Financing Secured by Other Revenues Regulations

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Financing Secured by Other Revenues Regulations

SOR/2011-201FIRST NATIONS FISCAL MANAGEMENT ACT
FIRST NATIONS FISCAL AND STATISTICAL MANAGEMENT ACT
Registration 2011-09-30
Financing Secured by Other Revenues Regulations
P.C. 2011-1105 2011-09-29His Excellency the Governor General in Council, on the recommendation of the Minister of Indian Affairs and Northern Development, pursuant to paragraph 74(b) and section 142 of the First Nations Fiscal and Statistical Management ActFootnote a, hereby makes the annexed Financing Secured by Other Revenues Regulations.
Return to footnote aS.C. 2005, c. 9Interpretation

Marginal note:Definitions

1 The following definitions apply in these Regulations.

Act
Loi

Act means the First Nations Fiscal and Statistical Management Act. (Loi)

other revenues
autres recettes

other revenues means the revenues described in section 3. (autres recettes)

secured revenues trust account
compte de recettes en fiducie garanti

secured revenues trust account, in respect of a first nation, means an account, established by the First Nations Finance Authority and the first nation, in which other revenues to be used for financing under these Regulations are maintained. (compte de recettes en fiducie garanti)

Marginal note:Adapted references

2 (1) In these Regulations, a reference to a provision of the Act or any regulations made under it — including a reference that occurs in any provision that is adapted by these Regulations — is to be read as a reference to that provision as adapted or restricted by these Regulations, except if the reference is made for the purpose of specifying the provision that is being adapted or restricted.

Marginal note:Adapted references

(2) In relation to financing secured by other revenues, a reference in the Act or any regulations made under it, or in any notice or other document issued under the Act or any regulations made under it, to the Act, the regulations or any of their provisions, is to be read as a reference to the Act, regulation or provision as adapted or restricted by these Regulations.

Prescribed Revenues and Purposes

Marginal note:Other revenues

3 For the purposes of paragraph 74(b) of the Act, the following revenues may be used to secure financing for the purposes set out in section 4:

(a) tax revenues and fees imposed by a first nation, other than

(i) local revenues, and
(ii) revenues from taxes administered by Her Majesty in right of Canada on the first nation’s behalf;

(b) royalties payable to a first nation under the First Nations Land Management Act or the First Nations Oil and Gas and Moneys Management Act;
(c) royalties payable to Her Majesty in right of Canada under the Indian Act or the Indian Oil and Gas Act on behalf of a first nation that has assumed control of its moneys under the First Nations Oil and Gas and Moneys Management Act;
(d) revenues that are from leases, permits or other instruments authorizing the use of reserve land issued under the Indian Act and that a first nation has assumed control of under the First Nations Oil and Gas and Moneys Management Act;
(e) revenues from leases, permits or other instruments authorizing the use of reserve land issued under the First Nations Land Management Act;
(f) revenues otherwise payable to a first nation under any contract with a person other than Her Majesty in right of Canada, other than revenues collected by Her Majesty in right of Canada on the first nation’s behalf;
(g) revenues, other than local revenues, received by a first nation from businesses wholly or partly owned by it, including dividends from shares owned by it;
(h) transfers from a provincial, regional, municipal or local government to a first nation;
(i) transfers from Her Majesty in right of Canada to a first nation if the agreement governing the transfer specifically permits such a use and if any other applicable conditions are satisfied; and
(j) interest earned by a first nation on deposits, investments or loans, other than interest held by Her Majesty in right of Canada on the first nation’s behalf.

Marginal note:Other purposes

4 For the purposes of paragraph 74(b) of the Act, other revenues of a first nation may be used to secure financing for any purpose that promotes the first nation’s economic or social development, including financing for

(a) capital infrastructure that is to be wholly or partly owned by the first nation, including infrastructure for the provision of local services on reserve lands, housing, plants and machinery, buildings and other capital assets;
(b) rolling stock that is to be wholly or partly owned by the first nation;
(c) land that is to be wholly or partly owned by the first nation;
(d) shares or any other ownership interest in a corporation whose purpose includes the ownership, operation, management or sale of products of power generating facilities, waste or wastewater treatment facilities or other public service utilities or facilities;
(e) lease financing of capital assets for the provision of local services; and
(f) short-term financing to meet cash flow requirements for capital purposes or to refinance a short-term debt incurred for capital purposes.

