08.c1 Midco Border 2 Border Grant Cost Sharing Agreement Staff Report
Date of Meeting: December 17, 2024
For: Honorable Mayor and Council
From: Kyle Morell, City Administrator
Subject: Midco Border 2 Border Grant Construction Cost Sharing Agreement
Background:
At the April 18 Internet Action Committee meeting, Midco announced they are applying for a Border 2 Border
grant for 154 passings within Scandia, most of which are east of Hwy 95 along the St. Croix River. A map and
project summary are attached. The cost of the Scandia project is estimated to be $1,337,459. Midco will
contribute $385,000 and is asking the City for a $300,000 contribution. If awarded, construction for the project
would have to be completed by the end of 2026.
At the May 1, 2024, City Council Work session, the Council authorized participation in the grant and committed
$300,000 to funding it. The Internet Action Committee set out to collect letters of support from residents within
the project area. All told, 100 letters were collected and sent to Midco to be included in their application to the
State. In October, Midco informed the city that it had been awarded the Round 10 Border 2 Border grant for its
project in Scandia. Midco has not signed its contract with the State for the grant. They are looking for the City
to approve the Construction Cost Sharing Agreement, which is attached. The Agreement commits the City to
$300,000 for the installation of necessary facilities to provide data and telephone service to the area, as Scandia
outlines within the grant application.
Financial Impact:
The requested city funds will not be due until after construction is complete and speed tests are done to verify
that grant requirements regarding delivered upload and download speed have been met. This is usually the
case with Border 2 Border Grants. In the past, the City funds were sent to Midco during the calendar year after
construction was completed. The attached 401 CIP Fund spreadsheet shows the funds available in 2026, but
they will more than likely be paid in 2027.
Options:
1) Approve Midco Construction Cost Sharing Agreement
Recommendation:
Option 1
Attachments:
Construction Cost Sharing Agreement
401 CIP Fund
CONSTRUCTION COST SHARING AGREEMENT
1
THIS CONSTRUCTION COST SHARING AGREEMENT (the “Agreement”),
dated as of ______________________________, 2024, is by and between City of
Scandia, whose address is 14727 209th Street North, Scandia, MN (“City”), and
Midcontinent Communications, a South Dakota partnership, whose principal address is
101 S Reid St – STE 202, Sioux Falls, SD 57103 ("Midco").
RECITALS
WHEREAS, the City controls certain Right-of-Way (“ROW”) within the area
depicted on Exhibit 1 (the “Project Area”);
WHEREAS, Midco seeks to install in the ROW in the Project Area cable and
certain other equipment necessary to deliver data and telephone service drops to the
residences named in Exhibit 2;
WHEREAS, the City and Midco desire to enter into an agreement to establish the
necessary infrastructure to provide data and telephone service availability to the residences
named in Exhibit 2;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the City and Midco enter the following:
AGREEMENT
1. Construction of Cable Plant. Subject to the terms and conditions of this
Agreement, Midco will install fiber optic cable and other equipment necessary to make
available data and telephone service to the residences named in Exhibit 2. Construction
(except for individual drops between the network and customer’s home) must be completed
by June 30, 2027. Individual drop to the customer’s home will be installed when service is
ordered and installation is agreed upon by the customer and Midco.
2. Service Speed. Midco shall provide access to data and telephone service for
the residences named in Exhibit 2 at a speed of up to 5 gigabit per second downloads and
up to 5 gigabit per second uploads.
3. Right of Way Permit Required. Prior to engaging in any excavation,
installation, or other work which may disturb the ROW in the Project Area, Midco may be
required to apply for a ROW permit. The issued ROW permit shall set forth the terms and
conditions for Midco’s work within the ROW.
CONSTRUCTION COST SHARING AGREEMENT
2
4. Cost Sharing. In consideration of Midco’s agreement to install the
necessary facilities to provide data and telephone services, the City shall pay to Midco
$300,000 (the “Cost Share Amount”), which represents the City’s share of the costs to be
incurred by Midco to finish its design, installation and construction activities to provide
service to the Property, upon Midco’s completion and City’s inspection of the
infrastructure. The Parties agree that inspection and processing for payment will be
completed within sixty (60) days of completion.
