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New debt policy looks to put Orangeville on sound financial footing

October 23, 2025   ·   0 Comments

By JAMES MATTHEWS

Orangeville is getting its books in order as part of a step toward financial sustainability.

The current debt load in the 2025 budget is about $3.7 million. Cheryl Braan, the town’s chief financial officer and treasurer, said that’s the cost required to service all of Orangeville’s outstanding debt.

The proposed Long-term Debt Borrowing Policy provides an overall upper limit of about 12 per cent, and Braan said the town sits at about six per cent right now.

“So if you were to do some very basic math, moving from six per cent to 12 per cent, we could increase our debt servicing costs up to about $7.3 million,” she said.

The town’s overall debt is about six per cent of its own-source revenue, which is below the provincial limit of 25 per cent. The 2025–2034 capital plan includes potential borrowing of up to $67 million over the next 10 years.

If all of this debt is issued, the town’s debt burden would rise to about 12 per cent.

Current debt levels by funding source include tax-supported debt at four per cent, water-related debt at 0.9 per cent, wastewater-related debt at one per cent, and development charge (DC) supported debt.

No DC debt has been issued for water projects. The current debt payments for wastewater exceeds expected DC revenue because of slower development. Less than one per cent of municipal debt is set to expire next year.

“Raising the overall debt burden from six per cent to the provincial maximum of 25 per cent would likely require substantial increases in property taxes and user fees,” according to a staff report to council.

In 2019, the town borrowed $18 million over 25 years to expand the water pollution control plant. This created annual debt payments of about $1.2 million. Development charge revenue has been much lower than expected, resulting in a shortfall.

As of the end of 2024, the wastewater DC reserve held about $1.15 million, and there is a significant risk that future DC collections will not be enough to cover the required payments, according to the report.

“This debt policy is part of our overall long-term integrated financial strategy,” Braan said. “We’ve done a lot of work over the past 12 to 18 months or so, putting together various pieces of financial policies and procedures to get the town on the right path to long-term financial sustainability.”

The new borrowing policy is the cornerstone of that effort, she said.

“The very fact that we’re almost ready to pay off the Alder facility (arena) is incredible to me,” Deputy Mayor Todd Taylor said. “That was a long journey, for sure.”

Taylor said the word debt is often dirty and unpleasant. But it can allow a municipality to do much. It allows the town to buy something at $10 that will be worth $30, but it will cost just 50 cents a year to maintain that resource.

“In the municipal world, I think it’s managed very appropriately,” he said.

The new Long-term Borrowing Policy will be applied to the development of the 2026-2035 capital program to be presented to council as part of the budget process in December.

Finance staff will also undertake a review of the town’s current borrowing arrangements and fall debt needs and make recommendations for near-term renewals and new debt requirements this fall in alignment with this policy.

Staff will reassess growth-related wastewater projects during the development of the 2026–2035 capital plan. Some projects may be delayed until adequate DC funding is available. If DC revenue continues to fall short, the town may need to temporarily use other funding sources to cover debt payments, with the intention of reimbursing those sources once DC revenue improves.

According to the report to council, Orangeville has no DC debt for water projects and only a small amount of debt remains for the police station and the Alder Street Recreation Centre, which will be paid off by the end of 2026.

Additional growth-related borrowing needs may emerge during the next capital planning cycle.

The town has historically used bank loans for borrowing. But other options allowed under the Municipal Act may offer better terms.

Agencies such as Infrastructure Ontario, the Canada Infrastructure Bank, and the Federation of Canadian Municipalities may offer more favourable financing options, depending on the project.

“The town could also issue debentures in capital markets, which typically offer lower interest rates,” according to the report. “However, this option requires annual credit rating reviews and more detailed reporting, making it more suitable for larger borrowing amounts.”

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