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Thread: City debt increases by 700% in just over 10 years

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    Default City debt increases by 700% in just over 10 years

    Mayoral candidate and current city councillour, Kerry Diotte, wants to know how much your property taxes has increased over the years.

    Did you know that Edmonton's debt has increased by 700% in over a decade?

    And, in the last 10 years alone (2004-2013), Edmonton property taxes have gone up an average of 50%.

    Read Kerry's latest post on this and feel free to share your property tax stories!

    Visit www.kerrydiotte.com

    Sincerely,

    Jasmine Franklin

  2. #2

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    ^And, in the last 10 years alone (2004-2013), Edmonton property taxes have gone up an average of 50%

    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes. One also just has to look at how the city has grown with new development in that same time frame to realize they had to collect more taxes to sustain growth. School taxes have also gone up in that period of time. When the school taxes are put on the same bill as city taxes it makes the pothole brigade blow a gasket because psychologically the amount due looks bigger and there brains short circuit and they cannot separate the two. There will always be death and taxes. Add to all that the city employees that need to be paid a fair wage to keep up with their growing costs. You cannot pay them more if the city does not collect more taxes.
    My tax story, well my house has at least doubled in value in the last 10 years, but then again so has bread, milk, eggs, utilities and a whole host of other things. It's called 'inflation', look it up.
    Last edited by Gemini; 12-06-2013 at 07:18 PM.
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    Quote Originally Posted by Gemini View Post
    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes.
    Not true. Higher assessments do not mean higher taxes. Only if your assessment is growing faster than the rest of the houses in the city.

    What a well thought out and eloquent post by Mr Diotte. He clearly explains why the debt has increased and what projects/programs he would cut to reduce the debt level and our tax burden.

    Wait, you mean he didn't? Just mindless 'i will lower taxes' tripe? oh.

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    city's debt have increase due to city's population growth.
    Edmonton Rocks Rocks Rocks

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    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by Gemini View Post
    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes.
    Not true. Higher assessments do not mean higher taxes. Only if your assessment is growing faster than the rest of the houses in the city.

    What a well thought out and eloquent post by Mr Diotte. He clearly explains why the debt has increased and what projects/programs he would cut to reduce the debt level and our tax burden.

    Wait, you mean he didn't? Just mindless 'i will lower taxes' tripe? oh.
    Oh, here am I thinking the city uses the market value assessment of a home to assess the taxes. Since the market value of nearly 99% of the houses in Edmonton have risen in the last 10 years one would have thought that is why the taxes have risen. What was I thinking...............

    ^Jag, you have a point. It would be interesting to get stats on how the city has grown in the last 10-20 years, in size and population.
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    Or we could follow Diotte's model of not spending anything on infrastructure that was needed decades ago and let everyone fend for themselves in a world that falls apart.
    $2.00 $2.25 $2.50 $2.75 $2.85 $3.00 $3.20 $3.25

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    Well, Edmonton *is* a city, and the city needed to pay to make our LRT go somewhere, plus they need to catch up on repairing all these crumbling roads, sidewalks, sewers, storm drains, and bridges somehow.

    Former councils cheaped out too much too often, and we have to pay for it now.

    Great math, too - 700% of practically nothing is only 7 times that.

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    Quote Originally Posted by Gemini View Post
    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by Gemini View Post
    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes.
    Not true. Higher assessments do not mean higher taxes. Only if your assessment is growing faster than the rest of the houses in the city.
    Oh, here am I thinking the city uses the market value assessment of a home to assess the taxes. Since the market value of nearly 99% of the houses in Edmonton have risen in the last 10 years one would have thought that is why the taxes have risen. What was I thinking...............
    That line is incorrect. I assume you're being facetious, but its hard to tell with the internet. The increase in taxes has everything to do with the city's budget and almost nothing to do with the increase in your home's assessment (unless you did substantial renovations).

    "Municipal property taxes are affected by two factors:

    The City budget for all services and programs for the year.
    Edmonton's total market value assessment.

    These two factors determine the tax rate, which fairly distributes the costs of services among all Edmonton properties:

    City budget ÷ total city property assessment = municipal tax rate

    If the budget increases, property taxes will likely increase. For 2013, the overall increase for residential property taxes (including apartments) is 3.3%.
    The tax rate and your property’s market value assessment are then used to calculate municipal property taxes:

    Your property’s market value assessment X tax rate = municipal property taxes

    If your property’s assessed value changed more or less than the average change in Edmonton, your tax increase will be more or less than the average tax increase."

    http://www.edmonton.ca/for_residents...tax-facts.aspx

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    Quote Originally Posted by jstock View Post
    Or we could follow Diotte's model of not spending anything on infrastructure that was needed decades ago and let everyone fend for themselves in a world that falls apart.
    Odd comment?.. Diotte's priority, as I read it, is to spend on essential infrastructure rather than p!ssing it away on vanity projects and shiny baubles.

  10. #10

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    Out of those past 10 years, Diotte sat in council and did nothing about it for 3 years. If elected, he'll continue to do nothing. Yay for doing nothing!

    Jasmine Franklin is a paid promoter of Kerry Diotte (Communications Coordinator, Coun. Kerry Diotte)

  11. #11

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    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by Gemini View Post
    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by Gemini View Post
    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes.
    Not true. Higher assessments do not mean higher taxes. Only if your assessment is growing faster than the rest of the houses in the city.
    Oh, here am I thinking the city uses the market value assessment of a home to assess the taxes. Since the market value of nearly 99% of the houses in Edmonton have risen in the last 10 years one would have thought that is why the taxes have risen. What was I thinking...............
    That line is incorrect. I assume you're being facetious, but its hard to tell with the internet. The increase in taxes has everything to do with the city's budget and almost nothing to do with the increase in your home's assessment (unless you did substantial renovations).

