sensitive growth in rural
areas

21. 20
Provincial and Federal Programs Have been
Established to Assist Rural Municipalities
 Ontario Municipal Partnership Fund
 Assists municipalities with their social program costs,
includes equalization measures, addresses challenges
faced by Northern and rural communities and responds to
policing costs in rural communities
 $625 million in 2010
 Canadian-Ontario Municipal Rural
Infrastructure Fund (from 2005)
 Roads – $78 million
 Bridges – $112 million
 Water – $140 million
 Wastewater – $238 million
 Solid Waste Management – $10 million

22. 21
Other Programs Have Also Been Available
 ReNew Ontario – Infrastructure Investment
 Ontario Small Waterworks Assistance Program
 SuperBuild
 Infrastructure Ontario Loan Program

23. 22
Ultimately, however, Municipalities Still
Need to Fund 1/3 or More of the Costs
 Development charges or levies
 Capital recovery charges on existing residents
 User (utility) rates
 Property taxes

24. 23
Case Study: Town of New Tecumseth
Background
 Municipality
 Geographically large (275 sq. km)
 Agricultural history
 Population of 25,000 (time of project)
 1998 Honda Canada wanted to expand
manufacturing plant
 Insufficient available ground water
 Significant Provincial interest in seeing Honda
expansion happen

25. 24
Case Study: Town of New Tecumseth
Solution
 Bring water from Georgian Bay
 57 km water transmission main from the Town of
Collingwood
 Total cost: $27.3 million
 $5 million grant from Province
 $7million Town of New Tecumseth
 $1.3 million Collingwood PUC
 $14 million in long-term debt financing
 New Tecumseth struggled with financial
obligation of long-term debt
 Only resolved this year with further Provincial assistance

26. 25
Case Study: Township of Russell
Background
 Municipality
 Geographically large (200 sq. km)
 Agricultural history
 Population of 15,000 (time of project)
 Equal mix of French and English
 Less than an hour drive east of Ottawa
 In 2008, Ministry of Environmental identified a
limitation in the Township’s ground water
supply and quality
 Freeze on development and growing water
quality concerns

27. 26
Case Study: Township of Russell
Solution
 Bring water from City of Ottawa
 27 km water transmission main from the City of Ottawa
 Total cost: $24 million
 $8.9 million Federal/Province Grant (COMRIF)
 $8.8 million water rate support
 To be financed by 30 year debenture
 $6.3 million development funded
 To be financed by 30 year debenture
 Significant financial impacts
 More than doubling of water utility rates
 Doubling of water development charges
 Municipality nearing debt capacity limits