July 28, 2014

Medina
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Medina County, cities, villages to loan fiber network $524K

Medina County and some municipalities are going to have to loan a combined $524,000 come Nov. 1 to boost the Medina County Fiber Network’s cash reserve so it can meet its debt obligations.

The county, along with the cities of Brunswick, Medina and Wadsworth and villages of Seville and Westfield Center agreed to help support the network if funds ran low, and network officials said sluggish sales have negatively impacted reserves.

“These municipalities pledged to help with money if the network needed it during the first few years while it started to ramp up,” network CEO David Corrado said.

The network opened in 2012, providing 151 miles of 144-strand fiber optic lines connecting businesses and local governments with high-speed Internet service. The project was financed with $14.4 million in bonds issued by the Medina County Port Authority in 2010 over 20 years and more than $45 million in federal grants.

The network makes bond payments of about $600,000 every six months.

The network is required to maintain at least $1.2 million in reserves — enough to cover two bond payments — but after its most recent payment on June 1, the reserve fund fell to nearly half of what it’s required to be.

As a result, Corrado said the network is asking the government entities for a $524,000 loan. The amount each entity will owe is based on the percentage of fiber lines in their area.

County Administrator Chris Jakab said the county’s share is expected to be about $242,916. He said the payment would have to be approved by county commissioners in the same way they approve paying other bills.

Brunswick Finance Director Todd Fischer said he received an initial estimate of $75,720 from Jakab for Brunswick’s share of the loan, but said he’s also requested information from the fiber network. He said the city plans to make the payment as required, but officials deserve the chance to inspect the agency’s finances.

“We have a plan to pay for what’s requested, but we’re going to ask for documents to support it,” he said. “If the reserve is low, we want to see what it is that led to the fund being low.”

Fischer said he has requested receipts and payment activities since 2012, customer base information, cash flow and any grant proceeds that have been applied to the bonds.

Corrdao said he plans to present that information when he meets soon with Brunswick’s city manager.

“We’ll be sitting down to go over all of those things,” he said.

In Medina, Mayor Dennis Hanwell said he expects the cost to be between $66,000 and $87,000, but said he wasn’t sure what the final amount will be because he’s only been given verbal estimates.

“We’re not sure on the exact amount, but we’ve already shared it with Council that the payment is going to happen,” he said.

Wadsworth’s finance director works part time and was not available for comment Wednesday afternoon.

Loan payments from all the cities and villages will be due Nov. 1, a month before the fiber network must make its Dec. 1 payment.

Contact reporter Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com. Follow her on Twitter @lorengenson.