    "Municipal property taxes are affected by two factors:

    The City budget for all services and programs for the year.
    Edmonton's total market value assessment.

    These two factors determine the tax rate, which fairly distributes the costs of services among all Edmonton properties:

    City budget ÷ total city property assessment = municipal tax rate

    If the budget increases, property taxes will likely increase. For 2013, the overall increase for residential property taxes (including apartments) is 3.3%.
    The tax rate and your property’s market value assessment are then used to calculate municipal property taxes:

    Your property’s market value assessment X tax rate = municipal property taxes

    If your property’s assessed value changed more or less than the average change in Edmonton, your tax increase will be more or less than the average tax increase."

    http://www.edmonton.ca/for_residents...tax-facts.aspx
    Well you have just basically said what I said only you added a few more characters to get to the point and cloud the waters.
    Your property price usually rises (or falls) on supply and demand and what the market can bear. The 'market' is the buying consumer. If there is a supply shortage and a big demand property prices rise. Therefore the market value for your house goes up. The city assesses your house at the market value. The market value of 99% of the houses in Edmonton has gone up in the last 10 years. (surely Diotte knows this).Yes, there will be variables in houses that are even side by side. You might have built a garage, have a fire place, fixed your basement and the only improvement you neighbor has made is mirrors on the bedroom ceiling. Some houses are going to be worth more than others because of this. Still does not get away from the fact the city calculates your taxes on the fair market value of your house. Market value for your house x municipal mill rate = your tax bill. Remember, the mill rate can also change. (If I was being sarcastic I would have put this after my post.
    Last edited by Gemini; 12-06-2013 at 09:34 PM.
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    Quote Originally Posted by expat View Post
    Quote Originally Posted by jstock View Post
    Or we could follow Diotte's model of not spending anything on infrastructure that was needed decades ago and let everyone fend for themselves in a world that falls apart.
    Odd comment?.. Diotte's priority, as I read it, is to spend on essential infrastructure rather than p!ssing it away on vanity projects and shiny baubles.
    1% of an infrastructure project's budget goes toward public art. Peanuts.
    $2.00 $2.25 $2.50 $2.75 $2.85 $3.00 $3.20 $3.25

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    Quote Originally Posted by JasmineFranklin View Post
    Mayoral candidate and current city councillour, Kerry Diotte, wants to know how much your property taxes has increased over the years.

    Did you know that Edmonton's debt has increased by 700% in over a decade?

    And, in the last 10 years alone (2004-2013), Edmonton property taxes have gone up an average of 50%.

    Read Kerry's latest post on this and feel free to share your property tax stories!

    Visit www.kerrydiotte.com

    Sincerely,

    Jasmine Franklin
    Well, since moving to Edmonton three years ago, I've spent just shy of $4K on vehicle repairs as a direct result of our roads (i.e. cracked oil pan, new tires, alignment tie-rods, etc.) so I'd gladly pay higher municipal taxes if it meant I didn't have to do that. You can take that back to Kerry.

  14. #14

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    Market value is very loosely correlated with replacement cost so in that sense one can expect taxes to rise as construction, maintenance, land and other costs rise. If its happening to property owners then its probably happening to the city too, to some extent. The doubling and tripling of house prices in the last decade though did not directly cause taxes to rise via the tax formula.


    http://www.edmonton.ca/for_residents...tax-facts.aspx
    "Setting taxes
    Each year the City determines the budget required to pay for the services and programs for the year. As part of this process, it determines the amount of the total budget that the City must bring in from property taxes. Then it uses assessed property values to determine each property owner’s share of the total property tax revenue required.

    Overall market value changes do not affect the total revenue the City collects from the property tax. The City only collects enough taxes to realize the revenue required in the budget.

    The tax rate
    Municipal property taxes are affected by two factors:

    The City budget for all services and programs for the year.
    Edmonton's total market value assessment.
    These two factors determine the tax rate, which fairly distributes the costs of services among all Edmonton properties:

    City budget ÷ total city property assessment = municipal tax rate ..."
    Last edited by KC; 12-06-2013 at 10:49 PM. Reason: Add city website info.

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    Quote Originally Posted by expat View Post
    Quote Originally Posted by jstock View Post
    Or we could follow Diotte's model of not spending anything on infrastructure that was needed decades ago and let everyone fend for themselves in a world that falls apart.
    Odd comment?.. Diotte's priority, as I read it, is to spend on essential infrastructure rather than p!ssing it away on vanity projects and shiny baubles.
    I doubt relatively little over the past ten years went towards baubles. Most of it would have gone for essential infrastructure, either catchup on deferred maintenance and replacement or new infrastructure related to the city's growth.

    Generally, voters demand restraint and cost control when recessionary times hit and then loosen up like mad when good times return. As a result they miss opportunities to finance cheaply or spend when wages are depressed, then when the economy improves they compound their error by pilling on costs as wage and material costs rise. A philosophy comparable to the investment world's buy high, sell low habit if you will. Crazy as it is, if hard times return, watch the public then demand restraint in a big way.

    So here we are again much like the very early 1980s. Remember the bumper sticker: "Please God, let there be another oil boom and this time I promise not to p _ _ _ it all away."

    Some quick, random thoughts... the EdTel fund, if it's still around, has likely returned once in a lifetime or two, or three, returns on its bond allocation. Going forward, prospective returns may not funnel much into City coffers if that's what has been done to date. A shift to equities? Double jeopardy. City debt? - rising yields, if they ever come, will raise the risk on rolling debt. Good thing they've borrowed cheap in the past few years. Pray for defeasance opportunities on the pre'08 debt, like those missed by the City in the 90s. Oil prices bailing us out? Maybe if demand rises faster than all the new supply and effect of conversion to natural gas and lack of local pipeline/refining capacity. Infrastructure requiring less R&M? Hmm, the city expanded like mad in the 70s so it's now 30-40 yrs old. Labour cost control? ??? Selling assets? Privatizing?
    Last edited by KC; 12-06-2013 at 11:26 PM.

