Citizen objects to Logan County plan to spend $3.5M on broadband
Young Conservatives recommend spending those funds on things the County actually needs!

 

[June 21, 2022] 

Introduction:

Terminologies: Request for proposal (RFP), Memorandum of understanding (MOU.)

A subcommittee of the Logan County Board has been searching for a company to expand broadband in Logan County. Several companies have been brought forward since November.

While working with one company, WANRack, Keenan Leesman said that it needed $3,500,000, and the company would apply for matching state funds to lay a fiber backbone for a first phase.

In March 2022, the Logan County Board approved a resolution “to set aside $3.5 million of ARPA funds along with supporting state and federal grant opportunities for a middle mile fiber optic network project. The county was awarded $5.5 M in ARPA funds from the federal government to provide support for losses due to the COVID pandemic.

At the Board’s May 6, 2022, Planning and Zoning Committee meeting, Board Chairman Emily Davenport asked about putting this fiber optic project out for bids.

Due to some state grant deadlines at the end of June, Planning and Zoning Committee Chairman David Hepler said it would be good to have the RFPs (bids) back before the May Regular Board meeting. With the RFP, Hepler said it would allow the county to see what options are out there.

Because Subcommittee Chairman Keenan Leesman had talked to a few different companies, board member Annette Welch said it would be good to let them know about the RFP. Parts of the county already have great service while others do not she said. Welch does not want to see someone come in and just amp up the service in populated areas.

Leesman said the bid specs would have specifications about what features he would like to see. He had been working on a plan with WANRack since January 2022, which could be utilized to develop the bid specs.

At the beginning of the RFP, it said that Logan County is seeking “a public or private partner that can construct, maintain and manage a self-sustaining, affordable, reliable and scalable open access fiber optic middle mile network.”

What the secure network is intended for is “to support next generation high speed broadband internet.” It would be for any entities, “but not limited to businesses, residence, municipalities and internet service providers.”
 

The proposal said: This committee “decided to move forward with a recommendation for an open access, revenue sharing middle-mile fiber project extending out to connect all villages, and municipalities in defined phases or in total (funding permitting) along with locations along the route that could support wireless towers for extending the broadband network for miles in all directions along the fiber route.”

RFP notice:
[RFP ISSUED: May 9, 2022
QUESTIONS DUE: May 14, 2022
ANSWERS DISTRIBUTED: May18, 2022
PROPOSALS DUE May 20, 2022
NOTICE OF INTENT TO AWARD May 24th, 2022 (pending full board vote)]

The 16 specific locations listed in the RFP were Hartsburg, Emden, Lawndale, Atlanta, Burton View, New Holland, Middletown, Broadwell, Elkhart, Flamingo Heights, Mount Pulaski, Beason, Chestnut, Lake Fork, Cornland and the Logan County Courthouse. (Editor: For reasons unknown Latham has been omitted from this project).

[See full proposal for details Request for Proposals]

The schedule allowed 11 days for vendors to put together a proposal to the specifications requested.

A special meeting was held a half-hour prior to the May 24 Regular Board meeting to open and discuss the Request for Proposals and decide whether to bring a partner forward.

As the special meeting began, Leesman said, “Let the record show we received one submission.” Leesman sent out RFPs to five companies. He said two of them replied and said they could not meet the criteria in the timeline given. A couple of businesses had questions and Leesman said he responded to their questions.

Next, Leesman talked about the proposal received from WANRack, [a telecommunications provider based in Kansas]. He said approving their proposal does not mean the county is obligated to do everything in it.

What Leesman said the county is interested in is choosing the right partner. Then the county can go forward and work out details going through each line [of the proposal].

The caveat Leesman said he gave bidders is that the board would choose a partner and be comfortable about who they are working with. Only then would they proceed with the grant process.

A memorandum of understanding would also need to be worked out with the chosen partner.

A memorandum of understanding had already been in the works for WANRack and was previously said to be with the State’s Attorney when the committee decided in May to go out for other proposals.
 

In looking at pricing in the [WANRack] proposal, Hepler said he saw two pricing options. One was for $11.5 M. The other was for $15.1 M. He wanted to know more about these options.

At the high level, Leesman said these two options showed what the costs would be without prevailing wage and with prevailing wage. If the project is not directly being done for government, Leesman asked if prevailing wage even mattered.

With either option, Hepler asked if it would require $3.5M [from the county ARPA funds].

Leesman said that would be the case either way.

If the board was comfortable with WANRack, Hepler asked if Leesman was looking for a motion from the board to partner with them. To have a chance for state money, Hepler felt the partnership needed to be voted on in May.

