Lake County accepts $8.4M bid for Lake Connections from Pinpoint Holdings

Lake County News Chronicle reports…

The Lake County Board of Commissioners has awarded the highest bid, $8.4 million, for Lake Connections, the county’s municipal broadband project, during a meeting Tuesday, Dec. 18, in Two Harbors.

The highest successful bid was the best and final offer from Pinpoint Holdings Inc. in Cambridge, Neb. The board unanimously accepted the resolution to accept the bid; Commissioner Rick Hogenson was absent.

Pinpoint was selected from the final four bidders, which also included Mediacom Communications Corp., Cooperative Light and Power Association and Hanson Communications.

Mediacom’s best and final offer of $8.25 million was selected as the backup bid in the event Pinpoint doesn’t close the sale.

And a little background…

In 2010, the board received a $56 million loan and $10 million grant from the U.S. Department of Agriculture’s Rural Utility Service to construct the network. Over three years, more than 1,200 miles of a fiber network was built in Lake County and parts of eastern St. Louis County. Most of the network was completed in June 2015.

In June 2017, the county entered into a deferral agreement with RUS for principal and interest on the condition the county sell the network to a private company or entity. Two months later, the county executed a memorandum of understanding with RUS in which RUS agreed to accept to the sale price of Lake Connections in full satisfaction of the county’s debt for construction of the network.

When the deferral agreement was executed, the county owed approximately $48.5 million on the RUS loan.

This means the federal government stands to lose approximately $40 million on the broadband project.

I wrote about Lake County and the impact of better broadband in the community a year ago. Using a pretty conversation formula, we figured out the annual economic benefit for broadband in the community was $13.7 million, which means in less than 3 years the community will have seen an economic benefit of more than $40 million. Now I recognize that that benefit won’t go to the federal government. BUT it does help realize the cost to the community of not investing.

Blue Earth County Board talks about expanding broadband

The Mankato Free Press reports

The Blue Earth County Board already has a New Year’s Resolution: kickstart efforts to bring more broadband options and data fiber connections to the area.

Commissioner Vance Stuehrenberg called on county officials Tuesday to lay the groundwork for a future public-private data fiber partnership as recent data show Blue Earth County is lagging in internet connectivity.

Stuehrenberg said during a board meeting Tuesday he was concerned only about 14 percent of the county was equipped to handle at least 100 mpbs download speeds and 20 mbps upload speeds. While almost all of Blue Earth County’s internet options meet the state’s immediate high-speed goals — at least 25 mbps downloads and 3 mbps uploads by 2022 — Stuehrenberg and other commissioners believe the county needs to have better internet access if it wants to continue growing and attracting more economic development.

“It’s kind of disheartening to hear that in Mankato and Blue Earth County, we don’t have the same ability to get internet service as some of those smaller communities,” Stuehrenberg said.

I applaud the forward-looking vision. They are brainstorming some ways to make it happen…

Stuehrenberg suggested future highway reconstruction projects include installing fiber to help offset connection costs in rural areas. Yet he and other commissioners said it will ultimately be up to area internet providers to use and maintain fiber networks.

The county finished installing fiber infrastructure around Mankato and nearby cities over the last two years, according to County Administrator Bob Meyer. He said county officials have been in preliminary talks with internet providers to expand broadband access throughout the county.

Yellow Medicine County decides to focus on broadband

The Marshall Independent reports…

At Tuesday’s meeting, the board also voiced support for a stepped up effort to expand broadband Internet service to rural counties.

Yellow Medicine County ranks near the bottom of the list among Minnesota counties for access to broadband. It provides a much more convenient access to the Internet than dial-up alternatives.

The county includes two large areas without any towns that have a population of more than 500 people. One is the southeast side of the county with Hanley Falls, Wood Lake and Echo. The other lies between Clarkfield and Canby with the towns of St. Leo and Porter.

Those and other rural locations are likely to be among the last areas to acquire broadband service.

Commissioner Ron Antony said he’s encouraged by a news release issued last week by Minnesota Sen.-elect Tina Smith which advocated including funds for broadband expansions in the upcoming federal Farm Bill.

Commissioner John Berends said it could be helpful this winter to organize local and regional meetings that allow opportunities to express points of view to federal lawmakers, state legislators, and their staff.

“There might be some interest in meeting with the public,” Berends said. “People would have a chance to explain our service needs.”

Heglund told the board that another key part of broadband expansion will be to encourage Internet providers to find ways of reaching out to potential rural customers.

“It would help if more providers approached us to express interest,” she said. “There are telecommincations investments being made in Minnesota. We just don’t have any control over where that money is spent.”

Lake County gets 4 bids for their fiber network

The Lake County News Chronicle reports

The Lake County Board of Commissioners learned four entities submitted bids for Lake Connections, the county’s municipal broadband project.

The initial bidding period ended Nov. 2 with Lake Partners, Hanson Communications, Mediacom Communications Corp. and Cooperative Light and Power (CLP) in Two Harbors submitting bids, along with a $100,000 deposit, for the network. They will have the opportunity to submit a “best and final offer,” according to the terms of the sale set by the county and the U.S. Department of Agriculture’s Rural Utilities Service (RUS).

The County received federal ARRA funding (loan ($56M) and grant ($10)) to build the network in 2010. After ups and downs that network was mostly completed in 2015. IN 2015, the County invested another $15 million and the FCC awarded a grant of $3.5 million.

