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THUNDER BAY -- Carol Pollard said the city’s moderate debt level is likely the reason the city has maintained its credit rating.
Standard and Poor’s on Thursday reaffirmed Thunder Bay’s AA- rating, which Pollard, the city’s general manager of finance called “really good news.”
“That’s a very good credit rating and it signals to investors that we are able to pay our debt,” said Pollard, also the city treasurer.
“It results in good news for our ratepayers, in that a good credit rating means that you borrow interest at a lower rate and are able to pass on those savings to the ratepayers of the community.”
It’s the second straight year Thunder Bay has held an AA- rating
From 1998 to 2011, the city’s rating was A+ (stable). In 2012 it improved to A+, with a positive outlook, and last year to the current AA- (stable).
“That’s a huge jump,” Pollard said. “It’s a lot of work to get to get from one level to the next. Reaffirming is what we were hoping and anticipating for this year.”
Pollard added there are a number of reasons why the rating has jumped twice in the past three years.
First and foremost is the city’s level of debt, which remains moderate compared to other Canadian municipalities.
The debt, expected to hit $184 million by year’s end, is more than manageable, Pollard said.
“We have good budgetary performance and very good liquidity,” she added.
“The other point that they address is we are taking steps to address the infrastructure deficit.”
Through the Enhanced Infrastructure Renewal Fund, Thunder Bay is spending close to $40 million annually to close the infrastructure gap.
In reality, the city’s finances are in good shape, Pollard said.
“Our debt, as a percentage of assets, is about 17 to 18 per cent. Compare that to a household and your mortgage on your house is often more than that.”
After-capital deficits of less than 10 per cent of total revenues are projected for the next two years.
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The rating company, in its report to the city, called Thunder Bay’s economic base stable, with more than 20 per cent of its workforce employed in the public sector. But the economy is also diversifying, with jobs created in biomedicine, health care and research.