D'Amato: Region’s financial management is a strength, not a weakness

Therecord.com
Sept. 26, 2014
By Luisa D'Amato

The Region of Waterloo has a stellar credit rating. Its AAA rating from Moody's Investor Services doesn't get any better. It's like graduating from Harvard University with an A+ average.

So it boggles my mind that, in the election debates for the regional chair, some of the opponents of incumbent Ken Seiling are choosing the region's debt as the issue on which to attack his leadership.

At a debate this week, candidate Moira-Sharon Magee said that she personally could "go out and rack up $120,000 in debt ... But I haven't done that because I know the money will have to come from somewhere."

Good for you, Ms. Magee, but I don't see what your personal decision has to do with the Region of Waterloo's situation.

The region's debt was $483 million in 2013. That's a big number. But like any debt, it cannot be judged on the amount alone. It depends on what it's for, and how well positioned you are to handle it.

The Moody's report says the region is in great shape. Here are some quotes from its credit analysis earlier this year:

• "Waterloo's position reflects positive operating results, a strong fiscal track record, and a currently lower-than-average debt burden when compared to other national peers."
  
  
• Although debt has risen relative to revenues from 2006 to 2012, the report notes that: "Waterloo's debt burden is still below average, and interest payments remain easily manageable and consumed only 1.3 per cent of operating revenues in 2012."
  
  
• "Similar to other highly rated municipalities in Ontario, Waterloo displays strong governance and management characteristics. In addition to long-term planning for capital and operating budgets and a history of meeting fiscal targets, management adheres to conservative debt and investment management policies, thus limiting the region's exposure to market-related risks and ensuring relatively smooth debt servicing costs. These fiscal management measures are also supported by comprehensive, transparent and timely financial reporting."

What more could anyone ask?

The region has an unusual set of issues to manage. Its debt level has risen because it has to both manage an aging infrastructure and also prepare for future growth.

Most municipalities have to do one or the other. For example, some relatively young municipalities in Toronto's orbit, such as Vaughan and Markham, are only building new infrastructure like roads and sewer systems for burgeoning subdivisions. Older municipalities like Windsor and London aren't growing as much. They're mostly just replacing or repairing their infrastructure.

But the Region of Waterloo is doing both. It's upgrading sewage treatment plants that have been around for decades, and it's also building new roads, buying more Grand River Transit buses, and building the light rail system to accommodate the surge of new residents.

It's a false economy to do nothing as more people move here. Look at Mississauga, where long-standing Mayor Hazel McCallion says her greatest regret is that transportation systems weren't developed along with housing growth, a move that would have relieved congestion in that city.

The region has a complex task. Moody's says it is doing an excellent job. That's good enough for me.