HomeMy WebLinkAboutMagellan Advisors, LLC - Feasibility Study - 10/28/19Consulting Services Agreement
This Consulting Services Agreement (the "Agreement") is made effective as of Oct 24th , 2019
(the "Effective Date"), by and between Waterloo Telecommunications Utility ("CLIENT"), a
municipal telecommunications utility of the City of Waterloo, Iowa, whose address is 715 Mulberry
Street, Waterloo, IA 50703, and Magellan Advisors, LLC ("Consultant"), a Florida Limited Liability
Company, whose address is 999 18th Street, Suite 3000, Denver, CO 80202, whose federal Tax ID
Number is 65-1218484. The City of Waterloo, Iowa (the "City") is also made a party to this
Agreement for the limited purposes stated herein.
WITNESSETH:
WHEREAS, the CLIENT desires to retain Consultant to provide professional consulting
services as more particularly described herein to the CLIENT and Consultant desires to provide
such professional consulting services to the CLIENT, all in accordance with the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the legal
sufficiency of which are hereby acknowledged, the parties agree as follows.
1.0 SCOPE OF WORK
1.1 Services. Consultant shall provide to the CLIENT professional consulting services and
deliverables as detailed in Exhibit A, "Scope of Work" of this Agreement.
1.2 Notice to Proceed and Performance Schedule - Consultant shall proceed to perform the
consulting services only upon receipt of a written notice to proceed from the CLIENT and shall
thereafter complete the consulting services and provide the project deliverables pursuant to the
performance schedule set forth in Exhibit A.
1.3 Confidentiality — Subject to the provisions of Article 5 below, in order for Consultant to
perform the consulting services, it may be necessary for the CLIENT to provide Consultant with
confidential information (as defined below) regarding the CLIENT's business and products. The
CLIENT shall provide confidential information to aid Consultant in performance and fulfillment of
consulting services. Consultant shall not use confidential information for any uses other than to
fulfill stated consulting services.
1.4 Standard of Conduct - In rendering consulting services under this Agreement, Consultant
shall conform to highest professional standards of work and business ethics. Consultant shall not
use time, materials, or equipment of the CLIENT without the prior consent of the CLIENT. In no
event shall Consultant take any action or fail to take any action or accept any assistance or engage
in any activity that would result in any university or other educational institution, governmental body
(except the Client), research institute or other person, entity or organization, public or private,
acquiring any rights of any nature resulting from the consulting services performed by or for the
CLIENT.
1.5 Outside Services - Consultant shall not subcontract or otherwise employ or use the
service of any other person, entity or organization in the performance of the consulting services
without the prior written consent of the Client. Should the Client consent to the use by Consultant
of the services of any other person, entity or organization, no information regarding the consulting
services to be performed under this Agreement shall be disclosed to that person, entity or
organization until such person, entity or organization has executed (1) an agreement consistent
with the confidentiality provisions hereof to protect the confidentiality of the CLIENT's Confidential
Information (as defined below) and (2) an agreement agreeing to the CLIENT's absolute and
complete ownership of all right, title and interest in the consulting services work performed and the
deliverables provided by such person, entity or organization under or with respect to this Agreement
and including provisions substantially in the form of Section 4.3, Section 5.3 and Article 6 hereof.
1.6 Reports — Upon request by the CLIENT, Consultant shall periodically provide the CLIENT
with written progress reports of its observations and conclusions regarding the consulting services.
As part of the consulting services, Consultant shall prepare a final report describing the consulting
services and containing the information, findings, determinations and recommendations of
Consultant, all as more particularly described in Exhibit A hereto.
ARTICLE 2 - INDEPENDENT CONTRACTOR
2.1 Independent Contractor - Consultant is an independent contractor and is not an
employee, partner, or co -venturer of, or in any other service relationship with the CLIENT. The
manner in which Consultant's services are rendered shall be within Consultant's sole control and
discretion. Except as otherwise agreed by the parties, Consultant shall provide all personnel and
all equipment, tools, materials, supplies or other items necessary to perform its services hereunder,
at no additional cost to CLIENT except as set forth in Section 3.1. Consultant is not authorized to
speak for, represent, or obligate the CLIENT in any manner without the prior express written
authorization of the CLIENT.
