PUD drops federal loan application for fiber

Commissioner cites extra costs associated with $60 million RUS loan

Grant PUD commissioners yesterday voted to give up pursuit of a federal Rural Utility Services (RUS) loan for $60 million and will instead look to other funding sources to keep the Zipp fiber network going.

Fiber supporters had touted the RUS loan as a means to speed up the buildup of a network that had slowed to a crawl, but Commission President Tom Flint said the loan came with too many strings attached.

He cited a $100,000 environmental review required by the U.S. Department of Agriculture and said that money could be used to extend fiber to more homes and businesses in the county.

Commissioner Mike Conley agreed.

"There's got to be a more cost effective way to do this," Conley said.

Conley, who is running for re-election this year, had included his support for the RUS in his campaign announcement in April. Flint, who is also seeking another term this year, has also supported the RUS loan to help the PUD build out fiber more quickly to the rest of the county.

Flint added at the meeting that the commission's action was not a rejection of fiber buildout, and the PUD would continue to seek other means to finance the system.

That statement relieved Grant County resident Joseph Carter, who attended yesterday's meeting to question the commission's decision. Carter said when he attended a community meeting last spring about the fiber program, about 90 percent of the people there supported a faster buildout of the system.

"I just wanted to make sure that this (the dropping of the RUS loan) doesn't kill it," Carter said.

The PUD first applied for the RUS loan in spring 2003. Since then, the district has been working on a solid business plan to include with the application.

The Department of Agriculture recently accepted the PUD's application, which PUD officials touted as a positive step toward finishing the process.

Telecommunications Director Larry Jones said in an interview after the meeting that the PUD spent $80,000 on a contract to prepare the RUS loan, as well as three man months worth of staff time.

Melinda Barnes, PUD accounting and finance director, gave commissioners three other options to obtain loans:

The PUD's electric R&C fund could invest bonds in the fiber system. Barnes said the PUD projects about $20 million will be available at the conclusion of 2004.

The PUD could issue tax-exempt revenue bonds. This move would require the electric and telecommunications systems would be required to become one for financing purposes.

The PUD could apply for a loan from CoBank, an $111 billion nationwide network of lending institutions. These federally charted banks provide quasi-governmental loans, which provide similar benefits as RUS.

In a news release, Flint said commissioners would accept public input before deciding how to fund further buildout of the fiber system.