What is the Local Government Committee?
As part of the Saskatchewan Municipal Board, the Local Government Committee ensures financial credibility and stability of local authorities (school divisions, cities, towns, villages, resort villages, rural and northern municipalities), ensures equity for municipal water and sewer utility users, and provides assurance to lenders and the general public of a local authority's financial health. The committee is required by provincial legislation, including The Municipalities Act, The Northern Municipalities Act, The Local Improvements Act, 1993 and The Education Act, 1995 to review and authorize borrowing, review and approve applications to undertake local improvements, and review and approve water and sewer utility rates for urban and northern municipalities. The committee also reviews and establishes debt limits for cities under The Cities Act.
The committee also assists and advises local authorities in complying with legislated requirements, procedures and process for marketing debt issues.

What local authority initiatives require the committee's review and approval?

Review and approval by the committee is required when

• a town, village, resort village or rural municipality borrows money
  • that causes it to exceed its debt limit (also applies to cities); or
  • that is not repayable within a three year term; or
  • that is secured by a debenture issue.
• a town, village, resort village or rural municipality
  • lends money or guarantees the repayment of a loan in an amount that would cause the municipality to exceed its debt limit;
  • enters into an agreement to purchase or lease capital property, or to share in the operating losses or a service, facility or project, if the term exceeds five years;
  • establishes rates for the use of water and sewer utility services (including related penalties and discounts) (also applies to northern municipalities);
  • invests in certain securities.
• a city, town, village, resort village, rural or northern municipality
  • undertakes a local improvement project pursuant to The Local Improvements Act, 1993.
• a northern municipality borrows money that is not repayable within the current year.
• a school division borrows money for any capital purpose (most commonly secured by loan or debenture).

The committee also has general authority to inquire into the financial and other affairs of a city, town, village, resort village, rural municipality, northern municipality or school division, when the local authority's financial position warrants such action.

How does a local authority apply to the Local Government Committee?
All applications to the committee must be from the respective councils or school division boards through the municipal clerk/administrator or school secretary-treasurer. Applications are considered individually and supporting material requirements differ for various types of transactions. For information on the material requirements, as well as frequently asked questions for each category, please see the following sections:

• Application for borrowing
• Application for local improvement approvals
• Application for approval of water and sewer utility rates
• General

APPLICATION FOR BORROWING

How does a local authority apply for approval to borrow?
Towns, Villages, Resort Villages, Rural and Northern Municipalities
The following material is to be submitted for all borrowing applications:

• Completed municipal borrowing application;
• Sealed, certified copy of a resolution or bylaw with one reading;
• Capital works plan, if available;
• Written confirmation of outside source of funds. For example, if the municipalities in the area are contributing funds towards the project then a complementary resolution from the participating municipalities confirming the funding is required. As well, written confirmation of funding provided from provincial/federal grants is required.
• Copies of approval from provincial agencies, such as Saskatchewan Environment or Saskatchewan Watershed Authority. Approvals from these agencies may be required for utility projects such as raw water lines, water treatment plants, sewage lagoon upgrades or lines for distribution of water or collection of sewage.

Additional information is required for capital water and sewer projects. Municipalities need to provide figures showing the water and sewer revenue required to offset the annual operating and debt repayment costs. Calculations for revenue versus expenditures can be completed on the borrowing application form.

Administrators should contact Local Government Committee staff if council is contemplating borrowing money. It is important to start the process early to avoid a situation where funds are needed and necessary approvals are not in place. The committee can review applications for borrowing based on estimated construction costs and estimated grants receivable and issue an approval in principle. This gives municipalities assurance that they will be able to finance these projects once other cost and financing approvals are in place.

Cities
Cities must apply to the Local Government Committee to establish their debt limit. They shall not borrow money in excess of this debt limit unless the borrowing is approved by the Local Government Committee. If a city wishes to have its debt limit established, or exceed its debt limit, the committee requires a resolution or bylaw of council indicating the dollar amount to be set as the debt limit or excess borrowing or the amount expressed in percentage terms (e.g. 75% of previous year's revenue). The latest audited financial statement and capital works plan, if available, are also requested.

