MONMOUTH/INDEPENDENCE -- Monmouth and Independence leaders recently authorized a $1.7 million loan to support the cities' broadband utility.
This is the second loan city officials have given a green light to for the Monmouth-Independence Network (MINET) since last November, when they guaranteed a $1.08 million loan.
Independence and Monmouth gave approval during respective council meetings on Feb. 27 and March 6. MINET manager Phil Garret said the loan will buy more capital equipment needed to meet increasing demands for service and add new customers.
Some city officials, however, expressed concern about having to sign off on another round of funding. MINET is an intergovernmental entity that operates independently of Monmouth and Independence, but the towns are ultimately responsible for any unpaid debt.
The Oregon Economic and Community Development Department (OECCD) originally loaned MINET $8 million in 2005 to complete capital and infrastructure construction of the system, based on estimates from any early business plan.
Later that year, officials sought an additional $2.5 million after engineers discovered that there were 1,500 more living units in the two communities -- 7,000 total -- than first projected.
Talks with one lender for the full amount broke off last fall, and MINET eventually received a $1.08 million loan from Key Bank.
That loan bought enough network-to-home equipment to serve 2,000 customers. To date, about 1,350 households or businesses in Monmouth and Independence subscribe to MINET.
MINET will now seek $1.7 million from OECDD as the balance to its original request.
"We upped the amount (from $2.5 million to $2.78 million) because we've been having a lot of success," Garrett said. "We anticipate having to deploy a great deal more equipment.
"At our current rate of installation," he continued, "we need to move now or we will run out of capacity by June."
This loan will pay for more capital and contract service costs, and increase MINET's service capacity to 3,000 customers, Garrett said, noting he expects to reach that benchmark next spring or summer.
"This isn't a surprise," Garrett told Monmouth councilors during the March 6 meeting. "Our business plan outlines that these loans were needed."
That didn't stop some from voicing concern and surprise about having to approve a seven-figure loan for the second time in four months.
"Are we going to get another request down the road?" asked Councilor Barbara Baxter. "Will the next request come to us as a surprise?"
"I don't expect that at all," Garrett replied. "I don't expect to have to be back before the council asking for additional funds."
Garrett said that MINET would start earning a positive net income by 2010 and that the utility's debt would be paid off in 12 years.
"We're financially successful; we're not spending more than we anticipated," he said. "We're actually making slightly more ... our business plan is working."
* In other city news:
Monmouth City Council approved a request to annex almost 34 acres at 5235 Riddell Road. Officials added a stipulation in which the owner of the property, Jane Gragg, must hold of on development until city has sufficient water capacity, a concern during Gragg's previous annexation request last year.
The annexation will come before voters during the May election.