Ontario Community Infrastructure Fund

How it works

The Province will provide approximately $400 million to 425 small, rural and northern communities across Ontario in 2023.

Communities don’t need to apply for the funding but will need to provide planning and reporting documents to the government to receive the grants.

Under the formula-based component, eligible recipients:

• receive annual allocation notices specifying OCIF funding for the calendar year
• may accumulate annual formula-based grants for up to five years to address larger infrastructure projects
• are guaranteed to receive a minimum of $100,000 per year

Who is eligible

1. Ontario municipalities

The following Ontario municipalities are eligible:

• small municipalities (municipalities with populations less than 100,000)
• northern municipalities
• rural municipalities

The Ministry of Infrastructure updates program eligibility to reflect the latest Census of Population data. 2021 census data was used to determine eligibility for 2023 grants.

Municipalities that have become ineligible as a result of updated census data are gradually phased out of the OCIF program over two years to provide stability and predictability.

For example, those that have become ineligible as a result of the 2021 Census of Population will receive OCIF funding in 2023 and 2024 and will no longer receive OCIF funding as of 2025.

These recipients can carry forward any unused funds from 2024 for up to five years until December 31, 2028, and will be required to meet the reporting requirements until funds are depleted.

2. Local Services Boards (LSBs)

Local Services Boards that own water and/or wastewater systems are eligible to receive the minimum grant of $100,000 per year.

A Local Services Board becomes ineligible for OCIF if it no longer owns water and/or wastewater systems. Effective at the beginning of the next allocation cycle, they will no longer receive OCIF funding.

Eligible and ineligible expenditures

Eligible capital expenditures

Capital expenditures on core infrastructure projects (such as roads, bridges, water and wastewater, including sanitary and stormwater facilities) that are part of an asset management plan are eligible, including:

• capital construction of new core infrastructure to be owned by the recipient that addresses an existing health or safety issue
• capital maintenance for the renewal, rehabilitation and replacement of core infrastructure owned by the recipient (this may include municipally-owned infrastructure assets that are owned by a municipality’s municipal services corporation)
• debt-financing charges specifically associated with the capital construction and maintenance of core infrastructure

Coordinated infrastructure and land-use planning

Capital projects must be consistent with Ontario’s land-use planning framework. The provincial land-use planning framework promotes a coordinated and integrated approach when planning for land use and infrastructure. This is achieved through policy direction derived from the Provincial Policy Statement (PPS) and applicable provincial land use plans such as the A Place to Grow: Growth Plan for the Greater Golden Horseshoe. The government recently commenced a review of the PPS and A Place to Grow.

An integrated approach to land use and infrastructure planning allows for the identification of benefits, such as cost savings and improved environmental protection, by ensuring development choices make the best use of existing infrastructure before consuming more land or resources.

When read together, the PPS and provincial plans require municipalities to consider, among other things:

• the implications of growth on infrastructure needs
• the full lifecycle costs of infrastructure, which may include asset management planning
• integration of environmental protection with infrastructure planning (for example, using watershed or subwatershed plans)

Eligible asset management planning expenditures

Eligible expenditures for the development, updating and improvement of asset management plans for any asset type(s), include:

• asset management software
• conferences and training for municipal staff that are 100% related to asset management planning, including reasonable related travel, meal and accommodation expenses
• third-party condition assessments
• third-party consultants whose responsibilities are limited to asset management planning

Collaboration on asset management

We encourage recipients to work together to develop and improve asset management plans. Smaller communities should consider hiring a shared resource to serve as their asset manager. By collaborating, communities can:

• share best practices
• learn from each other
• improve their asset management plans at a reduced cost

For example, four neighbouring communities with similar infrastructure systems could attract a full-time local expert dedicated to serving each municipality about one week per month.

In addition, the ministry encourages recipients to begin work as soon as possible to meet the July 1, 2024 timeline under the Asset Management Planning for Municipal Infrastructure regulation (O. Reg. 588/17 as amended by O. Reg. 193/21), which requires municipalities to have an asset management plan in place for all municipal infrastructure assets.

Eligible optimization expenditures

Activities that improve the performance or increase the capacity of existing water and wastewater infrastructure under the Composite Correction Program are eligible, including:

• third-party comprehensive performance evaluations
• third-party comprehensive technical assistance

Innovative capital technologies

Ontario has become a world-class centre for developing new technologies that can help reduce, avoid or defer capital and lifecycle costs. Recipients may want to consider incorporating innovative technologies into their projects.

For example, the Ontario Water Consortium supports the development, demonstration and adoption of Ontario’s water technologies. Many of these technologies already support communities across Ontario, including projects funded through the government’s Showcasing Water Innovation program (PDF) and the consortium’s Advancing Water Technologies program.

Innovative approaches to community management of water include:

• trenchless technologies for lining watermains
• phosphorus removal from stormwater
• ammonia removal from wastewater

Composite Correction Program

Municipalities can reduce or avoid life-cycle costs through non-capital solutions. The Composite Correction Program is a well-regarded, two-step protocol for optimizing water and wastewater systems.

