What is the Community Infrastructure Loans Scheme?
Victoria’s 79 councils provide much of the infrastructure that is fundamental to the functioning of communities across our major cities, towns and regions.
The Community Infrastructure Loans Scheme (the Scheme) is a recognition of the need for continued investment in community infrastructure by councils across Victoria.
The Scheme will support the delivery of community infrastructure by providing Victorian councils with access to low-interest subsidised loans of between $500,000 and $10 million per project.
Loans will be financed through Treasury Corporation of Victoria. Participating councils will receive an interest subsidy from the Victorian government that will further reduce the interest paid.
All Victorian councils will be eligible to apply for loans under the Scheme.
Applications are now closed.
For more information on the CILS, please contact:
Local Government Victoria
(03) 9948 8536
The Community Infrastructure Loans Scheme will support the delivery of community infrastructure by providing Victorian councils with access to low-interest, government-guaranteed loans through Treasury Corporation Victoria of between $500,000 and $10 million per project. Up to $100 million in loan funds will be made available.
Under the Community Infrastructure Loans Scheme, councils will be able to achieve savings through having access to low-interest subsidised loans financed through Treasury Corporation of Victoria. The triple-A credit rating currently held by Victoria means that the State can borrow money at cheaper rates than are commercially available. As a guide, the interest rate for a ten-year loan from Treasury Corporation of Victoria is currently approximately 1.75 per cent.
In addition, participating councils will receive an interest subsidy from the Victorian government that will further reduce the interest rate paid. It is expected that this subsidy will be 50 per cent of the applicable interest rate, up to a maximum of 150 basis points (or 1.5 per cent).
Councils may submit applications for loans of between $500,000 and $10 million per eligible project. Individual councils may apply for one or more loans, up to a maximum of $10 million.
Loan terms will be up to 15 years. Treasury Corporation of Victoria will work with participating councils to identify the most appropriate loan term on a case-by-case basis.
Projects that could be supported by the Community Infrastructure Loans Scheme include, but will not be limited to:
- community centres and hubs;
- multi-purpose community facilities;
- arts and cultural facilities;
- public libraries;
- kindergartens and early learning facilities;
- restoration of heritage buildings to enable community use; and
- parks, play spaces, reserves and trails.
Guidelines for the Community Infrastructure Loans Scheme are now being prepared.
It is anticipated that the Scheme will open for applications in mid October 2019 and will close in late November 2019.
An assessment process will then be undertaken with the announcement of the successful applications from February 2020.
Frequently Asked Questions
Victorian councils may submit applications for loans between $500,000 up to $10 million, up to a maximum of $10 million per council.
There is no maximum total project cost, however as the minimum loan request is $500,000 the minimum total project cost would be $500,000.
Loans through the scheme will be provided at Treasury Corporation of Victoria's borrowing rate at the date of contract execution. As of 23 September 2019, the interest rate for a 10 year credit foncier loan from TCV was approximately 1.42 per cent.
In addition to accessing a low interest rate loan from TCV, organisations will receive additional interest subsides that will further reduce the interest rate. This subsidy will be 50 per cent of the applicable interest rate, up to a maximum of 150 basis points (or 1.5 per cent).
Loans will be secured against the general rates revenue of the council.
Your council does not have to match the loan amount provided. The loan can fund 100 per cent of the total project cost. However. if you have received a Government grant for the same project, you must ensure that the grant program funding ratios are still met with the required cash contribution.
No. the loan facilities to be provided by TCV will be:
- An 11am loan facility during the construction period. The 11am loan facility is interest only and the interest rate is variable. Interest on the 11am loan facility is payable monthly on the first business day of the next month.
- Upon construction completion, the borrower will be required to structure the total loan amount drawn on the 11am loan facility during the period of construction as a credit foncier loan. The credit foncier loan will be provided by TCV for up to 15 years. The maturity date and interest rate are fixed for the term of the credit foncier loan.
An 11am loan facility is a short-term loan facility for clients seeking to borrow for a period between one day and one year. These loans are generally used to fund working capital, cash management requirements and project cash flows. The interest rate on the borrowing is variable and is calculated by applying an execution fee to the prevailing RBA cash rate. The accrued interest on an 11am loan facility is payable monthly on the first business day of the following month.
A Credit Foncier loan is a fixed term loan that is structured to provide for the repayment of principal and interest. The interest rate is also fixed for the entire term of the loan which gives the borrower cash flow certainty. The principal and interest repayments are made throughout the life of the loan at a regular frequency under an amortising loan structure. The frequency of repayment may be monthly, quarterly or semi-annual.
Loan terms will be up to 15 years. Treasury Corporation of Victoria will work with the organisation to identify the most appropriate loan term on a case-by-case basis.
After the Minister for Local Government and Treasurer have approved your loan application, you will be able to sign a loan agreement with Treasury Corporation of Victoria. Once this is done, you will be able to draw down on the loan.
Successful applications for the Community Infrastructure Loans Scheme are expected to be announced in February 2020. On this basis, it is expected that successful applications will not have an impact on councils’ 2019-20 Budgets.
To apply for a loan under the Community Infrastructure Loans Scheme, a council resolution will be needed to support the loan application. As part of that resolution, council will need to resolve that it approves the lodgement of an application/s for a loan of ($amount) under the 2019 Community Infrastructure Loans Scheme for (project name/s), and if successful, will refer the project and associated loan funding for consideration as part of its 2020-21 budget deliberations.
You will be able to make additional repayments. However, this would reduce the overall interest subsidy that you will be entitled to. Treasury Corporation of Victoria will work with councils to identify the most appropriate loan term on a case-by-case basis.
An administrative fee of up to 21.5 basis points (0.215 per cent) is charged by Treasury Corporation of Victoria to cover the cost of raising their bond in financial markets and other administrative costs. This will be incorporated into the interest rate. The calculation of the interest subsidy will include this fee.
You will be in breach of the loan agreement and action will be taken to recover the outstanding funds.
A council can apply for multiple loans to finance multiple projects only if they are not located within the same facility.
Should a council apply for multiple loans for multiple facilities, multiple business cases will be required, and financial forecasting will need to show how those loans will be serviced. Multiple applications for a loan must not exceed the $10 million maximum.
The borrower will be responsible for sourcing additional funding to finance any cost escalation after an application has been lodged.
Any portion of the loan which has been drawn down but remains unspent after completion of the approved project will be required to be returned to Treasury Corporation of Victoria.
Any portion of the loan which has not been drawn down after all project payments have been finalised will not be released by Treasury Corporation of Victoria.
Any amendment to the approved project scope will require a formal variation request and may require a review of the loan amount and terms. Should an increase in project scope lead to cost escalation, the borrower will be responsible for sourcing any additional funding.