2.2 Taxes - Consultant shall be responsible for all taxes arising from compensation and other
amounts paid under this Agreement, and shall be responsible for all payroll taxes and fringe
benefits of Consultant's employees. Neither federal, nor state, nor local income tax, nor payroll tax
of any kind, shall be withheld or paid by the CLIENT on behalf of Consultant or its employees.
Consultant understands that it is responsible to pay, according to law, Consultant's taxes, and
Consultant shall, when requested by the CLIENT, properly document to the CLIENT that any and
all federal and state taxes have been paid.
2.3 Benefits - Consultant and Consultant's employees will not be eligible for, and shall not
participate in, any employee pension, health, welfare, or other fringe benefit plan, of the CLIENT.
No workers' compensation insurance shall be obtained by CLIENT covering Consultant or
Consultant's employees.
ARTICLE 3 - COMPENSATION FOR CONSULTING SERVICES
3.1 Compensation — Consultant shall be paid the rates for performance of the consulting
services as set forth in Exhibit B, attached hereto and made a part hereof. CLIENT is exempt from
tax, and no invoice from Consultant shall include sales or use tax. Invoices shall contain a detailed
breakdown of the services performed for which payment is being requested. Consultant shall not
be entitled to any other compensation or reimbursement, unless the parties amend this Agreement
in writing to provide for same. All invoices received by the CLIENT shall be reviewed and approved
in writing by the Client and the City. Consultant shall provide a copy of each invoice to the City
concurrently with delivery of same to the CLIENT. The City shall pay invoices within 30 days from
the date the invoice is approved or advise Consultant in writing of reasons for not approving or
processing the invoice for payment. Notwithstanding anything to the contrary herein, Consultant
shall not dispatch an invoice to the CLIENT until the CLIENT has provided written confirmation to
Consultant that all consulting services to be described in a subject invoice pursuant to this
Agreement have been fulfilled. The Consultant shall clearly state "final invoice" on Consultant's
last/final billing invoice, which shall also contain a certification that all consulting services have been
fully performed by Consultant in accordance with this Agreement, that all charges and costs have
been invoiced to the CLIENT, and that any further charges not included on the final invoice are
waived. Acceptance of final payment shall constitute a waiver of all claims and liens against the
CLIENT for additional payments of any nature.
ARTICLE 4 - TERM AND TERMINATION
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4.1 Term — The term of this Agreement will commence upon the Effective Date and remain in
effect for one year. Consultant covenants to complete the services and provide the project
deliverables detailed in Exhibit A hereof in a timely manner in accordance with the duration of the
project and agreed upon schedules referenced in Exhibits A and B hereof. The CLIENT and
Consultant may by mutual agreement negotiate to extend the term of this Agreement and the terms
and conditions under which the relationship shall continue. The CLIENT and Consultant shall
amend this Agreement in such case.
4.2 Termination - The CLIENT may terminate this Agreement in whole or in part and take
possession of all materials, documents, plans and designs related to the consulting services in
Consultant's possession and may finish the services by whatever reasonable method the CLIENT
may deem expedient without prejudice to any right or remedy it has hereunder and after giving
Consultant thirty (30) calendar days written notice, during which period Consultant shall have the
opportunity to cure the violation, in the following events:
(1) Consultant enters into any bankruptcy proceedings or is adjudged as bankrupt or a receiver is
appointed on account of its insolvency; (2) failure to supply appropriate personnel or materials to
timely complete the consulting services; (3) failure to commence and maintain the performance
schedule for completing the consulting services; (4) disregard of laws, rules, regulations,
ordinances of any public authority with competent jurisdiction; (5) any violation of the provisions of
this Agreement; or (6) any other just cause.