The first step is a comprehensive performance evaluation to determine the factors that impact performance or capacity, including:

• operation
• design
• maintenance
• administration factors

The second step, comprehensive technical assistance, involves hands-on operator training and support to improve process control and operating procedures.

Eligible staff time expenditures (for municipalities only)

Municipalities may allocate up to 40% or $80,000 of their formula funding per year (whichever is less) to hours worked by municipal staff whose responsibilities include:

• asset management planning, and/or
• Composite Correction Program implementation while receiving third-party comprehensive technical assistance

Ineligible expenditures include:

• infrastructure expansion projects to accommodate future employment or residential development on greenfield sites
• acquisition and/or leasing of land, buildings and other facilities
• legal fees
• rolling stock (for example, trucks, graders, etc.)
• movable/transitory assets (for example, portable generators, etc.)
• the costs of completing any application for a provincial funding program
• all taxes
• stand-alone street-light projects
• costs for recreational trails

A more detailed list of eligible expenditure categories is included in the transfer payment agreement.

What you need to submit to receive funding

Eligible municipalities must submit the following to the Ministry of Infrastructure (MOI) periodically as requested by the ministry:

• publicly-accessible link to a comprehensive asset management plan, covering at least core infrastructure assets, and including all of the information and analysis described in the Asset Management Planning for Municipal Infrastructure regulation (O. Reg. 588/17 as amended by O. Reg. 193/21). If you haven’t made any changes to a previously submitted asset management plan between regulatory phase-in years, you do not need to re-submit
• in a form provided by the ministry, information on how your allocation was or will be used on eligible expenditures
• any other reporting requested

Eligible LSBs must submit the following to the Ministry of Infrastructure periodically as requested by the ministry:

• an asset management plan that covers water/wastewater assets which are owned/operated by the LSB
• in a form provided by the ministry, information on how your allocation was or will be used on eligible expenditures
• any other reporting requested

Submit by email to ocif@ontario.ca or mail to:
Ontario Community Infrastructure Fund
c/o Infrastructure Program Delivery Branch
Ministry of Infrastructure
1 Stone Road West, 4^th Floor Northwest
Guelph, ON
N1G 4Y2

In addition, eligible municipalities must submit their annual Financial Information Return (FIR), without critical errors, to the Ministry of Municipal Affairs and Housing via Smart FIR. For any related questions, please email fir.mah@ontario.ca.

Failure to provide this reporting may result in payments being withheld.

Banking funding

Eligible recipients may accumulate their formula-based grants for up to five years. For example, grant funding received in 2023 must be spent by December 31, 2027. Recipients will report on how and when banked funds will be used.

Banked funds must be kept in an interest-bearing account and recipients must report on interest earned on the funds. Failure to use banked funds within five years will result in the funds having to be repaid to the Province, including interest earned.

Calculating the grant

The size of grants is determined by:

• estimated Current Replacement Values (CRVs) for core infrastructure owned by municipalities, including roads, bridges, water and wastewater
• the municipality’s economic conditions

The grant is designed to be responsive to local needs and economic conditions. In order to ensure that municipalities with greater requirements to replace core infrastructure and more challenging economic conditions receive proportionally larger grants, the amount of funding per $100,000 of total core infrastructure is calculated using an “infrastructure index.”

Municipalities with a higher infrastructure index will receive a proportionally larger grant per $100,000 of core infrastructure.

The minimum grant size is $100,000. All eligible LSBs will receive the minimum amount.

Changes to the OCIF funding formula starting in 2023

Starting with the 2023 allocations, the OCIF formula is being calculated using estimates of CRVs to approximate requirements to maintain municipal core infrastructure assets, in place of closing cost balance values from the FIR.

Additionally, to support stability and predictability, a smoothing mechanism is implemented to generally limit changes in funding for 2023 within ±15% of the 2022 allocations.

How the formula works

We use the following steps to calculate a municipality’s grant.

Step 1: Determine the amount of core infrastructure owned by the municipality

Each municipality’s final estimate of core infrastructure depends on the completeness of their asset management plan for core infrastructure data. The following section outlines the composition of the CRV estimates used in the OCIF funding formula.

1. Using FIR data, the ministry created a core infrastructure replacement value estimate for each municipality. This estimate is referred to as the MOI (or ministry) FIR-based estimate. This estimation method involves inflating a historical book cost value by an age estimate, which is derived from amortization profiles within the financial data.
2. Subsequently, the ministry extracted CRV information from municipal asset management plans. Both the MOI FIR based estimates as well as AMP (asset management planning) information is collected in alignment with the FIR core infrastructure categories historically used in the OCIF funding formula.
3. Using the information from parts 1 and 2 above, a third, hybrid, CRV estimate is created. This hybrid estimate supplements the current replacement values extracted from asset management plans in part 2 above with MOI FIR based estimates from part 1. This joins together the information from both data sources to create a more wholesome CRV estimate.
   1. In cases where CRVs for OCIF-eligible core infrastructure were not included in a municipality’s asset management plan, or were not complete, the ministry used its own CRV estimates for those assets.
   2. In cases where CRVs for OCIF-eligible core infrastructure were included in a municipality’s asset management plan, the ministry supplemented the AMP estimate with MOI’s FIR-based estimate where gaps were identified between the MOI FIR-based estimate and the estimate extracted from the AMP.
4. The final CRV estimate used in the OCIF funding formula is anchored to the MOI FIR-based estimates. The CRV estimate used in the OCIF funding formula is created based on the following decision rules:
   1. If the total CRV estimate from part 3 above falls within 15% of CRV estimate from part 1, the CRV from part 3 is used in the funding formula.
   2. If the total CRV estimate from part 3 above falls outside ±15% of the CRV estimate from part 1 above, then the CRV estimate from part 1 is used and adjusted by ±15%.