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    When expat mentions "vanity projects and shiny baubles" how is it not obvious that he is including the arena funding in that?
    "if god exists and he allowed that to happen, then its better that he doesn't exist"

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    A bit more.. Coincidentally, some relevant thoughts in a very recent Satyajit Das article I'd just read today:
    The End of Growth?
    ...
    "Debt allows society to borrow from the future. It accelerates consumption, as debt is used to purchase something today against the promise of paying back the borrowing in the future. Spending that would have taken place normally over a period of years is squeezed into a relatively short period because of the availability of cheap money. Business overinvests, misreading demand and assuming that the exaggerated growth will continue indefinitely, increasing real asset prices and building significant over-capacity.

    Debt-driven consumption became the tool of generating economic growth. But this process requires ever increasing levels of debt. By 2008, $4 to $5 of debt was required to create $1 of growth. China now needs $6 to $8 of credit to generate $1 of growth, an increase from around $1 to $2 of credit for every $1 of growth a decade ago.

    The ability to maintain high rates of economic growth through additional debt is now questionable. The need for governments as well as the private sector to reduce debt simultaneously reduces demand and locks the world into a negative spiral of ever lower growth."...

    http://www.prudentbear.com/2013/06/t...l#.UblYScu9KK0

    This Bowne article is also worth a read. (Browne's a bit of a fanatic in my mind though)

    Crushing the Middle Class
    June 11, 2013
    By John Browne
    ..,"Many government policy decisions lead Americans to take on debt, such as ... In exchange for the loss of their savings, the middle class can't point to any significant gains. Wage rates in America and Europe have been largely flat for several years. ...

    Meanwhile the middle classes are reeling from price increases in many of the areas that are most vital to their lives, such as food and energy. Statistics show that ... In short, the middle class is being squeezed between lower net earnings and higher living costs. It's no wonder that many have turned to debt to get by."

    http://www.prudentbear.com/2013/06/c...l#.UblZfsu9KK0
    Last edited by KC; 12-06-2013 at 11:38 PM.

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    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by Gemini View Post
    Well, I think it could be safe to say that house prices have gone up by 50% from the 2003 levels. Higher assessment = higher taxes.
    Not true. Higher assessments do not mean higher taxes. Only if your assessment is growing faster than the rest of the houses in the city.

    What a well thought out and eloquent post by Mr Diotte. He clearly explains why the debt has increased and what projects/programs he would cut to reduce the debt level and our tax burden.

    Wait, you mean he didn't? Just mindless 'i will lower taxes' tripe? oh.
    +1

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    I see Diotte is going about his process of information percolating for his 'platform'...
    Don't feed the trolls!

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    Whats this about a Diotte platform?

  21. #21

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    Quote Originally Posted by JasmineFranklin View Post
    Mayoral candidate and current city councillour, Kerry Diotte, wants to know how much your property taxes has increased over the years.
    You would think that Kerry Diotte as councillor would have access to this information. Perhaps he would spend some time doing his actual job?

    Aslo, Jasmine, as you are the communications coordinator for Kerry, can you tell me where I could find a platform for Kerry Diotte? Or perhaps you could have Kerry answer how he proposes to lower taxes while increasing services provided??



    you can fool some of the people all the time, but you can't fool all the people all the time.

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    Quote Originally Posted by Medwards View Post
    Whats this about a Diotte platform?
    Haha, that's why I put it in quotes. By the end of coming up with ideas on the fly during the campaign he'll have something that looks like a platform. As patchwork and disorganized it likely will be.
    Don't feed the trolls!

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    Quote Originally Posted by Medwards View Post
    Quote Originally Posted by JasmineFranklin View Post
    Mayoral candidate and current city councillour, Kerry Diotte, wants to know how much your property taxes has increased over the years.
    You would think that Kerry Diotte as councillor would have access to this information. Perhaps he would spend some time doing his actual job?
    haha. Jasmine is doing work here. Jasmine - you should run instead!

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    It's odd that Diotte used 2001 as the starting year for his debt calculation, rather than 2003 when the City of Edmonton's long term debt bottomed out at $367 million. See p. 30 here:http://www.edmonton.ca/city_governme...l_report03.pdf

    CPI inflation for Edmonton between 2004 and 2012 increased by 16.92%, so if the 50% claim for the increase in average property taxes is correct, property taxes increased at about 3 times the rate of inflation, not 2 times. Link: http://cupe.ca/cpicalculator.php

  25. #25

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    You would think that Kerry Diotte as councillor would have access to this information. Perhaps he would spend some time doing his actual job?

    Aslo, Jasmine, as you are the communications coordinator for Kerry, can you tell me where I could find a platform for Kerry Diotte? Or perhaps you could have Kerry answer how he proposes to lower taxes while increasing services provided??
    First paragraph: I detest Diotte but questions like these are common. Ask administration and you are sure to get the right information, plus it then gets distributed to all councillors. Nothing wrong with this.

    Last paragraph: He cannot do that. He's positioning himself, plain and simple. He's been doing that for the last three years. The car is rusted out and the engine is bad, but he keeps applying new paint and turns up the radio so no one can hear the engine sounding like it's on its deathbed.

  26. #26

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    Quote Originally Posted by Replacement View Post
    When expat mentions "vanity projects and shiny baubles" how is it not obvious that he is including the arena funding in that?
    Some will argue that the benefits of building a new arena will reap far more rewards for the city in the way of new downtown growth which = more buildings and a bigger tax base. Sometimes vanity projects and shiny baubles pay off.
    Gone............................and very quickly forgotten may I add.

