Managing the debt of the City of Hamilton is a lot like managing the household debt—only the numbers are a lot bigger. Over the next 3 years Hamilton will incur significant debt as the city finally tackles the expensive rehabilitation and expansion of the sewer and water system—a necessity if the city is going to be able to accommodate the growth in population that is anticipated. A big piece of that cost will be paid out of the changes that are levied against property developers who must pay for the roads and water-wastewater infrastructure they create, as well as household water bills. Right now Hamilton’s debt sits at just under $600 Million while our reserves are pegged at $780 Million. Translated into household terms it would be the equivalent of carrying a $100,000 mortgage while you had $130,000 in a savings account—not a bad situation for the average taxpayer. But the numbers are soon going to start moving in opposite directions as the city takes on capital projects like the water and wastewater rehabilitation, and at the same time tries to chew into the roughly $2 Billion infrastructure deficit—the cumulative result of not keeping up with proper maintenance of our existing infrastructure.
Over the next four years the city debt will rise to a peak of almost $900 Million in 2017 and will then begin to taper off to an estimated $625 Million by 2023. At the same time some of the cash reserves will be depleted as some of those funds are earmarked for specific capital projects. During the next 10 years the cost of borrowing alone will hover around $100 Million—that is about $500 dollars per household.
Compared to other cities Hamilton is in the mid range in terms of debt per capita at $783. The most indebted municipalities are York Region and Toronto at $2,057 and $1,578. London’s per capita debt is 25 percent higher than Hamilton. Standard and Poor rates Hamilton’s credit at “AA – stable” which translates into “Very strong capacity to meet financial commitments.”