USDA to Implement Regulatory Reforms to Increase Access to Capital in Rural Areas

News on funding from the USDA. They are holding a few listening sessions and many are available online…

WASHINGTON, Sept. 5, 2018 – Assistant to the Secretary for Rural Development Anne Hazlett today announced that USDA is hosting listening sessions to solicit feedback on a plan to increase access to capital in rural areas by streamlining regulations for four Rural Development loan guarantee programs.

“At USDA, we know that for many rural communities the regulations that govern our programs can be outdated and difficult to navigate,” Hazlett said. “Under the leadership of Agriculture Secretary Perdue, USDA is committed to simplifying our regulations and streamlining our program resources so we can be a better partner to rural leaders in building prosperity.”

The changes will simplify the application process for four Rural Development loan guarantee programs that provide funding to start, improve and expand businesses and build critical infrastructure. They also will incorporate modern lending practices, accelerate the loan approval processes and increase the amount of capital available in rural communities. The programs are the Community Facilities Guaranteed Loan Program, the Water and Waste Disposal Guaranteed Loan Program, the Business and Industry Loan Guarantee Program and the Rural Energy for America Program.

The Rural Development Innovation Center is hosting listening sessions this month to solicit comments on the reforms.

Listening sessions will be held:

  • Sept. 10 in Denver from 9:30 a.m. to 12:30 p.m. MDT at the Denver Federal Center. To attend virtually, visit:  Attend virtually.
  • Sept. 10 in Lexington, Ky., from 1:00 p.m. to 4:00 p.m. EDT at the USDA Rural Development State Office. To attend virtually, visit: Attend virtually.
  • Sept. 12 in Lake Ozark, Mo., from 1:30 p.m. to 4:30 p.m. CDT at the Lodge of Four Seasons. To attend virtually, visit: Attend virtually.
  • Sept. 14 in East Stroudsburg, Pa., from 9:30 a.m. to 12:30 p.m. EDT at East Stroudsburg University. To attend virtually, visit: Attend virtually.
  • Sept. 19 (virtually only, focus on Tribal areas) from 3:00 p.m. to 4:30 p.m. EDT. To attend, visit: Attend virtually.
  • Sept. 20 in Washington, D.C., from 9:30 a.m. to 12:30 p.m. EDT at USDA Whitten Building, Room 107-A. To attend virtually, visit: Attend virtually.

Red River Communications speaks up for rural communities with good broadband

The Wahpeton Daily News recently posted a letter to the editor from Red River Communications as a reaction to someone assuming that all rural areas are bereft of good broadband. The letter details Red River’s network…

Reliable access to high-speed, broadband Internet is no doubt a huge driver for economic development and quality of life. It’s why we are continually reinvesting in the network we’ve built. In 2017, we completed a 12-year project that provided fiber-to-the-home to over 1,500 square miles of southeast North Dakota and west central Minnesota. Our efforts have been recognized regionally and on the national stage by US Senators and Representatives, the FCC, industry groups, and our peers.

The communities we serve in Richland County were awarded the status of “Smart Rural Communities” by NTCA – The Rural Broadband Association. Our entire fiber network earned Red River Communications the designation of being a “Gig Capable Certified Provider,” meaning every single one of our members on our fiber network in Richland and Wilkin counties can receive true gigabit Internet speeds.

The network we’ve built with other small communications providers across North Dakota and Minnesota is literally the envy of the nation in terms of connectivity and the speeds offered. The Internet speeds often far exceed what is available in major metropolitan areas. US News recently ranked North Dakota number 2 overall in the nation for Internet connectivity. Minnesota was ranked number 7.

And the problem with assuming the worst…

To suggest without inquiring with the local providers that many area residents don’t have access to quality high-speed Internet is misleading and damaging to economic development prospects in the Southern Valley. While it is true that there are areas of the country that lack adequate broadband access, that is simply not the case here. It appears local economic development leaders are buying into the narrative of national advocacy groups like Connect Americans Now without truly understanding the tremendous broadband opportunities in their own backyard.

