Short Term Borrowing LEGISLATION

Municipalities

Revenue Anticipation – CC Sec. 177 – a council may, by bylaw, provide for the borrowing of money that may be necessary to meet current lawful expenditures and pay amounts required to meet the municipality’s taxing obligations in relation to another local government or other public body. The debt under this bylaw must not exceed the total of the unpaid taxes for all purposes imposed during the current year, and the money remaining due from other governments. This may include grant money from provincial or federal governments provided that the funding is expected within the year. Typically, these bylaws are adopted at the beginning of each calendar year and are based on 75% of all property taxes imposed for all purposes in the preceding year.  The MFA requires borrowings under this section to be repaid upon tax collection. The maximum allowable term is one year. This bylaw is not reviewed or approved by the Ministry.

Short term capital borrowing – CC Sec. 178 – a Council may, by bylaw, adopted with the approval of the inspector (statutory approval), contract a debt for any purpose of a capital nature. The aggregate, maximum amount allowed under this authority is calculated under BC Reg. 368/2003. The regulation states that the amount is obtained by multiplying $50 by the population of the municipality. The population is as of the last census and will be verified by the Ministry. The debt must be repaid 5 years from the date the money is advanced. No public approval is required but approval of the Inspector of Municipalities is required.  The debt servicing under this bylaw must be deducted from the municipality’s

 

Temporary borrowing under loan authorization bylaw – CC Sec. 181 – a council that has adopted a loan authorization bylaw under CC Sec. 179, may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw.  The process for obtaining a loan authorization bylaw can be found under the long term borrowing section under approval process. This bylaw is not reviewed or approved by the Ministry. Money borrowed under this section must be repaid or transferred to long term debt within 5 years from the first advance. This bylaw is not reviewed or approved by the Ministry.

Loan under agreement CC Sec 175 - the MFA makes available short term loans (maximum 5 year terms) under section 175 of the Community Charter.  These loans must be of a capital nature and cannot be transferred to debenture or long term debt. The council must pass a resolution authorizing the debt for the project and specifying the principal repayment terms. Part of the application for a loan under this section includes the MFA receiving Council reports discussing the project, and a liability servicing limit certificate. This type of borrowing is not reviewed or approved by the Ministry. The debt servicing under this borrowing must be deducted from the municipality’s

 

Regional Districts

Revenue Anticipation LGA Sec. 404 – a board may, by bylaw, provide for the borrowing of money that may be necessary to meet its current lawful expenditures before its revenue, from all sources, to pay for those expenditures has been received. Money borrowed under this section must be repaid when the anticipated revenue with respect to which the borrowing was authorized is received. The MFA requires borrowings under this section to be repaid upon collection of tax requisition. The maximum allowable term is one year. This bylaw is not reviewed or approved by the Ministry.

Short term capital borrowing – LGA Sec. 405 – A board may, by bylaw adopted with the approval of the inspector, contract a debt for any purpose of a capital nature related to the service under section 338 (2)(a) – general administration. The debt must not cause the aggregate liabilities under this section to exceed the sum of $50,000 plus the product of $2 multiplied by the population of the regional district. The population is as of the latest census. The debt must be repaid 5 years from the date the money is advanced.

Temporary Borrowing under loan authorization bylaw – LGA Sec. 409 – a board that has adopted a loan authorization bylaw may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw. The process for obtaining a loan authorization bylaw can be found under the long term borrowing section under approval process. This bylaw is not reviewed or approved by the Ministry. Money borrowed under this section must be repaid or transferred to long term debt within 5 years from the first advance.

Loan under agreement – LGA Sec. 403 - the MFA makes available short term loans (maximum 5 year terms) under section 403 of the Local Government Act (Sec. 175 of the Community Charter).  These loans must be of a capital nature and cannot be transferred to debenture or long term debt. The board must pass a resolution authorizing the debt for the project and specifying the principal repayment terms. Part of the application for a loan under this section includes the MFA receiving applicable Board reports discussing the project. This type of borrowing is not reviewed or approved by the Ministry.

 

Regional Hospital Districts

Operating expenditures – HDA Sec. 31 – a board may, by resolution, borrow for purposes other than capital expenditures, by way of temporary loan, sums the board may deem necessary to meet current operating expenditures of the board for the year, including principal and interest falling due within the year on any debt of the board, but all money so borrowed must be repaid within 9 months of the date of the borrowing.

Capital Borrowing - HDA Sec. 32 and 33 – a board must not borrow or spend money to meet capital expenditures unless the board has enacted a capital bylaw in accordance with section 32. The capital bylaw is to be in the net sum required, after the required 1% deduction for the DRF. The actual amount required should be grossed up by the DRF deduction by dividing the required amount by .9900.  The capital bylaw is the same bylaw required for both short and long term debt.  The form for requesting a transfer from short term to long term debt can be found under Forms: Request for Long Term Borrowing.

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