FIRST NATIONS FINANCE AUTHORITY INFRASTRUCTURE SOLUTIONS FINANCING OPTIONS TO IMPROVE ON RESERVE INFRASTRUCTURE Montreal, October, 2017

FNFA – QUICK FACTS Prov. Scheduled & Pending FNFA Members AB 10 3 BC 105 40 MB 31 9 NB 7 NS 6 ON SK 29 4 QC 2 NWT 1   228 72 $410 million in loans to 47 First Nations since 2014 5 First Nations’ owned “Green Energy” projects Over 2260 acres of land purchased 71 new houses built, 30 remediated 2 On-reserve schools, wellness centre, recreation centre, admin building, paved roads, building supply centre and 2 grocery stores! FNFA LOAN RATES: Interim Loans = 3.10% today Fixed Rate Loans = 3.45% today

PROPOSAL FOR TODAY’S TALK To create a feasible Nation-to-Nation method of developing infrastructure in urban and rural First Nations, with the intent to close the infrastructure gap between First Nations communities and other levels of government in Canada.

WHY USE THE FNFMA (the ACT)? Purposes of the FNFMA go beyond financing: Commitments by participating First Nations to strengthen internal capacity development, The development of financial management and reporting systems to support economic and community development, The development of Committees (audit, finance, budget, etc.) to manage community infrastructure and wealth development FMB Certification process has achieved investor comfort, allowing First Nations as FNFA members to borrow from the Capital Markets Section 89 of the FNFMA allows the INAC Minister to recommend to the Governor in Council to make a Regulation extending the Mandates of the FNFA and FMB, FNFA is not-for-profit, ensuring the maximum leveraging of any annual cash flows into projects.

OPTIONS TO IMPROVE INFRASTRUCTURE FNFA OPTIONS TO IMPROVE INFRASTRUCTURE 5

OPTIONS TO IMPROVE INFRASTRUCTURE SHARED COSTING: Projects are built with financing (eg., Debenture issued by the FNFA); Annual Debenture service payments are shared by Canada and the First Nations MONETIZATION: Annual Debenture service payments made by Canada under an Agreement with the FNFA and the participating First Nations.

OPTIONS TO IMPROVE INFRASTUCTURE SHARED COSTING (CANADA & FIRST NATIONS) MONETIZATION (CANADA FUNDING) Who raises the financing for projects? - FNFA (current format) SPV (FNFA#2) - Same FNFA staff & Board Thoughts Multiple projects done asap, at today’s costs Less leveraging than monetization Not all First Nations will achieve FMB certification May only be feasible at the First Nations level due to safeguards in FNFMA (Certification, Intervention, etc.) Most leveraging into projects All First Nations will be eligible Could be done at the Tribal Council or other grouping levels There have been precedents in the Capital Markets, so easily understood by Investors This approach can be done quickly

“SHARED COSTING” MODEL Canada/First Nations – enters into long term (10 years?, 15 years? 20 years?) funding commitment with FNFA that supplies an annual cash flow. FNFA – issues Interim Financing notes (construction period) and Debentures once construction is completed. Manages Debenture over its maturity term.

SHARED COSTING of Future Cash Flows – Proposed Structure FNFA uses debenture proceeds to fund First Nations’ projects Federal Government Multi-year funding Agreement FNFA Project Investors Capital Markets Contractors Proceeds Proceeds from debenture Construction payments Multi-year funding Agreement First nations CERTIFICATION FMB

MONETIZATION MODEL Canada – enters into long term funding arrangement with FNFA that supplies an annual cash flow. FNFA – issues Interim Financing notes (construction period) and Debentures once construction is completed. Manages Debenture over its maturity term.

Monetization of Future Cash Flows – Proposed Structure FNFA uses debenture proceeds to fund First Nations’ projects First nations FMB Borrowing Agreements Certification Federal Government SPV by FNFA Multi-year Contract Funding Proceeds Contractors Project Construction payments Proceeds Investors Capital Markets (Bonds are fully backed by Federal Government contractual payments)

SUMMARY Proposed Program will leverage either Federal dollars, or Federal/First Nations’ dollars, through a monetization approach to construct many projects sooner, and at today’s cost levels. Possible development of a Regulation to allow each participating organization to meet its obligations? Contractual arrangements between Canada and FNFA, or Canada and First Nations and FNFA, outlining annual funding amount and term. Commitments by participating First Nations towards meeting FMB standards and FAL development. Maintenance of projects to ensure useful life exceeds monetization contract period.