Applying for Debt

LGC approval is required for more than just issuing bonds; units of local government wishing to enter into certain contracts, MOUs, and other financing arrangements also require LGC approval. These helpful flowcharts below from the UNC School of Government will help you to determine if LGC approval is required prior to a unit of local government issuing debt or entering into contracts or other financing arrangements. For a full explanation of transactions requiring LGC approval, refer to Local Government Commission (LGC) Approval of Contracts, Leases, and Other (Non-Debt) Financing Agreements.

The LGC staff publishes guidelines for units of local government wishing to issue debt.  These guidelines provide a summary of the fiscal management and debt management items that the LGC may consider, and are meant to assist applicants in receiving timely approval of financing requests.

Refer to the following North Carolina General Statutes below for information and requirements related to debt applications, approval, and issuance.

Local Government Bond Act
NCGS Chapter 159 Article 4

Revenue Bonds
NCGS Chapter 159 Article 5

Capital Appreciation Bonds
NCGS Chapter 159 Article 5A

Project Development Financing Act
NCGS Chapter 159 Article 6

Issuance and Sale of Bonds
NCGS Chapter 159 Article 7

Financing Agreements and Other Financing Arrangements
NCGS Chapter 159 Article 8

Bond Anticipation, Tax, Revenue and Grant Anticipation Notes
NCGS Chapter 159 Article 9

Borrowing by Cities for Competitive Purposes
NCGS Chapter 159 Article 9A

Assistance for Defaulting Units in Refinancing Debt
NCGS Chapter 159 Article 10

Borrowing by Development Authorities Created by General Assembly
NCGS Chapter 159 Article 12

Interest Rate Swap Agreements for Governmental Units
NCGS Chapter 159 Article 13

Borrowing by Airport Authorities
NCGS Chapter 159 Article 14

Borrowing for Expansion of Existing Landfills and Construction of New Landfills in Certain Circumstances
NCGS Chapter 159 Article 15
 

Applications:

Debt applications are required approximately one month before the date of the LGC meeting at which the unit wishes to appear on the agenda; see specific deadlines below. The application submitted by the due date should be substantially complete in all required documentation.

Audit Reports:

The deadline for the submission of audit reports falls several weeks before the date of the LGC meeting at which the unit wishes to appear on the agenda to ensure that LGC staff has adequate time to review the audit report and communicate issues to the unit, and that the unit has adequate time to respond to LGC staff's concerns.  Specifically, when a unit seeking debt submits an audit report:

• LGC staff reviews the report, communicates with the auditor and unit on any necessary changes to the audit (particularly those that could influence our analysis of the unit's fiscal health), and drafts a unit letter if necessary.  
• If a unit letter is issued, it is reviewed and shared with the unit, and the unit must provide LGC staff with a sufficient written response to the unit letter.  
• Finally, LGC staff makes a determination if a unit visit is necessary; if so, that visit must be conducted and the results summarized in writing prior to the LGC meeting.

Note:

The guidelines and deadlines presented above ensure timely completion of the steps necessary prior to a unit being considered for inclusion on an LGC meeting agenda. Other factors related to the application and financial health of a unit are also considered, and timely completion of the above steps does not guarantee that a unit will be included on a specific LGC agenda.

Deadlines:

The dates below were revised February 1, 2022 for LGC meetings April 4, 2022 through December 6, 2022.

*This is the date by which the audit report must be submitted to the LGC for review as part of the debt application. Note that this date has no bearing on the audit report due date of October 31.

**Response Letter in accordance with 20 NCAC 03.0508, as applicable. Please see the 2021 Audit Process webpage for information on developing and submitting FPIC Response Letters. 

***Changes have been made to the Local Government Commission’s meeting schedule and location for September and November 2022. Please see this blogpost for details.