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County seeks sales tax for high-speed internet

Proposed broadband project may cost $39 million

Montezuma County commissioners have agreed to ask voters in November to approve a county sales tax that would finance new broadband infrastructure for improved internet service countywide.

Believing that providing high-speed, affordable internet service to homes, schools and businesses will spur long-term economic growth, the county is seeking a 1 percent sales tax to build a fiber-optic broadband utility. They estimate the tax will generate $1.7 million to $2 million per year in revenues.

The new sales tax would be on most goods purchased in the county, Cortez, Mancos and Dolores. All registered voters in the county and Ute Mountain reservation will have the chance to decide the matter at the ballot box.

If approved, the sales tax revenues would be earmarked to finance an extensive broadband infrastructure project estimated to cost $39 million.

How the ‘utility’ would work

The broadband utility would be an open-access network, owned by the county and municipalities, but competitively leased to various internet-service providers who would deliver the service to customers.

The fiber-optic project would provide high-speed internet service at a minimum rate of 25 megabytes per second. Currently outside Cortez, internet speeds are between 1.5 mbps and 5 mpbs. The open-network system is designed to offer consumers more choices for service.

There are various financing options contemplated for the ambitious plan if approved.

It could be built out in phases, using sales tax revenues and grants generated each year.

Or it could be financed and built faster with county-issued revenue bonds or a bank loan. In this case, the revenues generated from the new sales tax would be used to pay back the debt, estimated to take 10-15 years.

“We are talking about doing something new to generate revenue and build a project that will diversify the economy,” said commissioner Larry Don Suckla. “It is our job as leaders to bring this to the forefront because unless you do something, you’re not doing anything.”

In the face of declining tax revenues from Kinder Morgan’s CO2 operations, the county has been brainstorming ways to attract more business to boost the economy, create jobs, and stabilize tax revenues to sustain the current level of public services.

“Companies have no interest in building the infrastructure for high-speed internet here,” said Jim McClain, director of information technology for the county. “It comes down to either we build it, or it will never get done.”

Said commissioner Keenan Ertel, “High-speed internet is like a utility, just like electricity or gas to your home. One of the first questions from people and companies considering moving here is ‘How fast is your internet?’ It’s becoming essential.”

Commissioner James Lambert agreed to ask voters for the sales tax, and compared forming a community-owned internet utility to early water projects.

“When you look back at Montezuma Water Co. we were scratching to get people on board at first so we could build the infrastructure, I see this as a similar situation,” he said.

Faster, affordable service

A key component of the county’s project is to provide high-speed internet at a cost middle- and low-income households can afford. Suckla said that is a key selling point, and sets up a scenario where phone, internet and television service can be bundled into one box in the home at an affordable rate.

“I’ve been proposing the idea to people set in their ways, and at first they say ‘no’,” he said. “But when I explain it would reduce what you’re paying now for internet, and be 200 times faster, they change their mind and think it is worthwhile.”

As the owner of the telecommunication road, the county can control rates, officials say, but services will be provided by private industry who pay the county to use the road.

“It’s really up to us to decide what the final product will be,” McClain said.

Ballot questions being formed

For the project to move forward, the county needs voter approval on at least two ballot questions, one to clear a legal hurdle, and the another for the new sales tax and formation of a broadband authority to manage the project.

One ballot question will ask voters to opt the county out of SB152, a law that prevents governments from getting into the broadband business.

County officials emphasize that they will not be providing telecommunication services. McClain explained that the open network system is designed for any private companies to competitively bid to use county infrastructure in order to deliver their services to customers. User fees collected by the county will be used to pay for the project and maintenance.

The second ballot question will be to approve the one percent sales tax and creation of a broadband authority made up of community representatives and technical experts to manage the new telecommunication utility.

“It will be managed in a community-wide manner where we make decisions together, not just one person managing it,” McClain said.

The county has informed the county clerk they plan to have questions on the November ballot. They have until Sept. 7 to submit the questions.

Suckla said the county needs to move forward with the project to stay viable.

“If you can come up with something better, I’m listening,” he said. “Whatever we do, we take a risk, and it is not free. But there are countless benefits to high-speed internet: education, telemedicine, home businesses, attracting entrepreneurs and industry to our county.”


How much would it cost county residents?

A proposed broadband network to provide high-speed internet access across Montezuma County is estimated to cost $39 million.

The price-tag is based on an estimated “take rate” — people who sign up for the service — of 30 percent from residents in Cortez, Dolores, Mancos and Towaoc. The take rate for residents in the unincorporated county is estimated at 45 percent.

In all, planners say it would initially connect an estimated 12,137 households in the county, but the fiber-optic network is designed to handle much more than that.

Installing 360 miles of fiber-optic lines underneath roads and along power poles is estimated to cost $23.6 million. Connecting fiber-optic lines into all of those homes is estimated to cost $5.3 million.

Electronics and engineering comes in at $5.4 million, and preparing 11,262 power poles to handle fiber-optic lines is estimated to cost $3.2 million. A five percent contingency of 1.4 million is also worked into the price.

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