Capital Transfer and Negotiation Loan Repayment

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Contents Capital Transfer and Negotiation Loan Repayment	Overview This chapter sets out the terms under which: > Canada and British Columbia will each pay their respective shares of the $190-million capital transfer to the Nisga’a Nation; and > The Nisga’a Nation will repay the monies it has borrowed over the years to finance the negotiation of the Agreement in Principle and the Final Agreement. How will Canada and British Columbia make capital transfer payments to the Nisga’a Nation? Canada and British Columbia have agreed to pay the Nisga’a Nation a total capital transfer of $190 million, as may be adjusted upward, or downward, in recognition of inflation, or deflation, that occurs between the date of the Agreement in Principle and the effective date of the Final Agreement. The Final Domestic Demand Implicit Price Index for Canada will be used as the basis for determining the amount of the inflation adjustment. The inflation-adjusted capital transfer will be remitted to the Nisga’a Nation through a series of 15 annual payments, commencing on the effective date of the Final Agreement, and ending on the 14th anniversary of that effective date. Payments of $22 million will be received on each of the effective dates and the first anniversary of that date. The annual payments then will be reduced to $13 million for each of the second through seventh anniversaries. The final seven payment amounts, to be received on each of the eighth through 14th anniversaries and estimated to be in the range of $23 million each, will be determined shortly before the effective date, as discussed below. The exact amounts of the last seven annual capital transfer payments will be calculated so that the total of all amounts received by the Nisga’a Nation during the capital transfer payment period equals the inflation-adjusted capital transfer plus a factor to compensate the Nisga’a Nation for interest during that period. The factor used to compensate the Nisga’a Nation for interest will be based on a rate that is one eighth of one per cent less than the rate of interest charged by Canada on loans made under comparable terms to parties borrowing from the Consolidated Revenue Fund of Canada. That Consolidated Revenue Fund Lending Rate will be selected based on the latest published data available approximately two weeks prior to the signing of the Final Agreement. The Chapter contemplates adjusting the capital transfer payments, if Canada experiences any unusual delay in completing its ratification procedures. It provides that, if the Parliament of Canada fails to enact the necessary settlement legislation within 15 months of the signing of the Final Agreement, then the calculation of the capital transfer payment schedule will be altered to: > Cut off the inflation-adjustment period referred to above at the date (“transition date”) that is 15 months after the date of signing the Agreement, rather than at the effective date; and > Provide for an additional interest factor to be built into the final seven capital transfer payments on the schedule to compensate the Nisga’a Nation for lost interest attributable to the period between the transition date and the eventual effective date of the Final Agreement. How will the Nisga’a Nation repay its Negotiation Loans? The Nisga’a Tribal Council financed the Nisga’a costs of negotiating the Final Agreement by borrowing funds from Canada. Money for costs incurred in negotiating the Agreement in Principle was borrowed by way of interest-free loans. Money for the costs incurred in negotiating the Final Agreement has been borrowed under a series of loans at various rates of interest. Shortly before the effective date, all such loans, and any unpaid accrued interest on those loans which bear interest, will be consolidated into a single amount (“consolidated loan amount”). The consolidated loan amount will then become a liability of the Nisga’a Nation on the effective date of the Final Agreement. The actual consolidated loan amount at the effective date, of course, will depend on the length of the period before the effective date during which interest accrues on the interest-bearing loans and on the amount of payments, if any, made on account of the loans in that period. The Nisga’a Nation will repay the consolidated loan amount through a series of 13 annual payments, commencing on the second anniversary of the effective date of the Final Agreement, and ending on the 14th anniversary of that effective date. Six $2-million payments will be made on each of the second through seventh anniversaries of the effective date. The final seven payments, to be made on the eighth through 14th anniversaries, will be equal amounts that will be determined shortly before the effective date, as discussed below. The exact amounts of the last seven payments will be determined shortly before the effective date. They will be calculated so that the total of all loan payments to be made by the Nisga’a Nation equals the total of the consolidated loan amount at the effective date plus a factor to compensate Canada for interest during the loan repayment period. The factor used to compensate Canada for interest will be based on a rate that is one eighth of one per cent less than the rate of interest charged by Canada on loans made under comparable terms to parties borrowing from the Consolidated Revenue Fund of Canada. That Consolidated Revenue Fund Lending Rate will be selected based on the latest published data available approximately two weeks prior to the signing of the Final Agreement. The Nisga’a Nation will have the right to make loan repayments before their scheduled due date. Such prepayments can be made at each anniversary, and up to three times during the first nine months after an anniversary. Each prepayment will be credited against future scheduled loan repayments in a manner which compensates the Nisga’a Nation for interest on the prepayment, and in that manner, will result in savings in the total payments that ultimately have to be made on account of the consolidated loan amount. A loan repayment due on an anniversary date may be paid by the Nisga’a Nation in cash. Alternatively, Canada may deduct that loan repayment from the amount of any capital transfer payment due to the Nisga’a Nation on that anniversary date.

