April 19, 2014

Medina
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Fiber optic network gets $1.6M grant for high-bandwidth connection to Medina businesses

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.

Stimulus money

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.

Collaboration

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.

Bonds

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 mkacik@medina-gazette.com.