The Ontario government on Tuesday introduced new provincial tax-exempt Ontario Opportunity Bonds to assist communities in financing improvements to local infrastructure.

“The government is committed to helping communities meet their local infrastructure needs – from water and sewer systems, to roads and bridges, to public transit,” Ontario Premier Ernie Eves said. “Through the introduction of Ontario Opportunity Bonds, Ontario residents will be offered a provincial tax-free incentive to invest in their local communities.”

The bonds support the province’s Smart Growth strategy for building a strong economy and vibrant communities. The new bonds will allow municipalities to borrow money at 50% below market interest rates, reducing the cost of municipal debt.

The bonds will be on sale through May 6. They are available to Ontario residents at a fixed interest rate of 4.25% over five years. There will be no Ontario income tax on the interest earned by purchasers of these bonds during the five-year term.

The money raised by the bonds will be used by the Ontario Municipal Economic Infrastructure Financing Authority to make low- interest infrastructure loans to municipalities. In the 2003 Budget Speech, the government committed $1 billion in start-up capital to OMEIFA.