Regulation - LGIC
Notice to amend Ontario Regulation 403/02 (Debt and Financial Obligation Limits) under the Municipal Act, 2001 to extend the increased annual debt-limit rules for York Region
Regulation Number(s):
Ontario Regulation 403/02 (Debt and Financial Obligation Limits)
Instrument Type:
Regulation - LGIC
Bill or Act:
Municipal Act, 2001
Summary of Decision:
-This regulation was filed on April 15, 2021 and will come into force on July 1, 2021.
-The province is extending the increased debt-limit rules for York Region for an additional 10 years until December 31, 2031.
-Since 2011, Ontario Regulation 403/02 Debt and Financial Obligation Limits under the Municipal Act, 2001, has provided increased debt-limit rules for York Region which enables the Region to use a growth-related debt and financial obligation limit which includes adding a Growth Cost Supplement to the Ministry determined Annual Repayment Limit (ARL), subject to certain requirements.
-These increased debt-limit rules were set to expire on December 31, 2021.
-The province is extending the increased debt-limit rules for York Region for an additional 10 years until December 31, 2031.
-Since 2011, Ontario Regulation 403/02 Debt and Financial Obligation Limits under the Municipal Act, 2001, has provided increased debt-limit rules for York Region which enables the Region to use a growth-related debt and financial obligation limit which includes adding a Growth Cost Supplement to the Ministry determined Annual Repayment Limit (ARL), subject to certain requirements.
-These increased debt-limit rules were set to expire on December 31, 2021.
Analysis of Regulatory Impact:
-As these increased debt-limit rules have been in place since 2011, there will be no additional direct compliance costs to York Region.
-However, there may be some administrative costs associated with the Region's calculations under its increased debt-limit rules. The Ministry of Municipal Affairs and Housing issues an annual debt limit for each municipality (other than the City of Toronto) and municipal treasurers are required to update this limit before their municipality commits to a long-term debt or financial obligation.
-There are potential ongoing cost savings to the Region, as the regulatory change may enable York Region to use an increased debt limit for issuing new long-term debt compared to if this change was not made. An increased debt limit would allow them to take on additional long-term debt without needing to seek approval of the LPAT for permission to do so. This may assist the Region by potentially reducing its costs associated with seeking an approval from the LPAT.
-However, there may be some administrative costs associated with the Region's calculations under its increased debt-limit rules. The Ministry of Municipal Affairs and Housing issues an annual debt limit for each municipality (other than the City of Toronto) and municipal treasurers are required to update this limit before their municipality commits to a long-term debt or financial obligation.
-There are potential ongoing cost savings to the Region, as the regulatory change may enable York Region to use an increased debt limit for issuing new long-term debt compared to if this change was not made. An increased debt limit would allow them to take on additional long-term debt without needing to seek approval of the LPAT for permission to do so. This may assist the Region by potentially reducing its costs associated with seeking an approval from the LPAT.
Further Information:
O. Reg. 403/02: DEBT AND FINANCIAL OBLIGATION LIMITS
Proposal Number:
21-MMAH010
Posting Date:
Summary of Proposal:
-Since 2011, Ontario Regulation 403/02 Debt and Financial Obligation Limits under the Municipal Act, 2001, has provided increased debt-limit rules for York Region which enables the Region to use a growth-related debt and financial obligation limit which includes adding a Growth Cost Supplement to the Ministry determined ARL, subject to certain requirements.
-The Annual Repayment Limit (ARL) may be summarized as the maximum amount a municipality may spend on principal and interest payments each year for long term-debt and other long-term financial commitments before being required to seek the approval of the Local Planning Appeal Tribunal (LPAT) for new long-term debt or other long-term financial commitments.
-These increased debt-limit rules for the Region were originally put in place to assist the Region in providing necessary infrastructure as a rapidly growing municipality. Under the increased debt-limit rules, if certain conditions are met, York Region includes up to 80 percent of their last three-year average collections for development charges (DCs) to the Ministry determined ARL.
-This increased debt-limit calculation only applies if the Region maintains a strong credit rating, and has a debt management plan that is approved by the Council and reviewed annually during the Region's budget process.
-These increased debt-limit rules do not apply to any other municipality under the Municipal Act, 2001. The City of Toronto is governed by the City of Toronto Act, 2006, which permits them to set their own annual debt limits.
-These increased debt-limit rules were set to expire on December 31, 2021.
-The province has extended the increased debt-limit rules for York Region for an additional 10 years, from its current expiry date to December 31, 2031.
-The Annual Repayment Limit (ARL) may be summarized as the maximum amount a municipality may spend on principal and interest payments each year for long term-debt and other long-term financial commitments before being required to seek the approval of the Local Planning Appeal Tribunal (LPAT) for new long-term debt or other long-term financial commitments.
-These increased debt-limit rules for the Region were originally put in place to assist the Region in providing necessary infrastructure as a rapidly growing municipality. Under the increased debt-limit rules, if certain conditions are met, York Region includes up to 80 percent of their last three-year average collections for development charges (DCs) to the Ministry determined ARL.
-This increased debt-limit calculation only applies if the Region maintains a strong credit rating, and has a debt management plan that is approved by the Council and reviewed annually during the Region's budget process.
-These increased debt-limit rules do not apply to any other municipality under the Municipal Act, 2001. The City of Toronto is governed by the City of Toronto Act, 2006, which permits them to set their own annual debt limits.
-These increased debt-limit rules were set to expire on December 31, 2021.
-The province has extended the increased debt-limit rules for York Region for an additional 10 years, from its current expiry date to December 31, 2031.
Contact Address:
John Ballantine
Municipal Finance Policy Branch
777 Bay St, 13th Floor
Toronto, ON M7A 2J3
Municipal Finance Policy Branch
777 Bay St, 13th Floor
Toronto, ON M7A 2J3
Effective Date:
July 1, 2021
Decision:
Approved