“Helping Aboriginal Communities Build Their Own Futures on Their Own Terms” Accessing Capital...

“Helping Aboriginal Communities Build Their Own Futures on Their Own Terms”

Accessing Capital Markets for First Nations’ Project Financing Needs

FNFA PRESENTATION

March, 2013

FIRST NATIONS FINANCE AUTHORITY

THE FNFA: WHAT IS IT?

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Created under “The Fiscal and Statistical Management Act”

Not a Crown Corporation, AANDC or an Agent of Canada

Non-profit; 100% First Nations owned and governed

Board of Directors are all First Nation Chiefs/Councilors

Structured after very successful pooled borrowing models

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WHAT ARE FNFA’S RATES?

FNFA Programs:

1. Interim Loans (Floating Rate) – Bridge FinancingFNFA lends @ 2.50%

2. Fixed Rate Loans: Can have repayment terms of 30 years Longer Loan Terms Match Project Life

FNFA FIXED RATE LOANS

Estimated Debenture rates as of March 2013:Interim Loan Rate = 2.50% currently

Debenture Loan Rates: estimated in March, 2013 to be 10 Year fixed rate loans = 3.85% 15 Year fixed rate loans = 4.25% 20 Year fixed rate loans = 4.50% 25 Year fixed rate loans = 4.75% 30 Year fixed rate loans = 4.85%

NOTE: All FNFA Borrowing Members receive the same rates.4

COST OF A $1 MILLION FNFA LOAN

Example: a $1,000,000 loan from the FNFA repaid over 30 years:

Annual Payments = $66,330.10 Monthly Payments = $5,527.51

Example: a $10,000,000 loan from the FNFA repaid over 30 years:

Annual Payments = $663,301.00 Monthly Payments = $55,275.10

NOTE: The above payments represent “fixed-rate” loans (i.e. the interest rate will not change for all 30 years).

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FNFA LOANS OUTSTANDING

The following loans have been made:

Membertou = $12,000,000 @ 2.50% (Note 1)

Tzeachten = $5,800,000 @ 2.50% (Note 1)

Osoyoos = $10,200,000 @ 2.50% (Note 1)

Sts’ailes, Splatsin and Taku River loan requests being processed

Note 1: these loans will be rolled into a debenture in Fall 2012 6

The FNFA: Who are members?

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Canada Wide: 99 Scheduled to the FSMA 16 approved Borrowing Members - Membertou , Metlakatla, Moricetown,

Osoyoos, Shxwhá:y, Songhees, Splatsin, Sts’ailes, Taku River Tlingit, Tsawout, Tsleil-Waututh, Tzeachten, Wasauksing, We Wai Kai, Tk’emlups and Kitselas

Scheduled First Nations

BC 61

YT 1

AB 2

SK 12

MB 4

ON 8

QC 3NB 6 NS 2

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THE FNFA: BOARD MEMBERS

The FNFA welcomes a new Board of Directors Sept. 28th, 2012

From left to right:Chief Willie Charlie – Sts’ailes Councillor Veronica McGinnis – Osoyoos Councillor Garry Albany – SongheesCouncillor Catherine Hall - TzeachtenChief Terry Paul (Chair) – MembertouCouncillor Jody Wilson-Raybould (Deputy Chair) - We

Wai Kai

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WHAT IS FNFA’S MANDATE?

To provide First Nations with access to the same financial loan opportunities that are

available to other levels of government:

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Pension Plans, Life Insurance Co.’s, Mutual Funds, Large Corporations, etc…

(i.e. those organizations with cash to lend)

WHAT ARE THE CAPITAL MARKETS?

WHY WORK UNDER THE FSMA?

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FMB Certificate

FNFA

- No Collateral

- Low Rates

- Access when needed

- Increasing access as revenues rise

Address Social & Economic

Needs of FN

Proven Governance Systems

FN Benefits

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WHAT PROJECTS DOES FNFALEND FOR?

FNFA Lends for Projects that are:

- Economic Development - Social Development - Community owned housing - Equity involvement (power projects, pipelines, etc…) - Land purchases - Infrastructure - Vehicles and equipment

PROPERTY TAX OTHER REVENUES

FNFA LOANS

REVENUES

BANKS

FOR PROFIT BUSINESSES

LAND

COMMUNITY BUILDINGS

ROADSWATER/SEWER

FIRST NATION

THE FNFA and BANKS COMPLEMENT EACH OTHER

FNFA’S purpose is to provide loans for: economic and social development purposes. FNFA cannot lend to people or private businesses.

Bank’s can lend to people and to for-profit businesses. Also for infrastructure, etc.

Each First Nation can choose what works for them!

FIRST NATION

ELIGIBLE REVENUE STREAMS TO SUPPORT A FNFA LOAN

The FNFA allows First Nations to support loans with their choice from two revenue sources:

1. Other Revenues (non-property tax): Royalties, Business revenues, Contract revenues, and Transfers from other levels of Government, IPP revenues.

2. Property Tax collected by First Nations:From individuals or businesses who reside on First Nations lands.

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TWO RECENT FNFA CLIENTS’ STORIES

FNFA Loans Since July, 2012

Membertou: refinanced existing bank loans plus infrastructure.Per Chief Terry Paul:“My community is saving $140,000 per month by refinancing our bank loan with FNFA . These savings are being re-invested into needed community infrastructure.”

Tzeachten: borrowed for 4 infrastructure projectsPer Chief Glenda Campbell: “Never in my lifetime did I think Tzeachten would have access to affordable financing. What we currently pay banks to service a $1 million bank loan we can now service a $3 million FNFA loan.”

CAPITAL/EC. DEV. PLANNING

FNFA’s role in the planning process:

First Nation – outlines their desired capital and economic development projects

Prioritize these projects Determines financing needed

FNFA – outlines for each community how loans can be structured to allow more than one capital/Ec Dev project to start simultaneously

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HOW MUCH CAN A FIRST NATION BORROW FROM THE FNFA?

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A First Nation can request FNFA loans to as much as their revenue streams can support:

The “Borrowing Factors” for each $1 of revenue are: Federal/Provincial Transfer = 12.21 Municipal Transfers = 11.61 Independent Power Projects (IPP’s) = 12.06 Provincial Gaming Revenues = 9.50 Land Benefit Agreements = 6.63 Contracts & Leases = 7.27 Band Businesses = 3.77 to 8.59 Property Tax = 3.77 to 12.21

NOTE: 30 years is an example; FNFA can lend up to 30 years

TO CALCULATE YOUR COMMUNITY’S BORROWING POWER

Use FNFA’s website: www.fnfa.ca

Once in the website choose “Calculators” tab at the top of the page

Once “Calculators” has been chosen use: “Other Rev Calculator”

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CONTACT INFORMATION

First Nations Finance Authority

PH: 250-768-5253

Steve Berna, COO

Visit our website:

www.fnfa.ca

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