Peel, Regional Municipality of

Paul Judson; Geneviève Lavallée, CFA; Eric Beauchemin, CFA/416-593-5577 ext.2261, ext. 2277, ext.2252/pjudson@dbrs.com

 

DBRS is confirming the Regional Municipality of Peel’s (the “Region” or “Peel”) long-term rating as indicated above, with a continuing Stable trend.

 

On a consolidated basis, the Region and its area municipalities have performed very well in recent years, with rapid population growth translating into strong revenue generation and, in turn, consistently sizeable DBRS-adjusted core surpluses ($168.5 million in 2002).  These surpluses have allowed the Region and area municipalities to build up substantial investment holdings ($2.9 billion in 2002) that are being used to internally fund service and infrastructure pressures generated by population growth, thereby preventing a heavy reliance on tax-supported debt.  As at December 31, 2002, the Region had the lowest net tax-supported debt burden of all the municipalities rated by DBRS, at $27.1 million, or $26 per capita.

 

While 2003 fiscal results were not available at the time of this report, another sizeable core surplus was likely realized, providing support to reserve fund balances and helping to further reduce net tax-supported debt.  The Region and area municipalities maintained a pay-as-you-go approach to funding infrastructure costs in 2003, with expanded capital spending financed without any reliance on debt.

 

The financial profile of the Region and its area municipalities is expected to remain strong over the medium term, as continued good financial management at the Region level is anticipated to help drive solid fiscal performances and a further reduction in net tax-supported debt.  Following more than a decade of rapid development, sizeable areas within the Region have become built up.  As a result, population growth is projected to moderate over the coming years, causing the Region to begin shifting its focus from expanding to maintaining the infrastructure base.  Minimal pressure on tax-supported debt is expected to arise from this change, however, as the Region’s infrastructure is relatively new compared to that of other more mature urban municipalities.  Moreover, the Region has substantial reserve funds and a relatively low property tax and user fee burden, both of which would likely be relied upon ahead of tax-supported debt to finance medium-term capital spending.

 

 

Dominion Bond Rating Service Limited (DBRS) will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, please contact us at: info@dbrs.com.