First Nations Finance Authority Infrastructure Solutions
This content focuses on the First Nations Finance Authority and its efforts to provide financing options to improve on-reserve infrastructure in Canada. It discusses the FNFA's accomplishments, loan rates, development proposals, and the importance of the FNFMA Act in supporting economic and community development within First Nations communities.
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Presentation Transcript
FIRST NATIONS FINANCE AUTHORITY INFRASTRUCTURE SOLUTIONS FINANCING OPTIONS TO IMPROVE ON RESERVE INFRASTRUCTURE Montreal, October, 2017
Prov. Scheduled & Pending 10 FNFA Members 3 $410 million in loans to 47 First Nations since 2014 AB BC 105 40 5 First Nations owned Green Energy projects MB 31 9 NB 7 0 Over 2260 acres of land purchased NS 7 6 ON 31 7 71 new houses built, 30 remediated SK 29 4 QC 6 2 NWT 2 1 2 On-reserve schools, wellness centre, recreation centre, admin building, paved roads, building supply centre and 2 grocery stores! 228 72 FNFA LOAN RATES: Interim Loans = 3.10% today Fixed Rate Loans = 3.45% today
PROPOSAL FOR TODAYS TALK To create a feasible Nation-to-Nation method of developing infrastructure in urban and rural First Nations, with the intent to close the infrastructure gap between First Nations communities and other levels of government in Canada.
WHY USE THE FNFMA (the ACT)? Purposes of the FNFMA go beyond financing: Commitments by participating First Nations to strengthen internal capacity development, The development of financial management and reporting systems to support economic and community development, The development of Committees (audit, finance, budget, etc.) to manage community infrastructure and wealth development FMB Certification process has achieved investor comfort, allowing First Nations as FNFA members to borrow from the Capital Markets Section 89 of the FNFMA allows the INAC Minister to recommend to the Governor in Council to make a Regulation extending the Mandates of the FNFA and FMB, FNFA is not-for-profit, ensuring the maximum leveraging of any annual cash flows into projects.
FNFA OPTIONS TO IMPROVE INFRASTRUCTURE 5
OPTIONS TO IMPROVE INFRASTRUCTURE SHARED COSTING: Projects are built with financing (eg., Debenture issued by the FNFA); Annual Debenture service payments are shared by Canada and the First Nations MONETIZATION: Projects are built with financing (eg., Debenture issued by the FNFA); Annual Debenture service payments made by Canada under an Agreement with the FNFA and the participating First Nations.
OPTIONS TO IMPROVE INFRASTUCTURE SHARED COSTING (CANADA & FIRST NATIONS) MONETIZATION (CANADA FUNDING) Who raises the financing for projects? - FNFA (current format) SPV (FNFA#2) - Same FNFA staff & Board - Multiple projects done asap, at today s costs Less leveraging than monetization Not all First Nations will achieve FMB certification May only be feasible at the First Nations level due to safeguards in FNFMA (Certification, Intervention, etc.) - Multiple projects done asap, at today s costs Most leveraging into projects All First Nations will be eligible Could be done at the Tribal Council or other grouping levels There have been precedents in the Capital Markets, so easily understood by Investors This approach can be done quickly - - - - Thoughts - - - -
SHARED COSTING MODEL Canada/First Nations enters into long term (10 years?, 15 years? 20 years?) funding commitment with FNFA that supplies an annual cash flow. FNFA issues Interim Financing notes (construction period) and Debentures once construction is completed. Manages Debenture over its maturity term.
SHARED COSTING OF FUTURE CASH FLOWS PROPOSED STRUCTURE FNFA uses debenture proceeds to fund First Nations projects Multi-yearfunding Agreement Construction payments FNFA Project Contractors Federal Government Proceeds Multi-year funding Agreement Investors Capital Markets FIRST NATIONS CERTIFICATION FMB
MONETIZATION MODEL Canada enters into long term funding arrangement with FNFA that supplies an annual cash flow. FNFA issues Interim Financing notes (construction period) and Debentures once construction is completed. Manages Debenture over its maturity term.
MONETIZATION OF FUTURE CASH FLOWS PROPOSED STRUCTURE FNFA uses debenture proceeds to fund First Nations projects FIRST NATIONS FMB Certification Borrowing Agreements SPV by FNFA Multi-year Contract Funding Federal Government Construction payments Proceeds Contractors Project Investors Capital Markets (Bonds are fully backed by Federal Government contractual payments)
SUMMARY Proposed Program will leverage either Federal dollars, or Federal/First Nations dollars, through a monetization approach to construct many projects sooner, and at today s cost levels. Possible development of a Regulation to allow each participating organization to meet its obligations? Contractual arrangements between Canada and FNFA, or Canada and First Nations and FNFA, outlining annual funding amount and term. Commitments by participating First Nations towards meeting FMB standards and FAL development. Maintenance of projects to ensure useful life exceeds monetization contract period. 1. 2. 3. 4. 5.
