Transcript Note 1 - Fraser Basin Council

FIRST NATIONS FINANCE AUTHORITY
“Helping Aboriginal Communities Build Their Own Futures on Their Own Terms”
Accessing Capital Markets for First Nations’
Project Financing Needs
FNFA PRESENTATION
March, 2013
THE FNFA: WHAT IS IT?
 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

Created under “The Fiscal and Statistical Management Act”
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WHAT ARE FNFA’S RATES?
FNFA Programs:
1. Interim Loans (Floating Rate) – Bridge Financing
FNFA lends @ 2.50%
2. Fixed Rate Loans: Can have repayment terms of 30 years
Longer Loan Terms Match Project Life
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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.
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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
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The FNFA: Who are members?

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
NB 6
NS 2
QC 3
ON 8
MB 4
SK 12
BC 61
AB 2
YT 1
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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 – Songhees
Councillor Catherine Hall - Tzeachten
Chief Terry Paul (Chair) – Membertou
Councillor 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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WHAT ARE THE CAPITAL MARKETS?
Pension Plans,
Life Insurance Co.’s,
Mutual Funds,
Large Corporations, etc…
(i.e. those organizations with cash to lend)
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WHY WORK UNDER THE FSMA?
- No Collateral
FNFA
- Low Rates
- Access
when
needed
- Increasing
access as
revenues
rise
Manage
Wealth
FMB
Certificate
FN Benefits
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WHAT PROJECTS DOES FNFA
LEND 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
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THE FNFA and BANKS COMPLEMENT
EACH OTHER
Each First Nation can choose what works for them!
FIRST
NATION
PROPERTY TAX
OTHER REVENUES
FNFA’S purpose is to provide
loans for: economic and
social development purposes.
FNFA cannot lend to people
or private businesses.
FNFA LOANS
Bank’s can
lend to people
and to forprofit
businesses.
Also for
infrastructure,
etc.
FIRST
NATION
REVENUES
BANKS
LAND
FOR PROFIT
BUSINESSES
COMMUNITY
BUILDINGS
WATER/SEWER
ROADS
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 reinvested into needed community infrastructure.”
Tzeachten: borrowed for 4 infrastructure projects
Per 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.”
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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?
NOTE: 30 years is an example; FNFA can lend up to 30 years
A First Nation can request FNFA loans to as much as their
revenue streams can support:






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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
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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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