MEDINA — The $13.8 million Medina County fiber optic network moved closer to reality following several developments this week, including a $1.6 million stimulus grant for the project.
The project involves building a 151-mile, 144-strand fiber loop throughout the county that would provide high-bandwidth connections for businesses and local governments.
The Medina County Port Authority would own the loop, but private businesses and public entities like schools and libraries would lease access to it.
The loop has a “neutral platform,” which means private broadband companies also would be able to lease bandwidth.
In addition to the stimulus grant, the Port Authority approved a loop partnership with the Medina County Economic Development Corp. and documents that will allow the authority to borrow money for the project.
The $1.6 million from the American Recovery and Reinvestment Act will be distributed through the U.S. Department of Commerce. It’s part of $44.8 million that Cleveland nonprofit OneCommunity is receiving to install 1,000 miles of fiber-optic cable throughout 27 Ohio counties.
The Port Authority contracted with OneCommunity in 2008 to build the $13.8 million fiber loop. It’s also in talks to contract with the nonprofit to operate the broadband network once the loop’s constructed.
Port Authority administrator Bethany Dentler said that once the grant is received, it will be used to pay off bonds the Port Authority is selling next month for construction purposes.
“The Port Authority has taken every possible opportunity to reduce expenses so we can bring a more efficient and cost-effective system to our potential users. It is gratifying to be able to bring our tax dollars back to Ohio,” Jim Gerspacher, chair of the Port Authority’s Fiber Network Committee, said in a statement Wednesday.
OneCommunity is part of the Ohio Middle Mile Consortium, a group of three service providers that created a statewide plan to expand broadband infrastructure to underserved areas.
U.S. Sen. Sherrod Brown, D-Ohio, wrote to the Commerce secretary to ask for funding for the consortium.
“Broadband expansion is critical to our economic development efforts in Northeast Ohio. These funds will enable the project to pass more than two million households and 210,000 businesses while creating nearly 400 jobs in Northeast Ohio,” Brown said in a statement.
On Tuesday, the Economic Development Corp. board voted to lease the part of the fiber project that will be used by private companies.
Dentler, who also serves as director of the nonprofit corporation, explained the deal arose because a private company needs to be involved in order for the Port Authority to receive low-interest Recovery Zone Facility Bonds.
“The reason for the lease … is the IRS. There are tax implications into accepting the Recovery Zone Bonds,” Dentler said. She said lawyers for the corporation and the Port Authority said the agreement between the two is legal. Earlier this year, county commissioners allocated $13.9 million in Recovery Zone Bonds for the project. About $8.7 million of those bonds were Recovery Zone Facility Bonds, which generally are given to private businesses for capital projects.
Although there will be private clients, Dentler explained it isn’t clear if there will be enough of them to satisfy the stipulations of the Recovery Zone Facility Bonds, and that is why the Port Authority is entering into a lease agreement with the Economic Development Corp. to rent some of the fiber strands. The Port Authority is a county organization established in 2003. It is run by a nine-member board appointed by county commissioners. Dentler said the board can use “flexible economic development tools” like issuing bonds to businesses for capital projects.
The Economic Development Corp. is a private nonprofit established in 1988. It’s funded primarily by membership dues. Members include private businesses and public entities such as the board of county commissioners. The corporation markets the county for economic development purposes, helps businesses expand and assists with other development issues.
Per the lease agreement, the corporation will pay the Port Authority “rent” every month that will cover operational costs, insurance and loan payments. That money will come from payments from the loop’s private customers. Dentler said if there aren’t enough private customers at first, the Port Authority will provide a loan to the Economic Development Corp.
“All of it is Port Authority revenue and expenses,” Dentler said. The Economic Development Corp. is “just acting as a middleman for tax purposes.”
“Your exposure as an organization is limited to whatever revenues you bring in as an organization. It doesn’t reach any further into your pocketbook,” said Medina lawyer and former county commissioner Ralph A. Berry Jr.
The agreement also states the Economic Development Corp. will get 5 percent of any net profits received from the fiber project.
Dentler said projections estimate $25 million in net revenue over 15 years, which would mean the Economic Development Corp. could receive $1.25 million. She said that money would go toward funding the nonprofit’s operations.
“Truly, the purpose of the fiber project is being met because all of those revenues are being used for economic development efforts in the county, so we can continue to growour tax base and business base,” she said.
She said the corporation started the ball rolling for the fiber project around 10 years ago.
“We wanted to capture some of the rewards for the project,” she said.
The Port Authority approved several documents Tuesday that will allow it to move forward with selling Recovery Zone bonds. Dentler said money from bonds sold should be received by the end of September.
Construction on the fiber loop should start shortly thereafter and will take about 18 months to complete. However, clients should start to be able to connect to the loop as it’s constructed in their area.
Contact Maria Kacik Kula at (330) 721-4049 or email@example.com.