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Latest consultant says Charles City fiber broadband system still possible

By Bob Steenson, bsteenson@charlescitypress.com

Another technology consultant that has been signed to work with the Charles City Telecommunications Utility to help establish a city broadband network says it is still possible the city could build and run a system by itself.

Dave Fridley, a partner in FARR Technologies of Sioux Falls, said recent efforts by the utility board of trustees to seek a partner in a community system could still work if the right partner is found, “but I wouldn’t lock that in stone.”

“I wouldn’t rule out that you could do it,” he said. “You’re going to do it in phases, it looks like to me, and then you’re going to hit targets, and once we get a certain amount of (customers) to alleviate banker concerns then they’ll allow more money to be borrowed back to build it all.”

FARR Technologies, which helped establish the New Hampton fiber-to-the-premises broadband system and many others, is now the third consulting firm that has agreed to work with the Charles City utility board of trustees while putting its fees on a contingency basis.

Todd Kielkopf of Kielkopf Advisory Services of Des Moines and Curtis Dean of SmartSource Consulting of Grimes had previously agreed to continue working with Charles City after efforts to finance a broadband system last fall were unsuccessful.

City Attorney Brad Sloter explained FARR’s agreement, which is similar to the agreements with Kielkopf and SmartSource.

“We have drafted that agreement in a manner that if, for whatever reason, the board is not able to obtain financing or funds that it feels is suitable for a project, there would not be funds available to pay FARR and there would not be any financial obligation owing to FARR,” Sloter said.

Fridley said FARR would take a look at the business plan and the budgets that had been developed already and see if its numbers agree.

“It could be — it’s happened before — where I come back to you and say we can’t do it,” Fridley said.

He said he has had to turn down projects because the numbers showed they couldn’t be done, but in the Charles City case he thinks a broadband fiber system is still feasible.

Fridley said he would develop a budget that would account for all the money that has been spent so far and what it will cost to get a network and services up and running, including inputs from possible third parties and options of what the city can contribute.

“What I’m trying to do is manage the whole shooting match so we all know where we’re at,” he said.

Fridley said he had already seen some of the previous work that had been done on the project, but now, after the agreement with FARR was approved at the utility board meeting Tuesday afternoon, he would dig in deeper, and especially meet with Michael Maloney, with D.A. Davidson & Co. of Des Moines, who has been working on the financing end.

“We need to sit down with Mr. Maloney and say, ‘Where are we at with what the banks will do? What’s our budget, including what you’ve got into it or anything like that?’ So we’ve got a total budget, then we build to that,” Fridley said.

“Once we decide if a third party’s coming in or not, and Michael decides, here’s what I can realistically get bonded, plus what you guys have put in, then we go from there. That’s when we really establish, here’s our budget, and that starts telling me initially what we can do,” he said.

“For example, how much you can build if you do a phased project? Can we do it in two years, can we do it in three years? How do we get customers on to start revenue?” he asked.

At the last several utility board meetings the focus had been on finding a partner, after Kielkopf and Dean presented that as the most likely way to be able to afford a fiber-to-the-premises system.

Partnership proposals were received from several companies, and the board had planned to hear more in-depth presentations from three of them — a partnership between CL Tel of Clear Lake and Premier Communications of Sioux Center; Omni-Tel of Nora Springs; and Router12 of Mason City.

Those presentations had been scheduled to take place at meetings earlier this month, but those meetings were canceled.

The community’s current largest internet supplier, Mediacom, also made a proposal, to upgrade the community to all fiber optic connections in return for the city giving it $2 million to $2½ million through a variety of possible incentives.

Mayor Dean Andrews, who was attending the board of trustees’ online Zoom meeting Tuesday afternoon, said he thought it had already been decided last fall when the first attempts at funding failed that the city couldn’t do the project alone.

“I thought we’ve already proven, unless this comes in significantly less, that we can’t do it by ourselves because we can’t get the money to do it. We can’t fund it,” Andrews said. “Aren’t we to the point where we’re almost certainly looking at another partner to make this happen?”

“Not necessarily,” Fridley said, repeating that even if the city finds an appropriate partner the system will likely need to be built in phases.

“Now a third-party guy could come in there and hit a home run for us, too. That’s why I’d say, leave it on the table,” Fridley said. “But you could do it yourself. It’s just how you attack it. And that’s really the way I’ll get the budget set up is we can do either-or, and here’s what our limitations and possibilities are.”

Fridley said he would be able to have some answers by the utility board’s next regular meeting, which will be Tuesday, May 11.

Also at the meeting Tuesday, the board of trustees tentatively agreed to ask the City Council to extend the due date on a previously established $1.2 million line of credit for another year.

City Administrator Steve Diers said, “The initial loan that the city set up, for a million, that was amended to a million-two, we put a due date on that of March of 2021. We haven’t gotten financed yet. March has come and now gone, and so need to look at officially extending that note.”

He said the extension was discussed at a recent City Council workshop meeting, “and there was really not much discussion or really any objection to that. They’re willing and waiting for the project to come along.”

Most of the $1.2 million has already been spent, on purchasing a building for the location of the broadband system’s offices and data center; for consulting fees for feasibility studies, business plan development and design work for various parts of the proposed system; and other expenses.

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