Reg. 654/05 (Debt-Related Financial Instruments and Financial Agreements, under the Municipal Act, 2001) and O. Reg. 610/06 (Financial Activities, under the City of Toronto Act, 2006) were amended on December 10, 2001 to enable Ontario municipalities to enter into conditional loan agreements for long-term borrowing for capital purposes with the Canada Infrastructure Bank (CIB).
Significantly, the amendments provide that the conditional loan agreements must include one or more conditions which, if satisfied, would extinguish the requirement for the borrowing municipality to repay all or part of the loan to the CIB. In addition, the conditional loan agreements may provide that all or part of the principal and interest of the loan may be repaid in any year.
In a government release about the proposed regulatory changes that was posted on October 7, 2021, the CIB was reported to offer “low interest rates at 1 percent”. The regulatory amendments filed on December 10, 2021 make no reference to a rate of interest.
The regulatory changes otherwise provide that the conditional loan agreements are generally subject to the rules that apply to other prescribed types of municipal long-term borrowing. For example, subject to money in a sinking or retirement fund, the loans rank concurrently and equally with other debentures and financial instruments for long-term borrowing of the municipality. As an additional example, lower-tier municipalities in a regional municipality do not have the power to enter into these conditional loan agreements with the CIB.
For further assistance in understanding the amendments, please contact Heather Douglas or any member of the Municipal Law Practice Group at WeirFoulds LLP.
The information and comments herein are for the general information of the reader and are not intended as advice or opinion to be relied upon in relation to any particular circumstances. For particular application of the law to specific situations, the reader should seek professional advice.