Application

Marginal note:Adaptations applicable to other revenues

5 The Act is adapted so that the provisions of the Act and the regulations made under it apply to the use by a first nation of other revenues to secure financing for a purpose set out in section 4, subject to the adaptations and restrictions set out in these Regulations.

Adaptations to the First Nations Fiscal and Statistical Management Act

Marginal note:Inapplicable provisions

6 The Act is adapted so that the following provisions do not apply to financing secured by other revenues, to laws made by a first nation to secure that financing or to laws made by a first nation under paragraph 5(1)(b) or (d) of the Act in relation to other revenues:

(a) section 6;
(b) subsections 8(4) and (5);
(c) section 11;
(d) section 13;
(e) subsections 31(1) to (3);
(f) sections 32 and 33;
(g) section 35; and
(h) subparagraph 84(5)(b)(ii).

Marginal note:Reference to local revenues

7 (1) The following provisions of the Act are adapted so that a reference to local revenues is to be read as a reference to other revenues:

(a) paragraph 5(1)(b);
(b) subsection 52(1) and paragraphs 52(2)(e) and (3)(d);
(c) subsections 53(1), (2) and (4);
(d) section 54;
(e) paragraph 55(2)(c); and
(f) subsection 86(4).

Marginal note:Reference to local revenues

(2) The following provisions of the English version of the Act are adapted so that a reference to local revenues is to be read as a reference to other revenues:

(a) paragraph 5(1)(g); and
(b) subsections 53(3), (5), (6) and (8).

Marginal note:Adaptation to subsection 5(2)

8 Subsection 5(2) of the Act does not apply to a law made under paragraph 5(1)(b), (d), (f) or (g) of the Act in relation to borrowing by a first nation from the First Nations Finance Authority that is secured by other revenues.

Marginal note:Adaptation to subsection 5(3)

9 Subsection 5(3) of the Act is adapted as follows:

Marginal note:Coming into force

(3) A law made under subsection (1) comes into force on the day set out in the law.

Marginal note:Adaptation to section 14

10 Section 14 of the Act is adapted as follows:

Marginal note:Reporting of other revenues

14 If a first nation is using other revenues as security for a loan from the First Nations Finance Authority, the first nation shall account for all of its other revenues — including other revenues that have not been used as security for the loan — separately from its other moneys, and must provide that accounting information to the Authority and the First Nations Financial Management Board on request.

Marginal note:Adaptation to section 51

11 Section 51 of the Act is adapted as follows:

Marginal note:Required intervention

51 On receipt of a notice from the First Nations Finance Authority under subsection 86(4), the Board shall either require the first nation to enter into a co-management arrangement in accordance with section 52 or assume third-party management of the first nation’s other revenues in accordance with section 53, as the Board sees fit.

Marginal note:Adaptation to subsection 52(1)

12 (1) The portion of subsection 52(1) of the Act before paragraph (a) is adapted to be read without reference to the local revenue account.

Marginal note:Adaptation to paragraphs 52(1)(b) and (3)(c)

(2) Paragraphs 52(1)(b) and (3)(c) of the Act are adapted to be read without reference to paragraph 33(3)(b).

Marginal note:Adaptation to subsection 53(1)

13 (1) The portion of subsection 53(1) of the Act before paragraph (a) is adapted to be read without reference to the local revenue account.

Marginal note:Adaptation to paragraph 53(1)(c)

(2) Paragraph 53(1)(c) of the Act is adapted to be read without reference to paragraph 33(3)(b).

Marginal note:Adaptation to subsection 53(2)

(3) Subsection 53(2) of the Act is adapted so that

(a) paragraph (a) applies only to laws made under paragraphs 5(1)(b), (d) and (f) of the Act;

(b) the rights and powers of the Board are to be read to include the power to act in place of the council of the first nation

(i) in relation to assets of the first nation that are generating other revenues, including any powers of the council to terminate an agreement, or to enter into a new agreement, in relation to those assets, and
(ii) under laws made under paragraphs 5(1)(b), (d) and (f) of the Act in relation to other revenues, to manage all other revenues of the first nation, and to undertake any necessary borrowing;

(c) if, in acting under subparagraph (b)(i), the Board exercises powers conferred on the council under the Indian Act,

(i) the powers of the Board are subject to any limitations imposed under the Indian Act, and
(ii) the Board acts as an agent or mandatary of the council in the exercise of those powers; and

(d) the rights and powers of the Board referred to in subparagraph (b)(ii)

(i) include the power to manage other revenues held by a first nation that were received before, or that are received after, the Board assumes management of the first nation’s other revenues, including those that are comingled with other moneys of the first nation; and
(ii) do not include the power to manage other revenues of the first nation while they are in the secured revenues trust account.

