WHEREAS in recent years, municipalities have experienced challenges in obtaining funding to support investment in infrastructure to promote industrial economic development; and

WHEREAS long-term funding for capital infrastructure can create strong, dynamic, and inclusive communities; an

WHEREAS critical capital infrastructure in rural communities goes beyond public transit, and includes new roads, bridges, stormwater management, water and wastewater treatment facilities that provide opportunities for new industrial development; and

WHEREAS current legislated debt limits can create barriers for critical infrastructure investment in rural communities; and

WHEREAS industrial and commercial development can ensure Albertans have access to modern, reliable services that improve their quality of life; and

WHEREAS the Government of Alberta’s 2022 Capital Plan identifies a total three-year investment of $20.2 billion dollars, focused on attracting private sector investment and long-term economic growth;

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate that the Government of Alberta establish a dedicated provincial funding model to enable long-term investment in capital infrastructure to support industrial economic development in rural Alberta.

Investment in critical infrastructure can help diversify local economies by providing the necessary infrastructure to support new industries and businesses. This can help to create new job opportunities and stimulate economic growth, which can have a positive impact on the overall health and prosperity of a community.

Investment in critical non-residential infrastructure also aligns with the Government of Alberta’s platform of job creation and diversification of the economy. By providing the necessary infrastructure to support new industries and businesses, these investments can help to create new job opportunities and stimulate economic growth across the province. This alignment can help to create a more resilient and robust economy.

Adding non-residential development to a rural municipality can also help to keep families in their home communities by providing local job opportunities. This can help to reduce the need for residents to seek employment in other areas, which can help to maintain the social and economic fabric of these communities.

Non-residential development can also help to diversify the assessment base in municipalities. Many municipalities experience erosion in their assessment base due to the treatment of linear assessment, which can make it difficult to maintain and improve critical infrastructure without significant tax increases to existing ratepayers. Non-residential development can help to offset this erosion by adding new sources of assessment to the municipality.

In January 2018, the Rural Municipalities of Alberta released a report titled The Economic Contribution of Rural Alberta, which highlighted the significant economic contributions of rural Alberta. Despite only comprising 18% of the provincial population, rural Alberta is home to 41% of public and private investment in the province and accounts for 26% of the provincial Gross Domestic Product (GDP).

There are currently some programs, such as the Alberta Municipal Water/Wastewater Partnership (AMWWP), that provide funding opportunities for critical infrastructure within eligible hamlets. However, country residential subdivisions, condominium associations, and private developments are not eligible for this funding in accordance with AMWWP requirements. To mitigate potential land use conflicts and limit disturbances to residents, rural municipalities often encourage the development of intensive industrial uses within other appropriate areas, rather than within hamlets populated with residents.

The Government of Alberta has allotted $722 million of funding for the first year of the Local Government Fiscal Framework, which will replace the Municipal Sustainability Initiative in 2024-25. This funding will be divided and distributed among all municipalities in the province and primarily used for repairs and replacements of infrastructure. A small percentage of this funding will be used to create new economic development opportunities in rural Alberta.

The upfront financial risk of investing in critical infrastructure can be a significant barrier for many municipalities. These investments can be expensive, and the financial burden is often shouldered solely by the municipality. This can be a particularly daunting prospect for smaller municipalities with limited resources.

Debt limits, which are defined in Alberta Regulation 255/00 as 1.5 times the revenue of the municipality, can also be a hindrance for municipalities seeking to invest in critical infrastructure. These limits can restrict the amount of debt that a municipality can take on, which can make it difficult for them to finance these types of projects. It can also lead to a municipality investing in small phases of infrastructure, which may be less efficient and more costly for the long term.

A provincial funding stream for critical infrastructure will help to alleviate these barriers by providing financial support to municipalities that are considering these investments. This can help to reduce the risk associated with investing in critical infrastructure, making it more feasible for municipalities to pursue these projects. It can also help to mitigate the impact of debt limits by providing an alternative source of funding.

A provincial funding stream can also help to ensure that critical infrastructure investments are made in a strategic and coordinated manner. This can help to ensure that these investments are aligned with the broader economic development goals of the province, and that they are distributed in a way that maximizes their impact on local economies.

A provincial funding stream for critical infrastructure can be an effective way to support the diversification of local economies, job creation, and the alignment with the Government of Alberta’s economic development goals. By providing financial support and helping to coordinate these investments, a provincial funding stream can help to create the necessary conditions for economic growth and prosperity in communities across the province.

RMA has no active resolution directly related to this issue.