5. Commitment to Deliver Access to Service. As part of this Agreement,
Midco must provide data and telephone availability to each of the residences named in
Exhibit 2. Midco bears responsibility for all costs necessary to provide access to each of
the residences named in Exhibit 2 in excess of the Cost Share Amount, and the City will
incur no costs in excess of the Cost Share Amount as a part of this project. This cost does
not include the cost of drop installation. Midco shall provide the City with plans detailing
the proposed project service area, including engineering design and diagrams for the
project that support the Cost Share Amount, that demonstrate data and telephone service
will reach each of the residences named in Exhibit 2, and that demonstrate the reasonable
of the timeline for the project’s completion.
6. Verification. The City may contract with a third party to verify the project
is completed in accordance with the project plan. Specifically, the City will confirm that
the number of service drops and service speed has met the terms of this Agreement. This
inspection must be completed within forty-five (45) days of completion.
7. Easement Rights. City acknowledges that Midco shall be entitled to install
and construct its cable and other equipment over and under the ROW areas controlled by
the City within the Project Area. The City agrees to grant any required ROW permits to
Midco for excavation and infrastructure installation within the ROW included in the
project. The City agrees to provide support in Midco’s pursuit of all non-City ROW permits
that are required.
8. Indemnification. Midco shall indemnify, save, and hold the City, its agents,
and employees harmless from any claims or causes of actions, including attorney’s fees,
incurred by the City arising from the performance of this Agreement by Midco or Midco’s
agents or employees. This clause will not be construed to bar any legal remedies Midco
may have for the City’s failure to fulfill its obligations under this agreement. By entering
into this Agreement, the parties agree the City is not and will not be acting as a data and
telephone service provider. Midco is solely responsible for the provision of data and
telephone service to the residences depicted in Exhibit 2. Any contracts for data and
telephone service between Midco and City residents are solely between Midco and the
residents, and Midco shall indemnify, save, and hold the City harmless from any claims
arising out of data and telephone service contracts.
CONSTRUCTION COST SHARING AGREEMENT
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9. Assignment. Midco shall neither assign nor transfer any rights or
obligations under this Agreement without the prior written consent of the City.
10. Severability. If any provision of this Agreement, or the application of such
provision to any party or circumstance, is found to be illegal or unenforceable for any
reason, such provision will be modified or severed from this Agreement to the extent
necessary to make such provision enforceable against such party or in such circumstance.
Neither the unenforceability of such provision nor the modification or severance of such
provision will affect the enforceability of any other provision of this Agreement.
11. Early Termination. This Agreement may be terminated by either party at
any time, with or without cause, upon thirty (30) days written notice delivered by mail or
in person. The party terminating must reimburse the non-terminating party for all
reasonable out-of-pocket expenses up to the date and time of termination.
12. Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of Minnesota, without regard to its conflict of laws
principles.
13. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and there are no
other representations, warranties or agreements except as herein provided. This Agreement
may be amended only by a written instrument signed by the parties.
IN WITNESS WHEREOF, the parties have entered into this Agreement effective
as of the date first written above.
