City Finances

Capital financing, debt and credit ratings

The size of the City of Toronto means debt must be used to help in financing the projects contained in the capital budget. Debt can provide the City with more affordable financing by matching the repayment term to the economic useful life of the project, instead of funding the entire cost from current revenues. 

Debt Financing for Capital Projects

Capital project requirements for municipal services can be funded by a variety of sources including the issuance of debt.

Debt provides the City with affordable financing and matches the repayment term to the economic useful life of the project. Without debt financing, the City may be hindered from taking on large capital projects. Also, present taxpayers would be funding projects that provide long-term benefit to future residents.

An Ontario municipality may issue long-term debt only for capital purposes and cannot borrow for operations. The only exception is issuing promissory notes that must be repaid with the current year's tax levy. Repayment of municipal debt is amortized over the term of the debenture with regular contributions being made to the sinking fund.  The city auditor certifies the sinking fund balance annually.  If the balance certified is less than the amount required in the year for the repayment of the sinking fund, the City will pay an amount sufficient to make up the deficiency into the sinking fund.

(000s) 2015 2014 2013
Debentures Issued By the City (Total Outstanding) 5,617,385 5,234,971 4,896,579
Debt issued by Toronto Community Housing Corp. 904,576 681,034 639,526
Debentures issued by the City on behalf of TDSB 75,846 75,846 75,846
Loans payable to the Province 93,171 170,171 170,171
Loans payable 509 668 816
Debt issued by Lakeshore Arena Corporation 19,602 19,932 38,937
Sony Centre loans payable 425 - -
Sinking fund deposits (1,934,095) (1,945,279) (1,912,275)
Sinking fund deposits - TDSB (64,872) (58,831) (53,435)
Total Net Long Term Debt 4,712,547 4,178,512 3,856,165


The City's net long-term debts are to be recovered from the following sources:

(000s) 2015 2014 2013
Property taxes and user charges 3,759,909 3,459,542 3,154,240
Toronto Community Housing Corp (TCHC) 921,106 681,034 639,526
Lakeshore Arena 19,602 19,932 38,937
Lakeshore Arena - Infrastructure Ontario 956 991 1,052
Toronto District School Board (TDSB) 10,974 17,013 22,410
Total Net Long Term Debt 4,712,547  4,178,512  3,856,165 
  • Debt issued to support funding for capital projects
  • Key priority is State-of-Good-Repair of key infrastructure
  • Debt requirement for the City’s 10-Year Capital Plan is estimated to be about $6.6 billion
  • In 2017, the City plans to borrow about $900 million to fund capital expenditures. 
  • Please see the debentures maturity schedule as below:

The City of Toronto's credit ratings (as of March 10, 2017) are:

  • AA with a stable outlook from the Dominion Bond Rating Service

"The ratings are supported by Toronto’s large and dynamic economy, considerable base of liquidity and moderate debt burden."

DBRS, December 9, 2016

  • AA with a stable outlook from Standard and Poor's Canada

“The ratings reflect our view of Toronto’s very strong economy which, along with strong financial management, has helped the city to continue to attract residents and investment…The ratings also reflect our positive view the very predictable and well-balanced institutional framework for Canadian municipalities.”

Standard & Poor's, October 27, 2016

  • Aa1 with a stable outlook from Moody's Investor Service

 “The City of Toronto's Aa1 rating benefits from a low debt burden (46% of operating revenue in 2013), a healthy liquidity profile evidenced by a net cash position, a large and diversified economic base as well as a track record of consolidated surpluses since 2008… The rating also reflects the city's additional unique taxation powers, which allow it to access additional revenue sources besides property taxes and user charges for environmental services.”

Moody’s Investors Service, June 30, 2016