the future of first nations finance...the future of first nations finance 2013 cando - winnipeg...
Post on 23-Sep-2020
2 Views
Preview:
TRANSCRIPT
The Future of First Nations Finance 2013 CANDO - Winnipeg
October 29th, 2013
FIRST NATIONS FINANCE AUTHORITY “Helping Aboriginal Communities Build Their Own Futures on Their Own Terms”
2
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:
Why? First Nations continue to struggle when it comes to raising financing for community
economic and social development.
3
TWO RECENT FNFA CLIENTS’ STORIES
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 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.”
FNFA RECENT LOANS
The following loans have been made recently: Membertou = $16,000,000 @ 2.50% (Note 1)
Tzeachten = $5,800,000 @ 2.50% (Note 1) Osoyoos = $10,200,000 @ 2.50% (Note 1)
Sts’ailes, Splatsin, Tk’emlups, We Wai Kai, and Taku River
loan requests being processed Note 1: these loans will be rolled into a debenture in Fall/Winter 2013
4
The FNFA: What is it?
5
Created under “The Fiscal Management Act, 2005”
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
6
FNFA BOARD 2013 - 2014
7
The FNFA welcomed a new board elected at the Annual General Meeting held on July 4th, 2013 in Westbank, BC
- Chief Terry Paul – Membertou (re-elected as Chair) - Councillor Jody Wilson-Raybould – We Wai Kai Nation (re-elected Deputy Chair) - Councillor Catherine Hall – Tzeachten – (re-elected Director) - Councillor Veronica McGinnis – Osoyoos – (re-elected Director) - Councillor Garry Albany – Songhees – (re-elected Director) - Councillor Patrick Courtois – Mashteuiatsh – Director - Councillor Katy Gottfriedson – Tk’emlúps te Secwépemc – Director - Chief Harvey Underwood – Tsawout - Director
Regulates and streamlines the approval of property tax
and new local revenues Builds administrative
capacity through sample laws and accredited training
Reconciles First Nation government and taxpayer
interests
Assists First Nations in strengthening their local financial management
regimes Provides independent certification to support
borrowing from FNFA and for economic development
Provides access to qualifying First Nations to work co-
operatively in raising long-term capital at preferred
rates through the issuance of debentures
Also provides investment services to First Nations
First Nations Tax Commission
(FNTC)
First Nations Financial Board
(FMB)
First Nations Finance Authority
(FNFA)
First Nations Fiscal Management Act (FMA) Enacted April 1, 2006
WHY IS CANADA IN GOOD SHAPE?
9
10
CANADA'S LENDING FACTORS ARE CONSERVATIVE COMPARED TO THE REST OF THE WORLD
CANADA’S BANK RULES
USA’S BANK RULES
EUROPE’S BANK RULES
MONEY IN THE VAULT
“LEVERAGING” MONEY IN A BANK’S VAULT
$1 $7:1
$1
$1
UP TO $28:1
UP TO $70:1
CANADA VS. WORLD (IE. CANADA’S CAPITAL MARKETS ARE SOLID)
11
0100200300400500600700800
USA EUROPE ASIA CANADA USA EUROPE ASIA CANADA USA EUROPE ASIA CANADA
MARKET CAP OF FINANCIAL INSTITUTIONS ($BILLIONS)
2007 (before crash)
Jan. 2009 (after crash)
Jan. 2013
WHY DO FIRST NATIONS WANT ACCESS?
12
AANDC
Capital Markets
BILLION
0
25
50
75
100
125
150
175
200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
13
Global Capital Markets
First Nations Fiscal Mgm’t Act:
FNFA, FMB &FNTC
HOW GOVERNMENTS ACCESS THE GLOBAL CAPITAL MARKETS
FIR
ST
NAT
ION
S
MU
NIC
IPA
LITI
ES
P
RO
VIN
CE
S
Provincial Statutes
& Auditor General
Municipal Act &
Ministry of Municipal
Affairs LOANS: - Below bank prime - Long repayment
terms – you choose the term
14
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
ELIGIBLE REVENUE STREAMS TO SUPPORT AN FNFA LOAN
The FNFA allows First Nations to support loans with their choice
of revenue sources:
Other Revenues: Royalties, Business revenues, Contract revenues, IPP revenues, Other Transfers from Government
15
16
THE FNFA and BANKS COMPLIMENT EACH OTHER
Each First Nation can choose what works for them! 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. REVENUES
BANKS
FOR PROFIT BUSINESSES
FIRST NATION
FIRST NATION
FNFA LOANS
PROPERTY TAX OTHER REVENUES
LAND
ROADS/WATER/SEWER
EQUITY PARTICIPATION
COMMUNITY BUILDINGS
HOW MUCH CAN A FIRST NATION BORROW FROM THE FNFA?
17
A First Nation can request FNFA loans to as much as their revenue streams can support:
20 years 25 years 30 years Federal/Provincial Transfer 10.35 11.37 12.26 Municipal Transfers 9.79 10.76 11.60 Independent Power Projects (IPP’s)
10.18 11.19 12.06
Provincial Gaming Revenues 7.95 8.74 9.42 Land Benefit Agreement 5.66 6.21 6.70 Contracts & Leases 7.27 7.99 8.61 Band Business 7.27 7.99 8.61
The “Borrowing Factors” for each $1.00 of revenue are:
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
18
*Appoints C&C’s Rep
*Authorizes FN to enter into Borrowing Agreements and pass Borrowing Laws
*Defines the working relationship between the FN and the FNFA
*Loan Request *Identifies Project and Revenue Stream
Borrowing Agreement
Law
Borrowing Agreement
Borrowing Law
Steps in the Borrowing Process
Other Revenues
SRTA Account
FNFA LOAN BANK ACCOUNT
FIRST NATIONS BANK ACCOUNT
Assignment of Receivables Agreement authorizes revenue to flow directly into the SRTA.
Diversion of revenues provides comfort to the Capital Markets that loans will be repaid = lower rates
SECOND: Balance in SRTA paid to First Nation
OTHER REVENUES LOANS “INTERCEPT MECHANISM”
First Nation controls spending of these monies.
FIRST: FNFA paid its loan amount.
20
SAFEGUARDS FOR FNFA DEBENTURE HOLDERS
The following apply to all Debenture Holders: 1. Financial Management Board (FMB): Certification Process -- FMB’s vetting process is a pre-requisite to any FNFA loans 2. Revenue Leverage Factors Set by Capital Markets: -- Each revenue stream has a loan leverage factor that cannot be
exceeded 3. FNFA’s reserve funds: -- Debt Reserve Fund (DRF) = 5% of loan requests withheld
-- One DRF for Property Tax; one DRF for Other Revenues
-- Credit Enhancement Fund (CEF) = $10 Million supports both DRF’s 4. Borrowing Members approve other Borrowing Member’s loan
requests. 5. Trust Account System ensures loan repayments.
21
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: “Property Tax Calculator”
22
CONTACT INFORMATION
First Nations Finance Authority PH: 250-768-5253
Frank Busch Director of Information and Marketing
fbusch@fnfa.ca Visit our website:
www.fnfa.ca = @thefnfa
23
top related