What message does it send to business leaders, investors, and developers when they see local economic leaders bemoaning a perceived lack of Internet connectivity? We need to promote the advantages we have in our area and not highlight shortcomings that don’t exist.

Update on RS Fiber Financial Situation – shortfall notification

The Arlington Enterprise reports…

The RS Fiber Cooperative is facing a projected financial shortfall. Based on information recently provided by the RS Fiber Cooperative, a shortfall is projected within the next two years which will impact loan payments for the 2015 A General Obligation Tax Abatement Bonds issued to fund an economic development loan to the RS Fiber Cooperative.

“Our duty is to report the estimated shortfall for the next two years so that member cities can implement tax levies to fulfill their obligation to replenish any shortfalls in debt service payments,” Shannon Sweeney of David Drown Associates, Inc., said in a letter to the nine cities.

Here are the numbers…

The projected shortfall will be $298,964.25 on Feb. 1, 2019; $156,066.25 on Aug. 1, 2019; $446,066.25 on Feb. 1, 2020; and $152,542.75 on Aug. 1, 2020. Overall, the projected two year shortfall will total $1,073,639.50. The member cities include Green Isle, Gaylord, New Auburn, Fairfax, Gibbon, Winthrop, Lafayette, Stewart and Brownton.

Green Isle has already discussed the issue…

The Green Isle City Council discussed the projected financial shortfall at its regular meeting on Tuesday night, Aug. 14. Green Isle will be asked to replenish $18,356.40 on Feb. 1, 2019; $9,582.47 on Aug. 1, 2019; $27,388.47 on Feb. 1, 2020; and $9,366.12 on Aug. 1, 2020. The total will be $64,693.46. The consensus of the Green Isle City Council is that the RS Fiber Cooperative needs to be much more transparent with the member cities.

BroadbandUSA Webinar, Nov 15: Electric Co-ops bringing Fiber to Rural America

Another good webinar coming up…

BroadbandUSA Practical Broadband Conversations Webinar Series

Topic: Practical Broadband Conversations: Electric Co-ops Bringing Fiber to Rural America

 

Date: Wednesday, November 15 from 2:00-3:00 p.m. EDT

 

Overview: Electric cooperatives are capitalizing on existing infrastructure and deep community roots to bring gigabit communications to rural communities, and the results can be transformational. Just as rural electrification energized the country in the early 20th century, high capacity broadband connections are necessary for thriving communities in the 21st century. Join BroadbandUSA’s Practical Broadband Conversations webinar to learn how member-based co-ops are making the case for investment and creating new opportunities for economic prosperity.

 

Speakers:

Brett Kilbourne, Vice President Policy and General Counsel, Utilities Technology Council

Randy Klindt, Founder, Conexon; General Manager, OzarksGo

Paul Belk, President, North Georgia Network

 

Please pre-register for the webinar. After registering, you will receive a confirmation email with instructions on joining the webinar.

Case study of Cook County MN – building a case, building partnerships, building broadband

CoBank recently published a helpful (and inspiring!) report on Making the Move to Broadband: Rural Electric Co-ops Detail Their Experience. The whole report is worth a read if you’re looking at tackling rural broadband and even you’re not an electric cooperative. One of the communities they highlight is Cook County and old ARRA project deployed by Arrowhead Electric Cooperative.

A little bit of background on the project. IN 2009, Cook County was listed as least served counties in Minnesota; last I looked they had 94 percent coverage for speeds of 25/3 and 100/20. ARRA Funding is the impetus for the jump. (Although they were also part of Blandin’s MIRC program, which certainly helped boost use of the network.)

The case study is in the form of an interview – Jenny Kartes from Arrowhead talking to Mark Doyle from CoBank. I am just going to pull out the section (pg 43-44) that I think will have the most value for the greatest number of reader – so folks with and without a relationship to a cooperative – although I have to say the ethos for the cooperative certainly seems like a good fit for getting rural broadband done…

MD: Did you partner with anyone?

