Review of Increased Investment in Capital Renewal Program
Update on the implementation of the 2022 Sustainable Infrastructure Replacement (SIR) Plan and its progress in closing the capital funding gap.
TOWN OF VIEW ROYAL COMMITTEE OF THE WHOLE REPORT
TO: Committee of the Whole
DATE: October 24, 2025
FROM: J. Adams, Deputy Director of Finance
B. Lubberts, Deputy Director of Engineering
MEETING DATE: November 12, 2025
Review of Increased Investment in Capital Renewal Program
RECOMMENDATION:
THAT the report dated October 24, 2025, from the Deputy Director of Finance titled “Review of Increased Investment in Capital Renewal Program” be received.
PURPOSE:
To provide Council with a status update on how the implementation of the funding recommendations identified in the 2022 Sustainable Infrastructure Replacement (SIR) Plan has positively impacted the Town’s financial sustainability.
EXECUTIVE SUMMARY:
The 2022 SIR Plan identified a 59% funding gap between current and sustainable capital investment levels and a plan to eliminate the gap by 2033. In response, Council has implemented annual increases in capital investment, from $2.02 million in 2022 to $3.24 million in 2025. These actions have narrowed the funding gap from 59% to 34% and positioned the Town to better sustain infrastructure renewal and service delivery over the long term.
Staff will continue to incorporate the financial recommendations into financial planning.
BACKGROUND:
The 2022 SIR Plan identified a significant infrastructure replacement funding gap that, if not addressed, could lead to an accumulated 100-year funding deficit totaling, approximately, $249.9 million (Figure 1).
Figure 1 - Source: SIR Plan, page 6
As a result, the SIR Plan recommended an annual investment target of $4.9 million to sustainably replace assets at the end of their estimated useful life. This target was based on existing 2022 capital reserves, maintaining existing service levels, and forecasted capital renewal spending over a 100-year timeline.
The SIR Plan calculated the 2022 investment in capital renewal at $2 million, by incorporating capital funding provided through taxation, utility fees, a portion of casino revenues, gas tax, debt principal payments, and earned interest on reserve balances.
This investment level represented a 59% gap from the recommended target of $4.9 million. The plan proposed an incremental approach to eliminating the gap by the year 2033 by:
- Dedicating additional casino revenue funds to reserves
- Incrementally increasing property tax and sewer utility tax revenues to contribute to reserves over a set period to increase tax/user fee-funded reserve contribution levels
- Converting debt servicing budgets to reserves when they retire
- Utilizing Non-Market Change revenue to fund reserves
For consistency and comparability, the long-term spending assumptions in this report remain aligned with those established in the 2022 SIR Plan. A fulsome update to the SIR Plan is planned for 2027.
ANALYSIS:
Investment in the capital renewal program
In consideration of the SIR Plan recommendations, Council has systematically increased the Town’s capital renewal investment levels to $3.24 million in 2025, reducing the sustainable investment gap by 25-points to 34%. The following table provides progress updates on the individual SIR Plan recommendations:
| Recommendation | October 2025 update |
|---|---|
| 1a – Immediately dedicate an additional $500,000 of the Town’s annual casino revenues toward infrastructure replacement. | The 2024-2028 financial plan included an additional contribution from casino revenues of $100,000, with $100,000 annual increases for 2025 through 2028, ending at the recommended level of $500,000. The 2029 budget included in the 2025 – 2029 Financial Plan maintains the $500,000 contribution. |
| 1b – Implement 5-years of 5% Sewer User Fee increases | Implemented starting in 2024 with a 2.5% increase. 2025 includes a 5% increase, with 5% additional increases included in future years. As noted in the October 7 report to Council titled ‘Fees and charges bylaw amendment – sewer user fees’, as part of the 2026 financial planning process, staff will revisit the calculation of sewer-related reserve contributions to align with the SIR Plan recommendation and include the CRD portion of user fees in the calculation, to ensure sustainable reserve levels in the future. |
| 1c – Implement 12-years of 1% tax increases | A 1% increase was implemented in 2024 and is factored into future year projections. The 1% increase is forecasted to end in 2036, after which the contribution to capital reserves funded through taxation will be maintained at existing levels. |
| 1d – Convert all debt servicing costs into annual infrastructure funding when debt expires. | View Royal has two MFA debt issues. The first expires in 2026, and an amount equivalent to the annual servicing costs ($167,193) has been included in budgeted reserve contributions starting in 2027. Assuming the 2nd debt issue will be converted into reserve contributions when it is fully repaid in 2033, an additional $201,822 will be added beginning in 2034. |
| 3c – Utilize Non-Market Change revenue to increase transfers to reserves for capital replacements. | $285,000 is budgeted for 2025, based on the information published by BC Assessment in November 2024. Any non-market change revenue for 2026 will be incorporated into the 2026 – 2030 financial plan. The SIR Plan model does not include the impact of this revenue stream as the amounts are too unpredictable. Budgeted investment in the capital program also does not include funding from this source, meaning that figures shown may be conservative compared to actual investments. |
Actual and forecasted investment in the capital program from 2023 to 2029 are provided in Figure 2 below (calculated using the same components as the SIR Plan model).
