Making Public Private Partnerships Work

November 19, 2014Shannon Sweeney, Associate

David Drown Associates, Inc.

History – R/S Fiber Project….

2010 11 Cities and 2 Counties formed a joint powers board to explore the feasibility of constructing a fiber-to-the-farm network.

2011 Joint Powers used funding from members and Blandin to explore project feasibility.

2012 Joint Powers worked in earnest to assemble and finance a project. Engineering, Legal, Finance

2013 Gave up on original structure due to changes in financial market conditions.

History….

2013 Identified alternative structure that took advantage of the grass roots nature of the project. Cooperative ownership.

2013 - 2014

Discussed feasibility of the units of government providing an economic development loan.

2014 Now have 17 townships and 10 cities as members of a joint powers board proposing to issue G.O. Tax Abatement Bonds to fund a loan to the private cooperative.

Key points

If multiple jurisdictions/partners are attempting to work together, make sure that the expectations and goals are similar. It is extremely expensive, time consuming, and frustrating when a project partner leaves.

Minnesota laws regarding telecommunications and governmental finance of fiber have not kept up with technology.

Key points

Tax abatement bond law currently provides a useful tool for local governments to assist private or governmental service providers.

Assisting the expansion of an existing service provider is a far easier task than starting from scratch.

A reliable source for working capital should be identified early on.

Suggested Legislative Changes:

Remove ambiguity about the authority for cities and counties to own and operate fiber networks, without referendum.

Allow cities and counties, without referendum, to pledge their full faith and credit to the payment of up to 30 percent of the annual debt service on bonds issued to finance a fiber network.

Suggested Legislative Changes:

Allow the State to provide credit-enhancement for the portion of bonds issued by a city or county that is secured by the issuer’s full faith and credit.