CITY OF SCANDIA
By: ____________________________________
Name: __________________________________
Title: __________________________________
MIDCO
MIDCONTINENT COMMUNICATIONS
By: MIDCONTINENT COMMUNICATIONS
INVESTOR, LLC, Its Managing Partner
By: ____________________________________
Name: _________________________________
Title: __________________________________
CONSTRUCTION COST SHARING AGREEMENT
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EXHIBIT 1
Map
CONSTRUCTION COST SHARING AGREEMENT
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EXHIBIT 2
ADDRESSES PASSED
SEE ATTACHED DOCUMENT
Inflation Assumptions
1 Revenue (Non-property tax) 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
2 Interest Earnings 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%
3 Expenses
4 CIP Inflation Factor 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
2023 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Actual Approved Projected
REVENUE
5 Property taxes 293,791 235,000 125,000 130,000 135,200 140,608 146,232 152,082 158,165 164,491
6 Intergovernmental - - - - - - -
7 Capital Improvement Debt Levy - - - - - - - -
8 Special assessments - - - - - - - - - -
9 Investment Income 2,300 1,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
10 Refunds and Reimbursements
11 Park Dedication Fees
12 Rental and lease income - - - - - - - - - -
13 Miscellaneous Revenue - - - - - - - - - -
14 Total Revenue 296,091 236,500 126,000 131,000 136,200 141,608 147,232 153,082 159,165 165,491
EXPENSES
15 Total Current - - - - - - - - - -
16 Payables internet - - - - - - - - - -
17 Debt service - - - - - - - - - -
18 Total Capital Projects 198,059 312,525 229,041 569,432 45,025 193,399 31,633 128,083 109,251 618,083
19 Total Expenses 198,059 312,525 229,041 569,432 45,025 193,399 31,633 128,083 109,251 618,083
20 Revenue Over / (Under) Expenses 98,032 (76,025) (103,041) (438,432) 91,175 (51,791) 115,599 24,999 49,914 (452,592)
OTHER FINANCING SOURCES / (USES)
21 Bond Proceeds
22 Transfers In 8,000 - - - - - - - - -
23 Transfers Out to Sewer Fund (2,640)
24 Transfers Out- (150,000)
25 Total Other Sources / (Uses) 5,360 (150,000) - - - - - - - -
26 accounts payable
27 Prior Period Adjustments
28 Ending Fund Balance 782,892 556,867 453,826 15,394 106,569 54,778 170,378 195,376 245,291 (41,810)
CITY OF SCANDIA CITY OF SCANDIA
Capital Improvement Plan Capital Improvement Plan
Capital Improvement Fund 401 Capital Improvement Fund 401
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Project Multiple 2023 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Capital Project Name Number Year?Year Last Year ACTUAL Actual Approved Projected
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30 Broadband Development Grants to MIDCO 2022
31 Development Code Update 2022
32 Community Center Improvements-Doors & security 2022
33 Council Chambers remodel 2022 7,476
34 Gateway Trail 2025 30,000 230,000
35 Broadband Development Grants to MIDCO 2023 119,500 92,000 300,000
36 County Ped & Bicycle Accomodations 2023 50,000
37 Wall Panel Joint Replacement Fire Hall-leaking 2023 16,250
38 Council Chambers remodel 2023 12,309
39 Security Improvements CCTV for Park 2024 14,000
40 Bliss Additions Stormwater plan 2023 122,525 135,000
41 new Exhaust removal system for truck bays 2024 58,399
42 new Warning Sirens 2025 31,633
43 Arts & Heritage Center Amphitheater 2027
44 Arts & Heritage Center Sidewalk and Walkways 2027
45 CC AC Condenser Replacement 2025
46 Lobbying 2025
47 Fire/PW Potable Well Pump (2000) Replacement 2026 11,699
48 2010 Fire Radios Replace 3 unspupported radios 2030 17,548 24,016
49 2010 Homatro Cutter Twin Line R-1(Jaws of Life)2030 40,945 56,036
50 2015 Lucas CPR Device-replacement 2030 17,548 24,016
51 Cold Storage Building 2030 130,000 31,000
52 Additional Comm Cent Elec Locks 2030 18,000 24,016
53 Large Hall and Heritage Room Carpeting 2030
54 2000 Station Bay floor epoxy coating-maintenance 2031 21,900 31,171
55 2010 Washer/Extractor-replacement 2031 9,125 12,988
56 2017 Thermal Imaging Cameras (1of3) find hot spots 2031 9,733 13,853
57 Zoll Monitor/Defib 2031 51,239
58 Second Fire Station 2032 337,136
59 Community Center Design & Planning 2032 280,947
60 Air Containment Unit 2033
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Community Center Improvements-Front Office + Equip
Room 60,000
62 CIP placeholder - SERVER REPLACEMENT Yes 2035 2036
Total Capital Projects 7,476 198,059 312,525 229,041 569,432 45,025 193,399 31,633 128,083 109,251 618,083
PROJECTED NEW DEBT TERMS Updated KHM As of Date:6/27/2023
1 Par Amount (Line 14) - - - - - - - - - -
2 Number of Years 15 15 15 15 15 15 15 15 15 15
3 Interest Rate 0 0 0 0 0 0 0 0 0 0
4 New Debt Levy - - - - - - - - - -
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