Business/Economy, debt, Fort Collins, Sherrie Peif, TABOR, Taxes

Fort Collins voters to decide $150 million gamble in broadband industry

FORT COLLINS – In 2015, 83 percent of voters in Fort Collins agreed to opt out of a 2005 state law that banned municipalities from supplying internet to its residents. In 2017, that vote could cost this Northern Colorado community $150 million.

Voters will decide on Nov. 7 whether to allow Fort Collins officials to explore a fiber optic network that would get the city into the Internet business – an idea that not everyone is happy with.

Fort Collins resident Sarah Hunt says the initiative is a huge risk for residents.

“Fort Collins wants to enter the ultra-competitive, quickly evolving broadband industry,” she said. “They haven’t shown they will out-maneuver some of the world’s biggest tech companies for decades to come. If they fail, every resident, not just subscribers will have to pay $17 per month, or over $2,420 for the life of the loan.

Fort Collins is one of 57 communities statewide that have decided to opt-out of the state ban. Voters in nearby Greeley will also get that chance this November.

According to the City of Fort Collins website, a yes vote doesn’t commit the city to supply the service, but it allows it to start the process if the details can be worked out.

The goal is to provide 1-gigabit per second of both download and upload speeds. A yes vote on the issue would allow Fort Collins City Council to:

  • Add a new telecommunication/broadband service to the City’s electric utility or create a new telecommunication utility.
  • Issue securities and other debt not to exceed $150 million.
  • Establish governance structure including the ability to:
    • Go into executive sessions for matters relating to competition.
    • Establish and delegate council’s authority and power to a board and/or commission, except the power to issue debt.
    • Delegate the ability to set and/or change rates or fees to the City Manager.

The up to $150 million in bonds needed to create the infrastructure would be secured by the city’s electric utility revenues and paid back by subscribers.   If there aren’t enough subscribers to service the debt, it would be paid back by utility ratepayers.

Hunt says there are too many unanswered questions that should be answered before asking voters for $150 million including:

  • Will this be implemented like a true retain model or a public-private partnership?
  • How does it differ from the options consumers have today?
  • The estimated subscriber rate has dropped several times and is now at 30 percent, how do they get the 30 percent when other municipalities who have implemented a similar idea have not met their projections?
  • How does government with no expertise in the area expect to compete in the fast-changing technology field?
  • What is the oversight? How do we ensure transparency to the taxpayers who are ultimately paying for this service?

Just voting in favor of the issue won’t make it so, however. Fort Collins Mayor Pro Tem Gerry Horak told the Fort Collins Coloradoan in August, that it’s likely the city will have to spend a lot more time and money before they move forward. Voters might be asked again to determine the service and its business model.

Hunt said the additional spending and the unknowns are not worth the risk.

“The City’s “plan” thus far is vague,” Hunt said. “At their May 9 work session they identified the need to spend another $215,000+ on consultants to finish the business plan by year-end. This is after they’ve spent upwards of $300,000 on consulting. With an investment this hefty, you’d think we’d have a detailed plan.”

Hunt said 98 percent of the city’s residents already have access to broadband. She said there are much more pressing issues the city should be concentrating on, including a reduction in sales tax revenues and a proposed $2.3 million in cuts to street maintenance, public safety and parks for 2018.

Additionally, the city’s Climate Action Plan calls for 100 percent renewable energy from Fort Collins’ City-owned utility.

“Right now, we’re at a mere two percent solar,” she said. “Investing in new services, such as broadband, detracts from these unmet goals. Fort Collins has more important core city services that it should focus on, such as fixing our roads and bridges, providing affordable housing and increasing public safety.”


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