Municipal Finance Authority Municipal Finance Authority

of British Columbiaof British Columbia

A Credit Union for Local A Credit Union for Local GovernmentGovernment

The MFA was formed in 1970 to promoteThe MFA was formed in 1970 to promotethe financial well-being of the financial well-being of

local governments local governments throughout British Columbiathroughout British Columbia

Regional District – Regional District – Purpose?Purpose?

Geographical areasGeographical areas Coordinate common infrastructure Coordinate common infrastructure needs:needs:~ Sewer, water, transportationSewer, water, transportation

Each municipality has a representative Each municipality has a representative on the Regional District Boardon the Regional District Board

MFA GovernanceMFA Governance

9 Trustees9 TrusteesAnnually elected from the Annually elected from the Members of the AuthorityMembers of the Authority

ChairChairAnnually elected from The Annually elected from The Members of the AuthorityMembers of the Authority

35 Members35 MembersAnnually appointed from the Annually appointed from the

Regional DistrictsRegional Districts

27 Regional Districts27 Regional DistrictsRepresenting 156 Representing 156

MunicipalitiesMunicipalities

MFA – At a GlanceMFA – At a Glance

2005

1. Trustees 10

2. Staff Size 9

3. Total Debt managed

- Annual debt issuance

- # of issues outstanding

$3,581 million

$400-500 million

approx. 200

MFA – At a GlanceMFA – At a Glance

20054. Total Investments Managed $1,300 million

5. Operating Fund:

Revenues- Tax Based - Expenditures

$2,406,0003.6% of revenues

$1,699,000

MFA – At a GlanceMFA – At a Glance

20056. Clients All Programs:

Municipalities, Reg.Districts, Utilities,

E-COMM, Reg.Hospitals, TransLink

Optional Programs:Universities, Colleges,School Districts, First

Nations and otherAssociations

Credit RatingsCredit RatingsProvincialProvincial

Moody’s S&P

Municipal Finance Authority Aaa AAA

Province of BC Aa1 AA+

Province of Alberta Aaa AAA

Province of Saskatchewan Aa3 A+

Province of Manitoba Aa2 AA

Province of Ontario Aa2 AA

as of January 2005

Credit RatingsCredit RatingsProvincialProvincial

Moody’s S& P

Municipal Finance Authority Aaa AAA

Province of Quebec A1 A+

Province of New Brunswick A1 AA

Province of Nova Scotia A3 A-

Province of Prince Edward Island A1 A+

Province of Newfoundland A3 A-

Canada Aaa AAA

as of January 2005

MFA ProgramsMFA Programs

Capital FinancingCapital Financing Pooled InvestmentsPooled Investments

Bond FundBond Fund

Intermediate FundIntermediate Fund

Money Market FundMoney Market Fund Interim Financing Interim Financing Leasing Leasing Municipal Investment PlanMunicipal Investment Plan

Capital FinancingCapital Financing

MFA Capital Financing MFA Capital Financing ProgramProgram

The basic purpose of the capital financing program is toThe basic purpose of the capital financing program is to

lend cash for capital projects at an interest rate set bylend cash for capital projects at an interest rate set by

the MFAthe MFA

The MFA can offer competitive rates because:The MFA can offer competitive rates because: Collective borrowing results in larger bond issues that Collective borrowing results in larger bond issues that

are easily traded and therefore more attractive to bond are easily traded and therefore more attractive to bond investorsinvestors

AAA credit rating – the highest rating possible – allows AAA credit rating – the highest rating possible – allows the MFA to raise funds in even the most difficult marketsthe MFA to raise funds in even the most difficult markets

MFA Capital Financing MFA Capital Financing ProgramProgram

The MFA structure is collective yet flexible:The MFA structure is collective yet flexible:

With the use of optional financial products local government With the use of optional financial products local government has the ability to set different rates than the interest rate set has the ability to set different rates than the interest rate set by the MFAby the MFA

For example if your project is for a 15 year term but the For example if your project is for a 15 year term but the current MFA bond issue is only for 10 years, you can request current MFA bond issue is only for 10 years, you can request a financial product that will secure a rate for the full 15 year a financial product that will secure a rate for the full 15 year termterm

What is MFA’s borrowing What is MFA’s borrowing costs?costs?

MFA’s borrowing cost is the same as the MFA’s borrowing cost is the same as the Province of BCProvince of BC

All 210 Members, regardless of size, receive All 210 Members, regardless of size, receive this interest ratethis interest rate

Does MFA Need Collateral?Does MFA Need Collateral?

