Maine Community Moves Internet Project Forward with Incremental Financing

Maine Community Moves Internet Project Forward with Incremental Financing

Date: 12 Jul 2018 | posted in: MuniNetworks | 0 Facebooktwitterredditmail

The City of Sanford, Maine, is putting the final pieces of funding in place to move forward with its ambitious 45-mile fiber optic build, SandfordNet, the largest fiber infrastructure build proposed in Maine to date.

Along with two other funding sources, the project will be financed by an existing Tax Increment Financing (TIF) district in downtown Sanford. According to the Journal Tribune, the project will cost $2.02 million in total to complete; that figure is higher than initially projected, due in part to fees to access utility poles.

The SanfordNet project involves building what the city describes as a “fourth redundant ring” that will attach to the statewide fiber loop known as the “Three Ring Binder.” Sanford’s building out the 45 miles of fiber and then connecting it to the Binder, which is about nine miles beyond city limits. The fiber will connect nearly 90 Community Anchor Institutions (CAIs), such as libraries and hospitals, to the infrastructure that will offer 10 Gigabit per second symmetrical upload and download capacity. The city is utilizing an open access model, leasing out its fiber to ISPs in a non-discriminatory approach that promotes competition.

GWI of Biddeford, Maine, will operate the network for Sanford and intends to offer Fiber-to-the-Home (FTTH) to residential premises along the fiber route in areas where there’s sufficient demand. The open access model will create the opportunity for competition, creating better rates and better services for Mainers in the region. For more on what has become known as the “Maine Model,” check out Christopher’s conversation with GWI’s CEO Fletcher Kittredge, episode 214 of the Community Broadband Bits podcast.

Where the Project Stands

logo-SanfordNet.pngThe last time we caught up with this multi-year planning process was early this past spring, when Sanford submitted requests for proposed bids from contractors to handle the fiber build. The city awarded the contract to Eustis Cable Enterprises Ltd. of Brookfield, Vermont to the tune of $1.38 million. Now that funding has been shored up, construction should start before the end of July.

In the past few years, the city secured a little more than $1.6 million in funding for the fiber effort. Around $800,000 of that came from the recent sale of the lot site of a decommissioned schoolhouse to Cumberland Farms, a chain of convenience stores and gas stations operating in the East Coast. A federal grant from the Economic Development Administration covered an additional $770,000.

TIF to Fill in the Fee Gap

One of the reasons the build is costing the city more than it initially estimated three years ago, is due to the price of “make ready” fees to the local utility company. The term “make ready” describes the process of preparing utility poles for more wiring, in this case the SanfordNet Fiber, to be placed on the poles. The same Journal Tribune article reported that these fees could be as high as $487,000. We’ve explained previously how “make ready” fees can be lofty, and the process complicated, often unnecessarily so due to inefficiencies and incumbent ISPs slowing down the process to stall or prevent competition.

The higher make ready fees, along with equipment and technology price increases, left a gap in funding. That gap led city officials to tap into an established model for funding municipal ventures, but a less traditional model for funding municipal broadband projects: Tax increment financing (TIF). TIF financing utilizes the gains in property tax value to pay back debts from borrowing up front for project costs. The basic premise is that a project involving a certain region or neighborhood within a locality (known commonly as a “TIF district”) will bring value to that region and thus increase each individual premises’ property taxes.

Other municipalities have started harnessing this funding model to pay for fiber build outs, including another Rockport, Maine, where the state’s first municipal network received significant fanfare back in 2014. Wabash County, Indiana, also used TIF, as Indiana seems to be a state where local communities have caught on to TIF for broadband infrastructure. In Wabasha, the county created a new TIF district, though in the case of Sanford it appears the city will draw on an existing downtown TIF district created more than a decade ago.

Photo of Downtown Sanford by Mitch Michaud courtesy Sanford Regional Economic Growth Council.

This article was originally published on ILSR’s MuniNetworks.org. Read the original here.

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Hannah Rank
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Hannah Rank

Hannah Rank was a Public Policy Research Intern for the Community Broadband Networks initiative. She is currently pursuing her Master’s in Public Policy at the University of Minnesota. Her research interests include local economic and social development and wealth equity, as well as local government sustainability work. Hannah enjoys hiking and biking around Minnesota’s countless parks and wilderness areas. She was born and raised in the Twin Cities.