Contents

Capital Transfer
and Negotiation
Loan Repayment

Overview

This chapter sets out the terms under which:

> Canada and British Columbia will each pay their respective shares of the $190-million capital transfer to the Nisga’a Nation; and

> The Nisga’a Nation will repay the monies it has borrowed over the years to finance the negotiation of the Agreement in Principle and the Final Agreement.

How will Canada and British Columbia make capital transfer payments to the Nisga’a Nation?

Canada and British Columbia have agreed to pay the Nisga’a Nation a total capital transfer of $190 million, as may be adjusted upward, or downward, in recognition of inflation, or deflation, that occurs between the date of the Agreement in Principle and the effective date of the Final Agreement. The Final Domestic Demand Implicit Price Index for Canada will be used as the basis for determining the amount of the inflation adjustment.

The inflation-adjusted capital transfer will be remitted to the Nisga’a Nation through a series of 15 annual payments, commencing on the effective date of the Final Agreement, and ending on the 14th anniversary of that effective date.

Payments of $22 million will be received on each of the effective dates and the first anniversary of that date. The annual payments then will be reduced to $13 million for each of the second through seventh anniversaries. The final seven payment amounts, to be received on each of the eighth through 14th anniversaries and estimated to be in the range of $23 million each, will be determined shortly before the effective date, as discussed below.

The exact amounts of the last seven annual capital transfer payments will be calculated so that the total of all amounts received by the Nisga’a Nation during the capital transfer payment period equals the inflation-adjusted capital transfer plus a factor to compensate the Nisga’a Nation for interest during that period. The factor used to compensate the Nisga’a Nation for interest will be based on a rate that is one eighth of one per cent less than the rate of interest charged by Canada on loans made under comparable terms to parties borrowing from the Consolidated Revenue Fund of Canada. That Consolidated Revenue Fund Lending Rate will be selected based on the latest published data available approximately two weeks prior to the signing of the Final Agreement.

The Chapter contemplates adjusting the capital transfer payments, if Canada experiences any unusual delay in completing its ratification procedures. It provides that, if the Parliament of Canada fails to enact the necessary settlement legislation within 15 months of the signing of the Final Agreement, then the calculation of the capital transfer payment schedule will be altered to:

> Cut off the inflation-adjustment period referred to above at the date (“transition date”) that is 15 months after the date of signing the Agreement, rather than at the effective date; and

> Provide for an additional interest factor to be built into the final seven capital transfer payments on the schedule to compensate the Nisga’a Nation for lost interest attributable to the period between the transition date and the eventual effective date of the Final Agreement.

How will the Nisga’a Nation repay its Negotiation Loans?

The Nisga’a Tribal Council financed the Nisga’a costs of negotiating the Final Agreement by borrowing funds from Canada. Money for costs incurred in negotiating the Agreement in Principle was borrowed by way of interest-free loans. Money for the costs incurred in negotiating the Final Agreement has been borrowed under a series of loans at various rates of interest. Shortly before the effective date, all such loans, and any unpaid accrued interest on those loans which bear interest, will be consolidated into a single amount (“consolidated loan amount”). The consolidated loan amount will then become a liability of the Nisga’a Nation on the effective date of the Final Agreement. The actual consolidated loan amount at the effective date, of course, will depend on the length of the period before the effective date during which interest accrues on the interest-bearing loans and on the amount of payments, if any, made on account of the loans in that period.

The Nisga’a Nation will repay the consolidated loan amount through a series of 13 annual payments, commencing on the second anniversary of the effective date of the Final Agreement, and ending on the 14th anniversary of that effective date.

Six $2-million payments will be made on each of the second through seventh anniversaries of the effective date. The final seven payments, to be made on the eighth through 14th anniversaries, will be equal amounts that will be determined shortly before the effective date, as discussed below.

The exact amounts of the last seven payments will be determined shortly before the effective date. They will be calculated so that the total of all loan payments to be made by the Nisga’a Nation equals the total of the consolidated loan amount at the effective date plus a factor to compensate Canada for interest during the loan repayment period. The factor used to compensate Canada for interest will be based on a rate that is one eighth of one per cent less than the rate of interest charged by Canada on loans made under comparable terms to parties borrowing from the Consolidated Revenue Fund of Canada. That Consolidated Revenue Fund Lending Rate will be selected based on the latest published data available approximately two weeks prior to the signing of the Final Agreement.

The Nisga’a Nation will have the right to make loan repayments before their scheduled due date. Such prepayments can be made at each anniversary, and up to three times during the first nine months after an anniversary. Each prepayment will be credited against future scheduled loan repayments in a manner which compensates the Nisga’a Nation for interest on the prepayment, and in that manner, will result in savings in the total payments that ultimately have to be made on account of the consolidated loan amount.

A loan repayment due on an anniversary date may be paid by the Nisga’a Nation in cash. Alternatively, Canada may deduct that loan repayment from the amount of any capital transfer payment due to the Nisga’a Nation on that anniversary date.