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Charles City fiber optic broadband still working on financing

By Bob Steenson,

In some possible schedules from as little as two months ago, it was expected that financing would be in place and construction beginning this week on Charles City’s proposed fiber optics broadband network.

Neither of those has happened yet, although members of the city’s telecommunications utility board of trustees and its consultants are hopeful that at least the financing can be put in place within a couple of weeks.

Charles City fiber optic broadband still working on financing
This is likely the logo for the Charles City Fiber service that will offer high speed fiber optic internet, television and telephone service. Artwork provided

A general manager to run Charles City Fiber had also been expected to be hired already and starting work by the middle of this month, but that decision — as with almost all the steps at this point of the process — depends on getting the financing in place, explained City Administrator Steve Diers.

This is the first time a city in Iowa has tried to form its own broadband system without also having some other sort of municipal utility such as an electric utility to back it, Diers said.

“Figuring out how all those pieces fit together is taking a little bit longer because it’s the first time it’s being done,” he said.

Talking to the Press after a telecommunications board meeting Tuesday afternoon, Diers said some initial thoughts on long-term “financing avenues” have turned out “maybe not going to be as good a fit.”

“There’s other avenues, other banks, that are willing to step forward and do the financing, so now we’re focusing in on those pieces, and within the next couple of weeks here we hope to have all that tied up, so by July 21 we’re taking action to approve finances,” he said.

Last month the telecommunications board approved issuing “up to” $22 million in revenue bonds to finance the system.

Diers said there has been no change from the plan to finance the entire fiber-to-the-premises broadband system with revenue bonds, to be paid back with revenue generated by the sales of services.

He said none of the potential lenders has requested something additional, such as backing by general obligation (GO) bonds that would put property tax revenue on the line.

“Nobody has come back and asked for any type of city GO committment,” Diers said.

The utility board spent much of Tuesday’s meeting closed to the public, so it could discuss pricing and finances, then again so it could discuss hiring a general manager.

Sessions closed to the public have become common for the board, taking place in eight out of the last 10 meetings to discuss rates, finances, hiring a general manager or sometimes more than one of those at the same meeting.

Any official action taken on any of those topics legally has to be done in open session.

Last month the board narrowed the general manager candidates to two finalists and conducted interviews with them in closed session, at the candidate’s request, which is allowed under the Iowa Open Meetings Law.

Diers said Tuesday the board has not moved beyond those two candidates, but it wants to make sure the financing is in place before offering anyone a contract.

Hiring a general manager, approving the contract for the construction of the fiber optic network throughout the city limits, making decisions on renovations of the building purchased for a data center — “all that stuff hinges on financing,” Diers said.

“Once we know we have money to do all these things we can take steps to move forward. I think we’re putting ourselves in a good position to be able to act quickly on all those fronts,” he said.

Board member Jeff Marty said after the meeting, “I just echo what Steve said. The next six to eight months are really going to be a whirlwind of activity. Once we get the financing piece in place it’s just going to be gangbusters.”

Board member Danny Wilson Jr. said, “People should finally see things happen. They won’t be wondering, they’ll be seeing physical evidence of change and things building and crews going around town. This will hopefully be where rubber meets the road and we get going, or, I should say, fiber meets the road.”

Diers said it’s likely the financing has delayed service startup a month or so, with initial testing and service offering possible in late spring or early summer 2021, but a lot of that will depend on how much construction work can get done through the winter.

Also at Tuesday’s meeting:

• Diers reported that talks he is having with MidAmerican Energy are looking promising to work together on laying fiber optic cable between Charles City and Mason City as part of the loop the city would need to supply broadband service.

MidAmerican is also looking at installing a fiber optic line between Charles City and Mason City, likely in 2021, and by sharing the cost of digging and boring and then each probably putting in their own conduit and fiber, both the city and MidAmerican could save potentially hundreds of thousands of dollars, Diers said.

The other side of the loop would go east to New Hampton, and Charles City and New Hampton are probably also sharing that cost, each paying for the part of the line that goes through their county.

• Board member Wilson said he has talked to more members of the community about potential pricing that was announced last month for the broadband, television and telephone services that will be offered.

“They all had pricing concerns,” he said. “All I told them was, yes, we were going to come back on pricing and look at things. I just said, we know, we’ve heard complaints.”

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