[Chart: Figure 2 - Line and bar chart titled "Investment in Capital Renewal Program" showing actual and forecasted investment growing from $2.46M in 2023 to a forecast of $4.08M in 2029, compared against the SIRP model target of $4.9M]
Through continued implementation of the SIR Plan recommendations, View Royal’s 2025-2029 Financial Plan will reduce the capital investment funding gap to 16.6% in 2029—from an original actual annual investment of $2.02 million in 2022 to a forecasted annual investment of $4.08 million by 2029.
If annual investment had remained at 2022 levels, total investment would have been $14.5 million from 2023 – 2029, whereas the proposed investment over this same period is forecasted to total $23.3 million, an increase of $8.8 million.
Capital spending
The estimated total value of the Town’s depreciable assets is approximately $300 million, with useful lives ranging between 13 to 100 years—such as vehicles compared to underground infrastructure. Capital spending in the SIR Plan is forecasted based on replacing these assets as they reach the end of their estimated useful life.
From 2023 to 2029, the SIR Plan forecasted $25.9 million in capital spending, while actual and forecasted capital spending over that period is $18.5 million. Through continued improvements to the Town’s Asset Management Program—including improving data and developing AM Plans for critical assets—the gap between the modelled spending in the long-term financial plan and actual spending is expected to narrow over future years.
Implications of Under-Investing
If annual capital investment levels do not eventually meet the sustainable target identified in the SIR Plan, the Town may face several risks in the future, including:
- Reduced ability to maintain service levels and respond to emerging priorities.
- A growing backlog of capital renewals, shifting financial pressure to future taxpayers, many of whom may not have directly benefited from the services originally delivered by the assets
- Higher long-term costs due to inflation, emergency repairs, and deferred maintenance.
- Misalignment with strategic objectives and diminished infrastructure resilience.
Implications of Under-Spending
While under-spending may indicate the under-delivery of capital renewal efforts, it may also be indicative of several other factors, including:
- View Royal’s relatively young infrastructure portfolio.
- Robust asset maintenance practices.
- Capacity limitations and increasing complexity of project delivery requirements.
- Procurement and project delays by forces beyond control.
Impacts and implications can be summarized as follows:
| Impact Category | Details |
|---|---|
| Community Impact: | Investment in capital renewal supports long-term service reliability, while under-spending may delay visible improvements and erode public confidence. |
| Financial Implication: | Continued alignment with the SIR Plan reduces future funding pressure. However, under-investing or under-spending may lead to escalating renewal costs and misaligned financial forecasts. |
| Inter-governmental Relations Impact: | Demonstrated progress in capital planning strengthens the Town’s position when seeking external funding or coordinating with regional partners. |
ALIGNMENT:
The recommended option aligns with the Town’s following core guiding documents as follows:
| Document | Alignment |
|---|---|
| Strategic Plan: | Supports long-term financial sustainability, infrastructure renewal, and service reliability through proactive capital investment planning. |
| Official Community Plan: | Advances the Town’s commitment to sustainable service delivery and infrastructure stewardship, consistent with growth management and environmental objectives. |
| Other Policy Documents: | Aligns with the Sustainable Infrastructure Replacement (SIR) Plan, and Financial Plan by reinforcing data-driven decision-making, lifecycle-based asset renewal, and responsible fiscal planning. |
PUBLIC PARTICIPATION GOAL:
The desired level of public participation for the recommended option is:
[x] Inform
[ ] Consult
[ ] Involve
[ ] Collaborate
[ ] Empower
[ ] N/A
TIME CRITICAL:
CONCURRENCE:
| Role | Initials | Comments |
|---|---|---|
| Chief Administrative Officer | SS | I concur with the recommendation. |
REVIEWED BY:
| REVIEWED BY: | Initials |
|---|---|
| Director of Corporate Administration | |
| Director of Finance & Technology | SV |
| Director of Development Services | |
| Director of Engineering | IL |
| Director of Protective Services |
ATTACHMENTS:
Document Images
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