City of Surrey's 2021 - 2025 Financial Plan

DEBT

The Province of B.C. limits municipalities, by legislation, on the amount of long-term borrowing they can maintain under section 174 of the Community Charter. This limit provides that a municipality’s cost to service their debt cannot exceed 25% of annual revenues, as defined by the legislation. Under Surrey’s principles for financial planning, the City continues to target total debt service costs to below five percent and continues to use a “pay as you go” approach to finance the majority of its capital works projects. Any debt required should only be for major capital works projects, such as recreational and cultural facilities, and not for on-going operations. The “pay as you go” approach employed by Surrey has two significant benefits: it preserves flexibility for the City by allowing it to avoid fixed debt costs and interest charges; and is particularly appropriate in a growing municipality where development can be funded through developer contributions and an increased tax base. The City has previously undertaken significant capital investments to meet the needs of our growing community. Under the current 2021 – 2025 Financial Plan, the City is committing to a new Surrey Invests program that will see new capital projects that will benefit everyone who lives, works, or plays in Surrey. Included in these projects are a new community centre in Newton, a new sports complex in City Centre and a new ice complex in Cloverdale. $150.6M in external borrowing, accessed through the Municipal Finance Authority of BC’s (MFA) Long-Term Borrowing program, is required for these three major projects. In addition to this external borrowing, various other sources will be required to fund these capital projects, including contributions from general operating, Community Amenity Contributions, external contributions (such as grants), City reserves, and internal borrowing as needed. The City of Surrey’s gross borrowing capacity, based on the criteria under section 174 of the Community Charter equates to approximately $2 billion in debt. Outstanding consolidated external borrowing on December 31, 2020 was $214,230,000. Of this external borrowing, $167,485,000 relates to City debt through the MFA.

The new Clayton Community Centre integrates arts, recreation and a library in Cloverdale.

City of Surrey | 2021—2025 Financial Plan | Financial Overview

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