Date of Release: 2004-12-03

Peel, Regional Municipality of

Confirms at AAA

Dominion Bond Rating Service (“DBRS”) has confirmed the long-term rating on the Regional Municipality of Peel (the “Region”) as indicated above. The trend remains Stable.

On a consolidated basis, the Region and its area municipalities have performed very well during the 1994 to 2003 period. Prudent expenditure management, together with robust revenue generation fuelled by a 32% rise in population, contributed to a cumulative DBRS-adjusted core surplus (after capital expenditures) of $1.8 billion, including a $63 million surplus achieved last year. These surpluses have allowed the Region and area municipalities to amass sizeable investment holdings ($3 billion or ten times current liabilities in 2003) that are being used to internally fund capital pressures arising from population growth, all but eliminating the need for tax-supported borrowing. At December 31, 2003, the Region, which borrows for itself and on behalf of area municipalities, had $7.6 million in net tax-supported debt or $7 per capita – the lowest burden among DBRS-rated Canadian municipalities.

Another core surplus is anticipated for 2004, with solid increases in growth-related revenue streams, including property taxes, user fees, and development charges, likely offsetting spending pressures stemming from greater demand for municipal services, salary adjustments, and increased pension contributions. The Region’s net tax-supported debt should remain essentially in line with the level seen in 2003, as no tax-supported borrowing is expected to occur this year.

DBRS expects the financial profile of the Region to remain strong over the medium term, with its traditionally responsible and proactive financial management likely safeguarding its healthy fiscal balance and liquidity position. Furthermore, the Region’s commitment to financing tax-supported capital expenditures on a pay-as-you-go basis should keep net tax-supported debt at a negligible level for at least the next few years.

While economic fundamentals will likely remain favourable, population growth is expected to relax (Region forecasts 16% growth during 2004 to 2013), causing the Region to start shifting its focus from expanding to maintaining the infrastructure base. Although this change may trigger a moderate decline in investment holdings, DBRS does not expect it to materially impair the Region’s financial profile, since the infrastructure base is still relatively young.

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, contact us at info@dbrs.com.

Related Research

• Peel, Regional Municipality of