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1 Click to edit Master title style Infrastructure Ontario s Loan Program Affordable financing in support of infrastructure renewal AMCTO Zone 1 Fall Meeting Town of Petrolia, October 14,

2 Click About to Infrastructure edit Master title Ontario style Crown agency of the Ontario Government focused on renewing and maintaining the province s infrastructure Successful track record in using an entrepreneurial approach to deliver public services with private sector expertise Driven to provide value for money and exceptional service to our customers Five lines of business: Commercial Projects: Identifying and leveraging private sector partnerships and investments to generate revenue, reduce costs and create efficiencies within the public sector Realty Planning & Development: managing the Province s property portfolio Real Estate Management: managing ministry/provincial client real estate portfolios through the oversight of service provider Lending: lending to broader public sector entities in Ontario through the Province s access to the capital markets Major Projects: delivering Ontario s larger and more complex public sector infrastructure 2

3 Click Beginnings to edit of Master the Loan title Program style Ontario government created the Loan Program as an alternative financing approach that could provide Ontario municipalities with affordable, longer-term loans to renew and build public infrastructure The Program was based on a pooled financing model that continues to be used successfully to support infrastructure investment in other jurisdictions across North America Similar models are used in BC (BC-MFA), Alberta (Alberta Capital Finance Authority) and Quebec (Financement Quebec) The Program offers a lower-cost, longer term financial product that is not being provided by private sector financial institutions Since 2003, the government has broadened the Loan Program several times to include other broader public sector groups The government sets the policy on all sectors; IO administers the Loan Program on behalf of the government 3

4 Click Infrastructure to edit Master Funding title Strategies style There are two fundamental ways that the broader public sector can choose to fund infrastructure: Full Cost Pay as you go Loan Financing 4

5 Click Full Cost to edit Pay Master you title go style The traditional approach to building and renewing infrastructure Undertake projects that are fully-funded using finite sources: Reserves Development charges (increase) Tax increases Apply for senior government assistance when available 5

6 Click Loan to Financing edit Master title style Assume manageable debt Current and future tax-payers share the benefits over the life of the asset Projects are financed over extended periods of time Match finance term to asset life (5 to 30 years) User fees collected Development charges Apply for senior government assistance when available 6

7 Click Funding to edit Considerations Master title style The cost of deferring the project Rise in operations and maintenance costs Lost opportunity costs May limit the opportunity for growth Will population or industrial growth be limited without the new infrastructure? Project financing Time to raise or save the required capital Ability and cost of servicing loans Impact of construction cost increases Uncertain economic conditions 7

8 Click The Loan to edit Program Master title style Affordable long-term financing solutions to help renew public infrastructure and deliver value to customers and residents across Ontario Efficient access to the Capital markets IO leverages the strength of the its good credit rating and passes savings along to its borrowers No need to be rated Short-term construction loans and long-term take-out financing Two kinds of long-term rates Serial and Amortizer No additional fees and no need to renegotiate 8

9 Click Providing to edit Access Master to Capital title style Markets CAPITAL MARKETS Short /Long-Term Money Capital Market Bonds Rating Agencies $$$ Eligible Borrowing Pool (Municipalities, non-profit long-term care, universities etc.) 9

10 Click Eligible to Applicants edit Master title style The following broader public sector organizations are eligible for Loan Program financing: Municipalities Municipal corporations (electricity distribution, power generation, transit) Universities and affiliated colleges Housing providers (social, affordable, co-operative, supportive) Aboriginal health access centres Community health and social service hubs (non-profit) Hospices (non-profit) Local services boards Long-term care homes (non-profit) Professional arts training facilities (non-profit) Sports and recreation organizations (non-profit) 10

11 Click Eligible to Projects edit Master title style Most depreciable capital expenditures are eligible for affordable, longterm financing, including: New construction, renovations and retrofits Water, wastewater and waste management Roads, bridges and public transportation Municipal housing and long-term care projects Ambulances, fire trucks, transit vehicles, snow ploughs, and other rolling stock Accessibility and energy efficiency projects Local police, fire, admin and recreation facilities Equipment, systems and asset management tools Land and facility acquisition Municipal Local Improvement programs 11

12 Click Municipal to edit Local Master Improvement title style Programs IO loans may also be used to support municipally-managed local improvement projects that are funded by Local Improvement Charges (LIC) Municipalities manage the LIC program within their jurisdiction and are responsible for lending funds to private landowners Municipality sets the requirements for the local improvement program IO does not lend directly to private landowners Examples of local improvement projects financed by a LIC: Upgrades to home heating, ventilation and cooling systems Installation of energy efficient windows and doors Upgrades to home hot water systems Improvements to insulation and weatherproofing Private landowners who benefit from the improvements have the LIC added to their property taxes each year until their portion of the improvement costs have been paid down 12

