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.

If you are a local government or public authority in North Carolina that:

• Wishes to apply for LGC approval of debt
• Is looking to determine if LGC approval of debt is necessary
• Needs information on the process of applying for LGC approval of debt

Please complete the Debt Inquiry form below and LGC staff will follow up to discuss your project and answer any questions you may have.

Note: Under recent changes to North Carolina statutes (Session Law 2022-53), units on the most recently published Unit Assistance List must obtain LGC approval of financing contracts relating to the lease, acquisition, or construction of capital assets, with terms that exceed 3 years and $50,000  (and meet other criteria), and must obtain LGC approval of contracts for the purchase, lease, or lease with option to purchase motor vehicles where the contract amount equals or exceeds $50,000. Please see our Unit Assistance List webpage for the most recently published list and additional information. Questions on requirements for LGC approval of debt for contracts or other financings by units on the UAL should be submitted to LGC staff using the Debt Inquiry Form below.

Debt Inquiry Form

On March 7, 2023, the Local Government Commission adopted updated “Guidelines for the Review and Approval of Debt Applications” 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 and 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).  
• The auditor reviews the audit and all Financial Performance Indicators of Concern (FPICs) with governing board of the unit.  While the unit has 60 days after the presentation to the governing board to respond to any FPICs, the unit seeking approval of debt must provide LGC staff with a sufficient written response addressing all FPICs no later than the Application Due Date.  
• The FPIC response letter must be signed by a majority of the governing board, the unit manager and the finance officer.
• 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 presented above and deadlines presented below 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:

*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 Submitting Your 2022 Audit webpage for information on developing and submitting FPIC Response Letters.