If any event giving rise to a right to terminate cannot, with reasonable diligence, be cured within 30
days, then Consultant shall have an additional reasonable period of time, not to exceed an
additional 60 days, in which to cure the default or violation. CLIENT may proceed with termination
if Consultant fails to cure the default or violation within the applicable cure period.
4.3 Responsibility upon Termination — Upon termination, Consultant shall forthwith deliver
to the CLIENT all original papers, records, documents, drafts, drawings, models and other material
set forth and described in this Agreement, together with any equipment provided by the CLIENT to
the Consultant in connection with or furtherance of the performance of the consulting services by
Consultant under this Agreement, including, but not limited to, computers, laptops, and personal
management tools.
ARTICLE 5 - CONFIDENTIAL INFORMATION
5.1 Obligation of Confidentiality - In performing consulting services under this Agreement,
Consultant may be exposed to and required to use certain "Confidential Information" (as hereinafter
defined) of the CLIENT. Consultant agrees that Consultant shall not, and Consultant's employees,
agents or representatives shall not, use, directly or indirectly, such Confidential Information for the
benefit of any person, entity or organization other than the CLIENT, or disclose such Confidential
Information without the written authorization of CLIENT, either during or after the term of this
Agreement, for as long as such information retains the characteristics of Confidential Information.
The parties hereby agree that the project deliverables shall be treated as Confidential Information,
and to preserve the confidentiality of same Consultant agrees that the project deliverables will be
delivered only to CLIENT and not to the City.
5.2 Definition - "Confidential Information" means information, not generally known, and
proprietary to the CLIENT or to a third party for whom the CLIENT is performing work, including,
without limitation, information concerning any patents or trade secrets, confidential or secret
designs, processes, formulae, source codes, plans, devices or material, research and
development, proprietary software, analysis, techniques, materials or designs (whether or not
patented or patentable), directly or indirectly useful in any aspect of the business of the CLIENT,
any vendor names, customer and supplier lists, databases, management systems and sales and
marketing plans of the CLIENT, any confidential secret development or research work of the
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CLIENT, or any other confidential information or proprietary aspects of the business of the CLIENT.
All information which Consultant acquires or becomes acquainted with during the period of this
Agreement, whether developed by Consultant or by others, which Consultant has a reasonable
basis to believe to be Confidential Information, or which is treated by the CLIENT as being
Confidential Information, whether or not specifically marked or designated as Confidential
Information, shall be presumed to be Confidential Information.
5.3 Property of the CLIENT - Consultant agrees that all plans, manuals and specific materials
developed by the Consultant on behalf of the CLIENT in connection with consulting services
rendered under this Agreement, are and shall remain the exclusive property of the CLIENT.
Promptly upon the expiration or termination of this Agreement, or upon the request of the CLIENT,
Consultant shall return to the CLIENT aII documents and tangible items, including samples,
provided to Consultant or created by Consultant for use in connection with services to be rendered
hereunder, including without limitation all Confidential Information, together with all copies and
abstracts thereof.
ARTICLE 6 - RIGHTS AND DATA
6.1 Data - All drawings, models, designs, formulas, methods, documents, reports and any
other tangible items of any nature whatsoever, prepared for the CLIENT, whether in hard copy,
paper copy, by electronic means or any other format, by Consultant in connection with the
consulting services rendered under this Agreement shall belong exclusively to the CLIENT and
shall be deemed to be works made for hire (the "Deliverable Items"). To the extent that any of the
Deliverable Items may not, by operation of law, be works made for hire, Consultant hereby assigns
to the CLIENT the ownership of copyright or mask work in the Deliverable Items, and the CLIENT
shall have the right to obtain and hold in its own name any trademark, copyright, or mask work
registration, and any other registrations and similar protection which may be available in the
Deliverable Items. Consultant agrees to give the CLIENT or its designees all assistance reasonably
required to perfect such rights.
