Fort BraggDigital Infrastructure Plan “Funding Gap” FINANCING APPROVAL April 28, 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: $17.23 Million (up from $14.8 Million estimated in November) Identified Funding Sources: $10.3 Million Grant
Funding “Gap”: $6.93 Million
NHA and Staff were given direction to evaluating financing options for the remaining $6.93 million Goals: Low interest rate, flexible terms, expeditious closing schedule, and a structure that provides a path towards the new Broadband enterprise to stand on its own without any General Fund backstop on the debt once the business stabilizes Financing team secured several bids for the loan; one of which met all goals On March 24th, City Council supported staff and the financing team’s recommendation to lock the interest rate with Everbank and move forward with the necessary steps to close the transaction Tonight’s approval of the Resolution and Financing documents is the next critical step in the process before the transaction can close
BANK SOLITICATION PROCESS
Oppenheimer Bank (Broker-Dealer) solicited over 10 banks 4 responses given unique nature of start-up Broadband enterprise Everbank was selected and the term sheet was signed on March 26, locking the interest rate of 4.85%
$7.86 Million Financing - Sources & Uses
DEBT SERVICE SCHEDULE
2-years of pre-funded interest
First payment of $527K in FY 2028
$672K annual payment from FY 2029 to final maturity in FY 2045
BROADBAND ENTERPRISEUpdated Pro-Forma
Debt service coverage above 125%
FINANCING DOCUMENTS TO BE APPROVED
Installment Purchase Agreement
Pursuant to the IPA, the City and the Authority are entering into an arrangement whereby the Authority has agreed to purchase the Project from the City with funds provided by EverBank, N.A. (the “Lender”), and the City agrees to use the funds to fund the remaining portion of the costs necessary to complete the Project by entering into an Installment Purchase Agreement. The IPA also sets forth the interest rate the Lender is charging, the requirement that the Lender be paid from gross revenues of the broadband system until net revenues are sufficient, and other terms and conditions of the financing.
Assignment Agreement
Pursuant to the Assignment Agreement, the Authority assigns certain of its rights under the IPA to the Lender, including its rights to payments under the IPA and enforcement rights under the IPA.
Project Fund Agreement
Pursuant to the Project Fund Agreement, the City, EverBank as Lender and EverBank as depository bank agree to establish certain deposit accounts where funds will be held and disbursed by the Bank for the Project and in which has certain security interests in.
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