Swift County approves bond for broadband internet
BENSON -- The sale of $7.8 million in general obligation bonds Tuesday was the final step needed to launch a $12.5 million project to bring high-speed broadband internet service to 1,100 homes and businesses in the eastern portion of Swift County...
BENSON - The sale of $7.8 million in general obligation bonds Tuesday was the final step needed to launch a $12.5 million project to bring high-speed broadband internet service to 1,100 homes and businesses in the eastern portion of Swift County.
“Huge,” said County Administrator Mike Pogge-Weaver of the board’s action to sell the bonds. “It’s a great day.”
Buoyed by a recent upgrade in their bond rating by Standard & Poor’s Rating Services, the county sold the bonds at an interest rate of 3.13 - well below the anticipated rate of 3.5 percent, said Chris Eng, from Northland Securities.
There had been “turbulence” in the market last month that had caused some government bond rates to increase, Pogge-Weaver said. The timing of the Swift County bonds was “perfect,” he said.
The money will be loaned to the Federated Telephone Cooperative, based in Chokio, to provide up-front construction money. A $4.9 million “border to
border” state grant will pay for the rest.
Federated will repay the loan to the county over the next 20 years.
The cooperative has provided a $1 million cash security in case any payments are missed.
While supportive of efforts to expand broadband internet to underserved residents in the county, Commissioner Edward Peterson, of Benson, was uneasy about the financial risk the county was taking by fronting a $7.8 million loan that he said would benefit about 20 percent of the county’s population.
“I didn’t sleep the best last night,” Peterson said.
He said when the Benson School District sells general obligation bonds, they have to get approval of thousands of voters but approval of this bond “is simply decided by the majority of the commissioners here.”
Peterson also said Lac qui Parle and Big Stone counties, where similar internet projects are underway, are carrying less financial risk than Swift County is.
Based on the assumption that Federated will pay back the loan, the actual cost to the county for the project is $67,000, which includes costs associated with selling the bonds and preparing legal documents, Pogge-Weaver said. That cost was initially estimated at $47,000 but was adjusted upward last month because of additional document preparation.
County Board Chairman Pete Peterson said there’s always risk when making decisions, especially ones that cost money, but said he hoped the county’s actions will “leave something behind for the next generation.”
Commissioner Eric Rudningen, of Kerkhoven, said the county does need to be “very careful when we’re borrowing other people’s money,” but that he’s optimistic the new broadband service will result in new business growth.
“It will be great to be able to look at my constituents and know that we provided the opportunity to be competitive in the world,” said Rudningen, who said his district would be the primary beneficiaries of the expanded internet service.
Kevin Beyer, general manager of Federated Telephone Cooperative and Farmers Mutual Telephone Company, said in an interview that without the financial partnership of counties, which can provide low-interest-rate loans by issuing bonds, it would be difficult for a telephone company to make this kind of investment in sparsely populated rural areas.
The installation in Lac qui Parle County, which was done by Farmers Mutual Telephone Company and funded with a federal grant and did not involve a county bond, is done. Beyer said installation of 400 miles of fiber-optic cable began last year in Big Stone County.
The Big Stone project, which is being done by Federated Telephone Cooperative and also included a state grant and county bond similar to in Swift County, will resume this spring, and once crews reach the border, work will begin in Swift County, Beyer said.
Depending on the weather, work in both Big Stone and Swift counties is expected to be completed this year, he said. That will bring the company’s fiber lines to the Kandiyohi County border, which is also talking with Federated about expanding services there.
Kandiyohi County is conducting surveys to determine the type of internet service county residents currently have and what they may need. The study is also expected to be a tool for providers to analyze the feasibility of bringing service to those underserved areas.
Beyer said it could cost $60 million to $80 million dollars to bring fiber cable to Kandiyohi County’s underserved residents. Because state grants are limited to $10 million, he said a project in Kandiyohi County would likely have to be done over a six- or seven-year timeframe.
Beyer said he needs time to get customers online in Big Stone and Swift counties to ensure there’s a positive cash flow before taking on another project in Kandiyohi County right now. He said the sign-up in Big Stone County is already over 50 percent, which exceeds budget expectations.