ARTICLE 7 - CONFLICT OF INTEREST AND NON -SOLICITATION
7.1 Conflict of Interest - Consultant covenants and agrees not to consult or provide any
services in any manner or capacity to a direct competitor of the CLIENT, a vendor of CLIENT, or
any person or entity that has a franchise or agreement to provide telecommunications services in
CLIENT's jurisdiction during the duration of this Agreement unless express written authorization to
do so is given by CLIENT.
7.2 Non -Solicitation - Consultant covenants and agrees that during the term of this
Agreement, Consultant will not, directly or indirectly, through an existing corporation,
unincorporated business, affiliated party, successor employer or otherwise, solicit, hire for
employment or work with, on a full-time or part-time, consulting, advising or any other basis, other
than on behalf of the CLIENT, any employee or independent contractor employed by the CLIENT
while Consultant is performing the consulting services for the CLIENT.
ARTICLE 8 - MAINTENANCE OF RECORDS
8.1 Consultant shall keep adequate records and supporting documentation related to the
consulting services provided hereunder for a minimum period of three (3) years from the date of
termination of this Agreement. The CLIENT or its authorized agents shall have the right to audit,
inspect, or copy all such records and documentation upon reasonable notice and timeframes. All
records and documentation related to the consulting services provided under this Agreement shall
be maintained in accordance with applicable grant award requirements and standards, as well as
applicable state and local laws.
ARTICLE 9 — INSURANCE
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9.1 During the term of this Agreement, Consultant shall pay for and maintain the types of
insurance described below issued by companies with A.M. Best ratings of A- or better. Prior to
undertaking any consulting services, Consultant shall provide to the CLIENT properly executed
Certificates of Insurance showing the CLIENT and the City as additional insureds and providing
that thirty (30) days written notice shall be provided to the CLIENT and the City of any cancellation,
intent to not renew, or reduction in the coverages. Consultant's policies of insurance shall be
primary and non-contributory. Renewal certificates of insurance, as may be applicable, shall also
be provided to the CLIENT and the City. Upon request, Consultant shall also provide copies of the
policies to the CLIENT and the City.
9.2 Required Insurance
a. Commercial General Liability Insurance—coverage on an occurrence basis with no less
than the following limits of liability:
Single Limit Bodily Injury & Property Damage—for each occurrence $1 Million and annual
aggregate, $1 Million; and
Personal Injury—Annual aggregate, $1 Million.
b. Comprehensive Automobile Liability—for all vehicles used in the performance of this
Agreement:
Single Limit Bodily Injury & Property Damage -each occurrence $1 Million.
Coverage shall include owned, rental and/or non -owned vehicles.
c. Professional Liability with limits not less than $1 Million. If coverage is made on a claims
made basis, then coverage must be maintained for the duration of this Agreement and for
not less than one (1) year thereafter, or in lieu of continuation, provide and "extended
reporting clause" for one (1) year.
d. The CLIENT reserves the right to require any other insurance coverage it deems necessary
depending upon the exposures.
ARTICLE 10 - INDEMNIFICATION
10.1 Consultant agrees to indemnify, defend and hold harmless the CLIENT and the City, and
the respective officers, agents and employees of each, from and against any liability, loss, damage
or expense (including without limitation all costs and reasonable attorneys' fees) suffered by the
CLIENT or the City arising from any claim, demand, judgment, decree, or cause of action of any
kind or nature arising out of any breach of this Agreement, negligent error, omission, negligent act,
recklessness, or intentional wrongful act of Consultant, its agents, employees, or servants, in the
performance of the consulting services under this Agreement.
ARTICLE 11 - REMEDIES and VENUE
11.1 This Agreement shall be governed by the laws of the State of Florida without regard to the
principles of conflict of laws thereunder, except matters for which Iowa municipal entities cannot
waive the applicability of Iowa law or consent to the law of another jurisdiction, and matters
pertaining to the status of CLIENT as a municipality, all of which shall be governed by Iowa law.
No remedy herein conferred upon a party to this Agreement is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
11.2 If any legal, administrative or equitable action or other proceeding is brought for the
enforcement of this Agreement, the prevailing party or parties shall be entitled to recover
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reasonable attorneys' fees and costs (at trial and through any appellate proceedings), in addition
to any other relief to which such party or parties may be entitled.
