The Medina County Fiber Network will need a loan from Medina County and its three cities and two of its villages to ensure the network can meet its debt obligations.
The fiber network opened for business in 2012 with $14.4 million in bonds issued in December 2010 by the Medina County Port Authority.
The network is a 151-mile, 144-strand fiber optic loop that runs throughout the county connecting businesses and local governments with high-speed Internet service.
The cities of Wadsworth, Medina and Brunswick and the villages of Seville and Westfield Center agreed to back the bonds, along with Medina County and Cascade Capital Corp.
Under that agreement, the municipalities agreed to make payments to the county, which then loan money to the network to maintain at least $1.2 million in a reserve fund — enough for a year’s worth of payments on the bonds.
The Port Authority makes two payments each year. The next payment of $599,359 is due June 1.
David Corrado, CEO of the Medina County Fiber Network, said the Port Authority has the money to cover the June payment but that will deplete the reserves below the minimum $1.2 million, triggering the need for a loan.
Corrado said he is working to determine how large a loan will be needed.
“We still have revenues coming in at this time, so we don’t know the exact amount,” he said. “We will make a calculation in May on what funds we will take out of our revenue account and what the cities will have to make payments on.”
County Administrator Chris Jakab confirmed, “There are contractual obligations in place for the county, cities and villages to guarantee that debt.”
Medina Mayor Dennis Hanwell said he learned Tuesday that the Port Authority would need more money.
Hanwell said city officials knew they might have to make some loans to help support the network in the early stages but added, “It’s our hope and desire that they continue to market the fiber network to make it self-sustaining.”
Hanwell said City Council must approve any money the city is required to provide.
In Wadsworth, City Service Director Chris Easton said Council members would have to pass legislation and appropriate money to pay for their share.
He said their contract obligates them to pay 5 percent of the loan amount — a percentage is based on the use of the network in the Wadsworth area.
“We’re a customer of the network and we’re hoping for success,” he said. “We understand there may have to be some short-term support.”
Corrado said one reason for the slow initial growth of the network was the decision to negotiate with utility providers to share utility poles. That delayed construction, but resulted in a $2 million savings for the project.
“They could have progressed with construction and gotten people on board quicker, but this saved money and made the loop a more stable operational expense,” he said.
Corrado, who was hired as CEO last year, said monthly sales to new clients have tripled since he came on board. He said he hoped sales would continue to rise so the network won’t have to borrow more money.
“I’ve put together a very aggressive marketing campaign,” he said.
Contact reporter Loren Genson at (330) 721-4063 or firstname.lastname@example.org.