‘We believe we’re in good shape’: Has COVID-19 affected Barrie’s more than $300M debt?

COVID-19 hasn’t added to the City of Barrie’s debt.

But the amount the municipality owes to lenders for major infrastructure projects will continue to hover above the $300-million mark for the foreseeable future, Barrie finance director Craig Millar said.

“We haven’t stopped anything on capital (projects) because of COVID-19,” he told Simcoe.com recently. “We’re still on plan to do what we forecasted. The COVID impact is really being viewed as an operational hit for this year and into next year. But long-term, we’re not seeing it impacting the debt levels we are currently carrying. If a year from now the situation turns for the worse, we’ll look at and potentially modify the capital plan. We believe we’re in good shape.”

The municipality projects a $2.3-million deficit this year due to revenue drop-off and other effects of the virus, though that number does not take into account nearly $9.2 million in funding received through the federal and provincial Safe Restart emergency program.

Barrie had $326 million in debt in late 2019. That number should dip to about $317 million by the end of 2020, before rising to $329 million — mostly due to money borrowed for Harvie Road bridge construction — next year.

That balance is costly. The city will pay $32.6 million toward debt servicing this year, with nearly $18.9 million coming from development-charge revenue. In total, only 62 per cent of the city’s annual debt payment goes toward the principal balance; the remainder covers interest.

Millar said 74 per cent of the debt is attributed to three projects — the city’s water treatment ($130 million) and wastewater pollution control ($55 million) plants and the Barrie-Simcoe Emergency Services Campus ($50 million).

“There are more needs on the capital side than we have money to fund,” he said. “We prudently manage debt so we don’t get ourselves into financial trouble.”

Mike Slinger, who once ran the Barrie Taxpayers Association, says the city’s debt means other key infrastructure projects — like road reconstruction or the building of new recreation centres — risk delay.

“In my 16 years in Barrie, community property owner associations have neglected to unify as ‘one voice’ to challenge past and present councils,” he said. “We property tax payers only have ourselves to blame for not monitoring and challenging councils that have created the unreasonable debt that is bogging down the city today.”

But Standard & Poor’s recently maintained the city’s ‘AA’ credit rating and noted the financial outlook for the municipality is “stable” over the next two years.

Standard credits the city’s cost-containment efforts, a diverse and healthy economy, growing workforce and strong operating balance for the rating.

“Although COVID-19 will be a temporary shock to Barrie, the city will proceed with its healthy growth rates and plans to diversify its economy once the effects of the pandemic subside,” Standard credit analyst Hamzah Saeed said.

STORY BEHIND THE STORY: Simcoe.com wanted to see whether a loss in revenue for the city due to COVID-19 would affect its debt.