MAYOR DON IVESON 2nd FLOOR, CITY HALL CITY OF EDMONTON SIR WINSTON CHURCHILL SQUARE EDMONTON. ALBERTA, CANADA T5J 2R7 PHONE: 780-496-8100 January 16, 2017 The Honourable William Francis Morneau Minister of Finance House of Commons Ottawa ON KIA 0A6 Dear Minister Mye/u: 1? The City of Edmonton is pleased to provide you with the following submission pertaining to the 2017 Federal Budget. Infrastructure forms the backbone of our economy and investing in the expansion of our infrastructure enables us to build a more ef?cient, competitive and prosperous country. We appreciate your government?s unparalleled commitment, begun in Budget 2016, to the long?term funding of infrastructure, including: (1) Transit infrastructure and the ambitious projects through the new Public Transit Infrastructure Fund; (2) Social infrastructure, particularly affordable housing; (3) Transportation systems to build stronger, more efficient tranSportation corridors in order to get Canadian products to global markets, and; (4) Continued commitment to invest in green initiatives that will reduce our carbon footprint and address climate change. In particular, the City of Edmonton appreciates the commitments to invest in a number of long- term key projects in our city, including recently the Yellowhead Trail Freeway Upgrade. In addition to providing productivity?enabling infrastructure as it comes on-line, this announcement represents an injection of economic confidence at a key moment for Edmontonians. Your government?s approach to infrastructure partnerships, as evidenced by this project, is truly appreciated by our Council. Infrastructure Funding and Nation-Building Edmonton has been a consistent advocate for long term, predictable and sustainable ?mding for municipalities, as this is essential for our ability to plan, prioritize and construct major infrastructure as well as fund day?to?day operations and programs in our communities. The current application-based grant system creates uncertainty over the long?term. This system makes it harder to make long?term decisions of the kind that build globally competitive cities in the 2lst century. Our request is simple: ?Give us the tools to do the job and the accountability that goes with them and we?ll build great cities for the bene?t of all Canadians? (An open letter from Canadian mayors - Edmonton, Calgary, Vancouver, Toronto, Ottawa calling for increased revenue powers for cities, December 13, 2016). Increasing predictable, long-term mechanisms such as the federal Gas Tax Fund would provide municipalities with the ?exibility to allocate funding toward local priorities. A related challenge that needs to be addressed is the formula used to fund municipal infrastructure. For decades, cities like Edmonton have struggled under the old one?third, federal-provincial- municipal formula. This approach did not recognize the signi?cant contributions municipalities make - far beyond a one-third contribution - when the full lifecycle of operating and maintenance costs plus ineligible costs, like land assembly, are considered. An example of this is our Valley Line LRT, where Edmonton is responsible for 56 per cent of capital costs. However, after accounting for full lifecycle costs, our municipal share of this vital project will amount to 74 per cent over 32 years. This ?scal arrangement is not sustainable for Canada?s big cities as we undertake the major investments needed to keep our country productive and competitive. Edmonton is proposing that the funding formula for major transformative infrastructure be revised to re?ect a 90-10 split of eligible capital costs (90% combined federal/provincial and 10% municipal, respectively). This formula is re?ective of both the ?scal capacities of each government and the life-cycle implications of major transformative projects. We also look forward to learning more about the role and structure of the Canada Infrastructure Bank (CIB) and to learning how municipalities can leverage this new ?nancing tool to deliver priority infrastructure. There is an important distinction between financing and funding that must not be lost; new mechanisms for financing are welcome, but sustainable and predictable long-term funding is essential to ensure the repayment of debt remains affordable, particularly for projects that produce public good bene?ts rather than leveragable revenue streams. A CIB could be a bene?t to municipalities if the parameters of the proposed ?nancial instruments are favourable secured direct loans, interest free direct loans, low rate of borrowing costs, credit enhancements such as loan guarantees, etc.). These are all important considerations given that Edmonton already enjoys the bene?t of a strong credit rating through the Alberta Capital Finance Authority, and can borrow at favourable rates. We also require clarity concerning the mandate for investing in revenue-generating infrastructure, since most high priority municipal initiatives - such as green energy projects, transit projects and affordable housing - rely on variable user fee revenues and may not be able to recoup the upfront investment required. In other words, depending on the de?nition of ?revenue generating. potential,? Edmonton may not be able to bene?t from the services given many of our projects could be deemed too risky or unpro?table. Below you will ?nd information on a number of speci?c projects and initiatives for which the City of Edmonton is seeking your government?s support. It is our hope that this list will provide you with guidance on our priorities and suggested direction on how we may be able to work together to achieve our shared objectives in the years ahead. Infrastructure Plan Phase 2: Public Transit The City of Edmonton has a goal to fully build-out its LRT network and make it easy for Edmontonians to ?mode shi?? toward lower private vehicle reliance, reduced greenhouse gas emissions and lead more productive, healthier lives. The projected cost of LRT full build-out to 25-40 years is estimated at $9.8 billion (in 2016 dollars). The stability