7. Ray report on Midco proposalHigher Taxes in Scandia?
Scandia has two options to expand Internet service that would effect our taxes in drastically different
amounts.
The first option is to start from scratch and build out the whole city with CTC, which offers fiber to the
home. It would lay fiber over the Midco areas and all Scandia property owners would have to pay for it.
Here is the cost breakdown:
DEED Grant $5,000,000
Scandia $5,729,005
CTC $2,648,777
Total $13,377,782
We would need to raise taxes on the median property value in Scandia by approximately $4,425. This
tax amount would vary up or down according to your property value (median property value approx.
$350,000). If we finance with a 10-year bond at 7%, it would cost approximately $445.50 a year (varies
according to property value). CTC is offering speeds of 1 Gigabit down and up. The CTC proposal is not
ready for a DEED grant application this year. DEED has only $20,000,000 for the whole state next year
and this year had 120 communities eligible for the grants. Is it realistic that Scandia would get 25% of
the total DEED funds when many communities are in need?
The second option is to work with our existing provider Midco, which already has 44% of Scandia wired
with speeds of 1 Gigabit down and 20 Mbps up. Midco has a DEED grant application ready to submit
now for Scandia which would add 219 wired homes. Here is the cost breakdown:
DEED Grant $510,000
Scandia $160,085
Midco $350,400
Total $1,020,971
If this grant is awarded, construction would begin in spring of 2020. Midco is committed to fixed
wireless technology. After receiving the grant, which would bring fiber closer to the Midco fixed
wireless towers at no cost to the city, Midco would add another 150 to 175 homes with speeds of 100
Mbps down and 20 Mbps up.
That leaves approximately 600 homes to cover with high speed Internet or 35% of Scandia. Midco has
committed to work with Scandia in 2020 on another DEED grant. Midco also wants to work with us on a
FCC Rural Digital Opportunity Fund in which Scandia does not contribute funding.
The Midco plan is open ended and evolving but starts almost immediately if the grant is awarded. It also
uses more existing funding and more private capital.
Our goal, whichever company we choose, is to get reliable, high-speed Internet to every property in
Scandia.
Both CTC and Midco offer 1 Gigabit download speed. A Gigabit is 1000 Mbps. It takes 25 Mbps down to
stream UltraHD 4K Video on your TV. A family of four, who streams Netflix, games online and does
video chat, sometimes simultaneously, will need fewer than 50 Mbps.
What about the up speed? CTC offers 1 Gbps where Midco offers 20 Mbps up speed. Up speed is for
uploading files and video to the web. Midco offers up speed scalable to 100 Mbps. Midco offers 1
Gbps up speed to customers who want it at an extra charge.
These are the questions facing Scandia on Internet and taxes. Do we start over and build a new “gold
standard” or do we build out from the existing 44% already covered with reliable, high-speed Internet?
Would we be over building with fiber to the home with more speed than homeowners need? Internet
speed costs money and you don’t want to pay for more speed than you need.
The City Council will be discussing these options at a public meeting on Wednesday, September 4th.
Patti Ray
Scandia City Council Member