Swift County wins $4.95 million state broadband grant

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Minnesota’s Lt. Governor Tina Smith (in red), presented Swift County and Federated Telephone Cooperative with a broadband grant check for $4.95 million Friday. Above are, from left, Mike Pogge-Weaver, Swift County Administrator; Erick Rudningen, Swift County Commissioner, District 5-Kerkhoven; Jennifer Frost, Swift County Rural Development Authority director; Lt. Gov. Smith; Kevin Beyer, General Manager of Federated Telephone; and Gary Hendrickx, Swift County Commissioner, District 1-Appleton.

Swift County and Federated Telephone Cooperative have received the highest award in this year’s latest round of funding for expansion of broadband services in Minnesota.

Friday the Minnesota Department of Employment and Economic Development (DEED) announced that Federated and Swift County had been awarded $4.95 million.

The project will deliver high-speed Internet service to 600 households, 425 businesses and 75 community institutions, DEED said.  The project affects 13 of the county’s 21 townships concentrated on area just east of the Benson city limits.

The area in Swift County included in the project is most of each of the following townships in the eastern half of the county: Kerkhoven, Hayes, Pillsbury, Dublin, Kildare, Camp Lake, Benson, Torning, Cashel, Swenoda, Six Mile Grove and Clontarf.

However, there were sections along U.S. Highway 12 between Murdock and Kerkhoven that would be excluded from the project as well as some areas east of Benson between Minnesota Highway 9 and U.S. Highway 12.  Much of the western half of the county already has fiber cable.

Total project costs are $12.5 million with $7.5 million (60 percent local match) coming through a loan from Swift County to Federated. Swift County’s Board of Commissioners plans to pass a bond issue early in 2016 with the proceeds being loaned to Federated for the project.

Federated had sought the county’s backing because no source of funding exists that has either the capacity to lend the amount of money needed for the project, or that can provide the terms needed to make it doable, Federated’s General Manager Kevin Beyer told commissioners in July.

A loan in the private sector would only be for 10 years with refinancing needed after that to pay the balance. “Most financial folks will tell you that interest rates will be higher 10 years from now than they are today,” he said. “We can’t take the volatility of a higher interest rate 10 years from now; it may sink the project. That is why the 20 years at current interest rates is very important. I can’t get a loan from anyone for 20 years at current interest rates.”

DEED only had $10.58 million available to lend this year for its Border-to-Border Broadband Development Grant Program with the maximum grant limited to $5 million – or nearly half the pot available.

In all, the 44 grant applications were submitted this year seeking $29.06 million to expand broadband coverage for their areas.

Last year, DEED received 40 applications seeking $44.2 million, but had $20 million available.

In July, Swift County pledged to bond for $7.5 to $8 million to help Federated expand broadband fiber optic cable to unserved areas in the eastern half of the county.

“With grant requests nearly triple the available funding, it’s clear that the need for investment in rural broadband access is significant,” said Lt. Governor Tina Smith. “The $10.58 million available this year is a start, but it’s essential that the Legislature provide sufficient funding next session.”

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