Security Issuing Bylaw Requirements
Regional districts use security issuing bylaws to access long-term debenture debt for themselves, or for their member municipalities, through the Municipal Finance Authority. These bylaws must meet certain legislative requirements before they may be approved by the Inspector of Municipalities.
Once a loan authorization bylaw has received a provincial certificate of approval, the local government may use temporary borrowing to finance the construction and development of a capital project, or the local government may proceed directly to long-term debt through a regional district security issuing bylaw. For local governments in B.C., long-term debt can range between five and 30 years.
The Municipal Finance Authority has member representation from all regional districts in the province, and is governed by a ten-person Board of Trustees, elected from the members. One of the Municipal Finance Authority’s key functions is to undertake security issuing (the process of offering securities, including bonds, debentures, notes, etc. to raise funds for long-term debt), on behalf of all local governments. The Municipal Finance Authority compiles all long-term debt requests and sells debentures (a debt instrument used to borrow money, backed by general credit, not specific assets) through the bond markets, twice annually (in the spring and fall).
Municipalities do not borrow long-term directly through the Municipal Finance Authority and instead request their regional district to borrow on their behalf. This reflects that the local government borrowing system in B.C. is built on the concept of joint-and-several liability. The collective liability of regional districts for their members’ debt underpins the financial integrity of the local government borrowing system in B.C. and helps the Municipal Finance Authority maintain its AAA credit rating. This is critical to provide access to low-cost borrowing for local governments.
Provincial Bylaw Review
Regional districts submit security issuing bylaws to the Inspector of Municipalities for a certificate of approval before the bylaw and supporting material proceeds to the Municipal Finance Authority for security issuing. In support of the Inspector of Municipalities’ approval role, provincial government staff review regional district security issuing bylaws against the requirements of the legislation.
Regional districts may submit a certified, adopted security issuing bylaw and the signed corporate officer's certificate by email to:
A hard copy is not required. The bylaw can be attached to the email separately from the certificate.
Before a regional district may adopt a security issuing bylaw, a loan authorization bylaw must be adopted by the local government for which the borrowing will be undertaken and approved by the Inspector of Municipalities. Starting the loan authorization bylaw process early allows time for the Inspector's review process and to receive all the necessary approvals.
Provincial Certificate of Approval for Security Issuing
A local government may apply for a provincial certificate of approval for security issuing after all the following have been met:
- The local government loan authorization bylaw has received provincial statutory approval
- Participating area approval or approval of the electors has been obtained (if applicable)
- The loan authorization bylaw has been adopted by the local government
- The one month challenge period has passed for the loan authorization bylaw
- The municipal council has passed a security issuing resolution (if applicable)
- The security issuing bylaw has been read three times and adopted by the regional district*
- The 10 day challenge period has passed for the security issuing bylaw
A provincial certificate of approval certifies that the bylaw meets statutory procedural and other requirements and provides financing institutions like the Municipal Finance Authority assurance that the bylaw cannot be challenged for failing to comply with legislative requirements.
Note that unlike most other local government bylaws, security issuing bylaws may be read and adopted on the same day.
Five year expiration of loan authorization bylaws
A local government's authority to borrow under a loan authorization bylaw ends five years from the date of bylaw adoption. Unless a temporary borrowing bylaw has been adopted, a security issuing bylaw must be adopted within five years of the loan authorization bylaw’s adoption date. A temporary borrowing bylaw secures the ability to borrow and allows a security issuing bylaw to be adopted beyond the five-year period.
Certificate of Approval for loan authorization bylaws
Usually, regional districts apply for a certificate of approval for a security issuing bylaw after the certificate of approval for the loan authorization bylaw has been issued, to be sure all requirements have been met. However, the legislation does not prevent a regional district from applying for both certificates at the same time, provided that the challenge period for both the loan authorization bylaw and the security issuing bylaw have passed. In both cases the security issuing bylaw cannot be adopted until after the challenge period for the loan authorization bylaw has expired.
Content of Security Issuing Bylaw
The Municipal Finance Authority provides recommended templates for regional district security issuing bylaws (one for regional district borrowing and one for borrowing on behalf of a member municipality). There are several provisions that must be present in the security issuing bylaw. These provisions change slightly when a regional district is undertaking borrowing for a municipality.
All security issuing bylaws must contain, at minimum, the following:
- Loan authorization bylaw number that authorizes the borrowing
- Amount of borrowing authorized by each loan authorization bylaw
- Amount already borrowed under each loan authorization bylaw (if applicable)
- Amount remaining to be borrowed under each loan authorization bylaw
- Amount authorized by the security issuing bylaw to be issued under each loan authorization bylaw
- The maximum debenture term
Corporate Officer's Certificate
When a regional district submits a security issuing bylaw for provincial approval, it must be accompanied by a signed corporate officer's certificate. The corporate officer's certificate certifies that the bylaw was passed at a legal board meeting, followed all the legal procedures, that the challenge period has passed, and no application was made to quash the bylaw.
An online version of the certificate can be downloaded from the Municipal Finance Authority website:
Municipal Security Issuing Resolution & Agreement
All long-term borrowing must be undertaken by a regional district through the Municipal Finance Authority. Municipalities may request that their regional district undertake borrowing on their behalf by forwarding to their regional district the following:
- a certified copy of the municipal security issuing resolution,
- a certified copy of the adopted loan authorization bylaw,
- the certificate of approval for the loan authorization bylaw, and
- a copy of the liability servicing limit certificate used for approval of the loan authorization bylaw.
The municipal security issuing resolution forms part of the legal documentation for Municipal Finance Authority financing and is used to prepare the agreements and demand notes between the regional district and their member municipalities.
The municipal security issuing resolution must include the following:
- The loan authorization bylaw number
- A stated term, which cannot be greater than the term in the loan authorization bylaw
- A stated amount, which cannot be greater than the amount in the loan authorization bylaw
- Consent language (asking the regional district to consent to undertake the financing)