O. Reg. 839/21: DEBT-RELATED FINANCIAL INSTRUMENTS AND FINANCIAL AGREEMENTS
filed December 10, 2021 under Municipal Act, 2001, S.O. 2001, c. 25
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made under the
Municipal Act, 2001
Made: December 9, 2021
Filed: December 10, 2021
Published on e-Laws: December 10, 2021
Printed in The Ontario Gazette: December 25, 2021
Amending O. Reg. 653/05
(DEBT-RELATED FINANCIAL INSTRUMENTS AND FINANCIAL AGREEMENTS)
1. Subsection 1 (1) of Ontario Regulation 653/05 is amended by adding the following definitions:
“Canada Infrastructure Bank” means the corporation established under subsection 5 (1) of the Canada Infrastructure Bank Act (Canada); (“Banque de l’infrastructure du Canada”)
. . . . .
“conditional loan agreement” means a financial agreement described in section 12; (“accord de prêt conditionnel”)
2. The Regulation is amended by adding the following sections:
Conditional Loan Agreements
Conditional loan agreement with Canada Infrastructure Bank
12. (1) A municipality may enter into a conditional loan agreement with the Canada Infrastructure Bank for a loan made by the Canada Infrastructure Bank to the municipality for the purpose of long-term borrowing.
(2) A conditional loan agreement must include one or more conditions which, if satisfied in accordance with the agreement, would extinguish the requirement for the municipality to repay all or part of the principal and pay all or part of the interest of the debt.
(3) A by-law authorizing a conditional loan agreement may provide,
(a) that an amount equal to or less than the maximum amount under clause 13 (1) (a) may be borrowed;
(b) that the borrowed amount may be advanced to the municipality in one or more instalments in any year; and
(c) for repayment of any amount of principal and payment of any amount of interest of the debt in one or more instalments in any year.
(4) A lower-tier municipality in a regional municipality does not have the power to enter into a conditional loan agreement.
Conditions
13. (1) A municipality shall not enter into a conditional loan agreement unless the agreement sets out,
(a) the maximum amount of money available to be borrowed;
(b) a fixed rate of interest; and
(c) the manner of determining how any amount that is required to be paid by the municipality to the Canada Infrastructure Bank will be calculated, including how instalments will be calculated.
(2) A municipality shall not enter into a conditional loan agreement unless the agreement provides that it shall not be assigned without the prior written consent of the municipality.
(3) A municipality shall not enter into a conditional loan agreement that provides for the giving of any security by the municipality for the debt.
(4) A municipality shall not enter into a conditional loan agreement unless the loan ranks concurrently and equally in respect of payment of principal and interest with all other debentures and other financial instruments for long-term borrowing of the municipality.
Deemed debenture
14. A conditional loan agreement is deemed to be a debenture for the purpose of the following provisions of the Act:
1. Section 403.
2. Subsections 404 (1), (2), (3), (4), (5), (6), (8), (10), (11), (12), (13) and (14).
3. Subsection 405 (2).
4. Section 406.
5. Subsections 408 (2.1) and (3), clauses 408 (4) (a) and (c) and subsection 408 (7).
6. Subsections 412 (2) and (4).
By-law under s. 404 of the Act
15. If a municipality passes a by-law under section 404 of the Act authorizing a conditional loan agreement, the by-law may provide for the payment of any amount in one or more instalments in any year to the municipality by the applicant municipality or school board.
Application of funds
16. (1) Money received by a municipality from a conditional loan agreement and any earnings derived from the investment of that money shall be applied only for the purposes for which that agreement was entered into.
(2) If the money described in subsection (1) is in excess of or is not required for the purpose for which the conditional loan agreement was entered into, it shall be applied,
(a) to repay the principal or pay interest of the debt; or
(b) to repay any other capital expenditure of the municipality if the debt charges for the other expenditure are or will be raised from the same class of ratepayers from which the amounts required for the repayment of the loan are raised.
(3) A municipality may reduce an amount to be raised for the repayment of a loan to the extent that,
(a) an amount applied in accordance with subsection (2) is sufficient to repay the principal and interest of the loan on the date or dates they are repayable; or
(b) all or part of the principal and interest is no longer required to be repaid or paid, as the case may be, because a condition referred to in subsection 12 (2) has been satisfied.
Option to use conditional loan agreement
17. A conditional loan agreement may be used instead of the issue of debentures to finance a work for which a municipality has authorized temporary borrowing under subsection 405 (1) of the Act.
Commencement
3. This Regulation comes into force on the day it is filed.