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Click to edit Master title style www.infrastructureontario.ca 1 Infrastructure Ontarios Loan Program Affordable financing in support of infrastructure renewal

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Click to edit Master title style www.infrastructureontario.ca 2 Crown agency of the Ontario government, created in 2005 Focused on modernizing and financing the renewal of public infrastructure, maximizing the value of public real estate and managing government facilities Four lines of business: Buildings: landlord to the Ontario Public Service Lands: managing the Provinces property portfolio Corporate Development: optimizing Provincial assets Major Projects: delivering Ontarios larger and more complex public sector infrastructure Loans: lending to broader public sector entities in Ontario through the Provinces access to the capital markets Infrastructure Ontario

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Click to edit Master title style www.infrastructureontario.ca 3 The Loan Program Affordable long-term financing to help renew public infrastructure and deliver value to customers and residents across Ontario

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Click to edit Master title style www.infrastructureontario.ca 4 The Association of Municipalities of Ontario (AMO) estimates an infrastructure gap of at least $60 Billion that will take 10 years to close, leaving municipal governments with a bill of $6 Billion each year Almost half of this gap exists within road and bridge infrastructure, with the remaining amounts occurring in other core infrastructure categories such as drinking water, wastewater, storm water, public transit and solid waste Ontario Infrastructure Snapshot 70% of Torontos road network is over 30 years old 20% of Ottawa's roads are between 20 to 40 years old, and 15% are more than 40 years old 50% of Torontos sanitary sewer system is over 50 years old 27% of Ottawas piped infrastructure is over 40 years of age; 50% is between 20 and 40 years old 50% of Torontos watermains are over 55 years old 30% of City facilities are over 40 years old, and 40% are between 20 and 40 years old Accumulated state of good repair backlog in 2012 is $1.7 Billion. Ottawas municipal infrastructure assets are valued at $32 Billion Source: Association of Municipalities of Ontario, The State of Municipal Infrastructure - Regional Snapshots (Federation of Canadian Municipalities - September 2012)

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Click to edit Master title style www.infrastructureontario.ca 5 Infrastructure Funding Strategies There are two fundamental ways that the broader public sector can fund infrastructure Full Cost Pay as you go Loan Financing

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Click to edit Master title style www.infrastructureontario.ca 6 Funding Strategies: Pay as You Go The traditional approach to building and renewing infrastructure Can only undertake projects that are fully-funded using finite sources: Reserves Development charges Tax increases Apply for senior government assistance when it is available

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Click to edit Master title style www.infrastructureontario.ca 7 Funding Strategies: Loan Financing Assuming manageable debt Current and future tax-payers share the benefits over the life of the asset Projects financed over extended periods of time Match finance term to asset life (5 to 40 years) User fees Development charges Apply for senior government assistance when it is available

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Click to edit Master title style www.infrastructureontario.ca 8 Funding Considerations Cost of deferring the project Rise in operations and maintenance costs Lost opportunity costs May limit the opportunity for growth Will population or industrial growth be limited without the new infrastructure? Project financing Time to raise or save the required capital Ability and cost of servicing loans Impact of construction cost increases Uncertain economic conditions

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Click to edit Master title style www.infrastructureontario.ca 9 Project cost = $1.0M Annual construction cost increase = 7.5% Funding Example FULL COST DEVELOPMENTLOAN FINANCED DEVELOPMENT Assume 4 yrs. to save at $250,000/yr. plus 3.5% interest Construct Project in 2012 = $1.0M Finance $1.0M such that principle + interest = or < $1.30M 2014 Project Cost = $1.33M Accumulated Interest = $26,500 Net 2016 Project Costs = $1.30M 10 yr. Term Amortized @ 2.74% Total Cost = $1.15M Additional Considerations: - Existing asset = increased O&M cost - Greenfield = price of lost opportunity Additional Benefits: - Use of the asset today - Reduced O&M cost

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Click to edit Master title style www.infrastructureontario.ca 10 Providing Access to Capital Markets INFRASTRUCTURE ONTARIO Infrastructure Renewal Bonds CAPITAL MARKETS Short /Long-Term Money Rating Agencies $$$ Eligible Borrowing Pool (Municipalities, non-profit long-term care, universities etc.)

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Click to edit Master title style www.infrastructureontario.ca 11 How is IO Different From a Bank? Infrastructure OntarioBank Financing Rating FeeNone Advisory and Other ProfessionalNone50-75 basis points Legal CostsNone Varies with transaction size and complexity Ease of Application ProcessModerate Interest Rate Markets + Cost of providing the service Directly related to credit worthiness of borrower TermUp to 40 years5 to 10 years Refinancing RiskNoYes Interest Rate RiskNoYes Needed Knowledge/ExperienceLow - ModerateModerate - High Amount$0 150 MillionTypically to $10 or $20 Million Access to FundsContinuous Debt StructureFlexible

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Click to edit Master title style www.infrastructureontario.ca 12 Aboriginal health access centres Community health and social service hubs Hospices Housing providers Social, affordable, co-operative, supportive Local services boards Long-term care homes (non-profit) Municipal corporations Electricity distribution, power generation, transit Municipalities Professional arts training facilities (non-profit) Sports and recreation organizations (non-profit) Universities and affiliated colleges Who is Eligible?

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Click to edit Master title style www.infrastructureontario.ca 13 Eligible Municipal Projects Most depreciable capital expenditures are eligible for affordable, long-term financing, including: New construction, renovations and retrofits Water, wastewater and waste management Roads, bridges and public transportation Municipal housing projects Ambulances, fire trucks, transit vehicles, snow ploughs, garbage trucks and other rolling stock Accessibility and energy efficiency projects Local police, fire, admin and recreation facilities (arenas) Equipment, systems and asset management tools Land and facility acquisition

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Click to edit Master title style www.infrastructureontario.ca 14 South-West Oxford partnered with IO to help finance its LED street lighting retrofit project. The project involves the conversion of 432 existing High Pressure Sodium street light fixtures to new, energy efficient LED fixtures. Oxford County South West Oxford 47% ENERGY SAVINGS $34,153.00 Reduced energy and maintenance costs will help finance the cost of the project HPS Lights 74,500 KW LED Lights 39,650 KW $40,112.13 Loan Amount $348,000 @ 2.67% over 10 yrs @ $ 0.98/KW ENERGY SAVINGS (Estimated Annual) LOAN PAYMENT (Estimated Annual)

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Click to edit Master title style www.infrastructureontario.ca 15 Since 2003 the Loan Program has received over $7.5 billion in loans from public sector clients all over Ontario Supporting over 1,900 infrastructure renewal projects Over $5.4 billion in affordable financing has been advanced Success of the Loan Program Loan Clients - As of Aug 2012

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Click to edit Master title style www.infrastructureontario.ca 16 Total Loans Approved $6.3 Billion Loan Program Portfolio Approved and Executed - As of April 2013

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Click to edit Master title style www.infrastructureontario.ca 17 Total Approved & Executed Municipal Loans $4,458.4 M Municipal Loans Breakdown As of April 2013

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Click to edit Master title style www.infrastructureontario.ca 18 Offered in both a short-term construction rate and long-term debentures (up to 40-years) Extra long terms are typically not available from traditional lenders or capital markets Terms are designed to match useful life of the asset Rates are the same for all borrowers, within each sector Flexible Terms

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Click to edit Master title style www.infrastructureontario.ca 19 Serial Loans: Constructed to pay equal principal amounts every 6 months with interest computed on the declining balance Serial & Amortizer Loans Savings Amortizer Loans: Constructed to pay equal total payments every 6 months, interest component decreases while principal component increases over the term

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Click to edit Master title style www.infrastructureontario.ca 20 Affordable long-term rates No additional fees and no need to renegotiate Borrowing pool aggregates the infrastructure needs of many borrowers, from unrated to AAA Ready to build, or already building? Our construction financing is the most affordable way to manage your short-term cash needs Two kinds of long-term rates Serial and Amortizer Affordable Rates Visit our website today for current lending rates!

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Click to edit Master title style www.infrastructureontario.ca 21 Todays Rates

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Click to edit Master title style www.infrastructureontario.ca 22 Client Resources Available Online

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Click to edit Master title style www.infrastructureontario.ca 23 Clients can download the municipal loan model from the IO website located in the Resources section at the bottom of the Municipal webpage Municipal Loan Model

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Click to edit Master title style www.infrastructureontario.ca 24 Available on our website, this tool allows users to enter loan amount, interest rate and length of loan to help determine monthly payment amount, payment schedule and amount of interest paid. The payment schedule is created in a PDF format which easy to save and print for use at council meetings. Loan Payment Calculator

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Click to edit Master title style www.infrastructureontario.ca 25 Loan Program Benefits Provide both short-term construction loans and long-term take-out financing Rates are all-in blended rates so there are no additional transaction fees or commissions Cost of capital is very low Rates are the same for all borrowers, within each sector Rates apply for the full length of the term

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Click to edit Master title style www.infrastructureontario.ca 26 Loan Program Summary All capital expenditures eligible Hassle-free access to capital markets No need to be rated, no minimum / no maximum Affordable market rates No extra fees or commissions Longer terms than generally available elsewhere One month construction loans and 5- to 40-year debentures Online application Dedicated knowledgeable staff

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Click to edit Master title style www.infrastructureontario.ca 27 95% of clients say they will work with IO again 95% agree that IOs rates are preferable in comparison to other sources 85% of clients rate the loan process highly 97% of loan clients would recommend working with IO Survey results from 2010-11 Infrastructure Ontarios Client Survey, Dec. 2010 What our clients are saying My experience with Infrastructure Ontario and the Loan Program have been exceptional and Timmins will definitely apply to the program for future capital funding. Joe Torlone, CAO, City of Timmins My experience with Infrastructure Ontario and the Loan Program have been exceptional and Timmins will definitely apply to the program for future capital funding. Joe Torlone, CAO, City of Timmins

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Click to edit Master title style www.infrastructureontario.ca 28 Loan Clients in the North East

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Click to edit Master title style www.infrastructureontario.ca 29