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