Access Criteria for the Credit Enhancement Facility
The Access Criteria for eligibility for the First Nations Market Housing Fund are separated into three main areas or pillars—Financial Management; Governance; and Community Commitment.
The Access Criteria established for the First Nations Market Housing Fund are principles-based rather than rules based. Access criteria which are principles-based provide more flexibility in terms of how a First Nation can demonstrate competency in a particular category. Within each of the three pillars—Financial Management; Governance; Community Commitment—a principle has been established and it will be incumbent upon the First Nation to demonstrate how it meets this principle.
To assist First Nations in completing the application form, this document provides examples of possible means to demonstrate competency in each category.
Please call the First Nations Market Housing Fund at 1-866-582-2808 should there be any questions.
Pillar 1
Financial Management
Pillar 2
Governance
Pillar 3
Community Commitment
1st PILLAR — FINANCIAL MANAGEMENT
Principle To Be Demonstrated
The First Nation demonstrates competency in financial management, a history of paying its obligations and an adequate financial position.
Number: 1.1
Category: Adequate Management Processes and Reporting
Principle to be Demonstrated
First Nation consistently has audited financial statements with an unqualified opinion from the Band’s auditor.
Examples of Possible Means to Demonstrate
- 3 years consolidated audited financial statements including notes – mandatory requirement. Where present, any issue(s) which contributed to a financial audit being qualified has been offset by the implementation of corrective measures as recommended by the auditor.
- First Nation demonstrates that it has met third-party standards for financial management and reporting (e.g. First Nations Financial Management Board; ISO).
- Policies are applied with respect to financial planning, budgeting, reporting, internal controls and management information systems.
- Copy of the Audit Review letter which is provided to the First Nation by Indian and Northern Affairs Canada (INAC).
Principle to be Demonstrated
There are qualified and/or certified individuals responsible for financial and loan management.
Examples of Possible Means to Demonstrate
- Financial literacy is evident through a combination of relevant staff experience (e.g. years of service, participation in Band administration programs), credentials (e.g. CAFM, CA, CGA, CMA) and/or availability of support from capable third-parties such as Tribal Councils, Provincial/Territorial organizations, etc.)
- Opinions expressed in Management Letter(s) from the Band’s auditor are indicative of staff/management capabilities.
- Continuing education is encouraged and appropriate training for new staff is available.
- The community is (or has recently been) participating in capacity building initiative(s) which will maintain or improve its financial management processes and reporting.
Number: 1.2
Category: Adequate Financial Position
Principle to be Demonstrated
First Nation demonstrates good cash flow management and a range of alternatives to be able to cover its obligations on a timely basis
Examples of Possible Means to Demonstrate
- Demonstrated record of loan repayment and consistent payment of invoices.
- Available lines of credit.
- First Nation maintains liquid assets which do not have restrictions on how they may be spent.
- Working capital is effectively managed (e.g. account receivables are collected on a timely basis, cash is available to cover expenses, etc).
Principle to be Demonstrated
First Nation demonstrates that it has financial flexibility. That is, it will likely be able to effectively adjust its revenues or expenditures to be able to maintain adequate financial performance in the face of external shocks.
Examples of Possible Means to Demonstrate
- First Nation demonstrates that it has discretionary cash flow and/or assets that they would be prepared to liquidate to repay financial obligations if necessary.
- First Nation has a diversified revenue base. In addition, it has some independent sources of revenue over which it may have a degree of control (e.g. revenues from non-government sources such as through owned businesses or fee-setting authorities).
- There is credible evidence that the First Nation would be willing to support a member borrower in a default situation and/or be able to cover housing loan defaults guaranteed under the Fund.
Principle to be Demonstrated
First Nation consistently operates on at least a break-even basis. If present, operating deficits are explainable.
Examples of Possible Means to Demonstrate
- Cumulative deficit is less than 8% of total annual revenues.
