Vol. 151, No. 14 — July 12, 2017

Registration

SI/2017-34 July 12, 2017

FINANCIAL ADMINISTRATION ACT

On-Reserve Housing Ministerial Loan Guarantee Remission Order

P.C. 2017-796 June 20, 2017

His Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Minister of Indian Affairs and Northern Development and the Treasury Board, pursuant to subsection 23(2.1) (see footnote a) of the Financial Administration Act (see footnote b), remits the following amounts, resulting from on-reserve housing ministerial loan guarantees:

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

The Governor in Council is granting remission under subsection 23(2.1) of the Financial Administration Act to the Long Lake No. 58 First Nation, the Ochiichagwe’babigo’ining First Nation, the Gull Bay First Nation, the Kashechewan First Nation, a community associated with the Albany First Nation, the Ginoogaming First Nation, and the Wabaseemoong Independent Nations in the On-Reserve Housing Ministerial Loan Guarantee Remission Order for their outstanding debt in the amount of $6,451,005.33 principal and the interest payable on that principal stemming from defaulted ministerial loan guarantees for on-reserve housing. This remission is being granted on the basis that doing so is in the public interest. Efforts have already been made to repay the original debts and to facilitate community efforts to provide housing which meets health and safety standards.

Objective

This Order will remove unrecoverable debt from the Crown’s accounts, the majority of which is related to accumulated interest. The Order will also allow these First Nations to clear the debt from their accounts in order to improve their ability to access a combination of commercial and subsidized funding sources to assist them in maintaining basic health and safety standards for housing in their communities.

Background

Housing is a foundation for strong and healthy communities. The Government of Canada is committed to supporting First Nations on reserve in achieving housing standards comparable to those of other Canadians. Subsection 89(1) of the Indian Act effectively prevents the seizure of real property located on reserve by a lender. This poses a significant impediment for Band Councils and individuals seeking loan financing for on-reserve housing projects. Despite the low default rate for on-reserve housing loans (0.052% between 2007 and 2016), in most instances, financial institutions will not take the risk of providing a housing loan on reserve unless there is a guarantee of payment in case of default.

To address the risk to lenders and to enable First Nations to secure housing loans, the Department of Indian Affairs and Northern Development (DIAND) issues ministerial loan guarantees to lenders who lend to Band Councils and their members on reserve. In the case of a loan default on the part of the borrower, the Minister pays out the outstanding principal and interest to the lender. Upon receipt of payment from DIAND for the outstanding balance of the loan, the lenders assign all of their rights under the loan agreement to DIAND. The Department then aims to recover these funds from the First Nation through the recovery of pledged security or a repayment agreement. Interest is charged at the same rate indicated in the original loan agreement; however, in exceptional circumstances, the interest rate can be changed at the time the repayment agreement is established.

Implications

The remission of the principal and interest of these loans will provide for a final resolution of debts which have been outstanding and accumulating interest for 10 years or more at rates much higher than the current market average. Resolving these housing related debts will support the Department in advancing on its priority of on-reserve housing for Indigenous peoples. It will close long outstanding files which have hindered the affected First Nations from working toward a sustainable housing strategy.

Consultation

Not applicable.

Departmental contact

For more information, please contact

Paul-André LeBrun
Acting Manager
Chief Finances, Results and Delivery Officer Sector
Indigenous and Northern Affairs Canada
Gatineau, Quebec
Telephone: 819-994-1148
Email: PaulAndre.Lebrun@aadnc-aandc.gc.ca