Ford scandal costing Toronto taxpayers as city’s borrowing rates rise

Toronto council will hold a two day debate over the upcoming operating budget beginning Wednesday Jan. 29, 2014.
Toronto council will hold a two day debate over the upcoming operating budget beginning Wednesday Jan. 29, 2014. Getty Images

The Toronto taxpayer, championed so fervently by Mayor Rob Ford, will have to cover higher interest rates owed by the city thanks to the embattled mayor’s staunch refusal to leave office.

Toronto’s borrowing costs have increased in recent days after city council urged Ford to leave following his admission to smoking crack cocaine and driving intoxicated while in office, among other allegations.

Interest on bonds the city issues to investors to finance big capital projects such as a new subway line rose four basis points or 0.04 per cent, according to Bloomberg, which reported the hike.

READ MORE: Rob Ford loses 11 staffers, powers stripped by city council

Though city council has shifted operational powers as well as control of the budget to other offices, the scandal has dominated city hall’s attention and impeded the ability of the government to operate. Investors are demanding a bit more interest due to the uncertainty.

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The extra interest Toronto must pay on some bonds has increased by 15 basis points, or 0.15 percent, since Nov. 12, when council started work on stripping the mayor of whatever powers it could in a bid to oust Ford, who rode to power in 2010 on a wave of populist angst about overspending at city hall.

Interest rates for other Canadian municipalities, meanwhile, have actually declined this month, by 0.01 per cent.

READ MORE: Global News’ extensive Rob Ford coverage

[UPDATE, Nov. 21, 12:25 p.m.: City of Toronto officials said in a release interest rates the city pays on its bonds have not be adversely affected the controversy surrounding the mayor. “Recent events at city hall have had absolutely no impact on our costs or our ability to borrow funds,” Joe Pennachetti, a city manager said. “The city of Toronto interest rate spreads remain stable in relation to the underlying Province of Ontario bonds and in relation to other municipalities.” The release noted Toronto’s credit rating of AA+ — the highest grade among large North American cities.]