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City of Vancouver’s approach to debt

July 15 2014

Vancouver City Hall

The City of Vancouver has a dynamic, highly diversified urban economy that is thriving as a result of its global brand, its leading global clusters in the high tech and creative sector, and its role as a global gateway to the Asia Pacific.

Visitors from around the world and  residents of the metro region come to the city regularly to enjoy our cultural amenities and unique destinations such as Stanley Park, the VanDusen Gardens, Vancouver Art Gallery, our beaches, and walk our Seawall. Adding to that, each day thousands people travel into our city from surrounding municipalities such as Richmond, Burnaby, and Surrey to work and take advantage of our great public facilities.

Building infrastructure for a growing city

Public amenities

Over the last 50 years, the City has responded to increased urbanization and population growth by building important and much valued public amenities across our 23 distinct neighbourhoods, these include:

  • Community centres
  • Libraries
  • Parks
  • Recreation facilities
  • Civic theatres
  • Social housing
  • Childcare

Public works

The City has invested regularly in maintaining our public works:

  • Water
  • Sewer
  • Streets
  • Solid waste

Vancouver's financial position

Key points

  • Vancouver’s net debt in 2013, at $205 million, is lower than it was in 2002, and we have always had a balanced operating budget.
  • Since 2009, City Council has reduced borrowing by $191 million. 
  • Our overall financial position (our consolidated position) is a $6.13 billion surplus, as seen on page four of the City's 2013 financial statements — $180 million better than 2012.
  • Our capital assets (parks, community/cultural and public safety facilities and all our public works, such as roads, bridges, and water and sewer infrastructure) have grown significantly over the last ten years.
  • We pay off our debt within 10 years, much quicker than most mortgages, and our capital assets last between 10 to 100 years.
  • In 2009, the City, with permission from the Province of BC, had to borrow $630 million to finance the Olympic Village project in Southeast False Creek; in 2011 our net debt peaked at $419 million related to the Olympic Village. This year, the City of Vancouver paid off the whole Olympic Village debt, and our net debt position is now lower than 2002.
  • In 2011, PwC provided us with advice on debt monitoring metrics and since then the City uses best practice benchmarks in the management of debt.
  • We are confident in our ability to manage our debt, and we have very favourable borrowing rates, strong credit ratings, and we are building a bigger, better Vancouver for our citizens in a responsible way.

A balanced budget

The City’s operating budget is balanced with operating revenues at just over $1 billion per year. About two-point-seven per cent of the revenue goes to paying interest on debt. Rating agencies consider interest payments at less than five per cent of operating revenue as an indicator for a high credit rating.

Credit ratings

The City’s balanced approach to debt management is reflected in the City’s high credit ratings (Aaa/AA) from Moody’s and Standard and Poor, which is as good or better than most other major cities in Canada.

Credit ratings are independent assessments of the City’s ability to repay its debts, and the City meets with rating agencies annually.

Credit rating agencies also look at the level of total borrowing as a percentage of operating revenues. At 61 per cent, the City is well placed among other major cities across Canada:

  • Winnipeg: 60%
  • Ottawa: 70%
  • Edmonton: 95%
  • Toronto: 35%
  • Montreal: 127%

Draft Capital Plan 2015-2018

As Vancouver continues to experience growth, we have to continue to renew and upgrade our existing infrastructure, amenities, and facilities to support our residents and businesses. Thus, the 2015-2018 draft Capital Plan focuses two-thirds of the budget on maintenance and renewal, while one-third is on new investments.

Like most major cities, in the City of Vancouver, infrastructure is only partly funded through debt. Only 37 per cent of the Vancouver’s draft Capital Plan for 2015-2018 is proposed to be funded by debt.

Learn more about the 2014 budget