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05.26.15 EDA Packet
AGENDA REGULAR ECONOMIC DEVELOPMENT AUTHORITY MEETING May 26, 2015 6:30 PM Room 169 Todd Larson, Chair; Geraldine Jolley, Vice -Chair Douglas Bonar, Steve Wilson, Kirk Zeaman 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVE AGENDA 5. CITIZENS COMMENTS 6. CONSENT AGENDA (a) Meeting Minutes (3/23/15 Regular Meeting) (b) Monthly Statements 7. PUBLICrHEARINGS 8. DISCUSSION ITEMS (a) Commercial Rehabilitation Grant Application - 341 Third Street (b) Property Acquisition and Business Expansion 9. DIRECTOR'S REPORT (a) May Director's Report 10. ADJOURN City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 - Fax 651.280.6899 www.ci.farmington.mn.us TO: FROM: SUBJECT: DATE: Economic Development Authority Adam Kienberger, Community Development Director Meeting Minutes (3/23/15 Regular Meeting) May 26, 2015 INTRODUCTION/DISCUSSION Please find attached the EDA meeting minutes from March 23, 2015. ACTION REQUESTED ATTACHMENTS: Type o Backup Material Description Meeting Minutes (3/23/15 Regular Meeting) MINUTES ECONOMIC DEVELOPMENT AUTHORITY Regular March 23, 2015 1. CALL TO ORDER The meeting was called to order by Chair Larson at 6:30 p.m. Members Present: Members Absent: Also Present: Larson, Jolley, Bonar Wilson, Zeaman Adam Kienberger, Community Development Director; Paul Often, Chris Kulus - FBA 2. PLEDGE OFALLEGL4NCE 3. ROLL CALL 4. APPROVE AGENDA MOTION by Jolley, second by Bonar to approve the Agenda. APIF, MOTION CARRIED. 5. CITIZEN COMMENTS/PRESENTATIONS 6. CONSENT AGENDA MOTION by Jolley second by Bonar to approve the Consent Agenda as follows: a) Meeting Minutes (2/23/15 Regular meeting) b) Monthly Statements APIF, Motion Carried. 7. DISCUSSION ITEMS a) Commercial Rehabilitation Grant Application — 400 3' a Street — Director Kienberger introduced Paul Otten whose application they will be discussing. Mr. Often is requesting $22,087 for improvement to eliminate conditions detrimental to health & safety. Both city staff and CDA staff feel this request meets the requirements. • Applicant to provide a 1 :1 dollar match • Competitive bidding • Davis -Bacon Wage Act (payment of prevailing wages to contractors) MOTION by Bonar second by Jolley to recommend approval and forward to the City Council for action. APIF, Motion Carried. b) Business Subsidy Policy Update — Director Kienberger reviewed the updates to the policy as previously discussed. Motion by Jolley second by Bonar to forward to the City Attorney for review and for the EDA to review annually. APIF, Motion Carried. 8. DIRECTOR'S REPORT March Director's Report — State of the City Address was held at City Hall on March 18th with approximately 30 people attending. Council strategic plan update Council and City staff discussed the 2014 plan and discussed how to transition it into 2015. Priorities included organizational efficiencies, VRC progress, citizen survey results, and financial planning for the future. Director Kienberger briefly EDA Minutes (Regular) March 23, 2015 Page 2 updated the board on the broadband issue. Building permits are anticipated to be lower this year due to lot inventory. Member Jolley asked about the church going into the Exchange Bank building and if they have asked for any assistance. Director Kienberger indicated that they have not. Member Jolley asked about business visits and encouraged members to notify the Director if they know of any business that would like a visit. Member Bonar asked if the Director had heard back from the Renaissance Festival organizers with regard to a new location for the event. Unfortunately, he has not. 9. ADJOURN MOTION by Jolley, second by Bonar to adjourn at 7:36 p.m. APIF, MOTION CARRIED. Respectfully submitted, Sue Miller Administrative Assistant City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 - Fax 651.280.6899 www.ci. farmington.mn.us TO: FROM: SUBJECT: DATE: Economic Development Authority Adam Kienberger, Community Development Director Monthly Statements May 26, 2015 INTRODUCTION/DISCUSSION Please find attached the monthly statements and bills for the EDA. ACTION REQUESTED ATTACHMENTS: Type © Backup Material o Backup Material 13 Backup Material Description January -March EDA Budget Summary March -April Bills April -May Bills % ; ar a u |a .43 $ 247,144.43 $ 247,144.43 $ 247,144.43 $ 247,144.43 $247,144.43 $ 247,144.43 $247,144.43 3251,384.27 $ 257,592.79 $ 264,400.93 $ 247,144.43 $ 247,1 giq Of •cr .E 22gEV4 $ 7,444 $ 29,706 ) crTvi 3 4 4/23/2015 11:31:03 CITY OF FARMINGTON 0 0 co 0 -J N N U N Council Check Summary Note: Check Amount may not reflect actaul check total due to sequence of data 3/16/2015 - 4/23/2015 Co Dept Div BU Description Subledger Account Description O z c 0 Z 0 0 0 0 Z yO 2 Z J J W m 0 Q U Supplier / Explanation C O E O O N O N N N D O 0 U a HRA/ECONOMIC DEVELOPMENT 02000 03 2000 6403 135864 1652 -000 FEB'15' 61.20 FEB EDA LEGAL SRVS - NON RETNR O N 0 131554 4/3/2015 HRA/ECONOMIC DEVELOPMENT 02000 03 DEVELOPER PAYMENTS 136165 CDBG 2014 REHAB 2000 6550 19,000.00 CDBG GRANT, 2013 FIRE SUPPR H Z 0 O O O FARMINGTON PRINTING INC N 0 O 131566 4/3/2015 HRA/ECONOMIC DEVELOPMENT 02000 03 OUTSIDE PRINTING O N CD 0 00 N 136170 12050 90.00 OFFICE SUPPLIES, EDA KIENBERGER, ADAM A 10 131577 4/3/2015 HRA/ECONOMIC DEVELOPMENT 02000 03 MILEAGE REIMBURSEMENT MAR 5 -26 EXP REIMB2000 HRA/ECONOMIC DEVELOPMENT 02000 03 TRAINING & SUBSISTANCE MAR 5 -26 EXP REIMB2000 m 0) N- N- N N 0 CO M CO REIMS MILEAGE, MTGS REIMB CHMBR MTG LUNCH Cr. M 0 CO • O 0 N 1- h 0 0 a 0 5/20/2015 9:49:59 CITY OF FARMINGTON 0) a Council Check Summary W (0 'O O 0) U C 0) 0 0) N O 0) 3 W O U v L U 3 tiW U W a) O C 01 O E co .-. an < 0 a) U Y U tr) 0 (O O Z Co Dept Div BU Description Subledger Account Desc I-IRA/ECONOMIC DEVELOPMENT 02000 03 0 Z c 0 z 0 0 0 0 z 0 z J J W m a a 0 N O O Supplier / Explanation C E 0 (0 O 131773 4/24/2015 136537 1852 -000G MAR'15 2000 MAR EDA LEGAL SRVS, NON -RETR O N 113579 KIENBERGER, ADAM 131942 5/8/2015 I-IRA/ECONOMIC DEVELOPMENT 02000 03 MILEAGE REIMBURSEMENT 137072 APRIL EXP REIMB 2000 6485 MTGS MILEAGE REIMB 0) N 0) N City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 - Fax 651.280.6899 www.ci.farmington.mn.us TO: FROM: SUBJECT: Economic Development Authority Adam Kienberger, Community Development Director Commercial Rehabilitation Grant Application - 341 Third Street DATE: May 26, 2015 INTRODUCTION/DISCUSSION Staff has received a completed application from Town Properties, LLC (Anne Olson and business partners) for a Commercial Rehabilitation Grant for the building they recently purchased at 341 Third Street in Downtown Farmington (between Heikkila Studio and Market on Oak). Staff has reviewed the application and worked in coordination with the Building Official and the Dakota County CDA to recommend approval of a $35,000 grant for necessary improvements to eliminate conditions detrimental to public health and safety. DISCUSSION Earlier this year, the EDA recommended, and the City Council authorized application for the City of Farmington to allocate its 2015 CDBG allocation (estimated to be $42,717) to the Commercial Rehabilitation Grant program. This program has been very successful in Farmington over the past several years, and encourages local building/business owners to reinvest in public health and safety improvements in Farmington. A program summary is below: Grant funds may be available to assist local businesses and /or property owners who are making qualified improvements to eligible commercial properties that eliminate conditions that are detrimental to public health and safety. The following are examples of qualified improvements: correcting code violations, code improvements, and the correction of handicap accessibility issues. The intent of the grant program is to prevent the deterioration of commercial structures and discourage blight, encourage projects that correct code violations and to eliminate accessibility restrictions. Requirements of the program include, but are not limited to the following: • Applicant providing a 1:1 dollar match • Competitive bidding • Davis -Bacon Wage Act (payment of prevailing wages to contractors) A location map, project description, and pictures are attached. The grant will cover roof replacement, brick tuck pointing /repair, ADA bathroom improvements, and structural repairs. While the grant amount requested is $35,000, the applicant is providing matching funds of exceeding $42,500 along with additional improvements to the