When you have a project that needs approval from the Local Government Commission, not everything you need to know about the process is written down in one place (or in many cases, written down at all). Bond lawyers and financial advisers will help you navigate, but it will be useful to know the lay of the land as you start thinking and planning.

The LGC staff wants to support you the best they can — That doesn’t mean they will do what you want them to do. They have their rules and processes, and sometimes your proposed deal won’t be consistent (and you need to pay attention to their deadlines). But you’ll get prompt and professional attention to your matter, and any disputes will not be personal (and won’t hang over to the next time you come to the LGC). Long gone are the days, I’m happy to say, when the LGC staff could make you feel like borrowing money was some moral or governance failure.

Audit deadlines and responses to FPICs – The LGC will not consider your financing application at its November meeting, or any subsequent meeting, until it has approved your audit for the year ended the previous June 30. In addition, if the LGC staff has identified any financial performance indicators of concern, you’ll need to have responded to those in a way the staff finds satisfactory.

Project bids in hand – You can’t get your financing application approved until you have your construction bids in hand. The LGC won’t approve a project based on your engineer’s estimates, for example. If your financing covers multiple projects then you may not need to have all of them bid, but you’ll need a good explanation as to what you’ll do if you can’t get all the projects done within the amount you borrow.

And that includes subcontractor bids on a CMR or design-build – It’s not usually enough if your CM gives you a fixed price; the construction manager will need to have completed the subcontractor bid process.

You need all your primary permits too – The idea here is that the final terms of a permit (and that would include a State fire marshal’s approval) could require redesign or other changes that materially change the project budget.

20-year, level principal on general fund projects – if you’re borrowing for a project where you will pay the debt service from the general fund, the LGC will generally limit your borrowing term to 20 years, and will require you to repay your loan in even principal installments (as opposed to level total payments). Projects paid for from the utility fund can go longer on a level-debt basis, and the LGC doesn’t control what USDA does.

No USDA refinancings that go beyond 20 years from the original loan date – Even if you can chop off many years of the loan term and save a lot of money in interest, the LGC won’t approve your refinancing a USDA loan to a term that goes more than 20 years from the original date of the USDA loan. You may get that extended to 25 years on a USDA loan for water or sewer.

Funding in place for project partners – If you’re doing a project with another public partner – let’s say you’re both contributing to a water plant expansion – the LGC wants all the financings approved before any one closes. They want to make sure that all the money is going to be available actually to build the project, and this applies even if you have an interlocal agreement in place committing to the funding.


Most of these rules make sense, at least more or less, and many of them have been in place for a good long time. None of them is in a statute, so there’s always some discretion with the LGC staff. If you can plan your project in accordance with the LGC’s preferences, you’ll be starting from a better place.

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