ARTICLE 12 - NOTICES
12.1 All Notices required to be given under this Agreement shall be sent via email with a copy
sent by certified mail, return receipt requested or by overnight traceable delivery, as follows:
To the Consultant: Magellan Advisors, LLC
999 18th Street, Suite 3000, Denver, CO 80202
To the CLIENT:
With copy to:
Waterloo Telecommunications Utility
715 Mulberry Street, Waterloo, IA 50703
Attn: Board Chair
City of Waterloo, Iowa
715 Mulberry Street
Waterloo, IA 50703
Attn: Chief Financial Officer
Consultant agrees that the project deliverables will be delivered only to CLIENT and not to the City.
ARTICLE 13 - GENERAL PROVISIONS
13.1 Construction of Terms - If any provision of this Agreement is held unenforceable by a
court of competent jurisdiction, that provision shall be severed and shall not affect the validity or
enforceability of the remaining provisions.
13.2 Complete Agreement - This Agreement and the Exhibits attached hereto constitute the
complete agreement and set forth the entire understanding and agreement of the parties as to the
subject matter of this Agreement and supersede all prior discussions and understandings in respect
to the subject of this Agreement, whether written or oral.
13.3 Dispute Resolution - If there is any dispute or controversy between the parties arising out
of or relating to this Agreement, the parties agree to make good -faith effort to resolve such dispute
or controversy by mediation before resorting to judicial remedies.
13.4 Modification - This Agreement may only be modified, amended, superseded or otherwise
altered by written instrument executed by the parties hereto.
13.5 Waiver of Breach - The waiver by a party of a breach of any provision of this Agreement
by the other party shall not operate or be construed as a waiver of any other or subsequent breach
by the party in breach.
13.6 Successors and Assigns - This Agreement may not be assigned by either party without
the prior written consent of the other party; provided, however, that the Agreement shall be
assignable by the CLIENT without Consultant's consent in the event the CLIENT is acquired by or
merged into another business entity. The benefits and obligations of this Agreement shall be
binding upon and inure to the parties hereto, their successors and assigns.
13.7 No Conflict - Consultant warrants that Consultant has not previously assumed any
obligations inconsistent with those undertaken by Consultant under this Agreement.
13.8 Time of Essence - Time is of the essence in this Agreement.
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13.9 Survival - All terms of this Agreement relating to the enforcement of this Agreement,
confidentiality, property of CLIENT, data, remedies, and indemnification shall survive termination
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Consulting Services Agreement by their
duly authorized representatives as of the date set forth above.
CONSULTANT CLIENT
Magellan Advisors, LLC Waterloo Telecommunications Utility
Signature:Signature
By: John Honker By: Andrew Van Fleet
Title: President & CEO Title: Chair, Board of Trustees
Date: 10-22-2019 Date: Oct 24th, 2019
Address: 999 18th Street, Suite 3000 Address: 715 Mulberry Street
Denver, CO 80202 Waterloo, IA 50703
Agreed to for the limited purposes set
forth above:
City of Waterloo, Iowa
By: LX tLNI 14 -CC AT._.
Quentin Hart, Mayor
Attest:
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K:` ley Felchle, CityCler
EXHIBIT A
Scope of Work
Task 1. Kick -Off Meeting, Project Charter & Goals
Our team will begin the project by conducting an onsite kickoff meeting with the
Client project team. The purpose of this meeting is to develop a project charter
with clear goals and objectives. This will ensure alignment of our team with yours'
and that the final deliverables will meet your expectations. Magellan will also
develop a project plan and timeline to meet your schedule.
Task 2. Broadband Needs Assessment & Demand Planning
Statistically -Valid Surveys
Magellan will determine the current broadband environment in Waterloo by
understanding what residents and business utilize today. We propose to utilize a
statistically -valid survey of residents and businesses to understand the current
services that they use, what they pay and what they desire in their internet services.