building and second floor apartments. After renovations, they will open Town Sports sportswear and have two leasable apartment units on the second floor. ACTION REQUESTED Recommend approval to the City Council of the Commercial Rehabilitation Grant application for the Town Properties, LLC 341 Third Street building in the amount of $35,000. Final approval will result in the City entering into a grant agreement with Town Properties, LLC funding the improvements outlined above. ATTACHMENTS: Type Description ® Exhibit Project Description & Pictures D Exhibit Location Map PROPERTY INFORMATION ESTIMATED DATE OF BUILDING CONSTRUCTION 1910 ESTIMATED CURRENT TAX MARKET VALUE $153,500 NUMBER OF STORIES 2 NUMBER OF BUSINESSES 1 NUMBER OF BUILDINGS 1 NUMBER OF APARTMENTS 2 HAS THIS BUILDING BEEN HISTORICALLY REGISTERED? NO PROJECT INFORMATION BRIEF DESCRIPTION OF PROPOSED PROJECT: COMPLETE RENOVATION TO ADDRESS STRUCTURAL DEFECTS INCLUDING REPLACEMENT OR REINFORCEMENT OF STRUCTURAL BEAMS, REPAIR FACADE, ROOF REPLACEMENT, BATHROOM UPGRADES TO ADA- COMPLIANT PUBLICLY ACCESSIBLE, RENOVATION OF APARTMENTS AND UPDATE ALL NON - COMPLIANT CODE ISSUES. GOAL IS RENTABLE SECOND FLOOR APARTMENTS AND OPENING OF COMMERCIAL BUSINESS ON FIRST FLOOR IN WHAT HAS BEEN A VACANT BUILDING FOR OVER NINE YEARS. SEE ENCLOSED PHOTOGRAPHS OF CURRENT BUILDING CONDITION. ESTIMATED PROJECT COSTS Improvements eligible for grant funding eliminate specific conditions detrimental to public health and safety. EXTERIOR/FACADE: ROOF REPLACEMENT, TUCK POINTING, WINDOW REPLACEMENTS, AWNING REPLACEMENT ESTIMATED COST $35,000 INTERIOR: BATHROOM ADA COMPLIANCE, STRUCTURAL REINFORCEMENT ESTIMATED COST $15,000 ELECTRICAL: REWIRING, CODE COMPLIANCE ESTIMATED COST $10,000 PLUMBING: CODE COMPLIANT UPGRADES ESTIMATED COST $10,000 MECHANICAL: CODE COMPLIANT UPGRADES ESTIMATED COST $5,000 FIRE SUPPRESSION CODE- COMPLIANT CEILING ESTIMATED COST $2,500 TOTAL ESTIMATED COST: $77,500 2 DOCS - #4630084 -v l f Print Preview http: / /gis.co.dakota. mn.us /DCG 1 S/ WebForms /Print.aspx ?img= http: / /gis.... 341 Third Streeet 1 of 1 5/19/2015 3:24 PM City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 - Fax 651.280.6899 www.ci.farmington.mn.us TO: FROM: SUBJECT: DATE: Economic Development Authority Adam Kienberger, Community Development Director Property Acquisition and Business Expansion May 26, 2015 INTRODUCTION/DISCUSSION Staff was contacted approximately six months ago by Seth Brittain, owner of This Little Piggy Catering in Farmington, regarding the parcel of land directly south of his existing location on Highway 3 (22282 Chippendale Avenue). Mr. Brittain noted that his business was growing rapidly and was interested in expanding at his existing location if possible. With not enough room to grow on his current site he wanted to know if there were plans for the site just south of his building. As the parcel is now in tax forfeit status, staff requested Dakota County place a hold on the parcel for six months to discuss the possible acquisition and expansion onto by the business. In communication with the Dakota County Property Taxation Manager, Dakota County has assigned a sale price of $90,000 to the 2.2.1 acre piece of property. Additional property details are attached. Staff recommends the City purchase the roe ` from the State of Minnesota via Dakota County for ty P P P rty $90,000 plans and €in,0073 in related Thee afeeswill then n d holds s same This Little Piggy Catering finalizes expansion, p financing. parcel me price to This Little Piggy Catering. At closing a development agreement would require both the new parcel and existing parcel be platted to clean up right of way boundaries for Highway 3, Carver Lane, and the frontage road in front of both parcels. Parcels would be combined to form a single conforming commercial lot zoned B -1 Highway Business. We have had several meetings with the business and they are interested in moving forward with this process as they develop their expansion plans for Farmington. They are currently hiring several positions and are eager to grow their business here. Because the City will likely retain ownership of the parcel for a few months while platting and financing are put in place, there will be some associated