Fort Collins Connexion needs more money for final phase of construction

Fort Collins Connexion, the city’s municipal broadband service, plans to seek additional construction funding of $ 19-20 million to complete the final stretch of network construction. The addition would increase Connexion’s budget by about 16%, but the director of Connexion assured city leaders on Tuesday that this would likely be the last budget increase for the project.

News of the fundraising has arrived at a Fort Collins city council discussion on building Connection which included several other updates: Connexion is well ahead of the residential participation rate required for financial solvency. The broadband network lags behind in the adoption of commercial properties and housing units, such as apartment complexes. And staff plan to release an update to Connexion’s business plan over the next few months, which contains many inaccurate financial projections created before construction began.

Previous coverage:Why Fort Collins Connexion Has Been So Quiet About Municipal Broadband Building

“We are moving forward towards a much more seamless connection,” said Executive Director Chad Crager. “And with that, we’re going to talk about the things we’re doing well, as well as some of our challenges and how we’re going to overcome them as we go forward.”

Connection executives expect construction to be complete by summer 2022 and service to be available to all premises by the end of 2022. “All premises” does not necessarily include apartment complexes and other properties that require the owner’s permission for construction.

Previous coverage:How Connexion progresses as the 2022 construction deadline approaches

Connexion’s participation rate for residential areas is 31%, which means that 31% of households with access to the service for at least 90 days have registered. The subscription rate needed to repay the bonds is 28%, and Crager said staff expect a residential subscription rate of 35% by the end of 2022. Residential properties make up about 90% of properties. of Fort Collins.

The Connexion service is now available in about 66% of the city, with most of the rest under construction. Crager said staff plan to update the “find my address” feature on the Connexion website by next spring to include estimates of when the service will be available in areas still under construction.

The Connexion service is not yet available in many apartment complexes, which are classified as residential units and require the owner’s permission for construction. Collective housing will need more attention in 2022 as the city must negotiate agreements for each. There are over 500 housing units in Fort Collins, and Connexion’s goal is to reach 150 by 2022. Connexion plans to sign with Colorado Boring next year to work on fiber for the units in Fort Collins. dwelling.

Connection executives plan to issue around $ 19 million to $ 20 million in bonds to fund construction costs over the next three years, Fort Collins chief financial officer Travis Storin said. In a 2017 poll, voters in Fort Collins authorized the city to issue up to $ 150 million in bonds for the project, and the city issued $ 129.6 million in bonds in 2018, which means the city is legally authorized to issue an additional $ 20.4 million in bonds.

If Connexion issues more bonds, the city plans to repay the money with Connexion’s income. The city is set to pay its first installment of bond repayments in 2018 in December 2022, with additional installments due each December through 2042.

Another option would be to borrow money from another municipal fund and eventually pay it back, Storin said. Council members will have the final say on whether or not to allocate the money and where it should come from.

Regardless of the funding source, the additional funding would bring the total construction budget to $ 143 million. Crager told Fort Collins City Council on Tuesday he was confident it would be the final budget extension for the project, after adding an $ 8.2 million extension in September and 5 , $ 4 million previously.

Board member Julie Pignataro asked Crager what gave her that confidence, noting that board members have been ‘burned’ before – Fort Collins Utilities’ billing system overhaul has seen its budget stretched several times. times despite assurances from staff that no further extensions would be necessary.

Crager said he felt more confident with the updated projections as the project design is now 100% complete and the boring, the most labor-intensive and costly aspect of building, is nearing completion. This means that staff now know “exactly how much it takes to complete the job”.

“One of the biggest risks this project had at the start was that it was all underground,” he said. “What gives me confidence is knowing that we have moved past that, and not only that (less impact on) our residents, but it gives me a lot more confidence that I won’t be back here asking. more money in the future. “

Connexion’s business plan projections underestimated the cost of installations by about 20% (or $ 113 per installation) and underestimated the cost of drilling the premises by $ 8.5 million, said Crager. The latter, in simpler terms, means the business plan didn’t take into account how expensive it would be to break through parking lots and driveways.

The plan was also overly optimistic about the commercial turnout, predicting that 45% of commercial properties with access to the Connexion service would sign by the end of 2022. Connexion has updated this projection to 28% by the end of 2022. 2024 to account for the increase in remote working, which has reduced the needs of some businesses for broadband services, and the tendency for commercial properties to have more specific broadband needs.

There are also approximately 8,000 more premises or properties in Fort Collins than anticipated in the business plan.

One of the main factors behind the increase in construction costs was the lack of available ductwork, Crager said. The business plan predicted that approximately 72% of the conduits needed for the fiber optic network were already installed underground, as the utility network included large amounts of “empty” or unused conduits that the city said could be used. reused for Connexion. However, when the crews went underground, they discovered that much of the conduit was up to 50 years old and was unusable. Ultimately, the existing pipes covered 48% of the project’s pipe needs.

“We thought we had all of this vacant conduit that would really lower the overall cost of the project, and what we found was we had to do a lot more boring than planned,” Crager said.

“If we could all go back and redo the business plan, we would,” he added, noting that the new business plan will be shared with the public.

Connexion this week rolled out a new invoicing system for customers with contractor GLDS. The new system allows people to register for the service online and make other account changes without calling, an option expected for Connect customers. Crager said a new customer service support center will launch in mid-January.

The next steps for Connexion’s funding additions will be further discussion at the Board’s finance committee on February 6 and potential appropriation in February or March.

Connexion remains in the dark as lower than expected operating expenses offset lower than expected revenue. In October 2021, Connexion’s revenue was approximately $ 4.45 million, up from a projection of $ 9.29 million. Operating expenses were $ 4.9 million compared to a projection of $ 10.93 million.

Jacy Marmaduke covers government liability for Coloradoan. Follow her on Twitter @jacymarmaduke. Support his work and that of other Colorado journalists by purchasing a digital subscription today