  27. #27

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    Rollin Stanley, General Manager of Planning for the City of Calgary mentioned at the Downtown Summit yesterday that economically speaking if you spend $1 in the suburbs, the value of that dollar had it been spent downtown would have been $3. So as long as we continue to sprawl our infrastructure outwards, we can expect higher taxes.
    www.decl.org

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    ^ What a deliciously myopic little anecdote.

    What about the maojority of the poeple who niether live downtown or in the far flung new 'burbs ?

    Lord.. if I wanted to hear constant whining from an entitled arrogant know-it-all I'd subscribe to your twitter feed
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    ^ I agree. I'm sitting here looking at downtown and sitting beside one of the major centres of employment (of the high tech, economic diversity kind). The area I'm in is dense and prosperous and has floods of people *walking* all day long. But sadly I'm on the wrong side of the river for our Rollin Stanley. Tax dollars are wasted here, yessiree.

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    I imagine that the $1 spent in the suburbs might be worth $1.50 around an LRT station. Still, I think this election will give voters a chance to say whether Edmonton is ready to grow up as a city.
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

  31. #31

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    Lighten up folks. I'm certain GS (or Mr. Stanley for that matter) are not referring to the technical boundaries adopted by the DECL/EFCL when referring to capital "D" downtown. By extension when referencing the "Suburbs" I don't think they mean the central, first-ring suburban expansion. Perhaps I'm mistaken.

  32. #32

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    ^Thanks for expanding on my thoughts. I didn't mean to suggest just the technical boundaries of downtown. Obviously what I said is a touchy subject and challenges the status quo.

    I'm not suggesting core vs. suburbs. I'm suggesting the economic reality is continued unfettered suburban and exurban expansion is unsustainable, based on the research I heard at the summit. It's certainly not the first time we've heard this argument, going back to Councillor Iveson's first inquiry about economic costs of suburban development.
    www.decl.org

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    Quote Originally Posted by Gemini View Post
    Quote Originally Posted by Replacement View Post
    When expat mentions "vanity projects and shiny baubles" how is it not obvious that he is including the arena funding in that?
    Some will argue that the benefits of building a new arena will reap far more rewards for the city in the way of new downtown growth which = more buildings and a bigger tax base. Sometimes vanity projects and shiny baubles pay off.

    Let's wait and see what materializes before we all start patting ourselves on the back shall we.

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    Sitting at my computer this morning getting ready to pay my 2013 property taxes, here is my property tax story in reply to Jasmine's invitation above. I've lived in the same house for the past 32 years and have kept my taxation notices for all those years.

    In the past 10 years (2003 to 2013), the municipal portion of my property taxes has gone up 80.1%. The education portion of my property taxes has gone up 25.6% in the same 10-year time frame.

  35. #35

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    Had Edmonton city council not put through 4-5 years of no tax increases than that 80% could have been far less.

    As Kerry himself mentioned the effect is compounded.

    Part of the reason we had little to no civic debt was because we didn't BUILD/FIX anything. Would you trade the civic dept in exchange for the removal of things like the 23rd city over pass. Overpasses on the AHD, LRT Expansion, the updating and realigning of Scona Road?... Not to mention MUCH NEEDED Rec Centers or Rec Center Expansions. Park refurbishment and Investment into the Airport lands...

    I am sure most of Kerry's cuts would be funding of a social nature. Just like Rob Ford who rages over the fact that festivals, events and social programs get city grants... to a paulty tune of 17-20 mill if i remember the numbers correctly.

    A good healthy city needs to focus on more than just roads.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  36. #36

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    Edmonton Does Not Have a Debt Problem

    http://blog.mastermaq.ca/2013/09/11/...-debt-problem/

    "Here’s what current Ward 6 candidate Scott McKeen wrote in the Edmonton Journal back in 2003:

    'And of all the cities in Canada, Edmonton stands out for being a skinflint among cheapskates. Our per capita debt is about one-fifth of Calgary’s and one-tenth of Vancouver’s.

    As you’re maybe already aware, Edmonton’s hell-bent determination these past two decades to eliminate civic debt has created its own set of problems: neglected and decaying roads; inferior civic services; dated, second-class public facilities.

    But we so loved the idea of getting out of debt that we ignored our mounting repair bills. We also ignored the fact that some other cities — Calgary and Vancouver, for example — were busy borrowing money to pave the way for growth.' "
    www.decl.org

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    Apple iPhone App for Kerry Diotte: iDiotte.
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  38. #38

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    Scott McKeen had 'er. Everyone was so anxious to be debt free that they forgot that things age, population grows, and the city gets bigger demanding more services and more modern services. Oh how the circle gets drawn back to its first marker. Neglect brings heavy backs for future generations. Maybe Edmontonians should think more about the city as a WHOLE rather than points A to B on their way to and from work. The "I don't use it so I shouldn't pay for it" attitude is fading, but it irks me all the time whenever I hear it.
    Live and love... your neighbourhood.

  39. #39

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    It's the same as running a house. If you have lived in the same house for the last 30-50 years and have not done any upkeep it will be looking pretty shabby by now. You will more than likely be walking on shag carpets and bathing in an avocado or harvest gold bath. This might be all fine and dandy at home but I would not want to feel a flash to the past every time I drive into the city and would not want to be driving on roads that have had no construction done on them for any amount of time. Like getting your house modernized you will more than likely have to take out a loan to do that.
    Gone............................and very quickly forgotten may I add.

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    Here is the entire article from 2003 that Scott McKeen write, with a new preamble:

    http://www.scottmckeen.ca/edmonton_s...res_smart_debt
    www.decl.org

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    the great thing is... some people here have their heads on straight. Our debt is fine. It's needed because of previous collections of council neglected (until a few weeks before elections that is) to take care of any repairs, upgrades, etc.