of Phase 2 infrastructure funding will be key in ensuring we are able to plan and build Edmonton?s LRT network, considered to be ?essential infrastructure?, in a reasonable and predictable timeframe. As a key element of the regional transit system, ?iture expansion of Edmonton?s LRT network will also signi?cantly improve connections between major destinations, spur economic activities through better accessibility to a larger labour market, and will offer numerous other direct and indirect bene?ts to residents and visitors to the Edmonton Metropolitan Region. Successful build-out requires long term commitment and certainty of matching funding for the following extensions as prioritized by City Council: . Valley Line: Downtown to Lewis Farms - Metro Line: NAIT to Blatchford City Council has also used Phase 1 PTIF funds to advance design work for three additional projects that are shown below (in no particular order as Council has not prioritized order of construction). This illustrates the order of magnitude of projects being advanced toward shovel- readiness in the coming years: . Metro Line: Blatchford to Campbell Road/St.Albert .89B) . Capital Line: Century Park to Ellerslie . Downtown Circulator: University to Bonnie Doon, Downtown to University Again, given the magnitude of these projects, it would be impossible for the City of Edmonton to advance this scale of build out, as well as commission and operate these transit services, without a more appropriate municipal capital contribution of 10%. The Heritage Valley Park-and-Ride and its associated Anthony Henday Drive-135 Street Interchange is a project that is required to ensure an ef?cient traf?c ?ow on Anthony Henday, provide access to residential and business areas, and ensure the required infrastructure is in place to support the Heritage Valley Park-and-Ride (to be completed by March 2020). We are grateful for the federal govemment?s contribution to funding 1,200 parking stalls through Phase 1 of the Infrastructure Plan. We look to both the federal and provincial governments for funding support for an additional 800 stalls under Phase 2. Infrastructure Plan Phase 2: Social Affordable housing remains a top issue for our city. The City of Edmonton appreciates the leadership your government has shown in the area of social infrastructure and the development of a National Housing Strategy. We support the position of the Federation of Canadian Municipalities (FCM) that the federal government dedicate substantial funding - $12.6 billion - for housing across the country in your Phase 2 Social Infrastructure Program. Along with CM, we call on your government to work in partnership with the municipal sector, and include the following in the proposed National Housing Strategy: - Predictable and long-term subsidies for rent-geared-to?income units affected by expiring operating agreements to protect vulnerable households; . Predictable capital investment in repair/renewal and new construction of social housing; . Expanded investment in the construction of new social and affordable housing, whether through the Investment in Affordable Housing Framework or another delivery mechanism; . Continued and expanded investment in the Homelessness Partnering Strategy, ensuring it provides maximum ?exibility to local communities to fund the initiatives that re?ect local needs and priorities; and . Expansion of affordable rental housing, urban Aboriginal housing and northern housing. Investment by your government on this scale would mean Edmonton could address some of the following high priority needs: . The creation of 1,000 Permanent Supportive Housing units at $21 million/year over 10 years for the more challenging to house homeless; . The regeneration of 13 city-owned social housing projects in dire need of upgrade or replacement. There are 1,030 units on these sites for which the City of Edmonton would need over $500 million; and . The redevelopment of surplus school sites with a mix of affordable and market housing. Assuming the development of two school sites per year, the City of Edmonton requires $42 million per year for eight years from the provincial and federal governments. Infrastructure Plan Phase 2: Green Cities are essential to combatting climate change, as they are the places where up to 70% of climate-changing GHG emissions originate world-wide. By enabling cities to reduce GHGs, the nation as a whole has the greatest opportunity to reduce our emissions. Across Canada, Edmonton is rapidly becoming known as an energy sustainable city. Over the past decade, we have launched innovative community projects that conserve energy, use energy more ef?ciently and reduce greenhouse gas (GHG) emissions. Our Community Energy Transition Strategy commits us to continue down this path. We require the partnership of other orders of government to achieve our goals and contribute to national environmental goals. The following are current projects that require investment by the federal government: Edmonton?s Blatchford redevelopment is shaping up to be one of the greenest communities in the world, a community that will be home to some 30,000 people once built. Edmonton City Council recently approved the creation of a Renewable Energy Utility for Blatchford based on a District Energy Sharing System that will heat, cool and provide domestic hot water for its buildings. This is a critical component in achieving Council?s ambitious goals for a carbon- neutral community that uses 100 percent renewable energy. Pre-tender estimates (for Stage 1) have indicated the cost to be $19.4 million. Provincial and Federal funding will be needed since the Blatchford District Energy project could help advance our shared interests in the areas of climate change mitigation and adaptation. The City of Edmonton is asking that capital costs for this project be split 90-10 Should the Green Infrastructure program criteria allow, the City of Edmonton has a number of other key projects that would contribute to climate change mitigation and/or adaptation. We believe that certain