The article continues…

In June 2017, the county entered into a deferral agreement with RUS for principal and interest on the condition the county sell the network to a private company or entity. Two months later, the county executed a memorandum of understanding with RUS in which RUS agreed to accept to the sale price of Lake Connections in full satisfaction of the county’s debt for construction of the network.

The county board is reviewing the bids, according to County Administrator Matt Huddleston, and specific bid information was not provided. Since there were fewer than five bids, Pinpoint Holdings Inc. in Cambridge, Neb., will also have a chance to make a final bid for the network.

In late July, Pinpoint offered $3.5 million for the network in an initial bid that set the baseline price for the network.

Two bidders, Mediacom and CLP, have conflicted with the network in the past.

The deadline for bids is Nov 29; the County is scheduled to make a decision on Dec 11.

Lake Connections is looking for a buyer

Minnesota Watchdog reports on the status of the Lake County community broadband network… (The Watchdog looks at public funding for projects to “expose the facts about government mismanagement and overreach.”)

 Lake County is trying to find a private provider to buy its taxpayer-funded Lake Connections network in part because the county doesn’t want to sink any more money into the business and also in part because – irony alert – county leaders believe a private provider will better be able to quickly connect eager customers.

The project received $66 million in grants and loans through the U.S. Department of Agriculture’s Rural Utilities Service (RUS) as part of President Barack Obama’s stimulus legislation. In total, more than $80 million has been sunk into Lake Connections, including federal and local tax money.

And here are some of the most recent numbers…

After seven years of operations, Lake Connections has 2,500 customers, with 750 more interested parties waiting for service. In addition to owing the federal government (taxpayers) $48.5 million, Lake County has put $17 million of local taxpayer money into the project.

Despite those heavy costs, the county is trying to sell Lake Connections for around $20 million. To get that value, bureaucrats assume $180 in revenue per month for each customer and a cash earnings margin of 50 percent.

But they recently announced the highest bid for the network was $3.5 million from Pinpoint Holdings, Inc. of Lincoln, Nebraska. Lake County will continue to accept bids, hoping to get a higher price. If $3.5 million is the final sale price, then federal taxpayers get to eat the $45 million difference between what’s still owed to RUS due to an agreement that the sale price will fulfill the balance of the loan.

The Lake County Board of Commissioners voted in April to approve a $7.24 million general obligation judgment bond to pay off contractors it still owed for the construction of Lake Connections.

We looked at Lake County as part of the case studies we did last year on the community return on public investment. We found that in seven years, the increase in household economic benefit would surpass the debt. That doesn’t necessarily mean the households pool that money to pay off the debt but there have been economic benefits.

 

Dakota Broadband Board finding a home and maybe a new ED

The Farmington Independent reports…

The Dakota Broadband Board may open office space on the second floor of Farmington City Hall.

“The Dakota Broadband is moving forward and they have offered to host the executive director here in the building,” said Brenda Wendlandt, human resources director for the City of Farmington. “We would also run salary and benefits through our payroll system and manage it and the DBB would reimburse us.”

The city is currently determining what the costs of having the office at City Hall would be. City staff are working on a contract for the rental space and human resources relationship between the city and the DBB.

And there’s more…

The DBB also plans to recruit a new executive director after Jan. 1, 2019, with the intention of the having a new director by the end of May.

Will Morse township strike out on their own for broadband without Ely-Area Join Powers?

The Ely-area Community Economic Development Joint Powers Board met last month to discuss a numb of issues. The Joint Powers Board is a collection of local communities working together to expand economic opportunities in the area. But as a recent article in the Timberjay points out, there are times when the members have to balance community with regional goals and needs. That came up with broadband…

Morse Township representatives dropped a bombshell on the Joint Powers Board by announcing they could be stepping away from an area-wide broadband project and going with their own plan.

The recently-completed broadband feasibility study, partially funded through the Blandin Foundation, is moving into the next phase, according to Novak, to determine costs and coverage area.

“We are looking at getting this off the ground quickly and offering a basic core of fiber optic service tied to the Northeast Service Co-op, and run the fiber to some poles and provide wireless broadband across the lake to Burntside and within the school district, and later on, as revenues come in, to start reinvesting and running fiber all over,” he said.

“As we were all participants in that study, it is upon us as leaders to make a decision if you are going to continue to be in (the co-op) or not be in,” Novak said.

Morse Supervisor Len Cersine announced that the township is planning to move forward on broadband alone. “We are going to try and run some broadband into the township, because right now we have nothing, absolutely nothing,” he said.

“The whole feasibility study was completed to lay out the best way to put broadband in,” Novak said.

“They have it running from Babbitt to Ely,” Berrini said, “but it doesn’t go to anybody’s house.”

Novak clarified that the project Berrini was referring to was the defunct Lake Connections plan that ran out of funding several years ago. “This is a totally different project,” he said.

“So is ours,” Berrini shot back. “We have six different poles. We put in for a grant. It will cost about $36,000 per pole, and they cover something like two miles. We can make a circle completely around Ely with ours.”

Novak pushed for a confirmation that Morse Township is going with their own broadband plan.

“We’re going to check on it. We’ll see what happens. We can’t wait. We can’t just have one part and the rest get nothing,” Berrini said.

Cersine said the “high-speed” internet project under consideration by Morse officials is through Frontier Communications.

“I wouldn’t put any faith in Frontier,” Novak said.

Cersine asserted, “Chuck, we are not abandoning your project, but we are checking on what we can do.”