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 (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, 2010, and The Local
Improvements Act, 1993 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, rural or northern 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, rural or northern 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.
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 through the municipal clerk/administrator. 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
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 must apply to the Local Government Committee to establish or re-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. Debt limits are established with a sunset date of up to three years after the debt limit is established.
If a city wishes to have its debt limit established or re-established the Local Government Committee requires the following information to be submitted:
Please contact the Secretary, Local Government Committee for information on borrowing in excess of the debt limit.
Sealed, certified copy of resolution requesting the board to establish a debt limit. I.e.
"Pursuant to Section 133 of The Cities Act, City Administration is authorized to request the Saskatchewan Municipal Board to (re) establish the debt limit for the (name of municipality)
at $ ."
- Financial Information: Latest audited financial statement. Provide additional information identifying any significant changes in the financial health of the municipality since
the latest audited financial statement. Include information on any new debt incurred, cash or reserve changes, contingencies, etc. Latest monthly trial balance.
- Current year operating budget.
Capital works plan, if available. If no capital works plan, an itemized listing of proposed works for the next 5 years, including financing and borrowing requirements.
- Provide a break down of how the proposed debt is and will be used. Include information on future projects and debt related to those projects.
- Provide information that will assist the committee in understanding the overall economic conditions of the city. I.e. assessment growth, permits issued, new industry, etc.
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 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 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, rural or northern 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 and Sections 145 and 146 of The Northern Municipalities Act, 2010.
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 Ministry of Government Relations website.
Does a council need approval to borrow an amount equal to or less than its own source revenue?
Section 162(1) of The Municipalities Act and Section 184(1) of The Northern Municipalities Act, 2010, allows council to borrow up to this amount without approval unless the term of borrowing exceeds three years or in any case, if the municipality is borrowing by debenture.
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 Ministry of 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.
As explained earlier in the discussion about the board's mandate,
hearings for the above mentioned committees are conducted under what is best described as a Hybrid Model,
leaning more to the Inquiry Model.
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:
For additional information municipal administrators should contact Local Government Committee staff.
- Three copies of a bylaw finally passed, certified and sealed.
- A completed water and sewer utility fund summary, which is the application for sewer and water rate approval.
- Latest audited financial statements. If latest audited financial statements are not for the immediate preceding calendar year, also include the trial balance for the last fiscal year.
- Current year trial balance.
- Current year sewer and water utility budget.
- Water rate policy and capital investment strategy, if available. (For further detail see: www.municipal.gov.sk.ca/Health-Safety/Public-Health-Welfare under Waterworks Regulatory Requirements.)
- Organized Hamlets only - copy of revenue and expenses for the organized hamlet.
- Public Utility Boards only - on initial application provision of copies of bylaws establishing the public utility board. If membership changes, provide updated copies of bylaws.
Draft water and sewer rate bylaws and the utility fund summary form are available in the forms section
of this website.
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.
The intent is to have a self-sustaining utility. The goal is to have a utility surplus after operating expenses and debt repayment. This will allow the municipality to set aside reserves for future utility capital projects.
When can the water and sewer rates be effective?
The rates can be effective on or anytime after the committee's approval date.
What factors does the committee consider in determining if rates are equitable?
In considering whether the rates are equitable, some factors the committee considers:
- Charges to customers are according to the cost of services they utilize. Based on:
- the demands they place on the system; and
- the impact they have on the system.
- Equal charges may not be equitable. If all users place the same demand and have the same impact on the system they may be equal.
- Social or economic policy should not be factored into the rates. There are other mechanisms a municipality can utilize if they wish to subsidize a user than to adjust the utility rate to a lesser rate.
Does a Public Utility Board require the committee to approve its sewer and water rates?
The committee approves water and sewer rates for public utility boards (PUB) where the establishing municipalities have delegated the authority for the rates to the PUB.
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).
How often does the committee meet?
The committee meets approximately once a week.
How long does it take for an application to be reviewed and approved?
This is dependent on the volume of applications received, complexity of the application, and completeness and orderliness of the application.
With whom does a council or public utility board file its applications?
All applications are to be filed with:
Secretary, Local Government Committee
Saskatchewan Municipal Board
480 - 2151 Scarth Street
REGINA, SK S4P 2H8