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Mechanisms, Entities, Districts, and Authorities

Mechanisms, Entities, Districts, and Authorities. MSA Legislative Framework. Internal Mechanisms Departments, business units, other External Mechanisms Municipal entity Company Co-operative Trust Fund Other corporate entity Service utility Other municipality Organ of state

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Mechanisms, Entities, Districts, and Authorities

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  1. Mechanisms, Entities,Districts, andAuthorities

  2. MSA Legislative Framework • Internal Mechanisms • Departments, business units, other • External Mechanisms • Municipal entity • Company • Co-operative • Trust • Fund • Other corporate entity • Service utility • Other municipality • Organ of state • CBO or NGO • Other institution, entity, or person • Internal Service Districts • Multi-Jurisdictional Service Districts

  3. Additional legislation • The foregoing represents only the choices under MFM Bill and Municipal Systems Act • Other menus are available to municipalities: • NLT Transportation Act provides for Transport Authorities with province and municipalities • Only Councillors may be appointed to Governing Body • Not a single TA formed as problematic governance arrangements • EDI anticipates REDS • Governance and ownership arrangements not finalised • National Health Bill provides for District Health Authority, with Exco members of health

  4. “Internal Mechanisms“MSA section 76(a) / most of MFM Bill Department or other administrative unit • Municipality creates these, can • freely change them • These have no independent legal personality – they are part of the municipality • Key issues are about good management and control systems Any business unit operating Within the administration And under the control of council “any other component” of municipal administration

  5. “External Mechanisms“MSA section 76(b) / MFM Bill Ch 8A Municipal entity • Where wholly owned, key issues • are: • accountability, • control, and • responsibility • Where co-owned, same issues as • w/ other external mechanisms Company Co-operative Trust Fund Other corporate entity Service utility Another municipality • These are truly external. • Key issues: • contracting and • managing contracts Public-public Organ of state CBO or NGO Any other institution, entity or person Public-private

  6. Typical Rationale • Need to ringfence business or specific finances or activities • Facilitates outside expertise (eg on board) • Cuts red tape • More operational autonomy • Easier procurement arrangements • Higher salaries • Balance between political accountability and autonomy

  7. Municipal Entitiesgeneral issues Conceptually: • To what extent are these to be controlled by the municipality? To what extent autonomous? • Accountability, control, and responsibility are related. Where do we want the line drawn? • We should be consistent: • We say a muni “must exercise its ownership control” to assure compliance with legislation and agreements, but • We also say that they are independent contractors and that municipality is generally not liable

  8. Municipal Entitieswholly owned Company Co-operative Trust Fund Other corporate entity Service utility National legislation and case law define these This is new with Municipal Systems Act • Issues: • Does a municipality need this much choice in “external” • entities, in addition to internal mechanisms? Why? • How to lay financial governance requirements • on top of existing corporate and cooperative governance requirements, trust and fund fiduciary requirements, etc?

  9. Municipal entitiesco-owned Company Co-operative Trust Fund Other corporate entity Service utility These can be co-owned, and partnerships and joint ventures can play similar roles Can this be co-owned? • Issues: • Does a municipality ever need to co-own an entity? • What governance, accountability, and responsibility issues with co-owned entities? • Does it matter if co-owners are public or private?

  10. Internal service districtsMSA section 85 et seq. • Internal service districts need not have separate: • legal personality • Governing board • budget • Accounting and charging mechanism for assigning costs and benefits, special tariffs, etc. • Community committee is consultative and advisory Issues: So long as these are part of the municipality, and have no independent existence, no special concerns

  11. Multi-jurisdictional service districtsMSA section 87 et seq. • MJSDs are new with Municipal Systems Act • MJSDs are created by agreement of municipalities • MJSD is not a juristic person, but governing body is • MSA: ‘municipal finance legislation’ will apply • These do not appear to be “internal” or “external” mechanisms, rather quasi-municipalities • Issues: • What parts of the MFM Bill apply? • Those related to municipalities? • Those related to municipal entities? • Those related to external mechanisms? • What do we need for effective financial governance?

  12. Public Private Partnerships • This term is used for many things • Can take many forms, including: • Concession, franchise, service or management agreement (external mechanism with private party, in terms of MSA) • Co-ownership of entity (should we really ever allow this?) • Joint ventures and partnerships (a JV is deal-specific, a partnership can cover a large area) Issues: • Does a municipality ever need to co-own an entity in order to have a successful PPP? Why? • If we allow co-ownership of an entity, where do we draw the line? “Ownership control?” Majority ownership?

  13. Financial Problems in Municipal Entities • Responsibility for financial condition relates to overall perspective on accountability • Where the financial condition of an entity threatens municipal financial health, municipality must act • But when entity failing, and municipality is healthy, what outcome do we want? • Intervention, for the sake of others dealing with the entity? • Must council decide to either fix or dissolve?

  14. Entity Financial Problems Recommendations • Municipalities must assure that entities act responsibly, pay their bills on time, etc. • Threshold for municipal intervention in entity much lower than for provincial intervention in municipality - entities are not democratic institutions • Financial problems should generate Council review, and explicit decision to fix or dissolve • No multi-jurisdictional entities or districts without clear and adequate provisions for unwinding

  15. BIG PICTURE • Do we want to offer fewer choices? • Which ones? • Is key difference between wholly owned and co-owned? • Should there be higher hurdles for co-owned? • Where do we strike the balance between accountability and independence?

  16. RECOMMENDATIONS • Entities: only allow companies and service utilities. Prohibit: • co-operatives, • trusts, • funds, • section 21 companies, • partnerships, and • joint ventures • High hurdles for co-owned companies and MJSDs • Favour accountability and control over independence

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