JK: We did. At the beginning of our project, we had a number of options as to how we were going to do this. Were we going to be the retail provider or the wholesale provider? We found quickly that there is a large learning curve especially related to phone and the assets you need for providing phone service. We wanted a partner with our same values and good industry knowledge. We found Consolidated Telecommunications Company (CTC) out of Brainerd, Minnesota, which as a cooperative really had our same values and has been doing this for a very long time. They were a good fit for us, and they were very excited to work with us as well. It was a good partnership as a small entity. There was a lot more on the front end than we had originally realized. We did indeed need that partnership and rely heavily on it.

MD: How are you funding the project?

JK: We funded this project through the American Recovery and Reinvestment Act, the broadband initiative program. It was funded through a $16.1 million federal grant and loan: $11.3 million in grant and $4.8 million in federal loan. After our application, we realized that due to our terrain and the seasonality of our customers, it was going to cost a bit more than that. We then went to our county, and they

provided $4 million more in grant funds to us. It was a $20 million project in total, roughly 75 percent grant funded.

MD: Did you collect contributions in aid to construction from your subscribers?

JK: On the initial rollout of our project we did not. We had a window of a few years, as we were rolling out our construction, when we allowed people to essentially sign up for free construction to the home. It did not require them to take service. Once that window closed, and if you did not sign up within that window, then we do require 100 percent aid to construction from the subscriber. Since our subscribers are not necessarily members of our cooperative, we do require them to fund that construction.

MD: Was the project on time and on budget?

JK: Based on our original projections, it was not. As I mentioned earlier, our original budget was significantly short and we required an additional $4 million to complete the project. We then reworked our budget a few times, and we did stay very close to our second budget that included the additional $4 million.

 

However, that did create a timing issue as far as securing the additional funds to complete the project. The project was initially to be done at the end of 2013, and we finalized the project in 2015. Construction delays were mainly due to the terrain. We have a lot of rock, and construction is slow going in our service area. Additionally, the very short construction season in northern Minnesota

slowed us down.

MD: Did you encounter any surprises or challenges along the way?

JK: Yes. I could talk for quite a while on that. Having detailed maps and accurate plant records would have saved us a lot of frustration and a lot of time as the project began. We also did not realize the importance of on-site engineering, on-site contractor management and constant quality assurance throughout the project, at every point. We ended the project with those elements in place. We also ended up changing some of our contractors/vendors mid-project. Many of our contract crews were a bit surprised by our service territory and the time it took to complete work, never doing work up here before.

MD: What is your long-term measurement for the success of this project?

JK: The long-term measurement for success, being that our goal was to just get our community connected, is that the broadband project and division can be financially self-sustaining. We do not want the project to have any risk for our electric members. We’re not looking to make large profits off of it. If it can stand on its own financially, and provide good customer service and good broadband service to our community, we will call it a success.

Mark Erickson (RS Fiber) on the NPR Rural Life on how fiber retains youth (or calls them back)

The Call In: Rural Life is a NPR show based on phone calls from folks in rural areas. The host mentioned that challenges that come up on a regular basis include: broadband, healthcare and education. Last weekend they spoke to a retired teacher to Minnesota’s own Mark Erickson from RS Fiber.

The teacher spoke about the difficulty of keeping students in a rural area once they graduate. Mark chimed in with Renville and Sibley Counties’ use of fiber to encourage students to stay. He offers an explanation of how or why people in the area can afford to invest in broadband…

ERICKSON: We formed a cooperative, and the subscribers to our network are the owners. So let me give you an example. To build a fiber-optic network and connect people in towns, the cost per home or per business is about $2,500. To build that network and connect the farms, it’s about $10,000, about the cost of a used pickup.

Now, the people in this area felt that those kinds of per home, per farm investments are OK because what the Internet can do for education and health care is amazing. We just feel it’s an investment that the phone companies and cable companies are unable to make. So the folks in this very conservative part of Minnesota decided that they wanted to put their tax dollars on the line and enable this network.

And he mentions the reward of investment…

ERICKSON: Well, it helps the present businesses. We’ve had several here say that hooking up to the fiber network has increased their ability to do business greatly. But we also saw this as something for the future, like you allude to. We expect our children to leave our communities when they graduate from high school and go to college and learn about life. But they have to have a reason to return. And the millennials today, and those who follow, will find it difficult to come back to a community that doesn’t offer the kind of Internet connection that they want. What we have our fingers crossed for, and it looks pretty good, we believe we’ve attracted a four-year medical school to our area, which will change the face of our communities in a very positive way for a long, long time, if it happens. And that was a direct result of the fiber network.