  43. #43

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    It's a larger Alberta problem. This idea that all debt is bad and this declaration of debt free status when really the debt is just hiding in other forms that done show up as line items on a budget
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

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    Quote Originally Posted by edmonton daily photo View Post
    It's a larger Alberta problem. This idea that all debt is bad and this declaration of debt free status when really the debt is just hiding in other forms that done show up as line items on a budget

    for a government all debt is bad...

    unless for every doller spent you can prove that you made that back plus some with increased economy.

    unlike individals who can borrow, spend, work, then retire our governments can never retire. they must go on into perpetuity and thus debt forced on the next generation of taxpayers is bad.

    there is a reason that to a regular citizen who buys a house 2X the cost of the house is mortgage payments.

    governments cant think so short term.. we have to plan for the future. its better to build smaller now. then build big now and have our next generation pay 3X its value.

    we cant waste taxpayer money on debt repayments.. look at what happened to Greece, Italy, Canada, USA, California, Spain, Ontario, Detroit.... ALL examples of governments who borrowed HUGE amounts of money.. and have to spend over 1/5 of the taxes they bring in EVERY YEAR to service them... Corporations can Take those risks... Citizens can take those risks.. Governments Shouldn't.

  45. #45

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    Most lucid comments you ever made Himser.
    Advocating a better Edmonton through effective, efficient and economical transit.

  46. #46

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    Some of you are obviously too young to remember, and others have obviously forgotten, the thirty years or so of debt-payoff.

    They coincided quite perfectly with the city's stagnation. Did the debt payoff contribute to the stagnation? I believe it did.

  47. #47
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    The last ten years could have seen a whole lot less debt added, but in turn we wouldn't have seen LRT proceed past Health Sciences station and definitely no NLRT. Projects like the 23 ave interchange wouldn't have happened as well as many other road improvements. No debt would be nice on the financial side but as for our city, we would then still be stuck in the 80's and things would not be any better here for us.
    LRT is our future, time to push forward.

  48. #48

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    I am sorry large capital expenditures should be paid for over the course of their life
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

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    Quote Originally Posted by Edmonton PRT View Post
    Most lucid comments you ever made Himser.
    [end sabbatical]

    being "lucid" is not the same as being correct. Himser may be lucid but he is wrong, as are you if you agree with him. as is kerry with his inaccurate comparisons to detroit and his assumption that no tax increases would be either attainable or good for the city he wants to mayor of if it was artificially imposed.

    [resume sabbatical]
    "If you did not want much, there was plenty." Harper Lee

  50. #50

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    Quote Originally Posted by kcantor View Post
    Quote Originally Posted by Edmonton PRT View Post
    Most lucid comments you ever made Himser.
    [end sabbatical]

    being "lucid" is not the same as being correct. Himser may be lucid but he is wrong, as are you if you agree with him. as is kerry with his inaccurate comparisons to detroit and his assumption that no tax increases would be either attainable or good for the city he wants to mayor of if it was artificially imposed.

    [resume sabbatical]

    lol Why would I be wrong? EDP made a valid point that the projects should be paid over the course of their lifetimes..

    My issue is that too oftain we are still paying for a project that is past its useful lifetime and still costs money every year. (Rexall Place, Commonwelth stadium, this new stadium in 20 years) as well as the debt repayments with interest themselves.

    In the land development world the ONLY time you start making money is After you paid the bank back for your debt.. Debt interest is basically a built in inefficacy to the system.. yes it may be needed if we are going to do what EDP said... but its still an inefficacy.

    Now for taxes. increase them? why does St Albert and Sherwood park have nice stuff and Edmonton doesent? St Albert their taxes are 200$ a year/ household higher. next time you drive through see what difference that makes compared to Edmonton. Sherwood Park.. They took the negative effects of having the refineries and turned it into a positive, now its much nicer then the COE. Kerry Diotte to me is kinda of an *****.. you cannot have low taxes and nice things. you need to spend the money you get wisely, but the Coe taxes are quite a bit lower then its suburban neighbors. why can residential suburbs like Spruce Grove thrive.. with very little industry.. if residential development is the bane of municipalities like many people here indicate?

  51. #51

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    We are not still paying for rexall or commonwealth... The rest of your post is equally out to lunch.

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    Himser: St. Albert's average tax rate is almost $1300 higher than Edmonton's not $200. Sparse suburban
    communities cost a lot to build and maintain. It's going to get even worse for them as they need to start refurbing existing infrastructure.

    It's also difficult to compare young, small municipalities with large older cities. Our costs and needs are very different. Calgary is a better comparison and they have more debt than us but because they didn't spend 10 years avoiding debt they've been able to keep up maintaining their infrastructure and facilities.

    "For every complex problem there is an answer that is clear, simple, and wrong"

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    Quote Originally Posted by Himser View Post
    Sherwood Park.. They took the negative effects of having the refineries and turned it into a positive, now its much nicer then the COE.?
    Ya goddamn those refineries and their tax revenues.
    not sure if this is joke post or not.
    be offended! figure out why later...

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    Quote Originally Posted by AShetsen View Post
    Some of you are obviously too young to remember, and others have obviously forgotten, the thirty years or so of debt-payoff.

    They coincided quite perfectly with the city's stagnation. Did the debt payoff contribute to the stagnation? I believe it did.
    It was 20 years of debt pay-off, not 30, but regardless...

    The stagnation as you called it, was caused by an interest rate bubble in the early 1980s, the collapse of world oil prices in the mid-1980s (from $30 to $10 barrel in a few short months), the subsequent cancellation of all major planned energy projects, triggering a collapse in Alberta real estate prices and the failure of every single Alberta-based financial institution, causing a ballooning provincial deficit and debt, and leading to devastating budget cuts with the advent of the Klein "revolution" in the early 1990s.

    With the uncertainties created by these events (none of which were within the ability of the City to control), the decision to pay down Edmonton's debt accumulated during the boom times of the 1970s was prudent and necessary.

