PORT TOWNSEND — The Jefferson County Public Utility District has submitted a grant and loan application seeking federal funds to construct broadband infrastructure throughout the county.
Under the terms of the agreement, the PUD potentially will borrow $4.6 million to help pay for its plan to build out fiber optic internet service throughout the county.
The application was officially submitted following a meeting of the PUD commissioners, who approved the motion in a 2-1 vote.
The only vote against the motion on Tuesday evening was by District 3 Commissioner Dan Toepper, who worried that the utility may not get enough broadband customers to cover the loan repayments.
“This level of spending and borrowing has me concerned, especially in the first couple years,” Toepper said at the meeting. “Even to become revenue positive is a stretch; it’s still not showing me where we’re going to be able to recover costs.”
The PUD’s projections don’t show the broadband program earning money until 2026, and that projection is based on an assumed number of customers. According to PUD’s budget report for the meeting, the loan will be paid back over 25 years at 4 percent interest, costing roughly $310,000 annually after the first three years.
But Commissioners Kenneth Collins and Jeff Randall both expressed optimism that the utility would reach the 65 percent of customer capacity needed to pay for the loan, based on the PUD’s projections.
“We could be proved wrong, but it strikes me the likelihood of getting the 65 percent and likely more than that is high,” Collins said. “We’re not going to have a lot of difficulty paying for the service and paying for the loan.”
The grant and loan comes under the U.S. Department of Agriculture’s ReConnect Program, which provides funding for broadband in rural areas. PUD staff had recommended the program to commissioners as a potential funding source for coverage in rural South Jefferson County.
Under the agreement, the PUD will receive a grant of $9.2 million for broadband infrastructure which requires a 50 percent match from the utility.
The utility has already secured a $4.6 million matching grant from the state of Washington, and the remaining funds will be covered by the loan of $4.6 million from the USDA’s Rural Utility Services program, said Will O’Donnell, PUD broadband and communications director.
The motion approved Tuesday included updated cost projections of $1 million for a total grant and loan request of $18.5 million.
“The loan will be paid by the returns from the projected customers and additional supplementation from tax funding,” O’Donnell told Peninsula Daily News in a later interview.
“This grant covers all the costs of connecting up to 65 percent of the customers, so any customers beyond that 65 percent will have to be a connection fee.”
A connection fee for those customers will be set by commissioners at a future date, O’Donnell said.
If the application is approved, construction on the infrastructure wouldn’t begin until 2024, but it would bring fiber optic internet service to customers who currently can access only older DSL connections.
“We’re building a $30-plus-million asset that the PUD will own outright in adding this fiber network,” O’Donnell said. “This will increase the value of the entire utility forces of Jefferson County.”
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Reporter Peter Segall can be reached at peter.segall@peninsuladailynews.com.
