The City uses debt to help finance large capital projects. This provides 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.

The City’s capital projects are 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.

The City of Toronto is a respected participant in the global capital markets. Adherence to the Financing of Capital Works Policy and Goals maintains the City’s reputation and affords continued efficient and cost-effective access to capital markets.

The City’s debt issuance guidelines and policies are outlined in the following documents:

City of Toronto Long-Term Debt ($ 000s)

2016 2015 2014 2013
Debentures issues by the City
(Total Outstanding)
5,824,726 5,617,385 5,234,971 4,896,579
Debt issued by Toronto Community Housing Corp. 955,976 904,576 681,034 639,526
Build Toronto Inc. Loan 33,407 33,407 0 0
Debentures issued by the City on behalf of TDSB 75,846 75,846 75,846 75,846
Loans payable to the Province 0 93,171 170,171 170,171
Loans payable 336 509 668 816
Debt issued by Lakeshore Arena Corporation 19,259 19,602 19,932 38,937
Sony Centre loans payable 340 425 0 0
Sinking Fund deposits (1,766,234) (1,934,095) (1,945,279) (1,912,275)
Sinking Fund deposits – TDSB (71,246) (64,872) (58,831) (53,435)
Total Net Long Term Debt 5,072,410 4,745,954 4,178,512 3,856,165

City of Toronto’s net long-term debts are to be recovered from the following sources:($ 000s) *Not including mortgages

2016 2015 2014 2013
Property taxes and user charges  4,057,913  3,776,013  3,459,542  3,154,240
Toronto Community Housing Corp (TCHC)        955,976        904,576        681,034        639,526
Build Toronto       33,407       33,407    –
Lakeshore Arena       19,259       19,602       19,932       38,937
Toronto District School Board (TDSB)            4,600          10,975          17,013          22,410
Leaside – Infrastructure Ontario            915            956            991         1,052
Sony Centre            340            425    –    –
Total Net Long Term Debt  5,072,410  4,745,954     178,512  3,856,165

The City issues debt to support funding for capital projects with a priority on state-of-good-repair of key infrastructure

The debt requirement for the next three years is approximately $2.65 billion. In 2018, the City plans to borrow up to $950 million to fund capital expenditures.

Forecasted Debt Issuance

Chart showing 2018 forecasted debt issuance 2018 - 950, 2019 - 950, 2020 - 750

The City typically issues sinking fund debentures with bullet maturity in terms of 10, 20 & 30 years.

Annual contributions to the sinking funds are held in an investment fund for repayment of the original amount of the debt at maturity.

The City often re-opens deals to build benchmark-sized offerings and enhance liquidity.

Long-Term Short-Term Outlook
Moody’s Investor Service Aa1 P-1 Stable
Standard & Poor’s AA A-1+ Stable
Dominion Bond Rating Service AA Stable


“The City’s large and diversified economy, competitive tax burden, and robust liquidity position are important credit strengths.” DBRS, September 26, 2018

“The City of Toronto’s Aa1 rating benefits from a low debt burden, 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, April 23, 2018

“The City has managed its budgetary pressures well while maintaining very high levels of reserves and liquid assets.” Standard & Poor’s, October 11, 2018