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0 pointstanzam7512y ago0 comments

Large capital expenditures undertaken by municipalities are usually funded by bonds.

A municipality would issue bonds to fund the replacement of their water mains, which are breaking and pouring water into the streets every winter. It would issue bonds to renovate their elementary school, which has a leaking roof, asbestos insulation everywhere, and drinking fountains that dispense leaded water.

Municipalities have limited borrowing power, so muni fiber does have to compete against all those other priorities. And it's been a tough market for muni bonds lately.

What's more, muni fiber would be considered a non-essential revenue bond. These types of bonds carry higher interest rates than essential services bonds, or general obligation bonds.

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ericd12y ago

Ah great, thanks for the concrete info!

I imagine that a fiber rollout would create entirely new revenue, though, where upgrading water mains and other existing infrastructure wouldn't, so it might be viewed by the govt as offsetting any difference in interest rates?

tanzam75OP12y ago

Well, it's pretty common for municipal power companies to return a profit to the city, which is then used to offset property taxes. In fact, a number of successful muni fiber projects have been managed by the municipal power company, or the municipal cable provider.

The problem is that a lot of municipalities aren't run all that well. Local politics can sometimes be very ugly. Muni fiber only really works when the municipal government works. Sadly, that's not as common as it ought to be.

ericd12y ago

Hm, that is a shame. I wonder if there's a way for technology to help change that. Maybe by offering a graphical budget breakdown of spending that the public can browse? I remember seeing something like that for the federal government, and it was pretty eye opening. I guess there's no incentive for a terribly run government to roll that out, though.

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0 pointstanzam7512y ago0 comments

Large capital expenditures undertaken by municipalities are usually funded by bonds.

Municipalities have limited borrowing power, so muni fiber does have to compete against all those other priorities. And it's been a tough market for muni bonds lately.

What's more, muni fiber would be considered a non-essential revenue bond. These types of bonds carry higher interest rates than essential services bonds, or general obligation bonds.

0 comments

ericd12y ago

Ah great, thanks for the concrete info!

tanzam75OP12y ago

ericd12y ago

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