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Municipal Finance Authority of British Columbia

Municipal Finance Authority of British Columbia. A Credit Union for Local Government. The MFA was formed in 1970 to promote the financial well-being of local governments throughout British Columbia. Regional District – Purpose?. Geographical areas

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Municipal Finance Authority of British Columbia

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  1. Municipal Finance Authority of British Columbia

  2. A Credit Union for Local Government The MFA was formed in 1970 to promote the financial well-being of local governments throughout British Columbia

  3. Regional District – Purpose? • Geographical areas • Coordinate common infrastructure needs: • Sewer, water, transportation • Each municipality has a representative on the Regional District Board

  4. MFA Governance Chair Annually elected from The Members of the Authority 9 Trustees Annually elected from the Members of the Authority 35 Members Annually appointed from the Regional Districts 27 Regional Districts Representing 156 Municipalities

  5. MFA – At a Glance

  6. MFA – At a Glance

  7. MFA – At a Glance

  8. Credit RatingsProvincial as of January 2005

  9. Credit RatingsProvincial as of January 2005

  10. MFA Programs • Capital Financing • Pooled Investments Bond Fund Intermediate Fund Money Market Fund • Interim Financing • Leasing • Municipal Investment Plan

  11. Capital Financing

  12. MFA Capital Financing Program The basic purpose of the capital financing program is to lend cash for capital projects at an interest rate set by the MFA The MFA can offer competitive rates because: • Collective borrowing results in larger bond issues that are easily traded and therefore more attractive to bond investors • AAA credit rating – the highest rating possible – allows the MFA to raise funds in even the most difficult markets

  13. MFA Capital Financing Program The MFA structure is collective yet flexible: • With the use of optional financial products local government has the ability to set different rates than the interest rate set by the MFA 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 a financial product that will secure a rate for the full 15 year term

  14. What is MFA’s borrowing costs? • MFA’s borrowing cost is the same as the Province of BC • All 210 Members, regardless of size, receive this interest rate

  15. Does MFA Need Collateral? • No collateral needed • MFA security is based upon General Credit of the municipality

  16. Pooled Investment Program

  17. MFA Pooled Investment Program Three programs for Local Government’s investment needs: • Bond Fund – for investments of more than three years • Intermediate Fund – for investments from one to three years • Money Market Fund – for investments of less than one year For MFABC Members to invest surplus cash at competitive rates with great liquidity and limited risk

  18. MFA Pooled Investment Funds – Usage ($ x 1,000)

  19. Leasing Program

  20. MFA Leasing Program For members who wish to lease equipment, but do not want to get tied into costly, long-term agreements Lease assets at interest rates below prime Rates = Bank Prime less 1% • The MFA oversees the program and provides low-cost funds to an independent lease administrator • Clients not locked-in: can payoff on one day’s notice without penalty

  21. Leasing Program Usage OverallJanuary, 1998 - December, 2005 $ millions Monthly Usage 2004 1998 1999 2000 2001 2002 2003 2005

  22. MFA Leasing Program

  23. Interim Financing Program - Short Term Loans -

  24. MFA Interim Financing Program For communities who need access to short-term funding for capital projects or operating budgets Short term funds at lower than the prime rate Rates = Bank Prime less 1.25% The Interim Financing program can lend you money in as little as 24 hours Clients are not locked-in: can pay off on one day’s notice, without penalty

  25. Interim Financing Program • Revenue Anticipation • Regional Hospital Districts – 9 months to repay • Municipalities/RD’s – 1 year to repay • School Districts – 1 year to repay • Short Term Capital • Capital projects to be repaid within 5 years • Temporary Borrowing • Done under loan authorization bylaw for capital projects destined for long term financing (5+ yrs)

  26. Interim Financing ProgramJanuary 1998 to Date $ millions 1998 1999 2003 2004 2005 2000 2001 2002 Monthly Usage

  27. Additional Programs

  28. Community Workshops • free service; voluntary • help municipalities with economic game plans • attempts to address economic challenges

  29. Len Traboulay Education Fund

  30. Municipal Investment Plan What is the plan? • A group RRSP / Investment Program negotiated by the MFA • All municipal employees, elected officials and their spouses / partners throughout BC are eligible • A variety of ways to contribute to the plan including: • convenient contributions through payroll • deductions for municipal employees

  31. Municipal Investment Plan How did the MFA become involved? The MFA was approached by both mutual fund companies and municipal staff asking if an investment plan could be offered to BC’s elected officials and municipal staff

  32. Rates of Return Prices based on December 31, 2004 Year to date results

  33. 2006 MFA Staff Steve Shelley Allison Graham Renata Meagan Jane Lorna

  34. Municipal Finance Authority of British Columbia

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