School Divisions
The following material is to be submitted if there is no provincial funding involved and the school division is borrowing for capital purposes:

• Completed school division capital borrowing application form;
• Sealed, certified copy of resolution which has been passed prior to notice of intention being published;
• Latest audited financial statement;
• Copy of the notice of intention;
• Certified statement giving the names of the newspapers and the dates published, together with a copy of the notice;
• Written notification of results of the hearing and if arguments were put forward at the hearing a certified statement summarizing all arguments and copies of written submissions presented at the hearing.

If provincial funding is involved, all the above information is required, except for the completed application form. The committee will receive a copy of the E-2 and/or E-4 from Saskatchewan Learning confirming the project as well as the amount of provincial funding involved. Secretary-treasurers should contact Local Government Committee staff if the Board of Education is contemplating borrowing money.

What does the committee consider when reviewing borrowing applications?
The committee is bound by section 23 of The Municipal Board Act to take into consideration a number of factors when reviewing borrowing applications. The committee reviews applications to ensure the amount of borrowing is manageable for the local authority. The committee will work with the local authorities to ensure applicable rates, such as water and sewer and/or mill rates are sufficient to manage annual repayment of the debt, as well as to allow for reserve funds for future capital expenditures. The overall financial position of the local authority will also be reviewed. Other measures are applied to analyze debt but, in each case, the need for the work is balanced against ability to repay the debt. Staff will provide advice and draft documents such as bylaws throughout the entire process.

What is the committee's borrowing policy?
For more information on the committee's borrowing policy see Publications & Policies.

What should a council or board of education know about differences in mode of issue (loan vs. debenture) for borrowing?
Loans are acceptable for four years where the interest rate is fixed to prime. Terms for loans greater than four years must have the interest rate specified for the term. Debentures with interest rates specified can be issued for any term.

Why does a council or board of education need approval from outside agencies before obtaining approval from the committee?
The Municipal Board Act states that the committee shall not grant permission unless the approval or consent from other agencies required by any Act has been first obtained by the applicant.

Does a council need approval to enter into long-term lease/financing/purchase agreements?
Approval is required for:

• A lease/agreement related to capital property with a fixed term beyond five years; or, with a fixed term of five years or less, but with a right of renewal that would, if exercised, extend the original term beyond five years;
• An agreement to contribute to the operating expenses or to share in the operating losses of a service, facility or project, if the term of the agreement exceeds five years; or, if the term of the agreement is five years or less but with a right of renewal that would, if exercised, extend the original term beyond five years.

Does the committee charge for borrowing approvals?
There is no cost to a municipality for applying to the committee for approvals. There are costs associated with issuing debentures. The cost is proportionate to the amount being borrowed and serves to offset expenses incurred for drafting debenture bylaws, and drafting and typing debentures. For example, the charge for issuing a $200,000 ten year annuity debenture is $1,500 authorization fees plus $200 for preparing the actual debenture.

Does the council of a town, village, resort village or rural municipality need to advise the committee of public notice of borrowing?
Public notice is to be given for borrowing as required in Sections 127 and 128 of The Municipalities Act. The committee requires a statement from the municipality confirming the date that public notice was given. The statement is included in the application form. Information respecting public notice can be obtained from Government Relations' website.

Does a council need approval to borrow an amount equal to or less than its own source revenue?
No, Section 166(2) of The Municipalities Act allows council to borrow up to this amount without approval but not more and keeping in mind that operating debt is considered part of this amount.

What does own source revenue mean?
Own source revenue includes taxes, fees and charges, utility income and investment income. All grants, including grants in lieu of taxes, are excluded from calculating own source revenue.