The partnership would be subject to a future approval of grants outlined in the proposal in addition to the MOU. Leesman said that is what he told any providers. To meet deadlines, Leesman said it did need to be voted on. Otherwise, the board would wait to get in on the next round [of grants].

Because people had been asking Davenport about the revenues, she wanted to know if WANRack could show what counties our size could make from the network. Davenport asked whether it would be $1,000 a month or tens of thousands of dollars a month. She also asked if the revenue would be [coming in] in the next few years.

What Leesman said in the executive summary is that the county is getting [a percentage of] a share. Generally speaking, Leesman said he would expect little revenue sharing until we get consumers onto the actual network.

As people or businesses start utilizing the services, Leesman said the county would then see a share.

For the record, Davenport asked what five companies Leesman emailed the RFP to and which two declined.

The companies Leesman sent copies of the RFP to were SBA Edge, Stratus Networks, WANRack, Nextlink and one other company he did not name. He said SBA and Stratus were the two that declined.

If the county does not get any grants from the state, Davenport said her understanding was that the county is not out $3.5 M. She asked whether the county would have to pay WANRack a startup administrative fee or grant fee.
 

In the MOU, Leesman said that could be defined. At this point, Leesman said there is no obligation other than the board saying they would partner with the company. The RFP depends on additional funds to do the project whether in its entirety or smaller chunks.

The proposed project could be done in smaller phases. Leesman said the $3.5 M could then go towards a smaller portion of the project while the county waited on other funds.

What Leesman wants to see is the project as a whole being done. That way, the county board is not making other parts of the county wait longer for that part of the project to get to them due to funding.

At this point, Leesman said the proposal just needed to be accepted.

Before submitting grants, Davenport asked if the MOU needed to be done.

To Leesman, the grants and MOU should be done in tandem. Leesman said that would show good faith and commitment to companies that would go forward with something to at least get the grants submitted.

Most of what would be needed for the grant is something Leesman said is defined in the project proposal. The MOU could then be finalized.

In the RFP, Leesman said the project was pending additional funds to do [either] the entire project or the scope of whatever funds we receive. He does not see the project as a one and done.

If going with something like the proposed project, Leesman said more grants could be filed the following year. That could be done until the county gets the project to the desired state.

Something else Leesman said the project would depend on is the interest level of partners.

In some or most cases, Leesman said it is not the county “driving the ship.” Rather it should be partners and other competitors utilizing the network being built. Leesman expects that other providers could file some of the grants.

Regarding providers, Davenport asked if WANRack would recruit ones like AT & T and Comcast. She wondered if it would be a case of “we build it, and they will come.”

Both could be done. Leesman said the idea is that an open access network is open to anyone. Being a provider does not have to just be companies like AT & T.

At the end of the special meeting, Davenport motioned to bring forward the RFP and select WANRack as the partner of choice for the county broadband.

Public comments

At end of the Planning and Zoning and Workshop meetings in May, Kim Coers of Logan County Young Conservatives asked the board to reconsider its decision to allocate $3.5 M of ARPA funds to broadband. Her reasons were about practicality, policy and protection of the tax base.

Coers said fiber broadband is already in the county. One company is already in the planning phase and installing broadband (i3) in Lincoln. She said fiber optic cable was buried in front of her house last year and she will probably be able to tap into that at some point.

As far as policy, Coers feels it is better to let the market drive this rather than government stepping in and investing money. For waters to stay unmuddied, Coers said we need government spending to not get in the way.
 

As far as protecting the tax base, Coers said the county has talked about many capital investments it would like to be making. These include work at the airport and animal control, vehicles that need to be replaced, body cameras and other investments. She said all these are investments that must be made.

To Coers, ARPA funds should be use for these improvements.

Finally, Coers reminded them they are not just committing $3.5M in ARPA funds to the project. They are also committing future funds they do not yet have to a project that will cost between $11 M and $15 M (in today’s cost.) She asked the board to reconsider using the money for projects that are needed. Though broadband may seem exciting and flashy, she feels it is not proven.

At the June Planning and Zoning Committee, Coers had questions about WANRack’s proposal.

One question was about the two different price structures based on whether WANRack applies Illinois prevailing wage. Their legal team does not feel Illinois prevailing wage is needed since it is building the network for their own use and leasing the dark fiber services back to the county.

Coers questioned, the county is putting up $3.5 million and they would not own it, they would not own the project; correct?

Though Leesman said that was true, he said there would also be a revenue sharing agreement. Coers wanted to know why the county is putting up $3.5M to not own what they were paying for.