Alberta Municipal Affairs

The Government of Alberta understands that municipal infrastructure is critical to meeting municipal needs, including industrial economic development as well as supporting Alberta’s broader economy. This is why the government has fulfilled its commitment to providing predictable, long-term infrastructure funding for all municipalities through the Local Government Fiscal Framework Act, which establishes a new funding mechanism for municipalities beginning in 2024/25. The Local Government Fiscal Framework (LGFF) program will provide $722 million in capital funding in its first year. As a result of an amendment to the Act that was passed in the spring 2023 legislative session, this amount will now increase or decrease at the same percentage change as provincial revenues.

Municipal Affairs has engaged with local governments and local government associations to gather input regarding the LGFF program design and allocation formula (for communities other than Calgary and Edmonton). This engagement provided the opportunity for all local governments to share input into how funding should be allocated and how the program should be administered. As the final allocation formula is determined, careful consideration will be given to a variety of factors that indicate local needs and capacity, in recognition of the different circumstances and opportunities faced by different types of municipalities. The LGFF allocation formula and program design will be announced later this year.

In addition, in 2023/24, local governments will receive $266 million under the Canada Community-Building Fund (CCBF), which is $11 million more than what they received the previous year. This funding can be used to invest in priority local infrastructure projects.

Both the CCBF and the LGFF offer local governments flexibility in allocating funding to address local priorities and make long-term investments in critical infrastructure. Rural municipalities can use both programs to allocate funding towards critical infrastructure to support the creation of new economic development opportunities in rural communities.

Given the flexibility and opportunities in the funding programs outlined above, and the room available to most rural municipalities in Alberta within regulated debt limits, as well as the option of requesting a debt limit extension (subject to specific requirements), the government is not considering a new funding stream for non-residential capital infrastructure at this time.

Alberta Transportation and Economic Corridors

Transportation and Economic Corridors (TEC) provides funding to eligible municipalities, either individually or as groups of two or more, for the construction of municipal facilities for water supply and treatment through the Alberta Municipal Water/Wastewater Partnership and Water for Life programs. As noted by the RMA, the programs do not support industrial development projects, industry expansion, or country residential projects.

TEC has been mandated by the Premier to lead an initiative, in consultation with the Alberta Ministries of Municipal Affairs, Indigenous Relations, Environment and Protected Areas, Agriculture and Irrigation, and Treasury Board and Finance, to develop an integrated water program to facilitate water treatment and distribution for residential, industrial, and agricultural water usage across Alberta. TEC will begin consultation on the development of this initiative over the coming months.

TEC’s Strategic Transportation Infrastructure Program (STIP) provides financial assistance to rural and smaller urban municipalities for developing and maintaining key transportation infrastructure. STIP funding is divided into four streams: Local Road Bridges, Community Airport Program (CAP), Resource Road Program (RRP), and Local Municipal Initiative. All four streams allow projects that support industry. Both the CAP and the RRP streams encourage municipalities to partner with industry to request funding.

Alberta Infrastructure

On November 15, 2023, the Premier released mandate letters to all ministers. Work is underway to deliver on Infrastructure’s mandate to work with the Minister of Transportation and Economic Corridors, and the President of Treasury Board and Minister of Finance to propose a formula that provides guidance on the amount of capital funding that should be budgeted each year to ensure greater predictability for our construction industry partners.

RMA members are unique in Alberta and across Canada due to their large size and responsibility for providing municipal infrastructure and services to isolated areas of the province with limited populations but extremely high levels of industrial activity. In other provinces and territories, rural and remote areas typically have a much less active industrial base and the province plays a direct role in providing traditionally local services and infrastructure. For this reason, much of the infrastructure built and managed by Alberta’s rural municipalities provides limited benefits to residents, but is hugely important to industries such as oil and gas, forestry, agriculture and renewable energy.

The Government of Alberta’s response is disappointing, as it fails to recognize this unique and valuable rural municipal responsibility. RMA members have shared multiple examples of major infrastructure projects designed to attract new industrial development or to service expanding existing development, including water lines, stormwater management upgrades, road and intersection improvements, and even the creation of entire industrial parks, including all utilities, transportation access, etc. While such investments certainly provide local benefits in the form of property tax revenues, the contribution to the province more broadly, as well as neighbouring urban municipalities, is often much greater in the form of income tax revenue, job creation, increased demand for urban residential and commercial development, etc.

While some of the existing programs referenced in the Government of Alberta response could potentially be used to support rural industry-specific projects, many cannot, and those that can typically weigh population or benefit to residents heavily in determining allocation. While RMA certainly does not suggest that the Government of Alberta not support municipal projects that support residents, the massive grant funding gap in supporting industry-linked projects not only reflects a lack of understanding of the unique role that Alberta’s rural municipalities play in this area, but also undermines further economic growth in the province by not providing rural municipalities with the grant support they require to meet emerging and evolving industry needs.

RMA assigns this resolution a status of Intent Not Met and will continue to advocate on this issue.