Region of Peel BMO Canadian Fixed Income Conference May 1 & 2, - - PowerPoint PPT Presentation

Spring 2018

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Region of Peel

BMO Canadian Fixed Income Conference May 1 & 2, 2018

Spring 2018

Who we are Economy Finances Debt Issuance

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Meet the Region of Peel

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Table of Contents

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Who we are ……… 2

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Economy ………… 5

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Finances ………… 14

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Debt Issuance ….. 27

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Responsibilities

Infrastructure Peel Member Munis* Water  Wastewater (Sewer)  Storm Water  Roads (Arterial)  Roads (Local)  Waste Collection & Disposal  Parks & Recreation 

* Member Municipalities include the Cities of Mississauga and Brampton, and the Town of Caledon

Services Peel Member Munis* Police  Paramedics  Fire  Transit  Public Health  Long-Term Care  Social Assistance  Social Housing  Children’s Services  Debt Issuance  Libraries  Licensing  Economic Development  Planning & Development   Parking 

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Governance

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

Peel Region is governed by the Regional Chair and 24 other members of Council comprised of the Mayors and Councillors from Mississauga, Brampton and Caledon

Regional Chair Members of Regional Council (25)

Regional Chair (1) Mayors of Mississauga, Brampton, Caledon (3) Councillors representing City of Mississauga (11) Councillors representing City of Brampton (6) Councillors representing Town of Caledon (4)

Executive Leadership Team (7)

Chief Administrative Officer; Commissioner, Finance & Chief Financial Officer; Commissioner, Corporate Services; Commissioner, Digital & Information Services; Commissioner, Health Services; Commissioner, Human Services; Commissioner, Public Works.

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Peel’s Strategic Advantages

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Location

 Situated in GTA, largest

economic hub in Canada

 Close to large US market

(within 200 km / 120 miles)

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Transportation network

 Five major highways  Toronto’s Pearson Int’l Airport  Regional, national &

international rail

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Young and well educated population

 Peel’s median age of 38.1 years

is lowest in GTA (2016 census)

 65% of Peel’s working age

population have a post- secondary certificate, diploma or degree (2016 census)

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Strong Population Growth

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1.48 million residents in 2017, 2nd largest in GTA & Ontario, 4th largest in Canada

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An estimated 32,147 new residents (2016 – 2017)

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Future population forecasted to reach 1.77 million by 2031

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Future population forecasted to reach almost 2 million by 2041 Peel Region Population Growth

1.36 1.48 1.56 1.77 1.97 0.0 0.5 1.0 1.5 2.0 2.5 2011 2017 2021F 2031F 2041F Millions

Brampton 44%

1.48 million

(2017)

Peel Region Population Share

Caledon 5% Mississauga 51%

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Labour Market Conditions

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Strong labour market performance in 2017

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Total labour force increased by 2.1% to remain strong at 873,000 persons

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Employment at 812,500 positions, up 2.5%

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Unemployment rate fell to 6.9% in 2017

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Employment growth was broad-based

Source: Statistics Canada and Peel Data Centre

Employed Labour Force Unemployment Rate

135 127 151 169 171.2 481 487 604 604 624 616 614 755 793 812.5

100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017 Thousands Goods Producing Services All Industries

8.9% 8.1% 7.7% 7.3% 6.9%

0% 2% 4% 6% 8% 10% 2013 2014 2015 2016 2017

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Diversified Labour Market

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812,500 strong employed labour force in Peel in 2017

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Peel’s well-diversified labour market supports a resilient economy

Source: Statistics Canada

Labour Market Breakdown by Sector – 2017

Trade Manufacturing and other Goods Producing Transportation and Warehousing Health Care and Social Assistance Finance, Insurance, Real Estate and Leasing Professional, Scientific and Technical Services Construction Educational Services Business, Building and Other Support Services Accommodation and Food Services Other Services Information, Culture and Recreation Public Administration 2.6% 2.8% 3.7% 5.0% 5.0% 5.1% 6.0% 8.5% 8.9% 9.4% 9.7% 15.1% 18.2% % 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

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Household Income

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Source: Statistics Canada, Census of Canada, 2016

Median Household Income (After-Tax) Peel at almost $76,000 in median after-tax household income is about:

