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Gainesville City Commission votes to spend $8 million in ARPA funds on housing instead of municipal broadband

BY JENNIFER CABRERA

Bottom line: The Gainesville City Commission voted to set aside $8 million in American Rescue Plan Act funds for affordable housing instead of proceeding with a proposed municipal broadband pilot project that would have cost $9.6 million.


Today the Gainesville City Commission heard a consultant’s report on a proposed municipal broadband pilot project that would use $9.6 million of the City’s American Rescue Plan Act (ARPA) funds. The commission had previously voted to set that money aside for broadband at their March 3 meeting.

“Reduced pilot project” to cover 2400 residences

Courtney Violette from Magellan presented a “reduced pilot project” for fiber-to-home deployment. He mentioned that Cox already has “fairly well-universal connectivity across the city,” but the presentation’s comparison of plans from AT&T, Cox, and GRUCom made no mention of Cox’s free broadband program for low-income residents.

The pilot program would cover portions of east Gainesville, including 2400 residential units and 550 businesses of various sizes, and the fiber deployment would cost an estimated $5.5 million. The total required startup capital was estimated at $8.7 million, with annual operating costs of $563k plus 3 new full-time positions.

The projected pricing ranged from $30/month to $79.95/month for residential service, depending on the desired speed. The federal government offers a $30/month subsidy under the Affordable Connectivity Program.

The project is projected to break even financially if 25% of the residential units and 15% of the businesses opt for the municipal broadband service.

Violette told the commission that risks of the project include lawsuits; local marketing campaigns to influence public opinion; lobbying the legislature to limit municipal providers; public relations campaigns against City-provided services; other market factors including price cuts, increased speeds, and/or network upgrades from competitors; not meeting the break-even take-up rates; and cost increases. Violette projected that the project could be up and running in about 12 months.

The commission had also requested an overlay of wireless service in the area, but the consultant recommended against that because of the cost and the fact that availability of free wireless internet could reduce up-take of the municipal broadband service.

The consultant recommended that the City communicate with its residents about existing broadband programs, deploy WiFi in public spaces, and build fiber where needed. Violette pointed out that a number of funding sources for broadband are ramping up from both the state and federal governments, but details are not yet available.

Charter officers recommend against the plan

Gainesville Regional Utilities (GRU) Interim General Manager Tony Cunningham said that GRU’s staff concluded that the business plan presented by Magellan is sound, but they saw competition as a “very big risk, as well as cost escalations, “especially in the environment we’re in now.” He pointed out that GRUCom, GRU’s internet division, “can’t have losses; we can’t subsidize GRUCom” from the other divisions. He said GRU’s recommendation is that “this can’t be a business that GRUCom can take on.”

Interim City Attorney Daniel Nee told the commission he is concerned that the City would be entering a marketplace rather than providing a service. He said that deploying municipal broadband could open the City to attacks in the areas of unfair pricing and unfair competition: “Win or lose, fighting the challenges that might come from competitors… is an expensive proposition.”

Senior Assistant City Attorney Lisa Bennett told the commission that there are no legal prohibitions to using ARPA funds for the project, but her concerns were about “how you operate once you’re in the market.” She said that antitrust litigation heavily favors plaintiffs and that even if the City won, they would probably not recover attorneys’ fees. She also said that using City funds to subsidize or expand broadband could violate the law.

Interim City Manager Cynthia Curry also did not support the project, saying that the General Government side has “no resources to drive this.” She also said they had “probably exhausted the consulting services into this project” and added, “We have no expertise on the General Government side to actually push this project forward.”

City commission divided on whether to proceed

Commissioner Adrian Hayes-Santos, who attended the meeting remotely “out of an abundance of caution” and has championed the municipal broadband program for years, said that “hundreds of cities have done municipal broadband.” He asked Bennett if she was aware of a lawsuit against any of those cities, and Bennett simply responded, “No.” Hayes-Santos said the City should be fine if they don’t “do predatory pricing, you don’t do deceptive practices… [The legal risk] is a little overblown, in my opinion.”

Hayes-Santos asked Violette if the City was in a position to be successful, and Violette said he didn’t have a crystal ball: “If you can’t finance or fund the project, that’s a hurdle” that each community has to figure out. Violette said Magellan has “a lot of belief that GRUCom could be successful.”

