City $1.65B debt to grow, treasurer insists 'good financial shape'

The city is carrying about $1.65 billion in net long-term debt and that number is going to climb higher in the coming years because of LRT.

The financial books were under scrutiny by councillors on the audit sub-committee as part of the annual disclosure of consolidated statements.

Currently, the city is paying just over $180 million a year related to debt, with about $80 million in interest costs.

That might cause a serious case of sticker shot, but Marian Simulik, the city's treasurer, argued the other option for how to pay for big projects likely isn't a popular one either.

"The tax rate would be higher and the water and sewer rate would be higher. How would we have funded Lansdowne, for example?"

She explained that if the redevelopment of Lansdowne Park was funded via property taxes, over a 5 year period, it would automatically tack on an extra 2% in addition to any other increases.

The city takes in about $3.7 billion in revenue every year, including property taxes, user fees, development charges, provincial and federal gas tax. So, about 5% of that total revenue is used to pay down the debt.

Simulik said the city has just over $11 billion net in assets. Some of that is cash in the bank and most of it is physical assets, like roads, pipes, and buses.

"The financial shape of the city is very good. The debt only represents about 10% of the book value of the assets. So for us, when we talk to citizens, it's would you be happy if your mortgage was 10% of what you actually paid for your house? Most people would be."

The debt will rise in 2018 by $300 million because of the first phase of light rail. Phase two would also drive up the debt the city has plans to build even more several years down the road which will add even more, but that's contingent on getting cash from the provincial and federal governments.

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