Step 2: Calculate the infrastructure index

The infrastructure index compares a municipality’s requirements to maintain its core infrastructure to its weighted property assessment and median household income.

The infrastructure index is composed of two indicators:

• the ratio of core infrastructure to weighted property assessment
• the ratio of core infrastructure per household to median household income

Note: Core infrastructure refers to estimated current replacement values of core infrastructure.

The two indicators are placed on comparable scales and then averaged to calculate a municipality’s infrastructure index.

Adjustments are made to core infrastructure values to make multi-tier municipalities comparable to single-tier municipalities when calculating the infrastructure index.

Step 3: Determine the funding to be calculated per $100,000 of core infrastructure

The amount of formula-based funding for every $100,000 of core infrastructure owned by the municipality depends on the municipality’s infrastructure index and how it relates to the median infrastructure index of all eligible municipalities.

Allocations for municipalities with an infrastructure index at the median is calculated based on the median amount of funding per $100,000 of core infrastructure funding noted in Table 1 below.

For every 10% that a municipality’s infrastructure index is below the median value, $24 less funding is calculated per $100,000 of core infrastructure, down to a minimum noted in Table 1 below.

For every 10% that a municipality’s infrastructure index is above the median, $24 more funding is calculated per $100,000 of core infrastructure, up to a maximum amount noted in Table 1 below.

Table 1 — Funding based on the infrastructure index

Notes:

• 2023 funding per $100,000 of core infrastructure has decreased largely due to the shift in using estimated CRVs to calculate core infrastructure.
• Values presented in the table may be rounded.

Read the accessible description for Table 1.

Step 4: Calculate the grant

Funding per $100,000 of core infrastructure will depend on a recipient’s infrastructure index (see step 3 above), relative to other recipients and within the limit of the annual funding envelope.

The amount calculated above will be subject to the minimum and maximum allocation parameters, resulting in no municipality receiving below $100,000, and the maximum grant not exceeding $10 million (2.5% of the annual funding envelope in 2023).

Next, a smoothing mechanism is applied to determine the final OCIF grant.

The smoothing mechanism

A smoothing mechanism has been implemented which generally limits changes in funding for 2023 to within ±15% of 2022 allocations. This allows for predictable and stable funding for municipalities.

If a municipality’s 2023 grant falls within 15% of its 2022 grant, the 2023 calculated amount would be used as the final grant.

If a municipality’s 2023 grant falls outside of 15% of its 2022 grant, the 2023 final grant amount would be adjusted to within 15% of the 2022 grant.

Financial matters and consultation with Indigenous groups

Payments

The size of the grant will determine the frequency of payments. Subject to meeting terms and conditions set out in the transfer payment agreement, recipients that receive larger grants are paid more frequently (payments can be made as frequently as monthly).

Consultations with Indigenous groups

The Government of Canada, the Government of Ontario and municipalities may have a duty to consult, where appropriate, with Indigenous Groups (First Nation, Inuit and Métis peoples) where an activity is contemplated that may adversely impact Aboriginal or treaty rights.

Consultation requirements will vary depending on the size and location of the project in question. Grant recipients should ensure duty-to-consult requirements are met prior to commencing construction of funded projects.

Contact us

If you have questions about the OCIF you can contact us by:

• Email: ocif@ontario.ca
• Website: Ministry of Infrastructure

Mailing address:
Ontario Community Infrastructure Fund
c/o Infrastructure Program Delivery Branch
Ministry of Infrastructure
1 Stone Road West, 4^th Floor Northwest
Guelph, Ontario
N1G 4Y2

Chart descriptions

Table 1 — Funding based on the infrastructure index

In 2022:

• for every 10% that a municipality’s infrastructure index is below the median value, $24 less funding is calculated per $100,000 of core infrastructure, down to a minimum of $574
• for every 10% that a municipality’s infrastructure index is above the median, $24 more funding is calculated per $100,000 of core infrastructure, up to a maximum amount of $1,148

In 2023:

• for every 10% that a municipality’s infrastructure index is below the median value, $24 less funding is calculated per $100,000 of core infrastructure, down to a minimum of $259
• for every 10% that a municipality’s infrastructure index is above the median, $24 more funding is calculated per $100,000 of core infrastructure, up to a maximum amount of $517