Applying for Debt

When Is LGC Approval Needed?

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. To determine if LGC approval is needed, choose one or both of the options below.

Option 1: Use A Flowchart

These helpful flowcharts from the UNC School of Government will help 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.

Option 2: Fill Out A Debt Inquiry Form

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.

Debt Inquiry Form

Where Will An Item Appear On The LGC Meeting Agenda Once It Is Submitted For Approval?

Debt items will be presented on the consent agenda with the following exceptions:

• Unit is on the Unit Assistance List and is requesting approval for a financing pursuant to the changes enacted in Session Law 2022-53. See the note below for more information on this change.

• LGC staff has determined that the unit has material Financial Performance Indicators of Concern (FPICs).

• LGC staff cannot make the statutory findings to recommend approval.

• A member of the LGC has requested that a unit’s application be held for individual discussion. In line with the procedural change requested by Treasurer Briner at the February 2025 meeting, such requests will be made by noon the Monday before a meeting. The unit will be notified of the request prior to the meeting to allow the unit to attend and answer questions from LGC members.

Special Note For Units On The UAL Seeking Approval Of Financings Under Change Enacted In Session Law 2022-53

Under 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 additional information. These changes are also reflected in the flowcharts above. 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.

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.

Not sure if LGC approval is required?  

Information on LGC Approval of Debt 

Inquiry Form

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 due date indicated below.  
• 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.

**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.