OUR CITY DEBT

The Truth About Our Debt

   Let's get one thing straight at the outset - I don't like debt, and I don't believe anyone else likes debt, but like life, it happens!

   I've read numerous opinions about the City's debt, including some erroneous facts. Unfortunately, too many people accept those opinions rather than checking against reliable sources. If you should doubt me, please do corroborate what I state against City Annual Reports and provincial ministry stats (where most of my information comes from).

                             http://www.cscd.gov.bc.ca/lgd/infra/statistics_index.htm

   Abbotsford and Matsqui amalgamated into one municipality in 1995; my data includes the years 1997 to present, so when I say Abbotsford has never been debt-free, I am assuming it had a debt in the two years immediately following amalgamation.

   It is has been publicly stated that Abbotsford was debt-free in 2006, which simply is not true. The City had a debt of $38.4m. The closest the City came to being debt-free was 2004 ($16m.). Of course that debt was greatly increased as a result of the elector-approved capital projects (Plan 'A'), resulting in a maximum debt, in 2008, of $104.8m. Today, the City's long-term debt stands at $78.4m. as of December, 2014. I need to acknowledge an error in an earlier post, on this topic, in that I stated debt figures that are not in agreement with the data I cite here.

   The debt has decreased by 25% over the last six years, which correlates with the fact that part of it has been amortized over 25 years (The Reach portion was amortized over 20 years). Like any homeowner, one always considers capacity for carrying debt and how much debt is reasonable to carry. In the City's case, debt principle and interest costs amount to less than 5%, annually, of the City's total budget.

   At the end of 2013, Abbotsford's per capita debt was $625, and will be approximately $525 at the end of this fiscal year. How does this compare with other municipalities? Twenty other municipalities have higher debt burdens, with most of those in excess of $1000. As I said at the outset, I am not advocating for continued debt. What I am trying to convey here is that we have never been debt free; we have a debt resulting from elector-approved capital projects; we have a plan to pay it down (called a mortgage); and that the debt is not more than Abbotsford has the capacity to carry.