Rural towns seek money to repay broadband debt
Run into limits on how federal COVID funds can be used
THE RURAL HAMPSHIRE County town of Goshen is in the middle of installing broadband internet service.
Even with state subsidies for the project, town officials estimate that Goshen will have to borrow $1.4 million to pay for the construction. Since municipal borrowing must be repaid through property taxes, that’s a big deal for a town with a population of approximately 1,000 residents.
“Many of the towns out here are relatively poor compared to towns in the eastern part of the state, and many of them have a large proportion of seniors,” said Wayne Glaser, Goshen’s municipal light plant manager.
With an influx of federal money for COVID relief and infrastructure, officials in rural Western Massachusetts towns are turning to federal and state funding bills seeking reimbursement for municipal broadband projects. However, they are running into trouble, in the form of language that forbids federal relief money from being used for debt service.
Hinds introduced an amendment to the Senate version of a spending bill that would let some state surplus money be used to reimburse towns for municipal debt from broadband projects. “This is an opportunity when you have significant resources for broadband to make sure it can be used to relieve that debt,” Hinds said.
Over the past eight years, under a project initiated by Gov. Deval Patrick, Massachusetts has funded a “Last Mile” initiative to get broadband internet hooked up in the final 53 communities that did not have it. Generally, these were rural communities with spread-out populations where it was not cost effective for a company to install internet service.
In nine towns, an existing cable network could be expanded. In 21 communities, the municipality decided to build and own its own network by hiring a company – in many cases, Westfield Gas & Electric – to manage the project and operate the network. Other communities negotiated with internet companies like Comcast and Charter to build out the service. In most cases, the funding came from a mix of state dollars and municipal money, in addition to the fees customers pay for internet service.
Bill Ennen, the last mile liaison for the state’s Office of Housing and Economic Development, said every town now has a solution that is either operational or in progress.
But there is a cost. Hinds estimates that once all 21 communities with municipally-owned networks complete their build-outs, these communities will have paid more than $40 million. Ten communities that have completed their networks already paid $13 million. There is likely to be additional money owed by towns that do not own their networks, but paid private companies for the service.
The state today is essentially rolling in money, including $5.3 billion in direct government aid from the American Rescue Plan Act, which may be used for broadband infrastructure. The problem, however, is US Treasury rules allow the money to be used to build a broadband network. But if one is already built, the rules do not let the money be used for debt relief.
“It’s been very frustrating,” Ennen said.
“These are funds the federal government would control,” Ennen said. “The question again will be whether or not these funds can be used for debt relief, which has been the bugaboo in all this.”
The American Rescue Plan Act spending bill being considered by the Legislature would allocate both federal money from ARPA and some state money left over from last year’s budget. Hinds initially sought to earmark additional money for municipal broadband relief. While lawmakers declined to add more money, they did adopt language allowing part of a $75 million line item for broadband spending to be used for debt repayment. Hinds said because of the federal restrictions, it would most likely be state money that is used this way.The language was not included in the House version, and the bill is now before a conference committee.
Hinds calls the amendment a matter of regional equity, necessary to ensure that every part of the state can recover economically from the pandemic. “There’s a reason we’ve seen large portions of our Commonwealth experiencing challenges when we don’t have basic infrastructure in place, including robust internet networks,” Hinds said. “This is part of the effort to ensure our recovery includes providing equal opportunity throughout the commonwealth.”