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

2. 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

3. 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.

4. 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.

5. OPTIONS TO IMPROVE INFRASTRUCTURE
FNFA
OPTIONS TO IMPROVE INFRASTRUCTURE 5

6. 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.

7. 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

8. “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.

9. 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

10. 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.

11. 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)

12. 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.