Hayes-Santos said the commission talks a lot about how to save residents money, including by cutting utility bills and property taxes, but this project would save money for the people in the pilot project area. He also said that Ocala is seeing 45% uptake rates for their municipal broadband initiative. “I believe this is low-hanging fruit; it’s a pilot project” that could turn GRUCom around. Hayes-Santos also argued that ARPA funds should be used for “transformational projects” like this: “If we don’t do this, it would be an incredible detrimental mistake on the part of the commission.”

Commissioner Cynthia Chestnut pointed out that their charter officers recommended not proceeding with the project and that the City has already spent $20,000 researching antitrust implications with an outside law firm. She said the project would be “costly to the City, costly to our taxpayers, and after much research… will not work.” She said the City has a once-in-a-lifetime opportunity to invest in housing with the ARPA money.

Commissioner Harvey Ward said that both Hayes-Santos and Chestnut were right, but it is a mistake to look at whether the project would turn a profit: “Cities provide services to the people who live there. We’re not here to make a profit; we’re here to make life better for people in the community.”

With that said, Ward said the plan didn’t make sense to him because it would only serve 4% of the City’s residents for almost $10 million. He said they should put a bond issue on the ballot so voters could make the decision on whether to spend that money and then provide broadband as a service, “like the streets.”

Ward also pointed out that “we don’t have any staff champions for this – none… We don’t have the people to get it done.” He said $10 million gets a lot of housing done.

Commissioner Reina Saco said, “I very much want GRUCom to offer internet services, but… I’m not 100% convinced that $9.6 million will do a lot… I want it done right.” She also supported putting it out to voters as a bond issue.

Commissioner David Arreola said they didn’t have to make a final decision today and added, “GRUCom is already subsidized by the other utilities.” He said that federal infrastructure funds could be used in the future and that the City could build around 125 housing units with the money. However, he was “still in support of our municipal broadband… This is the only project that’s been presented that could turn [GRUCom] around.”

Mayor Lauren Poe tried to stop the other commissioners from bringing housing into the discussion, saying, “This discussion is specifically about broadband,” although he acknowledged it was appropriate for commissioners to discuss their priorities for their remaining ARPA funds (estimated at close to $13 million by Curry). He said the proposed broadband program isn’t really a pilot because “once we make this investment, we can’t just end it, undo it.”

However, Poe said the services are needed: “We’re one of the most advanced economies the world has ever seen, and we’ve got kids sitting outside Taco Bell to do their homework. That’s not acceptable.” He said broadband would “remain something that is important to me… It just needs to be with the right funding, in the right time.”

Hayes-Santos made a motion to move forward with the pilot program as presented, and Arreola seconded the motion.

During public comment, Aimee Pfannenstiel from Cox Communications told the commission, “The areas you’re highlighting are already 100% covered. They have access.” She also said the Cox packages described in the Magellan report “lack accuracy” because some residents qualify for free internet through Cox programs. She pointed out the ongoing costs of technology upgrades and said that in the seven years the commission has been discussing this, Cox has invested $160 million in technology upgrades. She asked, “Is the City ready for this type of ongoing investment?”

Pfannenstiel said that the City of Tucson spent federal funds during the pandemic to create its own internet network, and it was used by fewer than 1,000 households at a rate of nearly $7,000 in costs for each family served.

Votes favor spending ARPA funds on housing, seeking other funds for broadband

Hayes-Santos’ motion failed, with only Hayes-Santos and Arreola voting in favor of moving forward with the pilot project as presented.

Chestnut made a motion to use $8 million of the City’s remaining ARPA funds to address affordable housing. Commissioner Desmon Duncan-Walker seconded the motion.

Poe said he wasn’t prepared to talk about housing at today’s meeting and favored asking Curry to bring a proposal to a July meeting.

Chestnut objected, saying they had deferred decisions on spending ARPA funds until they had the Magellan report: “I think we’re at a decision point… We can’t keep kicking this ball down the read.”

Saco also objected, saying that the topic of housing had not been noticed for that meeting: “I’m not going to make a decision blind… [This vote] is an insult to our neighbors… I’m going to vote no on this out of common decency.”

Ward said that supporting Chestnut’s motion would give City staff an opportunity to come back with specific proposals for how to use the funds for housing, which the commission would discuss with public input at a future meeting.