    The City of Edmonton has benefited from strong population, employment and earnings growth in most of the 2000s just as it did in the 1970s. Combined with the longest sustained period of low interest rates since the 1950s, has made it attractive to borrow which the City is certainly doing.

    Could something like the impact of global events in the 1980s and 90s happen to Edmonton's economy again? Who knows, but it is foolhardy to think the future will always be similar to the recent past.

  55. #55

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    Quote Originally Posted by AShetsen View Post
    Some of you are obviously too young to remember, and others have obviously forgotten, the thirty years or so of debt-payoff.

    They coincided quite perfectly with the city's stagnation. Did the debt payoff contribute to the stagnation? I believe it did.
    You can believe this if you want. I see no causal relationship in what you are suggesting.

    The debt payoff would represent a small amount of what a healthy economy would contribute.

    Occam's razor deduction being the economy resulted in the stagnation. Not debt repayment.

    Technically speaking your wording "contributed" is going to be correct in some sense. But did it impact in any meaningful way?
    "if god exists and he allowed that to happen, then its better that he doesn't exist"

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    "For every complex problem there is an answer that is clear, simple, and wrong"

  57. #57

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    Quote Originally Posted by GreenSPACE View Post
    Edmonton Does Not Have a Debt Problem

    http://blog.mastermaq.ca/2013/09/11/...-debt-problem/

    "Here’s what current Ward 6 candidate Scott McKeen wrote in the Edmonton Journal back in 2003:

    'And of all the cities in Canada, Edmonton stands out for being a skinflint among cheapskates. Our per capita debt is about one-fifth of Calgary’s and one-tenth of Vancouver’s.

    As you’re maybe already aware, Edmonton’s hell-bent determination these past two decades to eliminate civic debt has created its own set of problems: neglected and decaying roads; inferior civic services; dated, second-class public facilities.

    But we so loved the idea of getting out of debt that we ignored our mounting repair bills. We also ignored the fact that some other cities — Calgary and Vancouver, for example — were busy borrowing money to pave the way for growth.' "
    I cut this very article out of the paper back then and had it pinned to my office wall for years!
    Last edited by KC; 18-09-2013 at 02:07 AM.

  58. #58

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    Deleted duplicate post
    Last edited by KC; 18-09-2013 at 02:07 AM.

  59. #59

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    Quote Originally Posted by Paul Turnbull View Post
    Yes. Thanks for posting it!

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    Yeah, well, my personal debt increased around 7000% when I went to university. That in itself isn't a good reason not to go to school. We can argue over how the money is spent and where the priorities ought to lie, but just flinging numbers around is meaningless. If it's being spent wisely and for important projects and necessary investments, then it's hardly a hill to die on.

  61. #61
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    For anyone interested, this helps put debt in perspective: http://globalnews.ca/news/832372/cit...n-the-numbers/

  62. #62

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    Quote Originally Posted by Medwards View Post
    Out of those past 10 years, Diotte sat in council and did nothing about it for 3 years. If elected, he'll continue to do nothing. Yay for doing nothing!

    Jasmine Franklin is a paid promoter of Kerry Diotte (Communications Coordinator, Coun. Kerry Diotte)

    To JF: Past narcissistic Mayors ran the infrastructure into the ground, because they didn't know how to run a City, but thought they knew everything! So we had too take on a debt! We spent some extra money on making our new buildings nicer looking to show some pride in our City. Now you want us to feel guilty for looking good.

    "Having no mortgage on a clapboard outhouse isn't something to be proud of"......heard that one before Kerry????

  63. #63
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    ^exactly. That debt, while higher, is simply playing catchup for the most part and so the stats and timeframe present it in a way that seems/feels alarming when in fact it really is not.
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

  64. #64

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    Quote Originally Posted by KC View Post
    Quote Originally Posted by GreenSPACE View Post
    Edmonton Does Not Have a Debt Problem

    http://blog.mastermaq.ca/2013/09/11/...-debt-problem/

    "Here’s what current Ward 6 candidate Scott McKeen wrote in the Edmonton Journal back in 2003:

    'And of all the cities in Canada, Edmonton stands out for being a skinflint among cheapskates. Our per capita debt is about one-fifth of Calgary’s and one-tenth of Vancouver’s.

    As you’re maybe already aware, Edmonton’s hell-bent determination these past two decades to eliminate civic debt has created its own set of problems: neglected and decaying roads; inferior civic services; dated, second-class public facilities.

    But we so loved the idea of getting out of debt that we ignored our mounting repair bills. We also ignored the fact that some other cities — Calgary and Vancouver, for example — were busy borrowing money to pave the way for growth.' "
    I cut this very article out of the paper back then and had it pinned to my office wall for years!
    +1
    www.decl.org

  65. #65

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    City given strong marks for credit rating

    "International credit rating agency Standard & Poor’s has given its second-highest score, a AA+ rating, to the City of Edmonton for the third year in a row. The rating is just one notch below the highest possible mark and indicates a stable outlook for the City of Edmonton"

    "The independent rating report provides several reasons for its high confidence rating for Edmonton, including:

    • Strong liquidity position
    • A healthy economy
    • A debt burden well within provincial limits and the more stringent city policy"


    https://www.mailoutinteractive.com/I...aspx?id=491678
    www.decl.org

  66. #66

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    I bought a new car yesterday. My debt went up like 8 billion %. Does that mean I'm in some death spiral with the costs out of control? Nope. I can easily afford it. I'm simply financing it.

    Guess what? Cities do the same thing. We were simply not using that capacity before.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  67. #67

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    Quote Originally Posted by Chmilz View Post
    I bought a new car yesterday. My debt went up like 8 billion %. Does that mean I'm in some death spiral with the costs out of control? Nope. I can easily afford it. I'm simply financing it.

    Guess what? Cities do the same thing. We were simply not using that capacity before.
    Actually we were using that capacity in the past. Then came the 1980s and 1990s and demands to keep taxes low and within our new lower means.