costs staff is proposing be waived or absorbed by the EDA and City. While it is not uncommon for a municipality to purchase property for economic development purposes, there are some costs and potential risk involved (attorney fees, holding costs, platting costs). While unlikely, there is a possibility the City would retain ownership of this commercial piece of property if the expansion plans fall through. The risk of not acquiring this parcel now is that an outside party could potentially purchase it and use it for another purpose. ACTION REQUESTED Recommend the City Council authorize purchase via resolution of the tax forfeit parcel 14- 00500- 250 -14 to facilitate the expansion of This Little Piggy Catering in Farmington. ATTACHMENTS: Description Location Map Property Information Attachment SITE MAP PIN # 14- 00500 -25 -014 Parcel of Interest Print preview http: / /gis.co.dakota.mn.us /DCGI S/ WebForms /Print.aspx ?img= http: / /gis.... 14- 00500- 250 -14 FN"F._ "� NIALt Parcel ID Owner Joint Owner Owner Address Owner Address2 City /State /Zip Common Name Site Address Municipality Primary Use Use 2 Use 3 Use 4 Homestead Year Built Building Type Building Style Foundation Sq Ft Above Grade Finished Sq Ft 140050025014 Garage Sq Ft STATE OF MN - F TAX Other Garage Misc. Building % TREASURER AUDITOR Estimated Land Value $170,100 1590 HIGHWAY 55 Estimated Building Value $0 HASTINGS MN 55033 Tot& Estimated Value $170,100 Special Assessments $0 Total Property Tax $0 FARMINGTON Date of Sale (Improved) Exempt Sale Value (Improved) $0 Date of Sale (Vacant) Sale Value (Vacant) Total Acres 2.21 NON HOMESTEAD Total Lot Sq. Ft. 96,407 0 RW Sq. Ft. 28,385 Water Sq. Ft. School District 192 Watershed District VERMILLION RIVER 0 Plat Name SECTION 5 TWN 113 RANGE 19 Finished Sq Ft Tax Description Frame W 330 FT OF S 1/2 OF NW 1/4 LYING N OF 5808.5 FT & LYING S OF N 222 FT Lot and Block 5 113 19 Bedrooms Status 1 of 1 5/20/2015 8:35 AM City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 - Fax 651.280.6899 www.ci.farmington.mn.us TO: Economic Development Authority FROM: Adam Kienberger, Community Development Director SUBJECT: May Director's Report DATE: May 26, 2015 INTRODUCTION/DISCUSSION Broadband Update Craig Ebeling (consultant to the Dakota County CDA) and Lisa Alfson (Community & Economic Development Director of the CDA), provided an update to the City Council at their May 18th work session on the broadband study the CDA commissioned last year. Farmington staff will continue to work with other Dakota County cities on this initiative and provide updates to the EDA and Council as the implementation progresses. It is anticipated a joint powers agreement will be in place sometime around September to outline roles, responsibilities, and financial participation requirements to the cities and county. Planning Commission Work Session The Planning Commission will be holding a work session on Wednesday, May 27th to discuss a variety of topics, several of which include possible zoning ordinance amendments to address emerging business trends. Related topics are scheduled to include: breweries/brew pubs, data centers, solar farms, and home occupations. By proactively identifying emerging business trends and reviewing existing zoning ordinances, we seek to positively impact the perception of the business climate in Farmington. Building Permit Report As of May 18th, a total of 19 permits have been issued for new residential construction. All 19 have been for single - family. The City's lot inventory is 190 lots. During 2014, the City issued a total of 87 single - family building permits. Miscellaneous Articles Attached are a couple of articles you may find of interest. The first one discusses the debate surrounding proposed financial incentives for Amazon to locate a distribution center in Shakopee. The other two are broadband related articles that discuss the future of broadband technology and ties to economic development. NEXT MEETING Our next regular meeting is scheduled for Monday, June 22 °d ACTION REQUESTED None, this report is intended to be a monthly update on various development and industry related topics. ATTACHMENTS: Type Description Backup Material EDA Articles Shakopee considers tax incentives to lure Amazon distribution center City Council will consider a nine -year, estimated $6.4 million tax increment financing package for Amazon on Tuesday. By Emma Nelson Star Tribune May 18, 2015 — 9:58am In this Oct. 18, 2010 file photo, an Amazon. com package is prepared for shipment by a United Parcel Service driver in Palo Alto, Calif. Shakopee is poised to join cities across the nation that have offered millions of dollars in tax incentives in order to snag Amazon.com Inc. distribution centers along with the jobs and the speedy delivery they promise. The 820,000- square -foot warehouse on Shakopee's docket is expected to bring 1,000 full -time jobs and faster delivery around the Twin Cities region. The Shakopee City Council will consider a nine -year, estimated $6.4 million tax increment financing package for Amazon on Tuesday. If approved, it would position the nation's largest online retailer as the most prominent addition to the business community in Shakopee, where city officials have aggressively courted companies with tax incentives. In the last two years, the city has offered $1.7 million to draw Shutterfly to the southern suburb and lure Datacard and Emerson Electric from elsewhere in the Twin Cities metro area. Some in Shakopee and elsewhere are excited about the growth and are confident that the tax incentive for Amazon is a worthwhile investment. Others are nervous about pouring money into another company when some businesses already are complaining about a shortage of workers — a problem worsened by a lack of transit. And at least one City Council member is concerned about Amazon's long -term intentions when the tax incentives expire. "In nine years, are they going to come back and say `Either we get more or we leave ?' " said Council Member Mike Luce. Fast growth By the numbers The nation's largest online retailer is planning to open a distribution center in Shakopee -- and asking the city for tax incentives.'Here are some stats on the Seattle -based company. 20: Years since the website went live in July 1995 $89 billion: Annual sales in 2014 735: Number of U.S. data and fulfillment centers Amazon owns 154,100: Full -time and part -time employees as of Dec. 31, 2014 Shakopee's workforce grew nearly 25 percent between 2004 and 2014. But many are commuters — in Scott County as a whole, about three - quarters of the workforce is employed elsewhere. In an effort to tamp down the daily exodus, Shakopee has opened its arms to a slew of new companies and added about 1,500 jobs. The Amazon distribution center is expected to open in 2016, built on a piece of land that's long sat empty. "Local officials are under a lot of pressure to demonstrate that they're creating jobs," said Stacy Mitchell, co- director of the Institute for Local Self - Reliance. "When you have an empty piece of land and it turns into a warehouse, it certainly seems like economic development." But some of Shakopee's new companies already are struggling to fill jobs. At an April 29 Economic Development Advisory Committee meeting, Chairman Kevin Wetherille said he's heard from local employers looking for workers, especially in Amazon's wage bracket. "With that wage range from like $12 to $18 an hour, our local market is tapped out for those jobs," said Mayor Brad Tabke. Amazon has analyzed the region's workforce and isn't anticipating a problem. But Stacy Crakes, business development manager at Scott County's First Stop Shop, said the data Amazon reviewed are outdated and don't reflect recent business growth. The First Stop Shop is conducting a new workforce analysis on the county level, she said. Meanwhile, staff at the city, county and state levels are trying to figure out options for mass transit so that out -of -town Amazon employees will be able to get to work. Past practices Amazon has been criticized for its treatment of towns where its distribution centers are located, as well as for its treatment of workers. The company has stated that it intends to build a distribution center near every major U.S. metropolitan area, Mitchell said, regardless of financial incentives. "That's what's so frustrating about this, is that we've got the use of limited taxpayer resources going to fund something that is going to happen anyway," she