Latest on Monticello: A hold on bond holder lawsuit

Here’s the latest news on Monticello from Watchdog Minnesota Bureau

Threatened with a bond-holder lawsuit, the city of Monticello has quietly made a deal to buy time in negotiations with the trustee for  owners of $26 million in revenue bonds for the financially struggling FiberNet broadband network. …

A so-called “tolling agreement” approved by the City Council in March effectively extends the statute of limitations on legal claims bondholders can file against the city while ramping up the pressure to reach a resolution with the temporary agreement, set to expire June 1, 2013.

The article gives a little background…

The development follows the city’s decision to halt debt service payments in 2012, due to an annual operating loss of more than $400,000 and flat subscription rates. For the first few years of operation, FiberNet Monticello dipped primarily into about $4.5 million in profits from the municipal liquor store to make bond payments.

Going forward, however, the city wants to repay bondholders out of profits from the broadband triple-play network, as stipulated in the bond filing. While that arrangement would protect taxpayers from further subsidizing FiberNet, it’s not clear when bondholders would get a return on their investment with the system continuing to operate in the red.

Negotiations continue…

Meantime, behind-the-scenes negotiations continue between the city and representatives for Wells Fargo, the trustee. The confidential nature of the process leaves both bond holders and taxpayers largely out of the loop, including two recent closed-door City Council sessions on the threat of legal action against the city.

And service continues…

“I can assure you, the agreements and negotiations with Wells Fargo and the bondholders, have had NO impact on the operations of Fibernet, nor its customers, suppliers and other stakeholders,” Pultusker said. “I believe City Council’s release of over $200k of funds for Fibernet, is proof of this state of affairs.”

This entry was posted in Community Networks, FTTH, MN by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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