Charter Community Debt Regulations

Regulation

Registration: R-069-2005
Source: Unofficial consolidation PDF (justice.gov.nt.ca)
Under: Charter Communities Act

This is an unofficial reading copy parsed from the Department of Justice consolidation PDF above — itself an office consolidation, not an official statement of the law. The authoritative text is in the Revised Statutes of the Northwest Territories, 1988 and the annual Statutes volumes.

s.2 amended by R-030-2008,s.2
s.6 amended by R-030-2008,s.3
s.7 amended by R-030-2008,s.4
s.9 amended by R-030-2008,s.5. Territorial Printer, Northwest Territories Yellowknife, N.W.T./2008©

Cites

s.9 Conflict of Interest Act

Cited by

None.

Contents

1. 1 2. 2 3. 3 4. 4 5. 5 6. 6 7. 7 8. 8 9. 9

The Commissioner, on the recommendation of the Minister, under section 171 of the Charter Communities Act and every enabling power, makes the Charter Community Debt Regulations.

Interpretation

In these regulations, "municipal purpose corporation" means a corporation established for a municipal purpose, in accordance with section 71 of the Act, by the charter community or in which the charter community acquires or holds shares.

For the purposes of these regulations, the charter community’s revenue for a fiscal year consists of all amounts recorded as revenue for the previous fiscal year in the audited financial statements of the charter community, or if the audited financial statements for the previous fiscal year are not yet approved then the most recent audited financial statements of the charter community, from the following revenue sources:

(a) any funds provided by the Government of the Northwest Territories each fiscal year for operations and maintenance or for community public infrastructure, but not including any funds provided for the operation and maintenance of water and sewage services;

(b) any funds provided by the Government of Canada or the Government of the Northwest Territories for capital infrastructure;

(d) user fees and levies charged by the charter community.

R-030-2008,s.2.

(1) For the purposes of these regulations, the total principal amount of all debt of the charter community consists of

(a) the principal outstanding on all long-term and short-term debt owed by the charter community and municipal purpose corporations;

(b) the principal outstanding on any loans that are in good standing and that have been guaranteed by the charter community or a municipal purpose corporation;

(c) any amount that the charter community is liable to pay in respect of loans that are not in good standing and that have been guaranteed by the charter community or a municipal purpose corporation;

(d) the principal outstanding on all long-term financial commitments and guarantees made by the charter community and municipal purpose corporations; and

(e) the amount of any other liabilities recorded in the audited financial statements of the charter community or a municipal purpose corporation.

(2) For the purposes of these regulations, the total principal amount of all debt of the charter community is reduced by

(a) any portion of the amounts in paragraphs (1)(a) and (b) that the charter community is entitled to recover from another municipal corporation or government;

(b) the amount of any sinking fund held for the repayment of a debt; or

(1) For the purposes of these regulations, the total debt service payments on all debt owed by the charter community consists of

(a) for debt owed by the charter community or a municipal purpose corporation for which principal must be paid during the following 12 months, the total amount of principal and interest that the charter community or municipal purpose corporation will be required to pay in respect of that debt during the following 12 months;

(b) for debt owed by the charter community or a municipal purpose corporation for which principal need not be paid during the following 12 months, the total of the pro rata amounts in respect of that debt determined under subsection (3) for the following 12 months;

(c) the total amount that council estimates on reasonable grounds that the charter community or a municipal purpose corporation will be liable to pay during the following 12 months in respect of loans that are not in good standing and that have been guaranteed by the charter community or municipal purpose corporation;

(d) the amounts that the charter community or a municipal purpose corporation will be liable to pay during the following 12 months in respect of financial guarantees and commitments made by the charter community or municipal purpose corporation; and

(e) the amount of any other current liabilities recorded in the audited financial statements of the charter community or a municipal purpose corporation.

(2) For the purposes of these regulations, the total debt service payments on all debt owed by the charter community is reduced by the amount of any portion of the amounts in paragraphs (1)(a) and (b) that the charter community is entitled to recover from another party during the following 12 months.