said. At the April 29 committee meeting, Amazon's director of economic development, Mike Grella, touted the company's treatment of employees. Workers at the Shakopee facility will be paid $12 per hour minimum and $16 on average, plus benefits, stock grants, even tuition reimbursement, he said. "We are aware that there are other facilities and large employers here, and so we need to compete for that top talent," Grella said. But Seattle -based Amazon has faced multiple lawsuits for conditions at its distribution centers. Workers have described intense time pressures, overheated warehouses and being told to lie about workplace injuries. This weekend, two Shakopee council members and the city's economic development coordinator are visiting an East Coast distribution center similar to the ultramodern facility envisioned for Shakopee. "I fully expect that they'll get a great representation of what it is and what it looks like to work and be part of Amazon's infrastructure," Tabke said. In exchange for the estimated $6.4 million TIF package — of which Amazon is expected to capture about $3.3 million in net revenue Amazon's investment in Shakopee will total about $220 million. Billy Wermerskirchen, the owner of Bill's Toggery for Men in downtown Shakopee, said he's been happy to see business growth in recent years. Though he already faces some competition from Amazon, he said, he isn't too worried about a new distribution center just a few miles from his clothing store. "A tailor is something you can't find on the Internet," he said. Economic Development and Fiber I POTs and PANs http : / /potsandpansbyccg.com/2015 /04/24 /economic - development -an... POTs and PANs Pretty Advanced New Stuff from CCG Consulting RSS Feed Facebook April 24, 2015 Economic Development and Fiber 1 Comment (https://potsandpartsbyccg.files.wordpress.com /2015 /04 /sibley1898.gif)One of the main reasons smaller communities give for wanting fiber networks is economic development. They believe that fiber will help them attract new jobs or keep existing jobs. There are examples where fiber networks have led to these two things directly, but it's not always so clear cut I know one rural town that can attribute over 700 new jobs directly to fiber. The call centers and defense firms that came to the town said that fiber was the main reason they chose that community. And I know of another town that built fiber and was able to convince the major employer in town not to relocate elsewhere. But economic development is a funny thing and fiber projects often don't lead to these kinds of direct home runs — where fiber is the major reason for economic improvement. I saw an announcement this morning that shows there's often a more tenuous line between cause and effect. The city of Gaylord, Minnesota just announced that a medical school is going to be built there. Gaylord is a small city in a rural county in Minnesota that is known more for growing Del Monte corn and producing ethanol than they are for attracting things like a medical school. But Gaylord is in Sibley County which has been actively pursuing fiber for over five years. They are within months of completing financing and starting construction of a county -wide fiber network that is going to pass homes and businesses in 10 towns and the surrounding farms. Gaylord learned about the potential for attracting the medical school as part of their investigation into building fiber, and without the fiber initiative they would never have known about or pursued the medical school. You can't draw a direct line between the medical school and fiber because there are certainly reasons other than bandwidth why a medical school would locate in a rural location. But by the same token, the fiber is a very important part of why the area was chosen. The desire for fiber 1 of 3 4/24/2015 3:16 PM Economic Development and Fiber POTs and PANs http: // potsandpansbyccg. com / 2015 /04/24 /economic - development -an... clearly shows how progressive the area is in terms of being friendly to technology. And it certainly is not going to hurt in attracting staff and students to a medical school if they know that they can get gigabit fiber at home. Clearly, something like a medical school will be great for a small