Peel, Regional Municipality of: Confirms at AAA, Trend Now Stable

Genevieve Lavallee, CFA/Doug Hirano, CFA

(416) 593-5577

DBRS is confirming the Regional Municipality of Peel's ("Region") rating on long-term debt at AAA, and the Trend is changed to Stable from Negative. The confirmation and change to a Stable trend reflect: 1) a record of good financial management as demonstrated by continued strong fiscal results (DBRS-adjusted surplus of $115 million in 1997) and its stable tax and user fee burden, and the minimal fiscal effects of provincial downloading; 2) its very low level of tax-supported debt outstanding ($150 per capita in 1997) which is expected to decline further; 3) its strong liquidity position with liquid assets at 9 times its current liabilities and 4.9 times its tax-supported debt plus long-term commitments; 4) a municipal tax burden that has remained little changed over the past decade and is competitive relative to neighbouring municipalities; and 5) positive economic fundamentals and a continued favourable outlook.

Despite the Region's strong financial and economic fundamentals, it faces some challenges going forward such as managing the financial implications of the pooling of certain program expenditures in the Greater Toronto Area (GTA) which was part of the provincial downloading. The net financial burden on the Region from provincial downloading was minimal in 1998 and is expected to remain unchanged in 1999. However, GTA pooling introduces additional uncertainty to the Region's fiscal forecast as it has no control over this expenditure, and it limits the Region's financial flexibility to deal with its own expenditure pressures. Other challenges include ongoing management of expenditure pressures from continued population growth, managing the future capital expenditures for maintenance and rehabilitation purposes, and dealing with the implications of changes to the Development Charges Act.