Terms & Concepts in the Community Charter: Borrowing & Liability Authority
The authority for council to incur liabilities is outlined in
Part 6, Division 3 of the Community Charter. The legislation
addresses the types of liabilities available to council, the applicable limits,
the need for elector approval and, in the case of borrowing, the
requirements for issuing securities. Given that procedural
requirements are somewhat different for each type of borrowing,
Division 3 provides separate authority of each type of borrowing and
for other types of liabilities. However, it is important to note
that the limits provided under that Division apply to the overall
total of both borrowing and other liabilities.
Types of BorrowingCouncil may undertake three different types of borrowing:
Types of LiabilitiesIn addition to the borrowing noted above, councils may incur other forms of liabilities, under the following authorities:
Liability LimitsThe total debt allowed to be incurred through revenue anticipation borrowing is determined by the amount of tax revenue remaining to be collected by the municipality during the current year, plus the amount of money remaining to be collected from other governments.
The maximum amounts allowed through short-term
capital borrowing($50/capita), long-term borrowing and liabilities under
agreement are subject to a limit established by regulation.
The regulation limits annual servicing costs of defined liabilities
to 25% of defined municipal revenue.
Elector ApprovalRevenue anticipation borrowing bylaws and bylaws for short-term capital borrowing do not require elector approval. Most long-term borrowing and liabilities under long-term agreements, however, do require this approval. Although there are some exceptions provided for under the Community Charter and the Municipal Liabilities Regulation.
Issuing SecuritiesAs was the case under the Local Government Act, all long-term debenture financing under the Community Charter must be done by the municipality's regional district, through the Municipal Finance Authority. The municipality is not, however, required to adopt a security issuing bylaw in addition to its loan authorization bylaw. Under the Community Charter, the municipality may provide for the issue of securities through council resolution.
Please direct questions or comments to
Advisory Services Branch.