The Lake County News Chronicle reports…
The federal government stands to lose up to $45 million on Lake County’s broadband project, Lake Connections, after the county accepted an initial bid of $3.5 million in its planned sale of the broadband network.
Pinpoint Holdings Inc. of Lincoln, Neb., submitted the bid for the network, which will serve as the minimum purchase price for the network in a sales procedure also approved by the county during its meeting Tuesday, July 24, in Two Harbors.
The article gives a succinct history of the finances of the network…
In 2010, the board received a $56 million loan and $10 million grant from the Department of Agriculture’s Rural Utilities Service (RUS) to construct the network and over three years, more than 1,200 miles of a fiber network was built throughout Lake County and parts of eastern St. Louis County. Most of the network was completed in June 2015, and the focus shifted to connecting eligible customers to the network with the county pledging $15 million of its own money to fund “drops,” or home connections, that also included a $3.5 million grant from the Federal Communications Commission.
On June 13, 2017, the county entered into a deferral agreement with RUS for principal and interest payments on the condition Lake County sell Lake Connections to provide the federal government with maximum recovery of the loan and grants. When the deferral agreement was executed, the county owed approximately $48.5 million on the RUS loan.
In August 2017, the county executed a memorandum of understanding with RUS in which RUS agreed to accept the sale price of Lake Connections in full satisfaction of the county’s debt for the construction of the network, according to documents provided by Lake County Administrator Matt Huddleston. If the Pinpoint bid is the winning bid, RUS will receive $3.5 million to satisfy the $48.5 million debt.
And the potential for next steps…
If more than five qualified bids are submitted, the top three bidders will be asked to submit a “best and final offer” within 10 days. If there are less than five qualified bids, each entity will be asked submit a final offer.
Lake County was one of five counties we looked at for the reports last year on Measuring Impact of Broadband in 5 Rural MN Communities. It looks at the value of the network in a different lens – specifically we looked at the benefits of the network to the residents. We found that community-wide the residents reap $13.7 million each year and the household value (community-wide) and increased by $38.5 million. We got to those numbers by looking at two formulas – the value of houses with broadband increase 3 percent (times the number of house with broadband) and annual economic benefit per household is $1,850.
That doesn’t pay for the network – but it does demonstrate the value of the network to the community. As part of the research for that report, we spoke to members of the community. Many were quick to say that given the chance, they would go ahead again to help the community reap the benefits.