Finance

Repayments under a land development debenture not secured by general revenues must correspond to the amounts and timing of revenue proceeds from land sales and leases. The municipal corporation shall:

1. remit land sale proceeds within three business days after receiving them; and,
2. remit lease and lease-purchase proceeds within three business days after the calendar quarter in which the corporation receives them.

Repayment terms for a combination revenue and general obligation land development debenture must:

1. require accumulative minimum annual loan payments;
2. require that proceeds from land sales and leases be remitted as described in subsection 4.2.3;
3. require, only as necessary to meet exactly the accumulative minimum annual loan payment, an annual adjustment payment on the anniversary date of the loan, equal to the total payments shown on the amortization schedule for current and prior years minus the accumulative actual payments made to date; and,
4. have an amortization schedule similar to that of a general obligation debenture, to be used in calculating the required adjustment amount as described in (c) above. If the calculation in (c) produces a negative number or zero, no adjustment payment is required. Any extra amount paid above the required adjustment amount will be subject to a prepayment fee as stated in subsection 4.3.3.

A general obligation debenture payment made earlier than 30 days before the scheduled due date is subject to a prepayment fee, except that the following payment types are exempt from prepayment fees:

1. unexpended money returned in accordance with the requirements of Subsection 156(2) of the Cities, Towns and Villages Act; and,
2. borrowed money repaid from contribution or grant recoveries, including interest on the contribution or grant, in accordance with Subsection 156(3) of the Cities, Towns and Villages Act; and,
3. any annual instalment paid no more than 30 days in advance of its scheduled due date.

The prepayment fee in provisions 4.3.1 and 4.3.3 must be assessed against prepaid principal and interest at the following rates:

1. 5% in first year after the debenture is issued or refinanced;
2. 4% in the second year;
3. 3% in the third year; and,
4. 2% in each year thereafter.

The Department of Municipal and Community Affairs shall examine each proposed borrowing bylaw to verify that it will not cause the aggregate debenture borrowing of the municipal corporation to exceed the following percentages of the total current assessed value of all property in the municipality on which property taxes are paid or in respect of which grants are made in place of those taxes:

1. 20% in the case of a city or town; and,
2. 10% in the case of a village.

The Department of Municipal and Community Affairs shall, in the case of a revenue debenture, verify that:

1. the present value of estimated project-specific revenues are sufficient to cover all estimated costs of the project, including repayment of principal and interest on the debenture; and,
2. the revenue and cost estimates provided by the municipal corporation are reasonable and accurate.

The Minister of Municipal and Community Affairs may, with the approval of the Executive Council, exempt a long-term borrowing bylaw from ratepayer approval where:

1. money to be secured by debenture will be used to finance a project other than a local improvement; and,
2. municipal corporation general revenues will not be used to finance any part of the project.

An application for debenture financing must be submitted to the Department of Municipal and Community Affairs and dealt with in the following sequence if debenture financing is to be provided by the Government.

The Municipal Debenture Review Committee shall review all debenture applications and their respective bylaws. A municipal debenture bylaw must include the condition that all outstanding municipal corporation debentures will be in good standing when the loaned funds are disbursed to the municipal corporation. Only applications of merit may be recommended for approval. The Review Committee shall submit its recommendations to the Deputy Minister of Finance for approval by the Minister of Finance.

The Minister of Finance shall approve the debenture application. Financing for the approved debenture will be based on the Government's cost and revenue alternatives.

The Minister of Municipal and Community Affairs shall approve the municipal debenture bylaw.

Purpose

A Municipal Debenture Review Committee shall:

1. use established credit criteria for evaluating municipal debenture financing applications;
2. review municipal debenture financing applications; and,
3. recommend applications of merit to the Deputy Minister of Finance for approval by the Minister of Finance.

Membership

The Deputy Minister of Finance and the Deputy Minister of Municipal and Community Affairs shall each appoint two officers from their respective Departments to be members of the Debenture Review Committee.

Quorum

The attendance of three of the Committee Members constitutes a quorum.