Regulation - Minister

Amendments to O. Reg. 438/97, O. Reg. 84/16 and O. Reg. 653/05 under the Municipal Act, 2001 and O. Reg 610/06 under the City of Toronto Act, 2006

Regulation Number(s):
O. Reg. 438/97, O. Reg. 84/16 and O. Reg. 653/05 under the Municipal Act, 2001
O. Reg 610/06 under the City of Toronto Act, 2006
Bill or Act:
City of Toronto Act, 2006, Municipal Act, 2001
Summary of Proposal:
Amendments to O. Reg. 438/97, O. Reg. 84/16 and O. Reg. 653/05 under the Municipal Act, 2001 and O. Reg 610/06 under the City of Toronto Act, 2006

The Ministry of Municipal Affairs is proposing to amend rules governing municipal investments and other municipal financial activities under the Municipal Act, 2001 and the City of Toronto Act, 2006.

Overview

The Modernizing Ontario's Municipal Legislation Act, 2017 (the Act) received Royal Assent on May 30, 2017. Upon proclamation, legislative amendments would enable municipalities under the Municipal Act, 2001 to invest in any security in accordance with a prudent investor standard and a regulation.

Accordingly, regulatory amendments under the Municipal Act, 2001 are proposed that would set out some of the rules for municipalities that decide to invest using the new prudent investor standard including:
-eligibility criteria;
-the governance framework; and
-investment approaches for more than one municipality investing together as a group.

In addition, the ministry is proposing additional technical amendments to the prescribed investment rules in the eligible investments regulation under the Municipal Act, 2001. The prescribed investment rules are the existing rules for municipal investment, and some municipalities may decide to continue investing using them, rather than opting for the new proposed prudent investment rules.

The ministry is further proposing amendments to regulations for municipalities concerning bond forward agreements. The amendments are proposed to O. Reg. 653/05 of the Municipal Act, 2001 and O. Reg. 610/06 of the City of Toronto Act, 2006.

Municipal Prudent Investment Rules

Eligibility Criteria
A municipality proposing to invest using the new prudent investment rules would be eligible to invest that way if the municipality (i) individually or together with one or more other municipalities had a minimum investment balance of $100 million or (ii) individually had a net financial assets balance of more than $50 million, based on Schedule 70 of the most recent Financial Information Returns of the respective municipality.

Governance Framework and Related Requirements
The municipality would need to establish an investment board that is a municipal services board and delegate to it control and management of the municipality's investments (i.e. control of day-to-day investing).

The municipal council would need to develop an investment policy outlining the municipality's objectives for return on investment, risk tolerance, liquidity needs and other considerations. The investment board would be required to adopt and maintain an investment plan that would outline how investments would be carried out. Each year, the investment board would be required to prepare an annual report, which would include a statement by the treasurer that investments were consistent with council's investment policy.

An investment board could not contain members of council or municipal staff, with the exception of a municipal treasurer.

Summary of Proposal continued on separate page. See link below.
Further Information:
Proposal Number:
17-MMA009
Posting Date:
October 6, 2017
Comments Due Date:
November 20, 2017
Contact Address:
John Ballantine, Manager
Ministry of Municipal Affairs
Municipal Finance Policy Branch
13th Flr 777 Bay St
Toronto ON M5G 2E5