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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