Certain legislative requirements must be met before municipalities and regional districts may receive provincial approval for long-term borrowing (loan authorization bylaws). Ministry staff review these bylaws against the requirements of the legislation before approval.
Local governments may borrow long-term through a loan authorization bylaw for any of the purposes listed in section 179 of the Community Charter. Borrowing for capital projects is the most common reason for a loan authorization bylaw.
All local government loan authorization bylaws require approval by the Inspector of Municipalities and most also require either approval of the electors (municipalities) or participating area approval (regional districts) before they may be adopted. Other legislative requirements must also be met.
Once a loan authorization bylaw has received all its approvals, the local government may undertake temporary borrowing to finance the construction and development of a capital project, or the local government may proceed directly to long-term debenture debt through a regional district security issuing bylaw. Security issuing is undertaken through the Municipal Finance Authority, that pools all local government long-term debt and sells it through the bond markets.
In support of the Inspector of Municipalities’ approval role, ministry staff review local government loan authorization bylaws against the requirements of the legislation.
Local governments may submit their loan authorization bylaws along with supporting materials by email to the Ministry of Municipal Affairs, Governance and Structure Branch. A hard copy is not required. The bylaw may be attached separate from the supporting materials.
If a bylaw is expected to be complex or out of the ordinary, local governments may wish to consult with ministry staff early in the process, as additional supporting documentation may be required.
There are several steps in the process for a local government to undertake long-term borrowing, each of which may take several weeks or months to complete. Local government loan authorization bylaws are valid for five years from the date of adoption.
Steps in the process:
The Municipal Finance Authority lays out the borrowing process in a flowchart:
The first step in the provincial review process is statutory approval of the local government loan authorization bylaw. Once a loan authorization bylaw is given three readings, a signed, certified copy of the bylaw at third reading, along with all required supporting information is emailed to the provincial government. Staff review the bylaw for legislative compliance and financial viability. Once the initial review is complete, the bylaw is sent to the Inspector of Municipalities for final approval and issuance of a statutory approval certificate. If a regional district loan authorization bylaw is accompanying a new or amended service establishing bylaw, these would be submitted to the provincial government together.
All loan authorization bylaws must contain the following:
To assist the Inspector of Municipalities’ approval decision, ministry staff need the following information to support their review of a local government loan authorization bylaw:
Municipalities seeking approval of a loan authorization bylaw are also required to submit to provincial staff a liability servicing limit certificate that contains new and discharged debt since the end of the relevant fiscal year. This is to ensure that the total proposed municipal debt cost is within the municipal liability servicing limit.
Information needed to fill out lines "a" through "c" of the certificate is archived online:
Approval of the electors for municipalities is not required if the borrowing is for any of the following:
Participating area approval for regional districts is not required if the borrowing is for any of the following:
A local government may apply for a provincial certificate of approval for its loan authorization bylaw after all of the following have been met:
A certificate of approval certifies that the bylaw meets statutory procedural and other requirements. The certificate of approval provides lending institutions like the Municipal Finance Authority assurance that the bylaw cannot be challenged for failing to comply with legislative procedural requirements.
To apply for a certificate of approval send the following by email to the Ministry of Municipal Affairs, Governance and Structure Branch:
A copy of the corporate officer's certificate to be filled out by the local government is mailed with the provincial statutory approval. An online version is also available from the Municipal Finance Authority.
Once a loan authorization bylaw has received a provincial certificate of approval, the local government may undertake temporary borrowing to finance the construction and development of a capital project, or the local government may proceed directly to long-term debenture debt through a regional district security issuing bylaw.
Municipalities with approved loan authorization bylaws must request that their regional district undertake borrowing on their behalf by forwarding to the regional district a municipal security issuing resolution.
Regional districts submit security issuing bylaws to the Inspector of Municipalities for a certificate of approval before the bylaw and all supporting material proceeds to the Municipal Finance Authority for security issuing.
Loan authorization bylaws may be amended or repealed by following the steps in section 179 of the Community Charter for municipalities or section 349 of the Local Government Act for regional districts.
Once a loan has gone to security issuing, it may be difficult to amend or repeal the loan authorization bylaw. Please contact the Municipal Finance Authority and the Ministry of Municipal Affairs and Housing to discuss further.
Contact us if you have questions about loan authorization bylaw requirements.