Magellan's conjoint survey methodology will answer the following questions for the
Client and the City to help educate leaders on the State of Broadband in Waterloo:
1. What services are available to residents and businesses?
2. How many providers do residents and businesses have access to in Waterloo?
3. Is there a digital divide in Waterloo and to what degree?
4. Where are the territories of each provider and do they compete?
5. What do residents and business pay today?
6. What speeds do residents and businesses receive today?
7. Are residents and businesses getting what they pay for?
8. What market share does each provider hold today?
9. If the Client provided services directly or through a partnership, what take rates
could it expect?
10. What prices, speeds and packages are most demanded by residents and
businesses?
Magellan will conduct separate residential and business surveys of the Waterloo
community.
Stakeholder Outreach
Magellan proposes to hold interviews with key community organizations to gain an
understanding of their current and future broadband and technology needs. We
believe that engaging your key stakeholders is important to educate the community
and make broadband planning an inclusive process with the community. The
surveys mentioned above will provide important quantitative data; the stakeholder
outreach process provides important qualitative data. It will involve Waterloo's key
public organizations to determine community -wide needs for broadband. We would
suggest including:
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• City departments
• School district
• Local business associations or the chamber of commerce
• Residential representatives, opinion leaders or home owners associations
• Major healthcare associations or organizations
Magellan proposes to hold sessions with community organizations to gain an
understanding of their current and future broadband and technology needs. We find
the most effective format for these interviews to be in group settings where
participants are encouraged to share open, honest feedback with our team.
Magellan will collect information from these organizations to help the Client and the
City understand the needs of its major stakeholders.
Market Analysis
The market analysis will determine the services that are available, providers,
service level, pricing, and access. We will document all publicly -owned and
privately -owned networks in the City and build a comprehensive broadband map
to illustrate how the City is served by broadband providers today. The market
analysis will also provide a gap analysis, using data from the surveys, to determine
where the areas of greatest need are in the City, illustrate where the digital divide
may be most apparent and identify key regions of the City where economic
development could be bolstered by broadband.
Task 3. Broadband Engineering and Cost Estimates
Asset Inventory
Magellan will conduct a comprehensive asset inventory of any existing fiber network
resources and other above and underground assets, including traffic signal, utility
pole, and street light infrastructure to determine its usefulness toward improving
broadband. In addition, Magellan will research wireless tower assets to identify
additional need to support current wireless and future 5G services. This inventory
will give the Client and the City a realistic assessment of the infrastructure's
capabilities and opportunities to use it as a foundation for deploying broadband, in
effort to lower overall costs of deployment.
Broadband Engineering
Magellan will provide a broadband high-level design and cost estimates to the Client
for expanding fiber and wireless services to businesses and residents. We utilize a
phased approach to engineering and building broadband networks that allows our
municipal clients to evaluate different buildout strategies, considering commercial -
only, residential -only and residential plus commercial. Our engineering will give you
a clear understanding of the regions of the City to be covered by broadband
infrastructure and the costs of deploying the network.
The overall engineering process will be based on the needs of the residents,
businesses, and anchors in Waterloo. This will determine the bandwidths and
speeds, performance, redundancy and scalability requirements, meeting today's
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needs and future bandwidth requirements, such as:
• Gigabit -capable with a path to 10 -gigabit
• High-performance, dedicated connectivity
• Reliable and redundant
• Flexible to support multiple technologies, such as GPON and Active
Ethernet simultaneously
• Scalable to support future growth, density and bandwidth requirements
• Multi -service in design — voice, video, data, with the necessary QOS
management
Supporting future smart city and internet of things applications
Our analysis will include method of delivery (FTTP, wireless, fiber/wireless hybrid,
etc.), and associated infrastructure and backhaul routes. We will also include full
equipment budgets for the network, renewal and replacement and capital expansion
requirements over the long-term (15-20 years).