13 Click Financing to edit for Master Local Improvement title style Programs 13

14 Click Flexible to edit Terms Master title style Long-term fixed interest rates up to 30 year terms incorporating a shortterm flexible (construction) rate Extra long terms are typically not available from traditional lenders or capital markets Terms are designed to match useful life of the asset Rates are the same for all municipal borrowers Full debentures for capital expenditures Partial debentures with floating construction 14

15 Click Affordable to edit Rates Master title style Affordable long-term rates No additional fees and no need to renegotiate Borrowing pool aggregates the infrastructure needs of many borrowers, from unrated to AAA Ready to build, or already building? Our construction financing is the most affordable way to manage your short-term cash needs Previous capital expenditures are eligible Two kinds of long-term rates Serial and Amortizer Today s Rates 3.49% 25 year amortizer 15

16 Click Indicative to edit Interest Master Rates title style **Indicative Lending Rates as of October 13, 2015 Term Construction Serial Amortizer 1 Month 1.31% 5 Year 1.67% 1.67% 10 Year 2.38% 2.40% 15 Year 2.87% 2.93% 20 Year 3.19% 3.27% 25 Year 3.39% 3.49% 30 Year 3.51% 3.61% About our Lending Rates Our online lending rates are updated frequently as we track the movement of our cost of borrowing in the capital markets. Debentures - rates on debentures are fixed for the entire life of the loan once the debenture is purchased by Infrastructure Ontario. Construction Loans - for construction loans, rates float throughout the term of the loan until they are replaced by a debenture. Construction loan requests over $75 million are subject to funding availability and interest rates may vary from those posted. **These interest rates are the all-in cost for loans of the term and type selected 16

17 Click Applying to edit for Master a Loan title style Online application - WebLoans Credit and legal review Projects are reviewed to ensure that they are viable and meet eligibility criteria Execute Financing Agreement IO provides templates and our knowledgeable staff is available to assist throughout the process Draw money Capital financing available for short term construction loans and long-term debentures 17

18 Click Credit to Review edit Master Process title style All applicants are subject to a credit review and are required to meet financial soundness criteria before qualifying for a loan Debt Service Coverage = EBITDA / Payment > 1 Current FIR Financial Statements The legal, financial and technical due diligence helps ensure the integrity of the loan portfolio Infrastructure Ontario also monitors borrowers on a continuous basis to ensure that their credit quality continues to meet the loan criteria 18

19 Click Loan to Program edit Master Summary title style Rates are the same for all borrowers, within each sector All capital expenditures are eligible Hassle-free access to capital markets No need to be rated, no minimum / no maximum Affordable all-in blended rates No additional transaction fees or commissions Longer terms than generally available elsewhere One month construction loans and 5 to 30 year take-out financing Online application Dedicated knowledgeable staff 19

20 Click Loan to Program edit Master Portfolio title style IO has received applications for more than $8.8 billion in loans from public sector clients all over Ontario Supporting over 2,200 infrastructure renewal projects Over $6.4 billion in affordable financing has been advanced Approved and Executed - As of Oct,

21 Click Loan to Program edit Master In Action title style Township of Amherstburg Multi-use sports complex that includes ice pads, soccer fields and baseball diamonds Loan Value: $5.8 million South Huron Two construction projects to improve waterlines, sewage, and wastewater infrastructure Loan Value: $18.1 million 21

22 Click Loan to Program edit Master In Action title style City of Stratford Multiple projects: sanitary and storm water projects, road reconstruction, renovation of Allman Memorial Arena and Lions Pool Loan Value: $5.5 million City of Thunder Bay Multiple projects including: pavement rehabilitation, sidewalk construction, traffic signals, street lighting and more Loan Value: $6.8 million 22

23 Click Loan to Program edit Master In Action title style Town of Innisfil Multiple projects: construction of the Cookstown Library, town hall, multi-purpose recreation facility and police station renovations Loan Value: $18 million County of Brant Multiple projects: fire truck acquisition, clean water and sewage treatment system upgrades, and recreation facility Loan Value: $6.8 million 23

24 Click Contact to edit us today! Master title style Northern Ontario Gavin Maitland Client Relationship Officer Phone: Eastern Ontario Robert Keene Senior Relationship Manager Phone: Southwestern Ontario Anthony Pizans Senior Relationship Manager Phone: Central Ontario Catherine Barr Senior Relationship Manager Phone: