Funding ScenariosFederal Grants and Applications While the Technology Opportunities Program, US Department of Commerce, received no appropriation this year, since 1994 it has funded 610 grants in all 50 states+, totaling $233.59 million and leveraging $313.7 million in local matching funds, including private investment. All projects used advanced digital technologies to respond to opportunities in local communities, from community and economic development to public safety and education and arts & culture. Amy Borgstrom, Program Officer at the Program, said: “There are a lot of jokes about ‘We’re the Fed and we want to help,’ but that is actually true, and we’re committed to helping communities make innovative things happen for economic development, to correct inequities. It’s your money anyway, and it’s important to make the connection and get it back into the communities where it belongs.” Federal and state government programs, local government, national, regional and statewide foundations, business models and fees for services all constitute funding sources for municipal-wireless projects, including federal opportunities for digital cities. The federal Web site Grants.gov has a search engine that can be used to apply for grants. Within a decade there should be a single application across all federal granting agencies. The Technology Opportunities Program is also leaving left behind a Web site database. Enter a state or a year and search one-page summaries and the deeper executive summary and narrative about what happened. Among Federal grant programs, Ms. Borgstrom recommended: • The Appalachian Regional Commission, which has funding for wireless for thirteen Appalachian states (one county with only 60 people and received funding for a wireless cloud);
• The Department of Homeland Security, which has provide $19 billion to the states, including grants for interoperable communications systems; DHS also supports the Urban Areas Security Initiative for designated metropolitan areas;
• The Department of Justice funds justice system and emergency-preparedness deployments;
• The USDA Rural Utility Service calls itself a “new deal for the 21st century,” is committed to broadband as a basic infrastructure for rural locations, and has money for grants and loans;
• The Department of Commerce’s Economic Development Administration makes pretty large grants through state offices for infrastructure development;
• The Department of Education runs the E-rate program and the CTC (community technology) program
• The SBIR (Small-Business Innovation Research) program cuts across 10 different agencies (NASA, Commerce, Energy, etc.) and funds for-profit firms to do funding and development ($100,000 for phase 1 on feasibility; $750,000 for phase 2 product development, leading to phase 3 commercialization);
• The Department of Transportation also has funding that may support Intelligent Transport Systems.
Ms. Borgstrom offered application Do’s and Don’t’s: • “It’s heartbreaking the number of times I’ve seen brilliant applications come through the door and the review panel says they have a nine page narrative instead of an eight page narrative. The panel will score your application against a set of criteria.”
• “Not enough connection between problem, solution and outcome. People fall into the trap of circular reason, where the problem is the lack of a network and the outcome is its presence. They don’t factor in additional measurable outcomes and benefits that will accrue to the community, including changes in people’s lives in situations and communities, rather than just the existence of something you want to put in place.”
• “Show that you have the track record and the wherewithal to say what you’re going to do. At TOP, we don’t fund ‘events’ but things that are going to make a difference over time.”
• “Respond to the criteria on the application and you’ll score highly. People end up getting disqualified with good ideas because they don’t read the fine print.”
• “Avoid acronyms and jargon, because the reviewers don’t get paid much and they find all-caps difficult to focus on. Never assume the reviewers know anything about you, your project, and the field you operate in, and ancient history about you and what your doing. Use scenarios and help reviewers see, smell, and taste what you’re doing. Example: ‘In Corpus Chrisit, three years down the road, Mrs. Jones is going to be able to pay her property taxes from her home….’”
• “Be realistic; don’t try to achieve too much up front.”
• “Make sure to proofread and that all the math is correct. Have someone who knows nothing about muni Wi-Fi read through the proposal and make sure it’s clear to them.”
Three lessons learned emerged time and again from the evaluations of the 610 projects the Technology Opportunities Program has funded: • “It’s about the people and not the technology. Your partnerships are incredibly complex and the care and feeding of those partnerships will take three to five more times than the care and feeding of those networks. Build in the time to maintain those social relationships.”
• “Any complex technology project will take a lot longer to roll out than you think. Don’t set yourself up for failure at the outset. Look at the timeline you’re putting out; it’s important to be realistic about what you can achieve and when.”
• “Training is an important and significant cost when you get to the application level. As new devices come on board, there will be new things to do and should be built into any funding.”
Wireless Philadelphia In seeking the funding for Wireless Philadelphia, Varinia Robinson, Program Manager, said the Executive Team settled on a hybrid approach that avoids using city funds. They examined models for a private consortium, cooperative wholesale, and public community and public-utility/authority and saw different pieces that could work together using grants, loans, taxable and investment bonds, and other types of investing, including any available local, state and federal monies. The team also factored in concessions from local government for pole and tower licensing and funding from dial-up ISPs and WISPs. Orion Project, El Paso, Texas The Orion Project in El Paso, Texas, was initially launched in 1999 based on bridging the digital divide and doing community and minority education. The local community college was ineligible for a lot of grant funding, so it went to the University of Texas, El Paso to press for a National Science Foundation grant (within the computer information systems and engineering directorate), that would include 96 schools (K-12). The vision was to provide a community-wide infrastructure to promote information access and sharing, focusing on education as well as the health, training aspects, and economic development, which are all additional avenues that can lead to grant funding. “The mission was to provide educational leadership throughout the nation, something groundbreaking that no other community had done before,” said Jennifer Hemmerich, Manager of Grants Development Services, Grants Office, LLC, a private group of grant writers in Rochester, New York, that helps municipalities avoid bringing grant writers on staff. By sharing resources and leveraging their size, the Orion Project was able to share the infrastructure and lower costs and purchase software. The Project now stems from the educational unit to the public libraries, local law enforcement, municipality, and the health network, as well as emergency first responders because of monies from Homeland Security. The collaboration makes for a strong business case. “Although we advise collaboration, we seldom see it,” Ms. Hemmerich said. Current status: This year, the Project was going to focus on a Technology Opportunities grant (D.O.C.), but there was no appropriation this year, so they’re going to go forward with a Digital Government/NSF grant. To date, they’ve been able to deploy video/voice/data transmission, healthcare resources, and educating the workforce. For K-12, they’ve increased parental involvement, and have become no-child-left-behind compliant. All these achievements can be used in future grant applications. Because of the focus on the community college, they can develop their own teachers and enable professional-development opportunities. In the future, they will share the research with other institutions and increase enrollment and recruitment. Currently, they’re the only institution that does distance learning across the border to Mexico. They’ll focus on data/voice/video for the municipality as well. “Do the research and find out what the niche is in your area and find out what funding will be available for you,” Ms. Hemmerich said. In funding, you can aggregate cities, communities and regions to make a stronger case for grant money. Financial Instruments “What about a public body entering into this business?” asked William A. Johnston, Managing Director, Public Finance, for Banc of America Securities, a national firm affiliated with the second largest financial institution in the country. “I’ll never forget the [local community] meetings we’ve had. People would come out of the woodwork, as would the incumbents. Without exception, the public is overwhelmingly supportive. The incumbents nearly got lynched because they did such a poor job. “Another thing that surprised me is how unifying this is in some communities. In Covington, Georgia, they had an existing system. This community couldn’t agree on anything. Telecom came up, and they came out of their seats. The project was successful and they’ll sell it soon and make a heck of a lot of money.” Many wealthy communities have funded their own projects with cash, but that’s rare, Mr. Johnston said. Another common method is interfund loans—water, gas electric—to fund the telecom project. But this, too can lead to a cash crunch. “When we’re called in, the other funds will have a $4 or $5 million interfund loan built up, and they can’t expand.” Some of the smaller financings are with bank loans—$1, $2, $3 million. “Rather than issue bonds they’ll go to a bank or to government lending and borrow money.”
More common is bond financing for public-supported and non-public-supported projects. For public-support projects, general obligation bonds are issued, and the governmental body supports the project at hand. Or, revenue bonds are issued. If it’s public-supported, you’ll see a general obligation pledge or an interfund contract supporting that particular financing. “What we have financed more of is startup systems,” Mr. Johnston said. “With a typical bond issue for water or gas, those have been established and running for a long period of time with a consistent revenue stream, and just the revenues of that enterprise fund can be pledged for a financing. With a startup system you typically don’t have that, and without some startup support, they’re difficult to get off the ground.” In funding models with no public support, revenue bonds are issues based on the net or gross revenues of the telecom enterprise fund. Because of the startup nature of these projects, the bonds that are issued are not rated and generally do not have bond insurance. The interest rates are fairly high. “You’re dealing with public bodies that generally have debt outstanding and are rated, and you’re going into the market with an unrated bond deal that will usually affect their rated debt.” More common is a publicly supported issue, Mr. Johnston said. “We’ve also seen direct placements. We’ll find a buyer and place those with a large institutional buyer that has an interest in those projects.” Mr. Johnston has met with the RUS federal grant program: “Much money is available but there’s some difficulty in getting it out, and I think those difficulties will continue. It will take some time. But the application process is cumbersome. The real hurdle is that there’s a 20% match; you have to have 20% in equity to get a loan from RUS. Without cash flow, you must have four years operating cash flow in the bank before you can get a loan. That’s a little hard to do. And we’ve seen no one want to step up and provide that 20%. “But if a community really wants to do this, they’ll get it done.”
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