The county is not positioned to own the network, Leesman said, adding that the intent is to help subsidize to build an open access network that allows anyone and everyone to participate in it.

Leesman said that would include other providers and whoever wants to use it. He said the county would see a percentage of it.

The revenue share percentage WANRack proposed is 5% to 8%. Coers asked what amount the 5% to 8% is based on. She wanted a specific total, so the percentage would make sense. She illustrated that 5% to 8% of $100 and 5% to 8% of $1,000,000 are vastly different numbers. She asked again, 5% to 8% of what number?

Since percentages could change annually, Blankenship said it would be hard to project.

Moving on, Coers said the county would be paying $4,000 a month for its internet service to county buildings.
 

On the other hand, the county would be receiving a 5% to 8% kickback for other users on the fiber.

With the $4,000 a month, Leesman said it assumes the county would be utilizing the fiber. He said that would be part of the memorandum of understanding (MOU) discussion.

The $4,000 a month would add up to $48,000 a year the county would be paying for receiving service. Coers asked how that compared to current costs for the network the county utilizes.

Though Leesman said he could find and provide her with that information, he was not sure it is relevant to the project.

If we are putting money into a project and would end up paying more, Coers said it seems like costs would be relevant.

Another question Coers had was about the timeline for project completion.

If everything went to plan, Leesman said it would be done by the end of 2023.

As prices of materials may increase, Coers asked who would pay for the increase?

For outages, the proposal said customers would get back credit. The customer would be required to notify WANRack of the problem within 10 days. Coers asked what county employee would be responsible for managing that relationship.

If the county utilizes the network, Leesman said they would instantly know of an outage. That is something Leesman thought the board office could help follow up on.

For questions that were not answered, Leesman said he would send Coers an answer.

At the June Board Workshop, Coers expressed more concerns about the proposal.

Coers again shared her three reasons for asking them to reconsider their allocation of $3.5 M to broadband. These reasons were about being practical, practicing good policy and protecting the county tax base.

From a practical standpoint, Coers does not think it is necessary for the county to embark on the project. She said there are companies already bringing fiber broadband into the county.

From a policy standpoint, Coers said it is not good capitalism to offer subsidies to companies especially when subsidies are going directly to a company coming in under a private entity.

As far as economics, Coers said projects need to protect the tax base.

Because Coers feels all these issues still stand, she wants the board to consider that.
 

The project is being sold as a form of economic development. Coers does not see that. What she sees is the county spending $3.5M with little or no return for their investment.

There are other economic issues for Coers. The chosen partner, WANRack is based in Kansas City. The bits and pieces needed to build the network are not built or even sold in Logan County.

After millions have been spent on the project, Coers asked how much of that will have been spent outside the county?

At the end of the project, Coers said there will be a new network with the hope private companies will build a bridge from the network to the end user.

To Coers, the internet service providers are likely to be companies like Comcast and Mediacom. These companies already have technicians serving this area, so Coers said they would not be generating new jobs in the county.

Coers feels the best the county can hope is that some entrepreneurial Logan County resident creates their own company and becomes a service provider. She wonders how many jobs that would generate. For Coers, the project is not worth $15 M.

One argument Coers has heard is that this plan is needed and desired. In talking to friends, neighbors and business owners in the county, Coers has not heard that. She has not heard any business owners say fiber broadband would push them to the next level. Her question was who are the businesses and what do the businesses stand to gain [from fiber broadband]. Is it for jobs, expansion of business or more revenue?

The underlying question Coers had for all these points is what is the return on investment. She asked whether the county is bringing new business in, creating new jobs or building more revenue.

If this is economic development, Coers said she does not see that. She thinks the board needs to justify what they would be paying for. Coers thanked the board for time to make these comments.

[Angela Reiners]

Editor's note:

- Lincoln Daily News has had a reporter at all past Planning and Zoning and full board meetings when the topic has been discussed. Lincoln Daily News has reviewed all the county minutes and the county website pertaining to the subject of broadband.

- There have been no formal researches, studies, assessments of customer needs or desires for broadband use, or surveys of possible internet service providers presented.
 

April - During an open meeting in April the WANRack representative gave an update on its proposal via Zoom. The Lincoln Daily News reporter present at the meeting could not hear what was being said.

LDN made an email request to Board Chairman Emily Davenport and Subcommittee Chair Keenan Leesman for information in reference to a zoom session held.

LDN received no response to questions asking what was said.

June – The board approved partnering with WANRack. No details beyond that it will be accessible to any provider were discussed.

Lincoln Daily News filed a Freedom of Information Request to get a copy of WANRack’s proposal and the Memorandum of Understanding, but the FOIA request was denied.