APPLICATION FOR APPROVAL TO UNDERTAKE A LOCAL IMPROVEMENT

How does a council apply for approval to undertake a local improvement?
Municipal administrators should contact the Local Government Committee staff if council is contemplating a local improvement project. The committee may issue its approval to undertake a local improvement work/service upon receipt of required documentation and may set terms and conditions for approval. The municipal administrator should refer to the Local Improvements Manual published by Municipal Relations Division, Government Relations for information on process and required documentation. The manual contains forms such as local improvement report, sample resolutions and preliminary assessment schedules. The types of works or services which can be considered as a local improvement are set out in The Local Improvements Act, 1993.

What does the committee consider when reviewing local improvement applications?
The committee ensures that applications are prepared in accordance with the requirements of The Local Improvements Act, 1993. There are three types of applications: (a) when property owners have the right to petition against the work (b) when property owners do not have the right of petition against the work; or (c) when property owners have petitioned council for the work to be done. The committee may confirm that the project is a local improvement and that the land being assessed is benefited. The committee reviews applications including financial arrangements and may issue approval to undertake the work and the financial arrangements with or without conditions.

Can the assessable frontage for a special assessment be expressed in feet?
The Local Improvements Act, 1993 sets out several possible bases for council to choose a special assessment from including frontage (the most common). However, if council chooses frontage, the Act indicates that the special assessment must be expressed as a rate per lineal metre, rather than a rate per foot.

When does the committee hold a public hearing on a local improvement application?
The committee will hold a public hearing on a local improvement application when council chooses not to give property owners the right to petition against the work. Generally, councils do not allow the right of petition by property owners when the local improvement is of an emergent or public safety nature or has been previously petitioned out by property owners.

Will financing of the local improvement impact on the debt of the municipality?
Any borrowing for the municipal portion of any work approved will impact on the debt level of the municipality. Therefore, the committee may set maximum borrowing levels. Borrowing the property owners' portion will not have a similar impact as the frontage taxes assessed against benefiting land are used to repay the debt.

How does a council finalize a local improvement after completion of the project?
Municipal administrators should contact Local Government Committee staff when ready to finalize a local improvement. After completing the project, a final assessment schedule is prepared which outlines the final costs of the project. The final assessment schedule form is in the Local Improvements Manual.
If council is financing the final costs of the project internally, then a resolution or bylaw is required which indicates that costs are being paid out of funds of the municipality. A sample resolution and/or bylaw are in the forms section of this website. If council intends to finance a portion from its own funds and/or borrow a portion of the costs, then the final assessment schedule can be forwarded to committee staff for preparation of a draft bylaw.

APPLICATION FOR APPROVAL OF WATER AND SEWER UTILITY RATES

What information does the committee require from a town, village, resort village, and rural or northern municipal council when applying for approval of rates for the use of water and sewer services?
The committee approves water and sewer rates, charges, tolls or rents set by a council as it relates to the use of the service as well as discounts or additional amounts or percentages to be charged for arrears relating to the rates, charges, tolls or rents. The following material must accompany these applications:

• Two copies of a bylaw finally passed, certified and sealed; and
• A water and sewer utility fund summary showing five years history of revenue, expenditures and capital projects as well as an estimate of the change in revenue to be received by changing the rates; and an explanation of why the rate changes are required.

What does the committee consider when reviewing applications for approval of water and sewer rates?
When considering applications for water and sewer rate changes, the committee's approval is based on the following criteria:

• That rates are equitable to all users regardless of classification;
• That the revenue generated by the utility is sufficient to offset all expenditures including debt retirement resulting from borrowing for capital utility projects; and
• Municipalities are encouraged to set aside funds for future capital utility projects.

When can the water and sewer rates be effective?
The rates can be effective on or anytime after the committee's approval date.

ANNUAL REPAYMENT CALCULATION

How does a council calculate an annual payment (amortization) schedule?
This form will assist in calculating the annual repayment for loans, debentures and special assessments for local improvements. Download our amortization calculation sheet (Microsoft Excel spreadsheet).

GENERAL

How often does the committee meet?
The committee meets approximately once a week. If everything is in order, applications are reviewed and considered for approval within a week.

With whom does a council or board of education file its applications?
All applications are to be filed with: