“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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