- First Nation demonstrates comprehensive awareness of its financial position and outlook, including forecast cash flows and contingent liabilities.
- First Nation Resolutions with respect to all casual guarantees have been estimated and recorded on a best-effort basis.
2nd PILLAR — GOVERNANCE
Principle To Be Demonstrated
The First Nation demonstrates that it has good governance and administration within the community. In particular, it has sustainable processes and systems which will support the community’s commitment to housing management over the long-term.
Number: 2.1
Category: Good governance and administration within the community.
Principle to be Demonstrated
Through its various leadership selection decision making, policies, planning and administrative processes, the First Nation demonstrates adherence to the principles of accountability, transparency, fairness and legitimacy.
Examples of Possible Means to Demonstrate
- Evidence of community engagement processes and support for approved policies.
- Transparent decision making by accountable representatives.
- Alignment of interests between Band Council and the community.
- Community government infrastructure.
- Decisions respect the historical, social and cultural groundings of the community.
Number: 2.2
Category: Development and approval of a housing policy which supports market based housing.
Principle to be Demonstrated
Existence of a housing policy and/or Band by-laws which demonstrate a First Nation’s commitment to the development and preservation of housing units and support for on-reserve homeownership as an option for its members.
Examples of Possible Means to Demonstrate
For example, the housing policy or by-laws could include/require:
- That members cover their obligations related to housing loans and pay rent for rental housing.
- Procedures exist regarding collection of arrears.
- There are consequences for non-payment of housing loans and rent, such as foreclosure and eviction policies.
- That all construction and renovation complies with the applicable building code.
- A maintenance plan (e.g. annual inspections for preventative maintenance, work lists with estimated costs).
- A development plan for the construction and renovation of housing units.
- Formalized land registration practices, land survey, etc.
- Procedures to inform the membership and ensure transparency, community input and support for the housing policies.
Number: 2.3
Category: Demonstrated implementation of effective housing management.
Principle to be Demonstrated
Policies are implemented, by-laws are enforced and the First Nation (or its appointee such as Tribal Council) is adequately staffed.
Examples of Possible Means to Demonstrate
- Housing policies and by-laws have been implemented and enforced for a minimum of 3 years and are periodically reviewed by management and/or Band Council.
- There is dedicated administration in the community which is responsible for land management and housing. In some circumstances this may be accomplished by contracting regional technical bodies, Tribal Councils or other qualified assistance.
- There are qualified housing management personnel in the community (based on combination of experience and professional training).
- Housing policy specifically addresses considerations which are relevant to homeownership in the community.
- There are available and/or plans for residential lots.
- There are reports and data maintained on compliance for new construction and renovation projects as well as the condition of all houses on-reserve.
- Community has an established track record of paying for its housing. For example, government housing programs (e.g. CMHC Section 95) have acceptable procedural track records. This could be demonstrated through the provision of a letter from CMHC which indicates that the First Nation is in compliance with its operating agreements.
- Private housing loan programs (e.g. revolving loan funds and/or private lender programs) exist within the community and have experienced success.
- There is evidence that policies and by-laws have been enforced (e.g. stop work orders for construction/renovation projects, foreclosure procedures upon borrower default, etc.).
- The community is (or has recently been) participating in capacity building initiative(s) which will maintain or improve its housing management.
Number: 2.4
Category: The quality of housing is encouraged and maintained within the community.
Principle to be Demonstrated
The First Nation demonstrates efforts which encourage and maintain the quality of the housing stock in the community.
Examples of Possible Means to Demonstrate
- There is a permission or housing permit system to ensure that homes are built on land that is appropriate for housing.
- The community’s housing administration requires that existing houses be inspected at least every five years or that “home deficiency reports” be prepared for Band Council prior to providing a guarantee to finance an existing home.
- Fire insurance is accessible and obtained within the community.
- Qualified construction trades people and building/renovation professionals are located within the community or within a reasonable proximity.
- There is demonstrated access to building materials by the community.
