Charles City Fiber board looks at capital costs, logos and pricing as first bid-opening nears

By Bob Steenson, bsteenson@charlescitypress.com

The Charles City Telecommunications Utility could spend about $12.26 million in the first year on capital expenses to build a new broadband fiber optic network in the city.

Actual costs will depend on the construction bids the utility receives, with the first round of bids scheduled to be opened Tuesday afternoon, June 2.

Members of the utility board also looked at potential logo designs for the service at a meeting Tuesday, and talked about when will be the best time to let Charles City residents and businesses sign up to show their interest in the projected services.

Michael Maloney, senior vice president with D.A. Davidson & Co. of Des Moines, a financial consultant to the utility board, presented a five-year capital improvement plan for the board’s approval.

He stressed that the prices listed were just guideposts that come from the business plan, and that the bids will determine the actual costs.
“We know this is going to be a moving set of numbers,” Maloney said.

For the first fiscal year of construction, which is expected to begin this summer, projected costs are $9.63 million to install the fiber cable transport network that will link various districts in the community to the data center.

The data center, to be built on Main Street in the former City Tap building, was purchased for $190,000, and the capital plan estimates spending $680,000 to make it ready to become a sales center for customers and a service center for technicians, as well as housing the tornado-resistant data center room which will contain the equipment needed to run the system.

The rest of the first-year capital expenses include $1.75 million for various equipment, software, other electronics, as well as vehicles and furniture.

The total for capital expenses over the first five years of the project is estimated at $14.82 million. Much of the expense after the first year is in the cost to install fiber links to individual residences and businesses within the Charles City city limits.

At a meeting last week, the utility board set a public hearing for 4 p.m. Tuesday, June 9, to receive input on the board’s proposal to issue up to $22 million in revenue bonds to pay for the system.

Maloney said last week that the number was being set high enough to cover all contingencies, and it would be up to utility board to decide how much of the $22 million it would actually issue.

Included in that not-to-exceed $22 million is operating capital to sustain the project until revenue from the sales of the broadband internet, television and telephone services begins coming in from customers.

Cheryl Erb, the utility board chairwoman, said the board was approving the various parts of the capital improvement plan, not the specific amounts.

The members of the utility board also discussed when would be the optimum time to begin asking Charles City residents and businesses to begin showing their interest in the broadband, television and telephone services the system will offer.

On the agenda was a resolution approving a one-year agreement with CrowdFiber for $10,500.

Consultant Curtis Dean, president of SmartSource Consulting LLC of Grimes, said CrowdFiber, a Georgia-based company, would create a website where people could go to to indicate they want a fiber connection installed to their home or business.

“People could go through and say, ‘Yes, I’m going to want service,’” Dean said. “We’re not asking them to commit to a specific service at that time, but they are saying that they are going to want a service drop.”

A service drop is the term used for the connection to the home or business from the neighborhood fiber lines.

CrowdFiber would create and manage a database to track and validate addresses and perform other services, Dean said.

Board members discussed whether it would be good to make this sign-up available soon to be able to see where in the community the demand is and get people excited about the project, or if that would lead to disappointment that they signed up this summer but the service won’t be available until next spring.

“If they understand the process has several steps, and this is just the first one, then, to me, and has been proven in Vinton and New Hampton and in Pella, that starts to build the community buzz that this thing is happening and it almost creates a sense of inevitability that the project is coming and builds that momentum that people want to be part of it,” Dean said.

Board member Dick Herbrechtsmeyer said he favored getting commitments early, and board member Lydia Johnson said she wanted to do it when the board could get the biggest bang for its bucks.

Financial consultant Maloney said a demonstration of early interest could have an impact on the financing, with bond buyers more eager to participate in a project that has strong community backing.

The board agreed 5-0 to approve the resolution regarding the contract with CrowdFiber.

Dean also introduced Austin Karr of Monkeythis, a design and marketing firm based in Vinton, who showed examples of possible logos for Charles City Fiber.

Utility board members talked about their preferences and made some suggestions, and Karr said he would bring back some revisions based on those comments.

Charles City City Administrator Steve Diers said the board had received three applications for the general manager position to run the Charles City Fiber service.

The utility board agreed that the technical consultants would review the applications to see that they meet the required qualifications, then the board will discuss the applications at the meeting next Tuesday.

The board also went into closed session for almost an hour and a half to talk about the rates that would be charged for the various services. No action was taken on the discussion when the board reopened the meeting to the public.