(3) The pro rata amount referred to in paragraph (1)(b) for a debt is determined by the formula PRA = D x (12 ÷ E), where

(a) "PRA" is the pro rata amount for the borrowing;

(b) "D" is the total amount of principal and interest that the charter community will be required to pay from the calculation time to the end of the amortization period of the borrowing; and

Debt Limits

Pursuant to subsection 112(1) of the Act, a charter community is subject to the limits on borrowing established by these regulations.

At the time of application for financing, the principal amount of a charter community’s short-term borrowing must not exceed 15% of the charter community’s revenue for the prior fiscal year. R-030-2008,s.3.

(1) At the time of application for financing, the principal amount of a charter community’s long-term borrowing must not exceed the amount determined by the formula (A x 2) minus B, where

(a) "A" is the charter community’s revenue for a fiscal year; and

(b) "B" is the principal amount of the charter community’s short term debt.

(2) At the time of application for financing, the total of all debt service payments on all debt owed by the charter community must not exceed

(a) where the charter community’s property tax revenue for a fiscal year is less than 20% of the charter community’s revenue for a fiscal year, the lesser of

(i) 25% of the charter community’s revenue for a fiscal year, or

(ii) the amount of funds provided in the fiscal year by the Department of Municipal and Community Affairs for community public infrastructure; or

(b) where the charter community’s property tax revenue for a fiscal year is 20% or more of the charter community’s revenue for a fiscal year, 25% of the charter community’s revenue for a fiscal year.

R-030-2008,s.4.

Exemption from Voter Approval

The Minister may by order, under paragraph 116(2)(a) of the Act, exempt a bylaw authorizing a long-term debt from requiring the approval of the voters if

(a) the expenditure to be financed by the long-term debt

(i) is, in the opinion of the Minister, in the public interest,

(ii) is needed to improve or maintain public health, the environment or public safety or to meet any standards required by an enactment of the Northwest Territories or Canada, or

(iii) is the lesser of $250,000 or 5% of the long-term debt limit for that charter community; or

(b) the bylaw is authorizing a long-term debt that was previously approved by the voters but is invalid because of a minor irregularity in content or procedure.

Debt Management Plan

A charter community’s debt management plan must

(a) describe the measures to be taken to ensure that

(i) each borrowing decision made by or on behalf of the charter community complies with the Act, this regulation and the Conflict of Interest Act, and

(ii) no council member or officer benefits from, or is reasonably perceived to benefit from, borrowing decisions made by or on behalf of the charter community;

(b) identify the officer who is to be responsible for all borrowing and describe that officer’s duties;

(d) specify the prescribed debt limits that apply to the charter community under the Act and these regulations;

(e) specify the purposes for which the charter community is authorized to borrow under the Act;

(f) specify the purposes for which the charter community is authorized to borrow by Council, both for short-term borrowing and long-term borrowing, and specify the circumstances under which the borrowing may occur;

(g) specify any types of debt that the charter community is to be prohibited from creating;

(h) describe how the charter community will service its debt;

(i) identify the financial constraints on the capacity of the charter community to borrow and establish any further debt limits that council may approve, including

(i) the maximum debt per resident of the charter community, and

(ii) Repealed, R-030,s.5.

(iii) the maximum debt per dollar of the charter community’s annual revenue;

(j) state whether derivatives may be used and if so,

(i) state the conditions under which derivatives may be used,

(ii) specify the types of derivatives that may be used, and

(iii) specify how derivative risk, counter-party risk, termination risk, liquidity risk, remarketing risk and credit risk will be measured, evaluated and managed;

(k) identify, with respect to long-term debt,

(i) the maximum terms of the debt,

(ii) the target dates for maturity of the debt,

(iii) the plan for using optional redemption features, and

(iv) the plan for using fixed rate debts, foreign currency debts or other debts;

(l) specify the portion of the borrowing limits the charter community expects to use;

(m) set out the procedure the senior administrative officer will follow in reporting to council on the charter community’s borrowing activities, including compliance with the Act, these regulations and the charter community’s debt management plan;

(n) set out the term of the plan, not exceeding five years, and a procedure for regular annual review of the debt management plan during the term of the plan by council;

(o) identify the approach the charter community will take to meet current and future debt obligations, including specifying whether the charter community will set aside funds to finance future projects; and

(p) identify the information required to make a business case for any proposed borrowing that would increase total debt, including the sources of money to be used to pay the principal and interest outstanding on the current and proposed debt.