No collateral neededNo collateral needed

MFA security is based upon General MFA security is based upon General Credit of the municipalityCredit of the municipality

Pooled Investment Pooled Investment

ProgramProgram

MFA Pooled Investment MFA Pooled Investment ProgramProgram

Three programs for Local Government’s investment Three programs for Local Government’s investment

needs:needs: Bond FundBond Fund – for investments of more than three years – for investments of more than three years Intermediate FundIntermediate Fund – for investments from one to three – for investments from one to three

yearsyears Money Market FundMoney Market Fund – for investments of less than one – for investments of less than one

yearyear

For MFABC Members to invest surplus cash atFor MFABC Members to invest surplus cash at

competitive rates with great liquidity and limited competitive rates with great liquidity and limited

riskrisk

MFA Pooled Investment MFA Pooled Investment Funds – UsageFunds – Usage

MFA Pooled Investment MFA Pooled Investment Funds – UsageFunds – Usage

($ x 1,000)($ x 1,000)

Leasing ProgramLeasing Program

MFA Leasing ProgramMFA Leasing Program

For members who wish to lease equipment, but do For members who wish to lease equipment, but do not want to get tied into costly, long-term not want to get tied into costly, long-term agreements agreements

Lease assets at interest rates below prime Lease assets at interest rates below prime Rates = Bank Prime Rates = Bank Prime lessless 1% 1%

The MFA oversees the program and provides low-The MFA oversees the program and provides low-cost funds to an independent lease administratorcost funds to an independent lease administrator

Clients not locked-in: can payoff on one day’s Clients not locked-in: can payoff on one day’s notice without penaltynotice without penalty

Monthly UsageMonthly Usage

$ millions$ millions

Leasing Program Usage OverallLeasing Program Usage OverallJanuary, 1998 - December, 2005January, 1998 - December, 2005

19981998 19991999 20002000 20012001 20022002 20032003 20042004 20052005

MFA Leasing ProgramMFA Leasing Program

Interim FinancingInterim Financing

ProgramProgram

- Short Term Loans -- Short Term Loans -

MFA Interim Financing MFA Interim Financing ProgramProgram

For communities who need access to short-term For communities who need access to short-term funding for capital projects or operating budgetsfunding for capital projects or operating budgets

The Interim Financing program can lend you moneyThe Interim Financing program can lend you moneyin as little as 24 hoursin as little as 24 hours

Clients are not locked-in: can pay off on one Clients are not locked-in: can pay off on one day’s notice, without penaltyday’s notice, without penalty

Short term funds at lower than the prime rateShort term funds at lower than the prime rateRates = Bank Prime Rates = Bank Prime lessless 1.25% 1.25%

Interim Financing Interim Financing Program Program

Revenue AnticipationRevenue Anticipation~ Regional Hospital Districts – 9 months to repayRegional Hospital Districts – 9 months to repay~ Municipalities/RD’s – 1 year to repayMunicipalities/RD’s – 1 year to repay~ School Districts – 1 year to repaySchool Districts – 1 year to repay

Short Term CapitalShort Term Capital~ Capital projects to be repaid within 5 yearsCapital projects to be repaid within 5 years

Temporary BorrowingTemporary Borrowing~ Done under loan authorization bylaw for capital Done under loan authorization bylaw for capital

projects destined for long term financing (5+ yrs)projects destined for long term financing (5+ yrs)

Monthly UsageMonthly Usage

$ millions$ millions

Interim Financing ProgramInterim Financing Program

January 1998 to DateJanuary 1998 to Date

19981998 19991999 20002000 20012001 20022002 20032003 20042004 20052005

Additional Additional

ProgramsPrograms

Community WorkshopsCommunity Workshops

free service; voluntary free service; voluntary

help municipalities with economic game help municipalities with economic game plansplans

attempts to address economic challengesattempts to address economic challenges

Len Traboulay Education Len Traboulay Education FundFund

Municipal Investment PlanMunicipal Investment Plan

What is the plan?What is the plan? A group RRSP / Investment Program negotiated by A group RRSP / Investment Program negotiated by

the MFAthe MFA All municipal employees, elected officials and their All municipal employees, elected officials and their

spouses / partners throughout BC are eligiblespouses / partners throughout BC are eligible A variety of ways to contribute to the plan A variety of ways to contribute to the plan

including:including:~ convenient contributions through payrollconvenient contributions through payroll~ deductions for municipal employeesdeductions for municipal employees

Municipal Investment PlanMunicipal Investment Plan

How did the MFA become involved?How did the MFA become involved?

The MFA was approached by both The MFA was approached by both mutual fund companies and municipal mutual fund companies and municipal staff asking if an investment plan could staff asking if an investment plan could be offered to BC’s elected officials and be offered to BC’s elected officials and municipal staffmunicipal staff

Rates of ReturnRates of Return

Retail Plan MFA

Perigee Global Bond 2.37 % 3.00 %

TDAM Cdn Bond Index 14.92 % 15.77 %

Fidelity True North 14.49 % 14.70 %

Prices based on December 31, 2004Prices based on December 31, 2004

Year to date resultsYear to date results

2006 MFA Staff2006 MFA Staff

Steve Shelley GrahamAllison

Jane LornaRenata Meagan

Municipal Finance Authority of British Columbia