Rural broadband is like rural electrification? Then a little Minnesota REA history is helpful!

Yesterday MinnPost ran an interesting article on the history of rural electrification – Power to the farmer: Minnesota and the Rural Electrification Administration. I had a nickel for every time someone compared rural broadband to electrification I could pay for half of the deployment we need – but this article was different in that there’s no mention of broadband. It’s just the history of electrification, which make the similarities jump out.

The article is fun to read – so I’ll just pull out a few of the paragraphs that caught my eye.

Minnesota was first – and it wasn’t cheap..

Before the REA, there were pockets of rural electric service around Minnesota. In 1914, farmers in Yellow Medicine County formed the Stony Run Light and Power Company, one of the first electric cooperatives in the country. By December of that year, twenty-six farms had power obtained from the Granite Falls central power station. Farmers on the line paid for all equipment, including poles, line, transformers, and meters, at a per-farm cost of $400 to $750. By 1921 the number of farms on the line grew to fifty. Annual fees ranged from $30 to $75, depending on power usage.

The costs were too high and benefits too low for commercial providers to take on rural areas so cooperatives stepped up…

Commercial power companies showed reluctance to pursue rural customers due to the high cost of building power lines. They believed that rural electrification would not be profitable. Farms with central station service paid a high price for electricity. Average rates ranged from ten cents to fifteen cents, per kilowatt hour for lighting, and ten cents for farm power service, beyond the reach of many farm families in the Great Depression. As a result, less than 11 percent of American farms had electric service in 1935 compared with 90 percent of city residents. …

The lack of support from commercial power companies prompted groups of farmers to work together to organize electric cooperatives. Each co-op’s board of directors drew up articles of incorporation and bylaws and registered with the State of Minnesota. The REA encouraged the inclusion of women directors, but only Beltrami Electric Cooperative in Bemidji and Wild Rice Electric Cooperative in Mahnomen had female members on their original boards.

Minnesota was first REA coop too – but even with a first in the state they needed to prove the case to others…

On September 13, 1935, the Meeker Cooperative Light and Power Association (MCLPA) became the first REA co-op organized in Minnesota. Nearly seven hundred farmers signed up at five dollars per share within twenty-seven days of incorporation. The following February the co-op received a $450,000 loan, and by November 28 of that year it powered up the first REA lines in the state. Taking a cue from an electrified farm project set up in the eastern United States, the MCLPA went on to establish a demonstration farm on the property of Charles Ness. Appliance and farm equipment manufacturers furnished sixty-seven pieces of equipment for the purpose of sharing the benefits of electricity with local farmers. The Ness family hosted 2,000 people at the farm during its grand opening on June 12, 1937. Within two years, more than 34,000 people had visited the farm from around the United States and abroad.

Electricity improved quality of life…

Rural electrification has had a huge impact on Minnesota’s farm economy and the rural standard of living. Electricity found many uses on farms that helped to increase productivity, raise farm income, and boost the local economy. Electric motors drove milking machines, making it easier for farmers to manage larger herds and increase milk production. Motor-powered pumps enabled irrigation, which helped to increase crop yields and encouraged crop diversification. Electric lighting improved poultry operations by contributing to a significant increase in egg production. Better illumination on the farm helped to prevent accidents.

Farm families enjoyed more leisure time and physical comfort. Electric lighting made it possible to read, sew, and do other activities at night. Brighter light helped to prevent eyestrain and had a positive effect on residents’ mental health. Indoor plumbing with hot and cold running water saved time spent hauling water from a hand pump and eliminated cold, dark trips to an outhouse. Electric ranges meant less time spent chopping wood. Electric refrigeration ended the need for cutting and hauling ice and provided safer food storage. Clothes washers and electric irons made laundry day less labor-intensive. Electric radios and telephones connected once-isolated farm families with the wider world.