    The reality is that adopting a platform now, in a strong economy, to watch the dollars and risk exposure is a losing platform. Like bankers say: There is no such thing as a bad loan, just good loans that turn bad. Right now the public could care less about the City's debt levels and any exposure to higher future interest rates when that debt may have to roll.

    To speak to your analogy, people that borrow for consumer goods like cars, vacations, etc. may not be in a death spiral but they likely aren't increasing their potential for a higher long term standard of living either. Unless that debt increases earnings capacity, it's likely a drain on future well being. The city can use debt wisely to earn a return on it, but it may be questionable that it is doing so effectively right now. ( I bet the same discussions took place in the 1979s by the way.)

    For instance, apparently the economic return on the downtown arena was surprisingly rather marginal at best and so borrowing for that return is a risky move. Such debt that doesn't increase our sales (ie exports of goods and services and imports of wealth) is more akin to lifestyle debt. Hopefully it will attract more businesses (wealth) to Edmonton or pay off hugely in other unexpected ways, maybe increasing the velocity of money and job retention, in future recessions.
    Last edited by KC; 01-10-2013 at 12:59 PM.

  68. #68

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    Quote Originally Posted by GreenSPACE View Post
    City given strong marks for credit rating

    "International credit rating agency Standard & Poor’s has given its second-highest score, a AA+ rating, to the City of Edmonton for the third year in a row. The rating is just one notch below the highest possible mark and indicates a stable outlook for the City of Edmonton"

    "The independent rating report provides several reasons for its high confidence rating for Edmonton, including:

    • Strong liquidity position
    • A healthy economy
    • A debt burden well within provincial limits and the more stringent city policy"


    https://www.mailoutinteractive.com/I...aspx?id=491678
    Why not triple A and the lowest possible borrowing rate? No matter. The issue will be, what will our future cost to borrow be when we need to refinance? We're likely benefitting today from past conservative treatment of debt.

  69. #69
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    The closest consumer analogy to government debt is "Are you borrowing for a car or vacation or other trinkets?" Then you better be able to afford it. However, if you are borrowing for a house or an education, then that is an actual investment that increases net worth.

    Eve

  70. #70

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    Quote Originally Posted by KC View Post
    We're likely benefitting today from past conservative treatment of debt.
    Not sure about that. This high rating we've had for the past 3 years during a time of borrowing for infrastructure.
    www.decl.org

  71. #71
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    Quote Originally Posted by EveB View Post
    The closest consumer analogy to government debt is "Are you borrowing for a car or vacation or other trinkets?" Then you better be able to afford it. However, if you are borrowing for a house or an education, then that is an actual investment that increases net worth.

    Eve
    It's the difference between borrowing for your operating budget (food, utilities, etc) and borrowing for capital projects (buying a house). Currently I believe all of Edmonton's debt is capital debt were all the financing is set and very little of that financing comes property taxes.

    "For every complex problem there is an answer that is clear, simple, and wrong"

  72. #72
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    Quote Originally Posted by GreenSPACE View Post
    Quote Originally Posted by KC View Post
    We're likely benefitting today from past conservative treatment of debt.
    Not sure about that. This high rating we've had for the past 3 years during a time of borrowing for infrastructure.
    I agree, also if our past conservatism has led to a better rating then we should have a higher rating that cities like Calgary that have been less conservative rather than the same rating.

    "For every complex problem there is an answer that is clear, simple, and wrong"

  73. #73
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    Quote Originally Posted by Paul Turnbull View Post
    Quote Originally Posted by EveB View Post
    The closest consumer analogy to government debt is "Are you borrowing for a car or vacation or other trinkets?" Then you better be able to afford it. However, if you are borrowing for a house or an education, then that is an actual investment that increases net worth.
    It's the difference between borrowing for your operating budget (food, utilities, etc) and borrowing for capital projects (buying a house). Currently I believe all of Edmonton's debt is capital debt were all the financing is set and very little of that financing comes property taxes.
    I forgot about the operating expenses because it would never occur to me to borrow for those.

    It's what makes me a fiscal conservative that I don't think the city should borrow for ephemeral trinkets unless it has money in its budget.

    Eve

  74. #74
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    The trick there is what you define as a trinket.

    "For every complex problem there is an answer that is clear, simple, and wrong"

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    Quote Originally Posted by Paul Turnbull View Post
    Quote Originally Posted by GreenSPACE View Post
    Quote Originally Posted by KC View Post
    We're likely benefitting today from past conservative treatment of debt.
    Not sure about that. This high rating we've had for the past 3 years during a time of borrowing for infrastructure.
    I agree, also if our past conservatism has led to a better rating then we should have a higher rating that cities like Calgary that have been less conservative rather than the same rating.
    Bear in mind Standard & Poor's is not rating either Calgary or Edmonton's credit worthiness on a stand alone basis, as almost all the borrowing is from the province through the Alberta Capital Finance Authority. What is being rated is the ability of each city to service the debt that has been incurred.

  76. #76
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    Quote Originally Posted by GreenSPACE View Post
    City given strong marks for credit rating

    "International credit rating agency Standard & Poor’s has given its second-highest score, a AA+ rating, to the City of Edmonton for the third year in a row. The rating is just one notch below the highest possible mark and indicates a stable outlook for the City of Edmonton"

    "The independent rating report provides several reasons for its high confidence rating for Edmonton, including:

    • Strong liquidity position
    • A healthy economy
    • A debt burden well within provincial limits and the more stringent city policy"


    https://www.mailoutinteractive.com/I...aspx?id=491678

    Some critics have pointed out that the company and other rating agencies were part of the cause of the global financial crisis of 2008–2009, for example when Moody's downgraded Freddie Mac or, to quote Time, when "both agencies granted AAA rating to Collateralized Debt Obligations (CDOs) that were chock-full-of crap mortgages, thereby helping to precipitate the 2008 financial collapse". Ezra Klein wrote for The Washington Post that "Standard Poor's didn't just miss the bubble. They helped cause it"
    Yes, what could possibly go wrong?...

