Toronto: low debt, great for investing, better shape than most cities

Not only did the City of Toronto receive a great boost, but so did Mayor Miller and Deputy Mayor Pantalone with the release of a report which confirms their solid governing. Moody's Investors Service, a bond rating agency, recently released a report touting Toronto's low debt, the high levels of investments and that the city is a safe place for investors. This is all within the reality of the current international financial collapse and ongoing recession. Mayor Miller interrupted a city council meeting to make an announcement on the city's strong credit rating.

I think it is extremely important for members of council to know the premier rating service in the world recognizes this government’s strong fiscal position, this government’s strong fiscal management and the terrific work that our staff do every day to ensure that we are managed to the highest level in the world.

The report stated that Toronto can continue to handle the recent debt level as well as interest payments. The report alo stated that Toronto is in much better shape than most cities, with analyst Jennifer Wong saying:

This debt burden is considered low when compared with other Canadian and international cities and, as such, constitutes a credit positive.

Toronto's debt as of December 31, 2008 was $2.7 billion, and is expected to rise to $3.5 billion by 2016, but will then subside. Currnetly the city's debt is 41% of operating revenue. In comparison, Montreal's debt is 98% of revenue.

Toronto's debt ratio has stabalized for the last five years, even throughout the recent recession. Wong added:

They have been able to weather this downturn. And the city's debt service payments are manageable within their framework.

Toronto has also been prudent in saving reserves to finance future projects:

These reserves could be tapped as a source of liquidity to mitigate unanticipated shocks, enhancing the city's financial flexibility and constituting a major credit positive.

Councillor and Deputy Mayor Joe Pantalone said the report was positive:

It shows we must invest in the city and that we can," Pantalone said in an interview. Cities that stop investing become the Detroits of tomorrow. Those candidates who say we should sell the patrimony bestowed upon us by Torontonians present and past really don't get it. You don't sell your house so you can rent it from whoever bought it from you.