Cost Estimates
Magellan will provide full cost estimates for all fiber and wireless infrastructure,
equipment, services and renewal and replacement. We will also provide complete
operating cost estimates for the broadband network, to enable Waterloo to
understand all expenses that go into operating and managing services as a retail
provider such as Waverly and CFU. This will provide valuable information to inform
the Client of the overall costs of providing services versus creating partnerships with
current providers. The cost capital and operational cost estimates will be utilized in
the Study to evaluate different feasible business models for the Client to consider.
Task 4. Analysis of Feasible Business Models
Overview and Detailed Analysis of Each Business Model
Magellan will provide the Client a side-by-side comparison of each of the feasible
business models for expanding broadband in Waterloo. This comparison will provide
the essential functions of each business model, the financials, risks, rewards and
control elements that are important for the Client's consideration as it evaluates
expanding broadband. Magellan will also provide many real-world examples of other
cities that have implemented each business model to help the Client better understand
the best practices, successes and failures.
Magellan believes that the Client should consider the following business models and
we are open to evaluating other options for the Client as the project unfolds, as we find
unique opportunities in each community that may not conform to a particular business
model:
• Retail services — business and residential
• Retail services — business only
• Retail services — residential only
• Public-private partnership
• Public -public partnership
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• Open -access
• Dark fiber leasing
Some of the key questions that we will address in this section include:
• What immediate steps could the Client take to improve broadband and what
business models would be most effective?
• What would it take for the Client to provide all retail services to homes and
businesses?
• Could the Client work with neighboring broadband utilities, such as CFU or
Waverly to reduce risk and bring broadband services to Waterloo more quickly?
• Would a public-private partnership be appropriate for Waterloo and what are the
tradeoffs that the Client should consider?
• Could the Client provide business services first to support economic development,
followed by expansion into residential?
• What is the financial performance of each business model? What are the costs
and how long would it take for the Client to break-even on each business model?
• What are the financial and non-financial risks of each business model?
Financial Planning for Each Business Model
Magellan proposes using our Broadband Financial Sustainability Model to ensure
that the City of Waterloo has a full understanding of the business and financial
sustainability of various broadband business models. Using these tools will allow
the Client to evaluate different business models and make informed decisions on
which are most adequate for the City and community — including environments
that require no funding.
Our models are widely used tools to model feasibility and financial performance for
over 50 municipal broadband providers. Magellan's financial modeling tools have
been utilized to plan and manage broadband network investments for over $1 billion
of broadband investments in the US.
Using our financial tools, we suggest using the following process to conduct the
business model analysis and make recommendations. We would propose using
a 20 -year period to analyze business models:
1. Develop the cost model for the network, including one-time and ongoing
capital expenditures to build the network.
2. Develop the cost model for operations, including O&M, network
operations, field services, staffing, billing and customer service.
3. From the market analysis and outreach, determine the customer
segmentation and growth on the network, across each type of customer
(business, school, hospital, etc.).
4. Determine customer growth rates for the network, based on benchmarking
analysis from other utility and municipal providers.
5. Determine a proposed competitive rate schedule for potential services,
using pricing information from the market analysis and benchmarking
information.
6. Develop financial statements, pro -formas, depreciation schedules, and
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cash flows.
7. Conduct comprehensive financial analysis on the project to determine
overall financial sustainability using key metrics such as free cash flow, debt
service coverage, operating margin, and net income.
8. Use scenario analysis to evaluate different business models and
determine which are feasible for the Client to consider.
9. Recommend the most feasible business model based on overall business
and financial sustainability, community benefit, and long-term value to the
Waterloo community. This model will be designed to generate revenue for
the Client for a self -sustained broadband maintenance and development
program. Our pro formas will indicate the cost of resources both internally
and externally, as estimated based on previous similar engagements.
Task 5. Funding Opportunities & Analysis
Magellan will provide a detailed analysis of the funding options for the broadband
network and operations. Public funding sources analyzed to determine how the
Client could fund the project utilizing a variety of vehicles, including municipal bonds,
loans, leases, tax increment financing and other municipal options.
