How does Mark feel about the expansion of high-speed connectivity to commercial services?
The expansion of high-speed connectivity services to every resident, property owner and business is a highly desirable goal. This type of expansion is supported, if appropriately pursued, by both the state and federal governments. Low interest loans and some "economic stimulus" grants are available to fund projects that meet certain demographic criteria, and can demonstrate serious financial need.
It is important to understand high-speed connectivity includes many options for service delivery. "Broadband" is a general term referring to the capacity of a given service to carry high volumes of any kind of digital information at very fast speeds. Many types of services are used today to provide "broadband" connectivity. They include satellite, wireless (cellular), "glass" fiber, coaxial and copper...all of which can be intermixed depending upon cost and intended useage.
Mark strongly supports the expansion of capable, appropriate and cost-effective county-wide high-speed availability for access to internet, telecommunication and public video services.
What are the issues with Lake County's Broadband Project as it is currently proposed?
The initial County-sponsored consultant-driven broadband proposal involved projected "startup" 5-year operating and capital expenses of approximately $46,962,939 to be sourced from stimulus grant monies and borrowed funds from the federal government. The payback of any borrowed funds was to be guaranteed by the county. In addition, the issuance of somewhere between $3.5 and $5.0 million in county-sourced revenue bonds, with “interest only” but no principle pay-down for the first 10 years, were proposed to obtain investor “front money” needed for start-up expenses not allowed to be paid by any federal funds. Total expense to Lake County over the consultant’s proposed 22-year plan for the first project, including interest, could have reached $70 million. Revenues were projected by the consultants (NPB-National Public Broadband) to exceed these expenses.
The initial Lake County project financing was rejected by the Federal Government, and subsequently re-submitted with an expanded geographic and financial scope, to include portions of St. Louis County. Based upon news media reports, the revised initial 5-year operating and capital expense budget projections could reach around $69,869,064 or so. Using the same assumptions as in the analysis of the initial proposal, if the newly requested loans and grants are approved, this means Lake County’s total expense exposure for the same 22-year plan could reach $107 million. Again, the consultants assured the county that revenues would exceed expenses.
NPB was removed by the county as the primary consulting organization, and replaced by a newly formed private non-profit company working in conjunction with Lake County. This non-profit is managed by a new consultant/leadership group.
It is important for county residents, property owners and businesses to understand they are the proposed revenue sources necessary for the financial success of the current project. None of the services offered will be free or subsidized. The consultants feel the services can be priced at a lower cost than current providers, but there is no evidence to suggest this will, in fact, be possible.
In the event the project does not achieve its revenue projections to offset costs and pay back the government loans, the original consultants insisted the county can just default on its loan obligations, and the federal government would not hold county taxpayers liable. The only federal action would be to foreclose on the project, take back the remaining assets, and sell the assets of the project for whatever the market would bear…more than likely, however, at a substantial loss and at pennies on the dollar. These assertions, on the behalf of the original consultants, NPB, were made in spite of the fact the federal government indicated they had the right to exercise several options to recover any defaulted monies from the county in the sponsorship application for the financing signed by the county board chairman. If the federal government held Lake County fully accountable for any inability to repay the loan monies, or utilize the grant funds appropriately, county residents could be held responsible for repayment of the loans through increased property taxes. It is important to understand the county’s credit ratings could also be negatively impacted by any loan defaults, and that could increase future borrowing costs for basic services like highway and building projects.
What are Mark Broin's feelings on the direction the Broadband Project should take?
Mark has an extensive technical background, and stands unconvinced this particular project, as it has been proposed, is in the best interests of the county, its residents or its businesses. There are already several options marketed by various providers, and a choice of service levels for broadband services available to county residents and businesses. It seems to Mark, the county should be more proactively involved in partnering with those current providers to obtain federal funding for improvements and expansion of existing infrastructure, and not risking tens of millions of taxpayer dollars duplicating large portions of that existing infrastructure.
Mark is also concerned about the rather cavalier attitude by some, that the potential for the county defaulting on tens of millions of dollars in taxpayer loans, "if things don't work out", is ethically nothing to worry about.
The county has expended a substantial amount of its own taxpayer dollars and spent a lot of time on the initial aspects of this current broadband proposal. It has now accrued liabilities of hundreds of thousands of dollars more, payable to the consultants, when funds are eventually made available. It is time to properly and realistically assess just who will come out ahead with this risky project, and whether the county would be better off pursuing funding for a more appropriate path to meet the public's broadband needs.
