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Voters Beware! $45M Bond Issue on Longmont, CO’s November Ballot

September 6, 2013

Last week, members of the Longmont, Colo. city council voted to give taxpayers a chance in November to weigh in on a plan to speed up development of the city’s government-owned fiber network and expand its offerings to more residents. Voters had approved the original development plan in 2011.

The expansion would be funded through a $45 million bond financed with “rate and fee revenues from the city’s electric and broadband utility enterprise fund.” Council members promised the new plan “would not increase taxes or affect other city services.”

For that promise to be kept, the city must be able to draw enough subscribers to its new network, which will offer speeds up to one gigabit. As we have noted before, the city-owned GON to first offer gigabit speeds, the Chattanooga Electric Power Board, has failed to attract those subscribers. The price Longmont plans to charge for its gigabit service – $49.95 per month – is far lower than the price Chattanooga charges, but that does not guarantee subscribers will sign up.

Back in May, city officials and consultants estimated 35 percent of consumers eligible would subscribe to the service. According to the U.S. Census Bureau, Longmont has 32,655 households. A 35 percent subscriber rate would mean 11,429 households had subscribed to the service. (For context, Chattanooga has about a 22 percent subscribership ratio.) Even if Longmont’s predictions come true, the cost-per-household for the expansion would be $3,937.

That figure is already high – even if Longmont can stay on budget.

Members of the city council have basically admitted revenues generated by the network would not be sufficient to cover the costs of expanding the network, much less operating it. Officials in the city said it would take 40 years – four decades! – to complete the network without the bond’s approval. According to the Boulder County Business Report, “If the measure fails, the city could still do the buildout but estimates that it could take as many as 40 years because of the limited revenues currently generated by Longmont’s fiber optic loop.” That schedule, of course, would mean the system would be antiquated many years before it was even complete.

One other matter worth noting: council members didn’t willingly choose to put this vote to taxpayers. In 2005, the Colorado legislature passed a law that required municipalities to get voter approval for GONs. It’s a smart law – and that requirement is the very least supporters of GONs should be asked to do.