Arreola asked Chestnut to amend the motion to ask staff to seek out other funding options for broadband, including state and federal funds, and she agreed.

The commission voted 5-2 to set aside $8 million in ARPA funds for affordable housing, with Poe and Saco in dissent. They voted separately on the motion to ask staff to find other funding options for broadband, and that passed unanimously.

  • Saco has gone from shaking her middle finger around at people she disagrees with to chastising others about common decency? That’s rich. I hope everyone got a good look at Bryan Eastman when he spoke (he seemed like a completely brain-dead soyboy). He could potentially be even worse than Poe if he wins.

  • Did Adrian-Hayes pee his diaper? Probably didn’t come because he found out he was outnumbered and didn’t want to cry in front of the whole town. One of the most inexperienced (has he EVER had a professional job?) know-it-all wannabes ever on the commission. This project was a complete disaster waiting for some sucker to waste millions. It would have wound up just like Tucson with very few paying customers, and most of those few paying only $30. This sounds nearly identical to the nearby Dunnellon fiasco that almost bankrupted them a few short years ago. It was $8 million to start, all fiber, and going to provide a service to citizens. Sound familiar? They sold the scraps for only $1 million a couple years in. (Google it and see). Duh.,,it don’t work!!!

  • It’s funny to see lame duck Poe being disregarded by all on many fronts. Finally people see him for what he’s worth, a rotten watermelon full of grease and puke. Him and a few weak followers that he led ruined much of what our city had going for it. It will take years to dig out of the debt, pension shortages, false financial statements and alienated citizens that he has been the architect of. Say Never again!

  • As much as people complain about the occasional Cox glitch, for them to show up and say “Umm, hello..you’re wrong. There’s service that we have put $160 million of our money into the city for you, and many of those people qualify for free service”. Should have been a mic drop moment. Seems like the conversation continued. The commissioners should have said – let’s get some PR out there about that and move the conversation on. Nope, endless chatter just to hear themselves talk. They talk in circles and are not efficient. Just address the issue and move on.

    • Totally agree. But what you don’t realize is lib dem zealots like these idiots will NEVER recognize good works from private industry (unless they were paid off). Gov solutions are the only thing they think can fix anything. And, they want to be in control if it. It’s time to rid all gov lib zealots in charge of anything from animal control on up. The fiscal state of Gainesville is completely in the toilet as a result of Poe, Ward, and lying minority imposter Hayes-Sucktos (not Hispanic, from Canadian whites). Nothing worse that a lib lying in order to be a minority and a victim ( their highest goal.)

  • Don’t be fooled. City leadership realized GRU is their cash cow…the golden goose if you will. If you have a house within the city, you are more often than not, enslaved/chained/dependent, whatever you want to call it, to GRU provided utilities. Who runs it? City leadership. It brings in far more funds than any cable ever will.

    Don’t be fooled by their “fake” generosity. If they thought of it, it’s probably not for the benefit anyone but themselves and their own pocketbooks.

  • You don’t need broadband to do your homework.
    In fact, all those electronics makes the city’s carbon
    Footprint higher. They should go back to books &
    Chalkboards to save energy & the planet

  • What a joke that they have spent all this time discussing a non-feasible option. The issue has always been housing. It’s obvious they used their puppet Feldman to push their agenda and now that the policies are exposed (and he’s vanished or banished depending on how you look at it), the enormous waste of taxpayer money to pay for South Florida consultant mumbo jumbo is being chopped to pieces. Give us a break Ward – you walked on the other side until now when you realized your plans won’t win voter support. Nothing like am impending mayor’s race to put someone in check!

    • Most of us know Ward is quite capable and adept at straddling the fence… he’s got no balls.

      • Good ole “No Balls Ward” may siphon off a merger number of idiot votes while going down in flames, that’s doing a service at least! Then good riddance Lard Man!

    • I have spotted only ONE Harvey Ward for Mayor Sign (in front of the IBEW Local Union 1205 on NW 6th Street). Bielarski seems to be winning the Mayor Yard Sign Race, and in District 4 Christian Newman is vastly outnumbering Democrat Corrupt Machine Candidate Eastman in the Yard Sign Vote

      • Maybe voters are starting to smell the stench of the POS since they’re not mandating masks anymore.

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