Fort BraggDigital Infrastructure Plan“Funding Gap” UPDATE March 24, 2025
EXECUTIVE SUMMARY
NHA Advisors (City’s Municipal Advisor) and Staff delivered a comprehensive presentation to City Council outlining the details of the Middle-Mile-Broadband Initiative (MMBI) project on November 25, 2024 Project Costs: $17.8 Million
Identified Funding Sources: $10.3 Million of Grant
Funding “Gap”: $7.55 Million
NHA and Staff were given direction to evaluating financing options for the remaining $7.55 million Goals: Low interest rate, flexible terms, expeditious closing schedule, and a structure that would allow the new Broadband enterprise to “self-support” the debt without any General Fund backstop Financing team secured several bids for the loan; one of which met all goals Tonight: Seeking Council direction on Financing Team’s recommended option
BACKGROUNDDigital Infrastructure Plan – Project Objectives Construct and Deploy High Speed Internet over Fiber Optic Cable in the City of Fort Bragg. “Provide a digital infrastructure for affordable high-speed Internet access for 100% of households and businesses by 2026”
1. 2.
Operate a High-Speed Internet fiber optic infrastructure to support local residence and businesses, as well as local government
3. Improve Resiliency and Redundancy in Digital Infrastructure Systems by eliminating prolonged Internet outages.
BACKGROUNDProject Cost Estimates
BANK SOLITICATION PROCESS
Oppenheimer Bank (same broker-deal as was used by City on 2021 Lease Revenue Bonds) solicited over 10 banks 4 responses given unique nature of start-up Broadband enterprise 2 banks required real property lease
RECOMMENDATION: Everbank
Lowest interest rate (4.85%)
Only bank that provided automatic mechanism for security to transfer to Broadband enterprise (remove General Fund backstop) Triggers once enterprise shows 3 years of 125% debt service coverage No requirement for asset pledge
One-year debt service reserve fund can be funded through financing or with other cash reserves from the City Flexible call (prepayment) features starting in Year 1 (3% penalty) with penalty declining to 0% by Year 7 While structuring options (principal amortization) options are still being evaluated, annual net debt service is estimated at $645K by year 4 Lower in first three years ($350k to $500k) to allow time for enterprise revenues to grow
BROADBAND ENTERPRISEUpdated Pro-Forma
Debt service coverage above 125%
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