community. It will attract high - paying jobs, which is going to boost real estate and rentals for students. It's likely to attract a new hotel, and one can imagine that there are numerous businesses in town that will do better simply because of the presence of the medical school — it's going to be good for local banks, car dealers, restaurants, grocery stores — you name it. I would certainly put this into the category of success due to fiber because it's clear that without the fiber initiative this probably would never have happened. But the impact of fiber on rural communities is often more subtle than this. One thing that you don't hear mentioned in public discussions of economic development is the phrase brain drain. But every rural town and county in the country is extremely aware of this phenomenon. Rural families almost universally lament that there are not enough jobs for their kids, and it's routine for high school or college graduates from rural areas to relocate elsewhere to find work. Fiber can't, by itself, solve this problem for a rural community. But it helps. A fiber network generally creates a few new technical jobs. But more importantly, it gives people the ability to work from home. I've noted numerous times in this blog how poor the bandwidth is in rural America. There are numerous jobs today that people can do at home. My consulting company went virtual a few years ago and we all live in small towns and work from home. Bandwidth allows writers, architects, engineers, salespeople, and all sorts of employees to create a home base in a place they want to live while working from home. So, for every success of a town getting something amazing like a new medical school, there are hundreds of small successes in the form of people using bandwidth as the tool needed to live where they choose rather than have to move to a big city to find work. The income and tax base that such people bring to the rural communities that have bandwidth probably has an overall larger impact than the occasional home run. It's just very hard to measure because it happens under the radar. Posted by CCGConsulting in The Industry One thought on "Economic Development and Fiber" 1. Frank Ohrtman says: April 24, 2015 at 11:45 am "brain drain "? Try people drain. My home town of Pomeroy, Iowa has essentially died. Here is a NY Times story featuring Pocahontas 10 miles north of Pomeroy: http: / /www.nytimes.com/ 2014 /10/21/us/ politics /iowa- senate - election.html? r =0 *Like Like 2 of 3 4/24/2015 3:16 PM Wireless is Not a Substitute for Wireline 1 POTs and PANs http: / /potsandpansbyccg. com/ 2015 /04/27 /wireless -is- not -a- substitute... POTs and PANs Pretty Advanced New Stuff from CCG Consulting RSS Feed Facebook April 27, 2015 Wireless is Not a Substitute for Wireline 1 Comment (https:// potsandpansbyccg. files.wordpress.com /2014/02/cell- tower.jpg)Any time there is talk about government funding for broadband, arguments arise that wireless broadband is just as good as wireline broadband. But it is not the same and is not a substitute. I love wireless broadband and it is a great complement to having a home or business broadband connection, but there are numerous reasons why wireless broadband ought not to'be funded by government broadband programs. The most recent argument for wireless broadband comes the Minnesota House which is currently in session. In last year's legislative session, Minnesota approved a $20 million grant program to help expand broadband in rural areas of the state. That grant was distributed to a number of broadband projects, all wireline, which required a significant matching fund from an entity building the wireline facilities. The 2014 funding, which mostly went to independent telephone companies, is being used to bring broadband to thousands of rural residents as well as 150 rural businesses and 83 rural schools and libraries. But the chairman of the House Job Growth and Energy Affordability Committee in Minnesota killed an additional state grant; it's been left out of this year's House budget. Rep. Pat Garofalo, R- Farmington, said that wired broadband is too costly in sparsely populated areas and believes that wireless and satellite technologies are more financially effective. In another