Marginal note:Adaptation to subsection 53(8)

(4) Subsection 53(8) of the Act is adapted to be read without reference to the First Nations Tax Commission.

Marginal note:Scope of powers

14 For the application of sections 52 and 53 of the Act as adapted by sections 12 and 13,

(a) the rights and powers of the Board extend to all other revenues of the first nation, including other revenues that have not been used as security for a loan from the First Nations Finance Authority; and
(b) the rights and powers of the Board in relation to a default by a first nation on a loan secured by other revenues do not extend to management of the first nation’s local revenues or local revenue account.

Marginal note:Adaptation to section 54

15 Section 54 of the Act is adapted so that a reference to a local revenue law is to be read as a reference to a law made under paragraph 5(1)(b), (d), (f) or (g) of the Act in relation to borrowing by the first nation from the First Nations Finance Authority that is secured by other revenues.

Marginal note:Adaptation to subsection 78(1)

16 Subsection 78(1) of the Act is adapted as follows:

Marginal note:Priority

78 (1) If a first nation is insolvent, the Authority has a priority over all other creditors of the first nation for any moneys that are authorized to be paid to the Authority under a law made under paragraph 5(1)(b) or (d), or under an agreement governing a secured revenues trust account, for any debt that arises after the date on which the first nation requests from the First Nations Finance Authority financing that is to be secured by other revenues.

Marginal note:Adaptation to section 79

17 Section 79 of the Act is adapted as follows:

Marginal note:Limitations

79 The Authority shall not make a loan to a borrowing member that is to be secured by other revenues unless

(a) the borrowing member has made a borrowing law under paragraph 5(1)(d) and forwarded a copy of it to the Authority;
(b) the Authority is satisfied that the borrowing member has the ability to repay the loan;
(c) the borrowing member has obtained a certificate from the First Nations Financial Management Board under subsection 50(3) and forwarded a copy of it to the Authority;

(d) the borrowing member and the Authority have established a secured revenues trust account that is

(i) managed by a third party acceptable to the Authority, and
(ii) subject to terms that require the third party managing the account to periodically pay to the Authority the amounts required to be paid to the Authority under the borrowing agreement with the borrowing member, at the times set out in that agreement, before paying any remaining amount to the borrowing member; and

(e) the borrowing member has required the payors of other revenues being used to secure the loan to deposit those other revenues into the secured revenues trust account throughout the period of the loan.

Marginal note:Adaptation adding section 79.1

18 The Act is adapted by adding the following after section 79:

Marginal note:Maintenance of Authority registry

79.1 (1) The Authority shall maintain a registry of every law in relation to other revenues that is forwarded to it under paragraph 79(a).

Marginal note:Website posting

(2) Every law made under paragraph 5(1)(d) in relation to financing secured by other revenues shall be posted by the Authority on a website maintained by it within 30 days after the day on which it receives the law from the first nation under paragraph 79(a).

Marginal note:Adaptation to subsection 84(1)

19 (1) Subsection 84(1) of the Act is adapted as follows:

Marginal note:Debt reserve fund — other revenues

84 (1) The Authority shall establish a debt reserve fund for financing secured by other revenues that is separate from the debt reserve fund for financing secured by property tax revenues, to make payments or sinking fund contributions for which insufficient moneys are available from borrowing members in receipt of financing secured by other revenues.

Marginal note:Adaptation to subsection 84(2)

(2) Subsection 84(2) of the Act is adapted to be read to require the Authority to withhold 5% of the amount of any loan secured by other revenues and to deposit that amount in the debt reserve fund established for financing secured by other revenues.

Marginal note:Adaptation to subsection 84(5)

(3) Subsection 84(5) of the Act is adapted so that

(a) in relation to the debt reserve fund established for financing secured by other revenues,

(i) a reference to borrowing members is to be read as a reference to borrowing members that have received financing secured by other revenues,

(ii) the total amount contributed by borrowing members is calculated as the higher of

(A) the amount that would have been in the debt reserve fund if no payments from the fund had been made, and
(B) the total of all amounts contributed to the debt reserve fund under subsection 84(2) of the Act, and

(iii) the balance of the debt reserve fund is calculated without reference to any amounts contributed to it from the credit enhancement fund; and

(b) in relation to the debt reserve fund established for financing secured by property tax revenues, a reference to borrowing members is to be read as a reference to borrowing members that have received financing secured by property tax revenues.

