Long-term financing for municipalities

Long-term financing provides low-cost, long-term capital financing for municipalities to help meet economic development needs.

Flexible terms

Financing terms from 3 to 20 years (with amortization periods up to the useful life of the capital asset) are available to meet your municipality’s needs. Interest rates for municipalities are the lowest possible because financing is guaranteed by the provincial government.

Debentures are typically issued twice each year, in the spring and in the fall.

Debenture issue process

Municipalities, municipal enterprises, eligible fire departments, regional school boards and hospitals are eligible to participate in a debenture issue.

Before you start

Before you borrow, you should know that:

• municipal borrowing needs approval from the Minister, Department of Municipal Affairs and Housing
• municipal enterprises and villages require the municipality where they're located to guarantee the borrowing before they can participate in the debenture process
• municipal guarantees need approval from the Minister, Department of Municipal Affairs and Housing
• fire departments incorporated under the Rural Fire District Act or under special legislation can borrow with a municipal guarantee
• school boards need approval from the Minister, Department of Education and Early Childhood Development to borrow
• hospitals need approval from the Minister, Department of Health and Wellness to borrow

Step 1: submitting a capital budget

All municipal units need to submit a capital budget to the Department of Municipal Affairs and Housing under section 87 of the Municipal Government Act.

The capital budget should outline all capital projects that a municipality is planning to undertake and where the financing will come from.

Step 2: obtaining approval to borrow

Municipalities receive ministerial approval for all borrowing (section 88, Municipal Government Act).

To obtain ministerial approval, municipalities must submit a borrowing resolution. Borrowing resolutions can extend up to 10 years with the minister's permission.

Before you receive approval, the borrowing is evaluated to ensure that the municipality has the authority to borrow for the stated purpose (sections 65 and 66, Municipal Government Act) and that the debt-service ratio for the municipality is within the range determined by the Department of Municipal Affairs and Housing.

When a municipality receives authority to borrow, it can participate in the Department of Finance and Treasury Board debenture issue.

Step 3: participating in the debenture issue

The Department of Finance and Treasury Board sends out letters in mid-January and mid-July asking municipal units to confirm that they’ll be participating in the upcoming debenture issue.

After receiving the letter, municipal units need to complete a Commitment Letter (PDF) and send the letter to Municipal Finance. The letter is a binding document and needs to be signed by someone who has authority to confirm the municipality's intent to borrow.

Included with the commitment letter is a blank Pre-Approval Form (PDF).

Pre-approval requires a resolution of council, and it establishes the parameters that council is willing to participate.

Once the Department of Finance and Treasury Board has priced the debenture issue, each client receives loan documents for signature and a repayment schedule.

If a municipality returns all required loan documents by the closing date, the funds will be transferred to their bank account.

Fire departments

Fire departments are incorporated in different ways. They may be municipally owned, incorporated under the Rural Fire District Act, incorporated under special legislation or incorporated under the Societies Act. Options for funding the acquisition of capital assets depend on the way in which the fire department was incorporated.

In order to borrow or acquire capital assets through a municipality, a fire department must be registered. The process for registering a fire department is outlined in the Municipal Government Act.

The first step in determining the methods available to fund capital acquisitions is to verify the way the fire department is incorporated. This may require researching legislation or inquiring at Registry of Joint Stock Companies.

How different fire departments may acquire capital assets

All Fire Departments may receive a:

• grant from a municipality for capital assets
• loan from a municipality for capital assets
• grant or loan of assets without charge from a municipality

Fire Departments incorporated under the Rural Fire District Act may borrow:

• directly from a bank
• from Municipal Finance Division with a municipal guarantee

For fire Departments incorporated under special legislation, the incorporating legislation must be analyzed to determine if the fire department qualifies as a “service commission” under the Finance Act. If a fire department qualifies as a “service commission” under the act, this allows the fire department to borrow in its own name with a municipal guarantee. To qualify the fire department must provide a municipal service and have taxing powers.

Fire Departments incorporated under the Societies Act can’t borrow directly from Municipal Finance Division (a registered fire department isn’t a municipal enterprise under the Finance Act).