How Bad is Abbotsford's Debt?

In a column published in Abbotsford Today (April 21, 2014), Jordan Bateman calls for an independent audit of Abbotsford’s finances, believing that the whole “story” has not been revealed, specifically with respect to the Heat contract. I too, would be curious to know if such an audit would vary from that of the annual audits done by KPMG, which are reported to the public.

The point Mr. Bateman makes, in his article, about Abbotsford’s debt is what attracted my attention and provoked me into returning to the provincial data (which Mr. Bateman chose not to do for reasons I do not know), doing some basic research related to municipal debt loads throughout the province, and in particular, the Lower Mainland.

Abbotsford’s ‘Total Long-Term Debt’ at end of 2012 was $87,663.00 and at the end of 2013, it was approximately $79,000.00. Mr. Bateman quotes my article of a year ago in which 2011 stats were applied. Since then, Abbotsford’s status has changed to 6^th highest debt.

What is of more importance and interest is the per capita debt one finds when doing some basic sleuthing and math calculations. The following table highlights only 38 municipalities, which represent most of the municipalities with significant debt. With a little more time and effort, I could have produced a table that would have included the entire province. This table, however, will suffice to make the point that debt expressed in terms of dollar value only, is a very small part of the entire picture. The table provides some comparison in terms of capacity to carry a particular debt.

601.1 - Long-term Debt and Debt Charges as at December 31, 2012	Rank	Long-Term Debt	POP. 2013	Per Capita Debt
Northern Rockies	1	24,339,342	5,910	$4,118.33
Whistler	2	37,865,997	10,620	$3,565.54
Revelstoke	3	20,129,067	7,277	$2,766.12
Summerland	4	29,197,689	10,855	$2,689.79
Dawson Creek	5	29,058,370	12,475	$2,329.33
Nelson	6	20,148,186	9,810	$2,053.84
Penticton	7	67,599,365	33,318	$2,028.91
Cranbrook	8	37,404,453	19,125	$1,955.79
Salmon Arm	9	29,781,543	17,129	$1,738.66
Squamish	10	31,010,855	19,252	$1,610.79
Vancouver	11	1,060,667,000	666,517	$1,591.36
Fort St. John	12	33,081,338	20,992	$1,575.90
Prince George	13	109,221,000	76,286	$1,431.73
West Kelowna	14	32,055,028	27,661	$1,158.85
Kelowna	15	136,398,273	122,455	$1,113.86
Kamloops	16	95,782,075	87,647	$1,092.82
Langford	17	30,208,040	31,195	$968.36
Vernon	18	33,122,000	39,139	$846.27
Courtenay	19	20,415,836	25,116	$812.86
North Cowichan	20	21,503,802	30,168	$712.80
Abbotsford	21	87,663,000	140,235	$625.11
Victoria	22	52,363,439	84,360	$620.71
New Westminster	23	42,192,287	68,534	$615.64
Esquimalt	24	9,568,653	17,639	$542.47
Maple Ridge	25	42,115,768	78,124	$539.09
Mission	26	16,213,167	37,614	$431.04
Langley	27	43,700,000	107,505	$406.49
Port Coquitlam	28	23,608,539	58,517	$403.45
Pitt Meadows	29	7,426,052	18,604	$399.16
Nanaimo	30	33,152,899	87,515	$378.83
Surrey	31	175,478,000	482,725	$363.52
North Vancouver	32	18,850,523	51,870	$363.42
Port Moody	33	11,896,266	34,567	$344.15
Coquitlam	34	27,240,426	129,716	$210.00
Saanich	35	23,717,112	114,013	$208.02
West Vancouver	36	9,160,877	44,284	$206.87
Chilliwack	37	8,058,860	79,617	$101.22
Delta	38	9,969,816	100,337	$99.36

The Ministry data tells only one part of the Lower Mainland Municipal Debt story. In addition to the debt figures provided by the Ministry, each of the Metro Vancouver municipalities carry additional debt that is not represented in this data, which leads to the question, how is Metro Vancouver funded?

The operating budget of the Metro Vancouver Districts is paid for by six main sources:

1. Tax Requisitions
2. Sewer Levy
3. Solid Waste Tipping Fee
4. Water Sales
5. Housing Rents
6. External Revenues, Reserves and Other

These revenue sources support four separate legal entities: the Greater Vancouver Regional District (GVRD) is funded primarily through tax requisitions of member municipalities, the Greater Vancouver Sewerage & Drainage District (GVS&DD) through a sewer levy for liquid waste and user fees for the solid waste function, the Greater Vancouver Water District (GVWD) through the sale of water to participating member municipalities, and the Metro Vancouver Housing Corporation (GVHC) through property rentals.

It is Metro Vancouver’s debt-load, however, which is of particular interest here. The following information is a year old, however, for purposes of comparison and for making my point, is useful. Each figure provided represents debt carried by Metro Vancouver for each respective departments:

Water Debt - $97M.

Water, Capital Programs & Projects - $156M.

Liquid Waste - $33.5 M.

Liquid Waste, Capital Programs & Projects - $47.8M.

Solid Waste - $3.8M

Solid Waste, Capital Programs & Projects - $14.5M.

Housing - $15.5M.

Corporate Programs - $1.5M.

Total debt of $370 M.

This debt is shared by all Metro Vancouver property-tax payers, through the requisitions made annually. Needless to say, the Ministry information that places Abbotsford at 6^th largest debt is misleading in that the Metro portion is not included.

As for Abbotsford’s long-term debt, the Plan ‘A’ portion was amortized over 20 and 25 years, depending on the project, at very competitive interest rates. All other long-term debt will be paid by 2016. In 2006, Abbotsford’s total, long-term debt was $123,401,000; at end of 2013, it was $78,760,000 – a decrease of 36% over 7 years.

As noted earlier, not all municipalities were included in the table. Some, in fact, have a higher per capita debt than many in the list. If all were included, Abbotsford would fall even further down the list; here the City sits at 21^st. I am not advocating for burdening taxpayers with large debts, however, I am realistic enough to know that some debt is often to be expected, and if the interest rates are competitive, and the tax base wide enough, the burden to taxpayers can be tolerable. Presently, debt payment (principle and interest) constitutes approximately 2% of Abbotsford’s Operating Budget.