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MN: Gaylord keeps risk report on telecom bonds secret

By   /   September 21, 2012  /   Comments Off

By the Freedom Foundation of Minnesota

ST. PAUL — Gaylord city officials have informed the Freedom Foundation of Minnesota that they will not make public a key analysis of the potential financial risks posed by a plan to invest $70 million in bonding for the RS Fiber telecom network.

Proponents of the municipal broadband project expect RS Fiber to start paying for itself after three or four years. If not, a $4.5 million reserve fund replenished by local taxpayers in 11 cities and two counties participating in a joint powers agreement would be required to pay the system’s financial obligations.

An analysis of the potential liability in the event RS Fiber fails to attract enough customers was requested by the Gaylord City Council on Sept. 5. City Administrator Kevin McCann noted in a memo that Stephen Rosholt, a Minneapolis bond expert, would review the bonding and debt service shortfall funding documents. The analysis cost local taxpayers about $1,500.

Rosholt’s “initial thoughts are that it is a huge risk for the city since he is familiar with Monticello and other cases where the city got into a new venture that ended up costing cities a lot of money in the long run,” McCann stated in the memo.

Read the complete story at the Freedom Foundation of Minnesota.

 

 

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