FN Housing Institute The Housing Investment Fund

1. FN Housing InstituteThe Housing Investment Fund National Policy Forum on Housing and Water Sheraton Centre Hotel – Toronto, Ontario February 6-8, 2007

2. FNHI – Key Principles • Private ownership of houses not land • No changes to communal land ownership by First Nations • Strategy based on providing market-based housing through qualified First Nations housing authorities, creating supplemental benefits • National strategy with regional autonomy • No abrogation/derogation of treaty & aboriginal rights • Optional participation for those First Nations that choose to become involved and meet the participant criteria of the investment mechanism; • Maintenance of existing funding mechanisms for First Nations that do not want to participate • Structural change & capacity building • Provides an alternative to exclusive reliance on INAC & CMHC • Single First Nation institute can improve management & generate funding opportunities at the same time Assembly of First Nations

3. Creating the Investment Fund • Using regulations under existing legislation, establish an investment fund under the mandate of a non-profit organization from which First Nations or First Nations housing authorities could borrow • Legislative foundation promotes higher bond rating, confidence of investors, cooperation of Government of Canada • The investment fund would receive federal government dollars at start-up (initial capitalization) and move toward self-generated funding • Reporting to the Chiefs-in-Assembly, FNHI operates as an arms-length non-profit organization Assembly of First Nations

4. How It Can Work • This fund can provide qualified First Nations or their housing authorities with sustainable revolving loans, or indemnification against loss, risk & liability • Funding is for the purpose of building First Nations' housing • First Nations repay the loans which allows the fund to reinvest in more First Nations housing • FNHI sets criteria for participation in the fund & decides whether applicants qualify • Fund can be used for affordable housing, social housing & infrastructure where positive revenue stream can be demonstrated • Investment fund provides possibility of sustainable funding for housing on reserve • Also available to First Nations in the north with no reserves • Could support off-reserve building by First Nations Assembly of First Nations

5. How It Can Work Established Authority Best Practices Quality Assurance State of Readiness Certification for Funding • FNHI Centre • of Excellence • Building Capacity Crisis Intervention Emerging Authority Assembly of First Nations

6. The Numbers • Seed capital from the Government of Canada • e.g. $300 million up front investment • Set aside of 5% to indemnify fund against loss • $15 million on $300 million investment • Investment of 17% for leverage • $50 million could raise up to $650 million additional funding • Operations of FNHI fund & centre of excellence • Less than $5 million • Balance in sustainable, repayable loans to First Nations or First Nation housing authorities • Leaves $230 million on original balance • At an average of $100K for lot service and dwelling construction on band-owned land, this builds 2300 houses • INAC and CMHC currently build 2300 houses per year • Additional leveraged funds could provide market-based, affordable & social housing, plus infrastructure development at rate to satisfy need within 10 years (8700 annually) Assembly of First Nations

7. Projected Construction: GOC vs FNHI Assembly of First Nations

8. Functions of the Investment Fund • As administrator of the housing investment pool, the FNHI would • Liaise with the First Nations Finance Authority • Manage and operate trust fund • Seek additional funding through markets • Accredit housing authority network members for access to trust funds • Distribute loans from investment trust to housing authority network members • Manage & operate social housing investment fund • Distribute social housing investments Assembly of First Nations

9. First Nations Interface • Funding by application not allocation • Set transparent criteria for sound financial practice • Determine baseline for investment fund access • Identify appropriate financial, management and accountability mechanisms • Identify sound building management practices • Identify repayment capacity • Review applicant’s plan • Voluntary intervention • Crisis intervention Assembly of First Nations

10. Designing the Structure • Board of Directors • CEO and Operations • Working with the regions • Separate regional offices connected through a small central hub are possible and may be preferable for the functions of the Centre of Excellence • For the investment fund, leveraging capital, economies of scale and management consistency argue for a centralized design • This could be administered through regional offices Assembly of First Nations

11. Advantages of the Fund • Investment trust provides possibility of sustainable funding for housing on reserve • Also available to First Nations in the north with no reserves • Could support off-reserve building by First Nations • Does not provide full solution to housing shortages, but does generate structural change & critical capacity building • Opportunities for economies of scale to be driven both by funding & by closer cooperation through centre of excellence • Will not address social housing needs for communities that can not generate a revenue stream • Opportunities for economies of scale to be driven both by funding & by closer cooperation through centre of excellence Assembly of First Nations

12. Issues for Discussion • Principal Issues for discussion concern Certification for Funding and Intervention • Certification for funding • How to determine if FN or housing authority is ready to participate in FNHI investment? • Revenue stream(s), Accountability structure, Management capacity, Building experience • Intervention • If and only if a FN misses a payment, how should FNHI respond? • Objectives are to protect FNHI investments & credit rating as well as to assist FN or housing authority in successful operation to meet housing needs Assembly of First Nations