Marginal note:Adaptation to section 85

20 Section 85 of the Act is adapted by adding the following after subsection (1):

Marginal note:Repayments to credit enhancement fund

(1.1) Payments made from the credit enhancement fund to a debt reserve fund established for financing secured by other revenues shall be repaid within 18 months after the day on which the payment was made — or if more than one payment has been made, within 18 months after the day on which the first payment was made — and no payments shall be made from the credit enhancement fund to the debt reserve fund after the expiry of that period until the debt reserve fund has been fully replenished under subsection 84(5).

Marginal note:Adaptation to paragraph 86(1)(b)

21 Paragraph 86(1)(b) of the Act is adapted to be read without reference to the First Nations Tax Commission.

Adaptations to the Debt Reserve Fund Replenishment Regulations

Marginal note:General adaptations

22 The Debt Reserve Fund Replenishment RegulationsFootnote 1 are adapted as follows:
Return to footnote 1SOR/2006-244

(a) in relation to a default on financing secured by other revenues,

(i) a reference to the debt reserve fund is to be read as a reference to the debt reserve fund established for financing secured by other revenues;
(ii) a reference to a borrowing member is to be read as a reference to a borrowing member that has received financing secured by other revenues; and
(iii) a reference to a defaulting member is to be read as a reference to a defaulting member in receipt of financing secured by other revenues.

(b) in relation to a default on financing secured by property tax revenues,

(i) a reference to the debt reserve fund is to be read as a reference to the debt reserve fund established for financing secured by property tax revenues;
(ii) a reference to a borrowing member is to be read as a reference to a borrowing member that has received financing secured by property tax revenues; and
(iii) a reference to a defaulting member is to be read as a reference to a defaulting member in receipt of financing secured by property tax revenues.

Marginal note:Adaptation to section 4

23 Section 4 of the Regulations is adapted as follows:

Marginal note:Calculation of charges

4 On the expiry of the period referred to in subsection 2(1), the Authority shall send

(a) to the council of each defaulting member, a notice requiring that member to pay the charge determined under section 3; and

(b) to the council of each borrowing member that is not a defaulting member, a notice requiring that member to pay a charge equal to the amount determined by the formula

[A / (B - C)] × (D - E)
where


is the amount initially contributed by the borrowing member to the debt replenishment fund at the time the loan was made,


is the total amount initially contributed by all borrowing members to the debt replenishment fund at the time the loan was made,


is the sum of the amounts initially contributed by all defaulting members to the debt replenishment fund at the time the loan was made,


is the amount of the shortfall in the debt reserve fund set out in the notice referred to in section 2, and


is the amount charged to defaulting members under section 3.



Adaptations to the Local Revenue Management Implementation Regulations

Marginal note:General adaptations

24 The Local Revenue Management Implementation RegulationsFootnote 2 are adapted as follows:
Return to footnote 2SOR/2007-245

(a) a reference to a local revenue law is to be read as a reference to a law of a first nation made under paragraph 5(1)(b), (d), (f) or (g) of the Act in relation to other revenues; and
(b) a reference to local revenues is to be read as a reference to other revenues.

Marginal note:Inapplicable provisions

25 The Regulations are adapted so that the following provisions do not apply:

(a) paragraphs 5(1)(b), (c), (h) and (l);
(b) paragraph 6(1)(a); and
(c) paragraph 18(1)(d).

Marginal note:Reference to First Nations Tax Commission

26 The following provisions of the Regulations are adapted to be read without reference to the First Nations Tax Commission:

(a) paragraph 5(1)(a);
(b) paragraphs 21(1)(c) and (f); and
(c) section 22.

Marginal note:Adaptation to paragraphs 5(1)(f) and (g)

27 Paragraphs 5(1)(f) and (g) of the Regulations are adapted as follows:

(f) the first nation’s other revenues and all expenditures of other revenues, including the accounting information required under section 14 of the Act;
(g) any deposit, loan or investment, or any other agreement with a financial institution, relating to other revenues or any secured revenues trust account;

Marginal note:Adaptation to subsection 15(1)

28 Subsection 15(1) of the Regulations is adapted to be read without reference to the tax administrator.

Coming into Force

Marginal note:Registration

29 These Regulations come into force on the day on which they are registered.