MONMOUTH — The expansion of the Monmouth-Independence Network has affected the company’s bottom line, said Monmouth City councilor Chris Lopez in his Nov. 5 report to council.
Minet was formed as an ORS 190 corporation in 2002 to provide high-speed internet access, cable and phone services originally to its namesake cities, with the intention of expansion. Minet no longer offers cable, and provides phone numbers through CenturyLink.
In 2018, the company entered into a deal with an Arizona-based company to serve Dallas.
According to that agreement, the Dallas network was built and is owned by American Fiber Optics LLC, of Arizona. The company contracts with Minet to operate the network in Dallas under the name Willamette Valley Fiber.
“I know we haven’t had a lot of clear numbers yet, but this past meeting — we met on Oct. 24 — they were able to really create some wonderful graphics as far as detailing how that contribution really plays out to the bottom line,” Lopez said. “To get down to it, the expansion has contributed $122,000 in the fiscal year to date. That’s just since July 1.”
It was not clear at press time how much of that money is going toward paying off existing debt to Monmouth and Independence or going toward paying the Arizona-based company.
Lopez said the Minet board approved “a borrowing resolution, allowing Minet to generate a line of credit with banks.”
He told councilors that Minet employees would need board approval before using any money from any line of credit.
The borrowing resolution allows CEO Don Patten to seek a line of credit, he said.
“Whether that will materialize or not, it’s wonderful to have it as an opportunity to be able to have those liquid funds should we need them,” Lopez said.
Lopez said that in the last fiscal year, this calendar year, Minet had to purchase equipment for a system upgrade.
The company’s contribution to its debt owed to the two cities took a hit because of that, he said.
“What this borrowing resolution hypothetically would do, if we had already had that in place, it would have allowed us to spread that out over time and not have to take such a fiscal hit all at once,” Lopez said. “It was still the right thing to do then, but this would give us more options if we ever need to use that in the future.”
Councilor Jon Carey asked if there would be any discussion with Monmouth, Independence or their councils before Minet adds another line of credit.
“That’s additional debt,” Carey said. “We have an agreement. That whole tension is a big one, and there’s a lot of scrutiny of that.”
He added that he does not disagree with the Minet’s board’s decisions, but was “just curious about the communication with the cities.”
“The agreement with the line of credit did go through the financial committee and the concept behind the line of credit, at this point it’s very conceptual,” Lopez said. “If you’ll recall when Minet was going through the final phase of the G-PON expansion, they did apply for a line of credit to try defer some of those immediate costs. The bank that they applied with did deny that because their first and top obligation was back to the cities. And that will always remain so.”
Lopez reiterated that the Minet board’s decision was only “an exploratory measure,” not an approval for use.
“If they did end up going to actually extend the line of credit and utilize that, that of course would come back through proper channels,” Lopez said.
When Carey asked what the proper channels would be, Lopez said he did not know the exact mechanism for that. He said that question would be better directed to finance director Janet Chenard.
Mayor Cec Koontz said the city does have representation on Minet’s finance committee.
“I’m supportive of it,” Carey said. “I think to be nimble is good. On the other hand, we wrastle over intergovernmental agreements all the time, back and forth on how we’re going to manage that and how do we grow the company and still pay the debt.”
Lopez said Minet also is looking at revising the IGA.
“You all will have an opportunity to review that once it’s gone through all its processes and phases,” Lopez said.
The next Minet board meeting is scheduled for 7:30 a.m. on Dec. 12 at Minet, 405 N. Hogan Road.