Loveland Community Leaders Decide to Move on Fiber Project

Until November 6th, community leaders in Loveland, Colorado, vacillated between whether or not to hold a referendum for final voter approval on a muni project. Asking voters to make the final call can remove political uncertainty, but there are times when elected officials have to make the call themselves. When the city opted out of Colorado's restrictive SB 152 three years ago, 82 percent of voters supported the measure. On November 6th, Loveland City Council vacated a previous order to put the issue on the ballot and decided that it's time to move ahead on establishing a broadband utility.

Special thanks to Jeff Hoel who provided additional resources to enhance our reporting!

A Steady Hike Onward in Loveland

Loveland’s population is around 77,000 and growing. The city rests in the south east corner of Larimer County, which is located along the north central border of the state. Located about 50 miles north of Denver as part of the Fort Collins-Loveland Metropolitan Statistical Area, the city is organized as a home rule municipality. Other towns we’ve written about are part of the same statistical areas, including Estes Park and Windsor. They’re one of several bedroom communities where residents who live there work in Denver, Boulder, and Fort Collins.

Like more than 140 other local communities in Colorado, Loveland has opted out of the state’s restrictive SB 152. Loveland voters chose to shed themselves of the law in 2015 and the city followed up with a feasibility study the following year. Since then, they’ve moved ahead carefully with support from the community, including editorials from local media. City leaders have stated that their constituents also vocalize support for a publicly owned project. Approximately, 82 percent of voters approved opting out in 2015. In 2016, 56 percent of residential survey respondents and 37 percent of business survey respondents stated that incumbents were not meeting their needs. With numbers like that, it’s no surprise the public appears ready for community broadband.

logo-loveland-co.png Earlier this year, the city allocated $2.5 million toward obtaining the information they needed to make the best decision in addition to planning and design work. They hired firms to craft a network design and chose an underwriter for the project. Experts estimate the cost to develop the network will run approximately $69 million. The business plan anticipates that 42 percent of residents and 27 percent of businesses will choose the network; Loveland plans to offer Fiber-to-the-Premise (FTTP) services directly to the public. City staff and consultants estimate that the network will begin turning a profit by 2023 and will be paid off within 20 years. A primary goal for Loveland is more competition and the better rates and services that naturally flow from more choice.

Loveland’s staff looked at other possible models, including public-private partnerships, but:

"Staff's assessment of the responses (from six incumbent companies) is that none of the options offer the City of Loveland the ability to substantially reduce the risk of a large capital investment made by the City while still meeting the five primary objectives," [Project Manager Brieana] Reed-Harmel wrote [in a staff report]. "...Partnerships should provide a source of capital, management expertise or reduction in risk. Based on this evaluation and the risk assessment, staff does not consider a public-private partnership to be an optimal solution at this time."

As part of the project, the city intends to pursue regional collaboration efforts with the communities of Longmont, home to publicly owned NextLight, and Fort Collins, where the community is engaged in their own municipal network initiative. The Loveland Communications Advisory Board (LCAB) also recommended working with the Platte River Power Authority. In addition to sharing regional infrastructure, staff, and information, Loveland anticipates a time will come when the three systems may share an after-hours call center for Internet access and electric utilities, said City Manager Steve Adams at the recent meeting.

Adams also told the council that the city will use any surplus revenue for the utility to create a reserve fund earmarked for the telecom utility. They plan to direct those funds to pay off debt early and lower rates for subscribers whenever possible.

gavel.png To Vote or Not to Vote? That is the Question...

The issue of a referendum on the municipal network has been a matter that the city council has grappled with on several occasions. Everyone seems to agree on the fact that the community needs better connectivity and that a municipal network will benefit Loveland. While some councilors argue that it’s clear that the rest of the community feels the same way, others want a bright-line mandate in the form of a referendum.

Earlier this year, when city leaders didn’t meet the deadline to get the issue put on the November ballot, they considered a special February 2019 election. Those against the idea, argued that the high approval rate of the 2015 SB 152 opt out referendum signaled that voters were ready to move ahead and that holding another referendum was wasteful. 

City Manager Adams estimated a February election would cost about $40,000. City staff calculated that additional interest and construction costs caused by a delay would add millions to the final cost of deployment.

"I'm going to guess that by the time this is done ... that this little adventure is going to cost us $3.5 million to extend this and do an election," said [Council Member John] Fogle, who adamantly argued that the residents already voted in 2015 and, by holding another election, council members are showing they didn't listen.

"It's very disingenuous to ask them to vote again," he said.

"We have studied this to death and now, when the time comes to make a decision, we don't want to make a decision," said Fogle. "I think that is sad."

Members of the council also expressed concern about the short time to prepare for a February election. Councilor Kathi Wright noted that such a short period of time between now and a February referendum would not provide adequate time to raise funds to stave off a negative disinformation campaign that could come at Loveland from rich incumbents. Wright and her colleagues had front row seats to the attacks from Comcast, CenturyLink, and the shell political organizations they funded to try to stop Fort Collins’s muni initiative last year. 

At the October 23rd Loveland City Council meeting, members voted narrowly to take the matter to voters, but just two weeks later, they changed course. On November 6th, they decided to reconsider the issue of a referendum. This time, the decision to ditch the referendum passed 7 - 2. Even those who didn’t support cancelling the vote voiced the opinion that the move to create a muni in Loveland was the best decision. For at least one councilor, the decision in October to take the matter to the voters rested on the fact that he felt important information was lacking at the October 23rd meeting. Once the new resolution to press on without a public vote contained the level of detail he and other councilors needed, he felt the ballot initiative was no longer necessary.

Watch the discussion at the November 6th council meeting. The presentation by City Manager Steve Adams and Project Manager Brieana Reed-Harmel provide details of the plan that helped the Loveland City Council decide to move forward.

What's Next?

The next step will require the council to approve funding. The city plans to issue $93 million in revenue bonds to cover the cost of deployment, reserves, and related funds to ensure a solid start. As the city moves forward, they will also consider internal borrowing and refinancing the bonds. Loveland staff has considered a series of possible risk mitigation scenarios and presented them to city leadership.

Check out the detailed Broadband Update Presentation slides presented at the October 23, 2018, City Council meeting.

Read the Information Summary provided to the city council by city staff.

Check out the city website portal on the project, which includes a guestbook, news and updates, and technology information to help Lovelanders educate themselves. They've even produced a couple of videos:

Image of the Loveland Ice Festival by Jared Winkler [CC BY-SA 4.0], from Wikimedia Commons.