Infrastructure Ontario’s Loan Program Affordable financing in support of infrastructure renewal

1. Infrastructure Ontario’s Loan ProgramAffordable financing in support of infrastructure renewal

2. Infrastructure Ontario • Crown agency of the Ontario government, created in 2005 • Focused on modernizing and financing the renewal of public infrastructure, maximizing the value of public real estate and managing government facilities • Four lines of business: • Buildings: landlord to the Ontario Public Service • Lands: managing the Province’s property portfolio • Corporate Development: optimizing Provincial assets • Major Projects: delivering Ontario’s larger and more complex public sector infrastructure • Loans: lending to broader public sector entities in Ontario through the Province’s access to the capital markets

3. The Loan Program Affordable long-term financing to help renew public infrastructure and deliver value to customers and residents across Ontario

4. Ontario – Infrastructure Snapshot • The Association of Municipalities of Ontario (AMO) estimates an infrastructure gap of at least $60 Billion that will take 10 years to close, leaving municipal governments with a bill of $6 Billion each year • Almost half of this gap exists within road and bridge infrastructure, with the remaining amounts occurring in other core infrastructure categories such as drinking water, wastewater, storm water, public transit and solid waste Source:Association of Municipalities of Ontario, The State of Municipal Infrastructure - Regional Snapshots (Federation of Canadian Municipalities - September 2012)

5. Infrastructure Funding Strategies There are two fundamental ways that the broader public sector can fund infrastructure Loan Financing Full Cost “Pay as you go”

6. Funding Strategies: Pay as You Go • The traditional approach to building and renewing infrastructure • Can only undertake projects that are fully-funded using finite sources: • Reserves • Development charges • Tax increases • Apply for senior government assistance when it is available

7. Funding Strategies: Loan Financing • Assuming manageable debt • Current and future tax-payers share the benefits over the life of the asset • Projects financed over extended periods of time • Match finance term to asset life (5 to 40 years) • User fees • Development charges • Apply for senior government assistancewhen it is available

8. Funding Considerations • 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

9. Funding Example Project cost = $1.0MAnnual construction cost increase = 7.5%

10. Providing Access to Capital Markets CAPITAL MARKETS Infrastructure Renewal Bonds Short /Long-Term Money Rating Agencies INFRASTRUCTURE ONTARIO $$$ Eligible Borrowing Pool (Municipalities, non-profit long-term care, universities etc.)

11. How is IO Different From a Bank?

12. Who is Eligible? • Aboriginal health access centres • Community health and social service hubs • Hospices • Housing providers • Social, affordable, co-operative, supportive • Local services boards • Long-term care homes (non-profit) • Municipal corporations • Electricity distribution, power generation, transit • Municipalities • Professional arts training facilities (non-profit) • Sports and recreation organizations (non-profit) • Universities and affiliated colleges

13. Eligible Municipal Projects • Most depreciable capital expenditures are eligible for affordable, long-term financing, including: • New construction, renovations and retrofits • Water, wastewater and waste management • Roads, bridges and public transportation • Municipal housing projects • Ambulances, fire trucks, transit vehicles, snow ploughs, garbage trucks and other rolling stock • Accessibility and energy efficiency projects • Local police, fire, admin and recreation facilities (arenas) • Equipment, systems and asset management tools • Land and facility acquisition

14. Oxford County – South West Oxford • South-West Oxford partnered with IO to help finance its LED street lighting retrofit project. The project involves the conversion of 432 existing High Pressure Sodium street light fixtures to new, energy efficient LED fixtures. Energy Savings HPS Lights LED Lights 39,650 KW 74,500 KW Loan Amount Energy Savings (Estimated Annual) $348,000 $34,153.00 @ $ 0.98/KW 47% Loan Payment (Estimated Annual) $40,112.13 @ 2.67% over 10 yrs Reduced energy and maintenance costs will help finance the cost of the project

15. Success of the Loan Program • Since 2003 the Loan Program has received over $7.5 billion in loans from public sector clients all over Ontario • Supporting over 1,900 infrastructure renewal projects • Over $5.4 billion in affordable financing has been advanced Northeast 61 Clients 155 Projects Northwest 25 Clients 148 Projects Southeast 99 Clients 460 Projects Southwest 104 Clients 762 Projects Central 94 Clients 422 Projects Loan Clients - As of Aug 2012

16. Loan Program Portfolio • Total Loans Approved – $6.3 Billion Approved and Executed - As of April 2013

17. Municipal Loans Breakdown • Total Approved & Executed Municipal Loans – $4,458.4 M As of April 2013

18. Flexible Terms • Offered in both a short-term construction rate and long-term debentures (up to 40-years) • 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 borrowers, within each sector

19. Serial & Amortizer Loans • Serial Loans: Constructed to pay equal principal amounts every 6 months with interest computed on the declining balance Savings • Amortizer Loans: Constructed to pay equal total payments every 6 months, interest component decreases while principal component increases over the term

20. Affordable Rates • 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 • Two kinds of long-term rates – Serial and Amortizer Visit our website today for current lending rates!

21. Today’s Rates

22. Client Resources AvailableOnline

23. Municipal Loan Model • Clients can download the municipal loan model from the IO website located in the Resources section at the bottom of the Municipal webpage

24. Loan Payment Calculator • Available on our website, this tool allows users to enter loan amount, interest rate and length of loan to help determine monthly payment amount, payment schedule and amount of interest paid. • The payment schedule is created in a PDF format which easy to save and print for use at council meetings.

25. Loan Program Benefits • Provide both short-term construction loans and long-term take-out financing • Rates are all-in blended rates so there are no additional transaction fees or commissions • Cost of capital is very low • Rates are the same for all borrowers, within each sector • Rates apply for the full length of the term

26. Loan Program Summary • All capital expenditures eligible • Hassle-free access to capital markets • No need to be rated, no minimum / no maximum • Affordable market rates • No extra fees or commissions • Longer terms than generally available elsewhere • One month construction loans and 5- to 40-year debentures • Online application • Dedicated knowledgeable staff

27. What our clients are saying… • 95% of clients say they will work with IO again • 95% agree that IO’s rates are preferable in comparison to other sources • 85% of clients rate the loan process highly • 97% of loan clients would recommend working with IO Survey results from 2010-11 Infrastructure Ontario’s Client Survey, Dec. 2010 “My experience with Infrastructure Ontario and the Loan Program have been exceptional and Timmins will definitely apply to the program for future capital funding.” Joe Torlone, CAO, City of Timmins

28. Loan Clients in the North East