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10% higher than Toronto CMA median and

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25% higher than the national median

61 65 69 76 15 30 45 60 75 90

Canada Ontario Toronto CMA Peel

Thousands

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Growing Business Sector

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Source: Statistics Canada and Draft Growth Management ROPA – Oct 2017 Allocation

Region of Peel Employment Forecast

530 646 717 766 870

200 400 600 800 1000 2001 2011 2017 2021F 2031F

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Approximately 717,000 jobs in Peel in 2017

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An estimated 34,000 new jobs in 2017, up 5.0% from 2016

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Diversified Business Sector - 2017

Source: Statistics Canada, Canadian Business Patterns

Distribution of Business Sectors in Peel Region - 2017

1.0% 1.1%

2.6% 3.8% 5.0% 5.4% 6.7% 9.5% 10.3% 14.8% 19.8% 20.0%

% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Trade Manufacturing and Other Goods-Producing Transportation & Warehousing Professional, Scientific & Technical Services Financial, Insurance, Real Estate & Leasing Construction Management, Administrative & Other Support Educational Services Healthcare & Social Assistance Accommodation and Food Services Information & Culture

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Peel’s business sector is broadly diversified

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Business growth has been led by the Transportation & Warehousing sector

Other Services

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Strong Business Sector

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Strong and growing business sector

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The largest employers in Peel include Royal Bank (RBC) Financial Group, Suncor Energy, Rogers Communications, and Hewlett- Packard (Canada) Ltd

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With strong location and infrastructure advantages, Peel will continue to be an attractive destination for businesses

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New University approved for Brampton

Source: Statistics Canada and Peel Data Centre

Business Establishments by Category

17.7 18.2 18.7 19.2 108.4 113.9 117.1 124.3

20 40 60 80 100 120 140 160 2014 2015 2016 2017

'000 Goods Producing Services

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Housing Market

Source: Statistics Canada and Peel Data Centre

Building Permits Issued

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A total of 6,739 residential housing starts in Peel in 2017

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Building permit issuance at $2.8 billion

1.45 2.14 2.14 2.40 1.65 1.16 1.48 1.48 1.32 1.09

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2013 2014 2015 2016 2017

Residential Non-residential

Housing Starts

6,298 4,607 8,100 5,362 6,739

2,000 4,000 6,000 8,000 10,000 2013 2014 2015 2016 2017

$ Billions Units

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Sustained Growth in Assessment

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Peel’s total assessment base continues to grow at a healthy pace

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Both residential and non-residential sectors contribute to growth

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Peel region represents about 10%

• f the Province of Ontario’s

assessment base for property taxes Taxable Assessment 2008-2018

173 190 205 46 50 53

50 100 150 200 250 300 2008 2013 2018

$ Billions

Residential & Farm Commercial & Industrial

Source: Municipal Property Assessment Corporation

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Planning Financial Sustainability

Council and Management Actions

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Long-term Financial Planning Strategy

 Includes 10 year operating budget model

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Commitment to funding infrastructure replacement from reserves

 Tax: 1% average annual increase for State of Good Repair reserves since 2008  Water/wastewater: 4% average annual increase for SOGR reserves since 2009

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Commitment to integrated Growth Management

 Creation of Growth Management Committee overseeing land use planning, master

services planning and DCs for 2041 growth forecasts

 Includes earlier and more integrated consultation with area municipalities and

develop community in part to minimize debt

 Term of Council Priority

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Development Charges (DC) By-law updated in 2015

 Collection of residential DCs for hard services (97% of DC rate) at subdivision

approval expected to offset $100 million in borrowing

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Cash Management Strategy adopted

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$ millions

CAPITAL BUDGET $723 (23%) OPERATING BUDGET $2,374 (77%)

Operating Capital

$286 $177 $134 $54 $72

Water Wastewater Transportation/Roads Police Other

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Budgets and Borrowing

2018 Total Budget $3.1 Billion (Gross)

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Debt can only be issued for capital

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Investing in Growth Infrastructure

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Water, Wastewater and Roads at 75% of the Capital Budget Expenditures

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Repair and replacement funded from reserves

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External funding from: York Region for joint water/wastewater projects and Clean Water and Wastewater Fund (CWWF) for proposed projects

$4,124 $2,786 $257 Reserves (57%) Development Charges (39%) External Sources (4%) $ millions

2018 – 2027 Capital Funding $7.2B

$2,583 $1,421 $1,388 $398 $455 $488 $434

Water (36%) Transportation (20%) Wastewater (19%) Police Services (6%) Housing Support (6%) Other (7%) Waste (6%) $ millions

2018 – 2027 Capital Expenditures $7.2B

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Levy DCs against new development to fund growth-related infrastructure (Provincial legislation)

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Peel Council: “growth pays for growth” philosophy to ensure existing tax base not impacted by cost of development

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DC rates must be updated at least every 5 years

 Peel DC by-law updated Sept. 2015

with a new DC by-law review scheduled for 2019/2020

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Borrowing needs are for long life projects

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Water, wastewater, roads are major programs funded from DCs

Development Charges (DCs)

(a.k.a. System Impact Fees)

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Growth Projects funded with Development Charges

Key

Key DC Related Capital Projects

2015-2018 Expensed/Committed($ mm) 2019-2031 Planned Investment($ mm) Wastewater G.E. Booth Plant Expansion & Upgrades $35.3 $32.5 Clarkson Plant Expansion & Improvements $34.3 West Trunk Sewer Twinning $189.7 $38.8 East to West Diversion Forcemain & Pumping Station $22.4 $230.2 Water West Caledon Elevated Tank / Transmission Main $51.5 West Brampton Transmission Main & Pumping Station $26.4 Williams Parkway / Central Brampton Transmission Main $54.9 $174.0 Hanlan Transmission Main & Pumping Station $228.0 Lakeview Treatment Plant $41.5 $24.3 Alloa Reservoir & Pumping Station $82.1 Victoria Transmission Main & Reservoir $56.6 $127.2 Mississauga City Centre Feeder Main $224.5 $34.9 East Brampton – Transmission Main $43.7 $162.0 Meadowvale North Transmission Main $170.5 Streetsville Transmission Main $166.5 Mayfield Road Transmission Main $31.2 Total Key Water/Wastewater Capital Projects $1,013.0 $1,270.0 Total Water/Wastewater Capital Projects $1,584.3 $1,834.2 Total DC Related Capital Projects $2,050.5 $2,836.3

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Hanlan Water Project

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Section of 8 foot (diameter) water pipe

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Hanlan Water Project

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Tunnel boring machine

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Peel’s Development Charges

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Per Person Residential Development Charges in the GTA

19.6 20.8 20.6 19.5 17.7 21.3 23.6 15.3 $0 $5 $10 $15 $20 $25 Caledon (Peel) Brampton (Peel) Mississauga (Peel) Oakville (Halton) Milton (Halton) Vaughan (York) Markham (York) Whitby (Durham) Note: Values represent Regional, Area, Education and GO Transit Development Charges - As of February, 2018

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Peel DC rates are competitive with our peers in the GTA.

’000

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Peel’s Development Charges

Development Charges for a Single/Semi-Detached Family Dwelling Unit in the GTA

81.3 86.4 85.6 68.5 62.3 79.7 88.4 53.0 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Caledon (Peel) Brampton (Peel) Mississauga (Peel) Oakville (Halton) Milton (Halton) Vaughan (York) Markham (York) Whitby (Durham) Note: Values represent Regional, Area, Education and GO Transit Development Charges - As of February 2018

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Higher Persons Per Unit drive Peel’s residential dwelling rates higher.

’000

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Peel’s Development Charges

Development Charges for Industrial Development ($ per m2) in the GTA

191.69 203.72 239.48 260.13 180.70 261.60 310.70 176.89 $0 $50 $100 $150 $200 $250 $300 $350 Caledon (Peel) Brampton (Peel) Mississauga (Peel) Oakville (Halton) Milton (Halton) Vaughan (York) Markham (York) Whitby (Durham) Note: Values represent Regional, Area and Education Development Charges - As of February, 2018

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Peel DC rates are competitive with our peers in the GTA.

$/m2

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Future Development

 Peel Region is well

positioned to attract growth given its central location and land base that will be serviced and available for development.

 Provincial legislation

has an impact on land development.

 Future development is

restricted in the Greenbelt. Greenbelt Plan 2005

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Peel’s Low Water and Wastewater Rates

2018 Combined Water & Wastewater Utility Bill – Residential Homeowner

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Peel’s combined water and wastewater rates are the lowest in the GTA.

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Peel contributes approximately 49% of its rates (or $179 million in 2018) to reserves for future repair and replacement of the system.

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Low water and wastewater rates help attract businesses like Coca-Cola, Pepsi and Cott Beverages to Peel Region.

Based on 290 m3 / 77k US gal usage per year

$1,061 $659 $1,103 $1,173 $1,253 $1,177 $1,134

200 400 600 800 1000 1200 1400 Halton Peel Toronto Vaughan (York) Richmond Hill (York) Markham (York) Durham $/Year

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Ontario Municipal Act, 2001 Safeguards

 Municipal debentures rank pari passu s.408(7)  Annual budget provisions

 Debt provision: municipality shall in each year prepare and adopt a

budget including estimates of all sums required during the year including amounts sufficient to pay all debts falling due within the year and amounts required to be raised annually for sinking funds and retirement funds

 Balanced budget: budget shall provide that estimated revenues are

equal to the estimated expenditures and the municipality will levy taxes sufficient to ensure that this is the case s.289 and 290

 Proceeds from the sale of a debenture issue cannot be applied

towards the payment of current expenditures s.413(1) and 408(2.1)

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Municipal Act, 2001 Safeguards (cont’d)

 Debenture by-law cannot be repealed until the debt and interest have

been paid s.414(1)

 Doctrine of ultra vires

 Municipalities only have borrowing powers which are expressly set out in

legislation s.9 and 17

 Municipal officer guilty of an offense

 Any municipal officer who refuses to perform his or her duty to ensure that

all the obligations of their municipality’s debenture by-law are fulfilled is guilty of an offence s. 422

 Liability of members of council for diversion of funds

 Any member of Council who votes to divert funds to pay current

expenditures – funds that were originally raised to retire debt is personally liable for the misapplied funds and is disqualified from holding any municipal office for two years s.424

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Strong Credit Rating

 Long Range Financial Planning Strategy endorsed by Council

commits to maintaining a strong credit rating

 S&P “AAA” since 2001  Moody’s “Aaa” since 2011

 Large, highly liquid investments of $2.4B (as of March 31, 2018)

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Borrowing Summary

 Forecasted borrowing equals net of

 slowing growth infrastructure

spending, offset by

 increasing DC revenues

 Benchmark sized bullet C$ offerings

 $150 - 200 mm, 10 year

 Reduced Regional forecasted

borrowing makes benchmark bullets less frequent

 Smaller long term bullets for social

housing & Long Term Care

 Still expect to issue smaller serial

• nce per year and long term bullet for

lower-tier (local) municipal needs Peel’s Total Debt Issuance

100 200 300 400 500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020* ($) Millions

FORECASTED

*Region Only

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Summary

 Bullet benchmark debt issues. These bridge

 upfront DC growth expenditures (water, wastewater and roads) with  longer term DC revenue collections as development is built

 Peel also issuing annually for Area municipalities and

forecasting occasional smaller long term bullets

 All Peel debt is general obligation  AAA/Aaa credit ratings

 Strong liquidity ($2.4B) with large annual contributions to reserves  Water and Wastewater rates lowest in GTA  Strong and diversified Peel economy  Strong financial management

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Spring 2018

More Information

Dave Bingham, MBA, CPA, CMA

Program Director, Treasury Transformation Finance 10 Peel Centre Drive, Suite A, 4th Floor Brampton, ON L6T 4B9 dave.bingham@peelregion.ca tel: 905-791-7800 ext. 4292 peelregion.ca/investors

Julie Pittini, MBA

Director, Treasury Services Finance 10 Peel Centre Drive, Suite A, 2nd Floor Brampton, ON L6T 4B9 julie.pittini@peelregion.ca tel: 905-791-7800 ext. 7120 fax: 905-791-9691 peelregion.ca/investors

Updated information including:

• credit rating reports
• financial statements
• budget
• tax and water/wastewater rates
• development charges

peelregion.ca/investors

Peel Investor Website

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