Municipal Capital Markets Group (MCM ) provides analytic and fiscal market assistance to determine the most effective way to build infrastructure using the lowest cost of capital available in the financial markets.
SERVICES
- MCM provides Underwriting OR
- MCM provides Financial Advisory and Analysis
SOLUTIONS
- MCM Underwrites General Obligation (GO) Bonds
- MCM Underwrites Revenue Bonds
- MCM assists with RUS Grants
MCM is a registered securities broker/dealer and municipal advisory firm that specializes in the origination, sale, underwriting, and trading of public or private financings for projects in the broadband communications industry. Our service-oriented approach to solving long term needs can help issuers and municipal entities ensure that they provide an optimal plan for smart city communications infrastructure and broadband services to area residents.
Since the founding of our firm in 1989 we have served as underwriters of financial advisors in the placement of over $25 billion of debt for municipal projects including broadband systems.
Broadband communication systems are typically financed by cities, counties, states and non-profit organizations using tax-exempt municipal bond financing. Each financing is contingent on having a business plan that meets the needs of the investors and the residents being served.
Cash Flow The entity wishing to construct or add to an existing communications system must prepare a business plan that will indicate sufficient revenue to cover the proposed debt service. Many times, a local property tax, or revenue from another municipal department, such as the water or sewer system can be used to supplement the cash flow for a start-up or major expansion. MCM can be very helpful in working with the borrowing entity in the development of this business plan.
Obsolescence When evaluating any technology, obsolescence risk is certainly a major consideration. Based on MCM’s acknowledgement of this, our primary focus will be transactions involving ultra-broadband fiber systems, a technology which has a long-life expectancy, and which is robust enough to be modified as the delivery of video, data, and telephony evolves. Qualities of ultra-broadband Fiber-To-The-Premise systems that help mitigate obsolescence include:
- Fiber is very dynamic and adaptable, and if appropriate can be integrated with other technologies (such as wireless, powerline technologies, or radio frequency transmission)
- Fiber transfers data at the speed of light (other technologies utilize fiber optic backbones so it is unlikely anything faster can prevail)
- Engineering can focus on flexible infrastructure using Passive Optical Network configurations.
- Systems are designed and built with excess capacity (once the trenches are open, the costs to lay additional capacity are nominal)
- Although some system components have an expected life of 7-10 years, the Fiber (which represents the largest percent of project costs) is expected to have a useful life of 20-50 years (note that cable technology has lasted 20+ years and copper has lasted 100+ years)
In the evolution of the telecommunications industry, many small to mid-size communities have not received adequate attention from incumbent telecom and cable operators. These incumbents have traditionally invested capital in more densely populated cities, where they can realize a higher return on investment. As a result, many communities throughout America do not have an adequate telecommunications infrastructure, forcing them to rely on low-speed internet access and simple cable TV. In an age where our society is increasingly utilizing the internet as an integral component of life (information, education, commerce, medicine, security, entertainment, voice communications, and video) cities are no longer willing to stand by while the Information Age passes them by.
In recognition that telecommunications capacity increases standards of living and spurs economic growth, many municipalities are now taking an active role in implementing telecommunications infrastructure. By investing in state-of-the-art infrastructure, which is resilient enough to accommodate updates over time, the municipality can offer superior internet, phone, and television services to residents at lower prices than incumbents charge for older technology.
Government’s role in providing essential infrastructure can be traced back to canals, bridges, roads, railroads, airports, power utilities, and water utilities. The next step in the progression is municipal public private telecommunications systems to facilitate the Information Age.
Frequently, the municipality and/or its utility division can provide certain financial and non-financial support to the Project, as follows:
- Funding for initial studies to estimate demand, project costs, and deployment strategies
- Acquisition of required permits and rights-of-way (or providing rights of way already owned)
- Contribution of existing fiber optic and other telecommunications facilities owned (e.g., dark fiber, fiber links between municipal buildings, etc.)
- Accessibility of infrastructure to facilitate deployment (including pole attachments and underground conduit access)
- Contractual arrangements, committing the Utility and/or the municipality to provide service and maintenance equipment and personnel for the Project
- Contractual arrangements committing local governmental agencies which use high-speed telecommunications (such as administration, libraries, schools, police, fire, and hospitals) to take services provided by the Project (thus creating an anchor tenant)
- Marketing support will be provided by the utility to take advantage of its customer base
