Key Milestone for Deployment of Municipal Broadband System

This checklist of key milestones will help you deploy your municipal broadband system.

Getting Started
  • Identify municipal entity (City, County, Utility District, or Regional District) ready to partner. 
    • Local government desires participating in owning the system and having a beneficial interest of the system after repayment of the financing. 
    • Define broad project scope, assess market conditions
    • Anticipated Contributions from Municipal Partner 
      • Use agreement to sign on to use the service.
      • Support of existing municipal utility systems (if any)
      • Assistance in connecting schools, hospitals, other institutions and major local business to sign onto system. 
      • Local financial support totaling appx 25-30% of project costs from:
        • Local Funds contributions,
        • State Funds contributions, 
        • Contributions of existing telecom assets (and/or rights of way) which could be utilized in the new build, 
        • Utilize funds awarded to the local community from ARPA (American Rescue Plan Act) or RDOF (Rural Digital Opportunity Fund)
        • Private Equity Investors, and/or
        • Local investors willing to purchase Junior Revenue Notes which would be subordinate to the Senior Revenue Notes. 
  • Coordinate Development Team, including design firms, contractor, financing firm, operator, grant writers, and legal team 
    • Enter into exclusive Predevelopment Agreement with Municipality,
    • Engagement of Professionals, including MCM
    • Qualified Design and Engineering firms, as well a construction contractor able to provide construction manager at risk, or otherwise, as directed by state laws. 
    • Qualified Operator on board to provide operational expertise, marketing to customers, and in certain cases provide credit support in the form of [potentially a minimum take rate] 
  • Credit Review, Project Creation, and Building ProForma
    • Fine tune Initial Project scope,
    • Build detailed financial models,
    • Engineering, Design Development, 
    • Project Pricing Estimates,
    • Interaction with Municipality on a periodic basis
  • Create Financing Documents, operator agreements, design/build contracts, anchor tenant agreements, intergovernmental agreements, etc. 
    • Engagement of Bond Counsel
    • Interaction with Municipality on a regular basis
  • Sell the financing
    • Once the “solution” is fine tuned the transaction can be offered to investors interested in purchasing the resulting securities or loan (ie, Senior Revenue Notes and/or Junior Revenue Notes). 
    • Upon sale of securities at market rates, the transaction would be set to close and cash deposited into a Project Account held by the Trustee. 
  • Launch Initial Pilot and Getting in Business 
    • Start PILOT Construction 
    • Operations Plan Implementation
    • Marketing Plan 
      • Sales Force
      • Web interface mapping for customers to pre-subscribe for service
  • Full System - Federal/ State Grants Submittal and Approval Process
    • Process and Timing – still being defined by Federal and State broadband offices
    • Involvement with State Broadband Offices
    • Involvement with State Depart of Local Affairs
    • Professionals will be needed to complete planning and mapping for the Federal Grant application. It is widely anticipated that likely requirements may include:
      • Detailed Business Plan 
      • Detailed Mapping of the service area (requirements still TBD)
      • Detailed Engineering
      • Environmental Studies
      • Grant Writers
  • Long Term Full System Build Out
    • Grow incrementally from: 
      • grants received,
      • cash flows from operations, and/or 
      • future revenue note financings after stabilization of the PILOT and growth of the system.  
  • Other Best Practices
    • Phase construction in order to not incur too much debt early on,
    • Don’t build line extensions until [40%] of customers to be served on that line are pre-registered for service.   Areas with higher pre-subscriptions % will be prioritized.

Chris Perlitz

Managing Director

Municipal Capital Markets Group, Inc.

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