case, Verizon recently got the New Jersey State Board of Public Utilities to agree that it could use LTE data plans as substitutes for homes that are losing their copper or DSL services. Another place where this same argument is being made concerns the upcoming funding from the Connect America Fund, which is part of the federal Universal Service Fund, and that is being directed towards expanding rural broadband. As written several years ago, the Fund is allowed 1 of 4 4/27/2015 1:47 PM Wireless is Not a Substitute for Wireline l POTs and PANs http: / /potsandpansbyccg.com/ 2015 /04/27 /wireless -is- not -a- substitute... to consider investing in wireless as well as wireline broadband networks. There have been numerous parties lobbying to try to get these billions get directed towards landline networks and not towards wireless networks. The NTCA, which is now called the Rural Broadband Association, sponsored a report ( http: / /www.ntca.org /images /stories/Documents / fixedwirelesswhitepaper.pdf)from Vantage Point Solutions that compares wireless and wireline technologies, and which argues that government funding should only be used to fund wireline networks. This whitepaper makes many of the same arguments I have been making for years about the topic, and included a few I had not considered. Here are some of the major arguments made by the whitepaper: o Even without considering the cost of spectrum, it costs far more to build a wireless network when comparing construction cost per megabit that can be delivered to end users. Modern fiber networks rarely cost more than $10 per Mbps capacity created, and often far less than that, while it costs several hundred dollars per effective megabit to construct a wireless network using any of the common technologies like LTE. o From a physics perspective, the amount of frequency available through US allocated spectrum is not large enough to deliver large symmetrical bandwidth, which is the goal of the National Broadband Plan. This limitation is a matter of physics and not of technology. That limitation is still going to be there with 5G or later wireless technology unless the FCC massively reworks the way it allows frequency to be used. o At least in today's world, the prices charged to customers are drastically different for wireless and wireline data. Already today, 25% of residences are downloading more than 100 gigabits per month in total data. That can be affordable on wireline, but almost every current wireless provider has 'monthly data caps that range upward from just a few gigabits per month. A customer on a.capped data plan who uses 100 gigabits in a month would face an astronomical monthly bill. o The report also made the economic argument that the shelf -life for wireless equipment and networks is relatively short, in the range of seven years, while fiber networks can have an incredibly long economic life. The report argues that the Connect America Fund should not be investing in technology that will obsolete and potentially unusable just a few years after it's built. There certainly is no guarantee that the large wireless carriers will make needed future investments once they stop getting a federal subsidy. o The report also made all of the normal comparisons between the two technologies in terms of operating characteristics such as available bandwidth, latency times, and high reliability, all of which tilt in favor of landline. I agree with this report wholeheartedly. I know that when I first read the language in the Connect America Fund my initial reaction was that the money would all go to cellular companies who would use the money to build rural cell towers. But fiber technology has gotten far more efficient in just the few years since that order. Also, the wireless businesses of Verizon and AT &T are the two most profitable entities in telecom, by far, and it makes no sense to flow billions of federal dollars to them to build what they will probably build anyway with their own money. Certainly, expanding rural LTE would get some broadband to more people, but in the long run we would be better off directing that same money to bring a permanent solution to some rural areas rather than a poor solution for all of it. 2 of 4 4/27/2015 1:47 PM