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Building Strong Neighbourhoods Debt Service Ratio

 
icons Council Strategic Plan Report

Debt Service Ratio

Debt service ratio is one of three key performance indicators relating to the Building Strong Neighbourhoods priority, one of five priorities outlined in City Council's 2018–2022 Strategic Plan.

Why this Measure Matters

The debt service ratio demonstrates responsible use of debt to finance growth as a municipality. It measures the cash flow available to pay current debt obligations. This measure is also a World Council on City Data measure.

2019 Performance: 8.68%

2015:
8%
​​2016:
8.31%
​​2017:
8.54%
​2018:
8.78%
2019:
8.68%
chart
Source: Finance department. The ratio is measured as a percentage of the City’s own source revenues used to pay down debt including principal and interest.

2019 Activities

The City made significant progress toward its goal of diversifying its sources of financing and financial instruments as well as achieving lower cost of borrowing. The year marked the City’s successful return to capital markets to raise funds on the back of its strong credit rating. the City raised $54.9 million in capital for the long-term financing of the Barrie-Simcoe Emergency Services Campus in two separate transactions:

  • $30 million 10-year public serial debenture, issued on June 6, 2019, at an all-in cost of borrowing of 2.32%; the lowest municipal borrowing rate in the prior two years for similar deals at the time.    
  • $24.9 million interest rate swap loan at an interest rate of 2.28% entered into on December 5, 2019, which further reduced the overall borrowing rate on the project to 2.30%.

These transactions were well received by capital markets in spite of recent market volatility caused by heightened global trade tensions. The market confidence validates Standards and Poor’s (S&P) assessment of the City’s financial management. In October 2019, S&P affirmed the City’s “AA” credit rating with a stable outlook stating that, “Barrie is well positioned among other 'AA' rated municipal entities given its overall credit profile. Barrie's creditworthiness benefits from the quality of its financial management, with generally strong political consensus in passing budgets without major amendments or delays.”

2020 Activities

In 2020 the City plans to raise around $11 million in capital toward financing various capital projects.

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