public transit projects in the future should be eligible under the Green Infrastructure program. For Edmonton this would mean accelerating our plan to electrify our bus ?eet without diverting needed funding for LRT build-out under the Public Transit Fund. The City does have a current application under Phase 1 of the Public Transit Infrastructure Fund for electric bus purchases and we are in the process of submitting amendments for that application. We look forward to your govemment?s continued support for this initiative and, moving forward, we are eager to see the criteria for the Green Infrastructure Fund include ?eet electri?cation projects of this sort. One noteworthy opportunity to mitigate the effects of climate change is the City of Edmonton?s Expanded Flood Mitigation program, which was developed in response to 2012 ?ooding. Estimates are that the City will require between $60-$120 million per year (over the next 50 years) to upgrade drainage infrastructure to deal with climate change. Edmonton requires the partnership of other orders of government to make funding available for these ?ood mitigation projects in order to shorten the time frame required to complete the work and to potentially bene?t customers through lower or more stable drainage utility rates and lower ?ood insurance premiums. Infrastructure Plan Phase 2: Trade and Transportation Corridors Program Rail grade separations at 50th and 75th Street respectively are an important addition to our roadway network as key commuter and goods movement corridors. These projects will ensure more ef?cient movement of commuters and commercial vehicles in these bustling industrial areas. At a combined cost of $140 million, we have applied for funding under the Provincial- Territorial Infrastructure Component (PTIC) of the Building Canada Fund. While we understand the PTIC program has been discontinued, we are encouraged by the federal govemment?s interest in supporting these vital rail grade separation projects, which are situated at critical arterial roadway locations and are subject to signi?cant train and vehicle traf?c. As these priority improvements have considerable safety and economic implications for our City, we believe that both projects could be strong candidates for your govemment?s new Transportation and Trade Corridors funding envelope. Infrastructure Plan Phase 2: Social - Cultural and Recreational Infrastructure The City of Edmonton invests in infrastructure in our community outside municipally-owned facilities and supports the initiatives of partner organizations. The following are high priority community initiatives that also require the support of other orders of government. The addition of culture as an eligible category under. the Federal New Building Canada Fund Provincial-Territorial Component, has opened up a new pool of funding for the $53 million facility expansion of the Francis Winspear Centre for Music, which includes construction of a new 540 seat acoustic hall theatre, multi-purpose rooms and commercial space. The City of Edmonton has approved its share of ?mding for the expansion ($13 million) and a loan guarantee ($12.9 million) for a parking facility to complement the expansion. To move this important community partner project forward the City of Edmonton is calling on the federal and provincial governments to each commit $13 million to supplement the City?s committed share. The remainder required funding of $14 million is to be raised through the Centre?s fundraising efforts. The Aurora Project is a $40 million expansion project for the TELUS World of Science that has already begun using funds committed by the City of Edmonton. The project encompasses 20,000 square feet of new construction, plus extensive renovations, new exhibits and new technology to enhance the visitor experience. The project is leveraging $12 million of capital funding committed by the City of Edmonton and the Centre?s own $500,000 investment, with an anticipated $10 million each from the provincial and federal governments and $7.5 million in private philanthropic support from individuals and corporations. The TELUS World of Science is requesting funds from various federal and provincial departments and grant programs. The City of Edmonton has entered into a partnership with the Edmonton Triathlon Academy and the Velodrome Association for the development of the Coronation Community Recreation Centre, with doors set to open in 2020. The City has committed $80 million in its 2018 Capital Plan for the recreation centre. The Edmonton Triathlon Academy and the Velodrome Association are raising $4 million from private, philanthropic sources and are looking for $16 million in federal/provincial support dedicated to the construction of the indoor velodrome/cycling track which would be only the second intemational-level indoor cycling track in Canada. Finally, Edmonton has been a long-time advocate for the development of the Artists Quarters, part of the broader redevelopment of the Quarters Downtown. Arts Habitat Edmonton and Artists Urban Village have partnered with the City of Edmonton in the development of a new facility for artists and arts organizations. The facility is proposed to be located only two blocks east of the core of the Edmonton arts district, which includes the Citadel Theatre, the Winspear centre, the Art Gallery of Alberta and is one block from what will be the new Quarters station along the new Valley Line new Artists Quarters will be an integral part of the redevelopment of the east side of downtown Edmonton. The City of Edmonton has already committed $8.3 million to the $63 million project. We are seeking federal and provincial support to each match the City?s contribution. In closing, I look forward to further discussions on these and other important economic, environmental and social matters that will bene?t Edmontonians and Canadians. Yours truly, Don Iveson Mayor 0: Hon. Amarjeet Sohi, Minister of Infrastructure and Communities Hon. Randy Boissonn'ault, MP Edmonton Centre Members of Edmonton City Council