Alberta Capital
Finance Authority
Borrowing Procedures Under
Revised Municipal Government Act
Following is a summary of the procedures for borrowing
from ACFA under the revised Municipal Government Act (MGA) which came into effect
on January 1, 1995.
- Prior to January 1, 1995, the Local Authorities
Board reviewed all municipal by-laws which create a debt not payable within
one year to ensure that no local authority incurs debt beyond the limits permitted
by the MGA.
Under the revised MGA it will be the responsibility
of the local authority to ensure that debt limits established by the Minister
of Municipal Affairs will not be exceeded by passing a borrowing by-law.
- ACFA requires a copy of the latest audited financial
statement (or a projected financial statement for the past year if borrowing
is at the beginning of the year) and the financial information return prepared
pursuant to Section 277 of the Municipal Government Act (submit one per year).
ACFA requires that a completed debt limit worksheet
be included with applications for each borrowing from municipalities with
no credit rating or with a credit rating lower than "A" (see Appendix
C). If the debt limits are exceeded the Ministerial Order approving the borrowing
pursuant to section 252 must be attached.
ACFA requires additional
documents pursuant to Section 3 of the ACFA
Credit Policy - By-law No. 211
The following certifications on the Application
to Sell Debentures form must be signed by the Chief Administrative Officer
(or designee) and it is recommended but not mandatory that it also be signed
by the Chief Elected Official:
- That the by-law is a valid by-law pursuant
to Section 273 of the Municipal Government Act.
- That either:
- The by-law has been advertised pursuant
to Section 606 of the Municipal Government Act or
- The by-law does not have to be advertised
pursuant to Section 257(4), 262(4) or 263(2) of the Municipal Government
Act.
- That either:
- The debt limit is calculated based on regulations
pursuant to Section 271 of the Municipal Government Act will not be exceeded
by the borrowing, or
- The Minister of Municipal Affairs has approved
the borrowing pursuant to Section 252.
- That there is sufficient authority remaining
under the by-law to issue the debenture.
- That the Municipality has obtained all approvals
required for the project and has complied with all statutes and regulations,
including but not limited to the Municipal Government Act, which apply to
this borrowing and project.
The following supporting documents must be included
with the "Application to Sell Debentures to ACFA" form (see Appendix
A):
- A "Certified True Copy"
of a by-law in substantially the same form as Appendix B, complete with
seal, as finally passed indicating the dates of all three readings.
- A copy of the municipality's latest audited
financial statement (or a projected financial statement for the past year
if borrowing is at the beginning of the year) and the financial information
return prepared pursuant to Section 277 of the Municipal Government Act
(submit one per year).
- A copy of the completed Debt Limit Worksheet,
Appendix C (submit one for each borrowing). ACFA required additional
documents pursuant to Section 3 of ACFA Credit
Policy - By-law No. 211. If the debt limits are exceeded the Ministerial
Order approving the borrowing pursuant to Section 252 must be attached.
As under section 273 of the MGA, an application
to have a by-law declared invalid can be made to the Court of Queen's Bench
for 30 days after the by-law is passed, ACFA will not consider an application
to borrow until the by-law can be certified a valid by-law.
- The requirements of a borrowing by-law are set
out in section 251 of the MGA which must be advertised. The by-law format
for borrowing from ACFA should be in substantially the same form as set out
in Appendix "B".
- Section 257 of the MGA sets out the requirements
for borrowing for a capital project when the term does not exceed five years.
(ACFA does not loan for terms of less than three years).
- Section 258 of the MGA sets out the requirements
for borrowing for a capital property when the term exceeds five years.
- Section 263 of the MGA sets out the requirements
for borrowing for local improvements and sections 391 to 409 set out the procedures
for initiating a local improvement and passing a local improvement tax by-law.
- Section 253 of the MGA states that money obtained
under a borrowing must be used for the purpose for which it is borrowed. Repayment
to ACFA of over-borrowed funds will be subject to the prepayment policy of
the Authority as outlined in Section 9 of Resolution No. 223 (see Appendix
I).
- As the forms in the guide to borrowing are universal
and worded to include small borrowers as well as the large cities, ACFA may
consider accepting revisions of some forms to accommodate individual borrowers.
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here to download the Borrowing Manual and/or Appendices in MS Word format.
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