- There are community development plans, supported by progress reports, showing the intention to ensure the necessary infrastructure essential for home ownership.
- The community has access to qualified and certified building inspectors and inspections are mandatory for new housing.
- Lots are subject to soil tests (e.g. to assess loose soil, ground water, permafrost, etc.).
Number: 2.5
Category: Security of land tenure, particularly as it pertains to market housing.
Principle to be Demonstrated
Certainty exists that a homeowner’s right-to-occupy represents a transferable interest in the residence both during and after the life of the housing loan and there is a land management system in place.
Examples of Possible Means to Demonstrate
- Certainty exists that a homeowner’s right-to-occupy represents a transferable interest in the residence both during and after the life of the housing loan. This could take various forms such as a First Nation Resolution, a Certificate of Possession, Certificate of Allotment, leasehold interest (on undesignated lands) or other such arrangement which would permit the house to be sold or disposed of under a will. There must also be an ability to pledge, hypothecate, mortgage, forfeit, terminate, quit claim or surrender the interest in favour of the First Nation. Such arrangements should be defined in the First Nation’s housing policy.
- Processes exist to register changes in ownership (e.g. the community’s housing administration reviews all purchase and sale agreements and there is a land management system in place).
3rd PILLAR — COMMUNITY COMMITMENT AND EVIDENCE OF DEMAND FOR MARKET-BASED HOUSING
Principle To Be Demonstrated
There is evidence that the community is willing to make the financial commitment to support the concept of market housing and that members have the desire and ability to afford homeownership and market rentals in the community.
Number: 3.1
Category: Community Commitment
Principle to be Demonstrated
There is acceptance within the community that individuals who are capable of paying can own their own home.
Examples of Possible Means to Demonstrate
- Evidence of rental housing in the community (financial characteristics, number of units, trends, etc.).
- Evidence of home ownership in the community (financial characteristics, number of units, trends, etc.).
- First Nation Resolution supporting market-based housing in the community – mandatory requirement.
- There are initiatives and/or programs in the community which aim to increase home ownership. For example:
- selling Band-owned housing
- use of a revolving loan fund
- accessing financing for home ownership purposes from banks and private lenders
- granting transferable interests in land
- Band grant programs for home ownership (e.g. down payment assistance)
- improving community infrastructure to enable more homes to be built
- First Nations communication efforts to share information about home ownership and its potential benefits for members. For example, community consultations, community meetings, articles in community newsletters, information provided on the First Nations website, etc.
- Recognition that homeownership represents an ongoing commitment which consists of more than just building or buying a house. First Nation efforts to build the capacity necessary to support home ownership. For example, seminars on purchasing a home, home maintenance and repair, home renovation, insurance requirement and/or how to prepare a home for sale.
Number: 3.2
Category: Borrower Demand
Principle to be Demonstrated
There are households who have expressed an interest in building, purchasing or renovating a home in the community.
Examples of Possible Means to Demonstrate
- Best-effort estimate of the number of households who are able to afford to build, purchase or renovate a home based on standard off-reserve home affordability criteria.
- Evidence of a revolving loan fund or private lender’s housing loan program(s) operating in the community.
- Evidence that a resale market exists.
Number: 3.3
Category: Market Characteristics
Principle to be Demonstrated
Not a principles-based category. Rather, market attributes will be evaluated and assessed.
Examples of Possible Means to Demonstrate
- Demonstrated existence of a sound economic environment in which a range of business activities exist (e.g. retail, construction projects) within the First Nation and in nearby off-reserve locations, contributing to stable employment levels.
- Best-effort estimate of demographic, migration and employment trends in the community over the next five years:
- outlook for the community’s labour force and employment by largest employers (e.g. full-time, seasonal, part-time, temporary positions)
- economic development activities (e.g. natural resources, infrastructure, tourism)
- population characteristics (e.g. best-effort estimates of on and off reserve trends, percentage of young and elderly in the population, members moving back on-reserve, etc.)