We believe that some funding streams could come from public grants and private
providers and we will help you analyze what funding opportunities are available,
potentially reducing the Client's funding requirements. Magellan provides grant
writing and compliance for a variety of broadband grant and loan programs managed
by the USDA, USAC and FCC. We will provide a deep analysis of programs for
which the Client may qualify, amount of funding available and requirements to apply.
Our funding analysis will also inform the Client of the best approach to funding the
broadband project, which may include the utilization of multiple funding sources
where they apply to specific aspects of the project.
Task 6: Recommendations & Next Steps
Based on the results of the study, a series of key recommendations will be made to
inform the Client of the most feasible options to expand high-speed broadband in
Waterloo. Recommendations may include key policy decisions that the Client could
consider, based on the outcomes of the study. The study will discuss each option in
detail and provide a series of next steps that the Client could take to pursue one or
more of the feasible options. Timelines, costs and resources will be included in the
recommendations and next steps. Magellan will workshop these options with the
Client's project team and if desired, with Client or City leadership in a workshop or
meeting.
Task 7. Final Broadband Feasibility Study Report
Magellan will provide a final Comprehensive Feasibility Study to the Client at the
conclusion of this engagement. The final report will inform the Client of key
information that it can use to make decisions on how to proceed in the most prudent
way. This information will include:
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• Executive summary
• Broadband needs assessment and demand
• State of Broadband in Waterloo today
• Broadband opportunities
• Broadband benefits
• Broadband design and costs
• Broadband financial analysis for each business model
• Business model options, financial comparisons, risk and reward tradeoffs
• Most feasible options
• Recommendations and next steps
We will work with the Client's team to refine this plan, so it is highly representative
of your stakeholders needs and is relevant to the Waterloo community.
The Study will function as the guidebook for broadband development across the City
and will include the relevant information necessary for Waterloo to begin
implementing its broadband initiative. All supporting information such as individual
task analysis, raw data, mapping (ESRI) shapefiles and the technical memoranda
from each previous task will be included with the Study. All documents generated to
support delivery of the Study will also be provided to the Client.
Deliverables
See items identified in Task 7 above.
In addition to the final report, Magellan will provide all project support materials used
to develop the feasibility report. This includes:
• GIS Maps of All Infrastructure, Survey Results and Planned Designs, in GIS,
KMZ or related formats
• Excel financial plans for each business model studied
• Excel raw data for residential and business surveys
• Project documentation, plans, meeting minutes and agendas
Magellan will provide the final report and all other deliverables to the Client but not
to the City, in order to preserve the confidentiality of such information as provided in
the Agreement.
6
Project Timeline
Task Month 1 Month 2 Month 3 Month 4 Month 5
Task 1. Kick -Off Meeting, Project Charter &
Goals
Task 2. Broadband Needs Assessment &
Demand Planning
Task 3. Broadband Engineering & Cost
Estimates
Task 4. Analysis of Feasible Business
Models
Task 5. Funding Opportunities & Analysis
Task 6. Recommendations & Next Steps
Task 7. Final Broadband Feasibility Study
Report
Task 8. Final Presentations to Client
Leadership
7
EXHIBIT B
Rates and Pricing
The total cost of the project is $84,450, including all tasks to be completed by
Magellan and a $5,000 expense budget. Magellan's price is not -to -exceed total
budget for the project. Magellan will bill in equal installments over the term of the 5 -
month project on the first day of the month for the current month's services, less a
10% holdback until full project completion.
Task
Task 1. Kick -Off Meeting, Project Charter & Goals
Cost
$7,000
Task 2. Broadband Needs Assessment & Demand Planning
$10,500
Task 3. Broadband Engineering & Cost Estimates
$14,000
Task 4. Analysis of Feasible Business Models
$12,250
Task 5. Funding Opportunities & Analysis
$12,250
Task 6. Recommendations & Next Steps
$8,750
Task 7. Final Broadband Feasibility Study Report
$10,500
Task 8. Final Presentations to Client Leadership
$4,200
Travel & Incidental Expenses
$5,000
Total Not To Exceed Price
$84,450
1