What is an infrastructure Bank and its role with infrastructure funding – Canada – April 2017By: Paul Young CPA, CGA

Agenda• What is infrastructure bank?• How does an infrastructure bank work• Bank Rules/Infrastructure Bank• Issues/Risks facing infrastructure bank

What is an Infrastructure Bank?

• https://www.liberal.ca/realchange/canada-infrastructure-bank%E2%80%A8%E2%80%A8/

• The federal government can use its strong credit rating and lending authority to make it easier and more affordable for municipalities to build the projects their communities need.

• Where a lack of capital represents a barrier to projects, the Canada Infrastructure Bank will provide loan guarantees and small capital contributions to provinces and municipalities to ensure that the projects are built.

How does an Infrastructure Bank work?

Source - http://smallbusiness.chron.com/infrastructure-bank-work-39194.html

Revenue for infrastructure -- such as roads, highway projects and bridges -- is typically supplied by state and municipal bonds or federal monies. Unlike Europe, the United States does not have a central source of financing for large-scale construction projects. An infrastructure bank would provide a central source of funds for these necessary construction projects.

Infrastructure Bank / Funding

• https://watershedsentinel.ca/articles/whose-canada-infrastructure-bank/ or http://www.ctvnews.ca/politics/federal-budget-to-show-how-infrastructure-bank-can-attract-free-up-investment-1.3332522

CTV News – March 20, 2017

Risk with Infrastructure Bank• Cost of Capital vs- return on capital for projects• Projects would then require tolls/users fees as part of supporting the requirement• Pensions Funds have certain requirement in terms of investment• How will the stress test be completed?• Banks need to follow the Bank Act as well as Basel and Solvency Reporting

• Who sits on the board for the infrastructure bank• Is the board independent?

• What happens when projects lose money? • Are there guarantees? i.e. taxpayers flip the bill for the short-falls

• Municipalities asked for dedicated funding, not loans• Interest expense would be cover through increase taxes and user fees