  77. #77

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    Quote Originally Posted by KC View Post
    Quote Originally Posted by GreenSPACE View Post
    Edmonton Does Not Have a Debt Problem

    http://blog.mastermaq.ca/2013/09/11/...-debt-problem/

    "Here’s what current Ward 6 candidate Scott McKeen wrote in the Edmonton Journal back in 2003:

    'And of all the cities in Canada, Edmonton stands out for being a skinflint among cheapskates. Our per capita debt is about one-fifth of Calgary’s and one-tenth of Vancouver’s.

    As you’re maybe already aware, Edmonton’s hell-bent determination these past two decades to eliminate civic debt has created its own set of problems: neglected and decaying roads; inferior civic services; dated, second-class public facilities.

    But we so loved the idea of getting out of debt that we ignored our mounting repair bills. We also ignored the fact that some other cities — Calgary and Vancouver, for example — were busy borrowing money to pave the way for growth.' "
    I cut this very article out of the paper back then and had it pinned to my office wall for years!

    We are now approaching a point where shifting away from that conservatism towards debt 'may' be a wise move. We sure can not count on the lady's high energy prices going forward but we can count on a stabilization of the economy once all the boom time effects are flushed out of the economy. So I'd say now's the time to seriously and strategically think about taking advantage of low borrowing costs and the eventual recessionary opportunities to build out and replace, repair and upgrade infrastructure more cheaply and cost effectively.

    From 2013:

    For about a decade from the early 1990s until 2002, the City of Edmonton avoided the use of debt. Unfortunately, this policy meant that much of the infrastructure in the City was not maintained to the level it should have been and demands for new infrastructure to support a booming population were not being fully met.

    Although the City avoided debt, it created “infrastructure debt” in which the City fell behind in providing new infrastructure like LRT expansion and recreation facilities for a growing community.

    Since 2002, debt is once again a key financing tool for the City to build high priority, major projects.

    Fiscal responsibility

    When debt is used to finance capital projects, it must be affordable and sustainable. Just like a household should only take on debt that is within the means of that household to repay, a City should only take on debt for major infrastructure projects when the repayment is manageable.

    The key to using debt financing is to:
     establish sustainable limits,
     ensure the debt is used only for the right infrastructure projects,
     ensure the debt is structured with sources of repayment in place.

    The Alberta Municipal Government Act limits total municipal debt to two times municipal revenues, with debt servicing not to exceed 35% of revenue. The City of Edmonton imposes even more conservative borrowing guidelines through its Debt

    Management Fiscal Policy (DMFP). It limits total debt servicing to 22% of annual City revenues.
    The City of Edmonton’s debt at the beginning of 2013 was $2.2 billion. Under the Municipal Government Act, the City could borrow as much as $4.2 billion – which means the City is only at 53% of the debt limit set by the Province. It could borrow $2 billion more than it has.

    As we pay off debt, our debt room (the amount of money we can borrow for future projects) will grow in 2017 through to 2021.

    Interest rates and terms

    Edmonton is able to borrow money at a rate of interest below what is available to citizens, and the City can lock in rates over the duration of the loan period. Currently, interest rates on the City’s debt range from as low as 1.59% for 5 year terms to 3.27% for 25 year terms – still a very low rate.

    ..."

    http://www.edmonton.ca/city_governme..._sheet_(1).pdf
    Last edited by KC; 28-02-2016 at 12:07 PM.

  78. #78

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    Alberta Capital Finance Authority is the agency that allows munis to borrow at the provincial rate. There's some good info you can glean from their website.

    http://www.acfa.gov.ab.ca/

    Edmonton is borrowing below the threshold allowed by the Muni Act shows that conservatism is alive and well in a city that elected a ..ahem..'progressive' mayor.

    P.S Is 'boom time effects being flushed out' made of people?

  79. #79
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    ^ Yes, municipalities are required by law to maintain extremely conservative debt limit ratios. This is one of the reasons that funding projects is so difficult. You can't, say, just "put the LRT line underground" when you aren't legally allowed to borrow any more, and you don't have access to any more tax revenues.

    If a municipality consistently goes above its debt limit ratio, the Minister will step in and take control.

  80. #80

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    Quote Originally Posted by Jaerdo View Post
    ^ Yes, municipalities are required by law to maintain extremely conservative debt limit ratios.
    The point was: the law requires a debt service ratio of no more than 35%. Edmonton has elected to have a ceiling at 22%. So even more conservative and way less progressive than the Progressive Conservatives.

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    Operation below the limit allows for emergency expenditures if need be, and fluctuations in interest rates. Should be standard practice everywhere.

  82. #82

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    Quote Originally Posted by Jaerdo View Post
    Operation below the limit allows for emergency expenditures if need be, and fluctuations in interest rates. Should be standard practice everywhere.
    We're still well below the limit aren't we?

  83. #83

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    The City of Calgary has found itself with an unexpected $86-million surplus. And now, city council is faced with a big decision of what to do with the extra money.
    "This is really good news," Calgary Mayor Naheed Nenshi said on Tuesday. "We continue to be one of the few governments in the country that has such a positive financial picture."

    http://www.huffingtonpost.ca/2016/03...n_9479634.html

    Meanwhile C of E council struggle to keep their head above water.
    Gone............................and very quickly forgotten may I add.

  84. #84

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    ^Having a surplus has a lot of factors to it, not to mention possibly over estimating costs or running into cost efficiencies. Budget is not set in stone.
    www.decl.org

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    ^ Or chintzing out on things, or ignoring some things to make Nenshi and company look like financial wizards come next budget time. Is there an election coming up?
    Nisi Dominus Frustra

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