Charlemont Municipal Fiber Network
Selectboard Status Report
July 9, 2020
Summary
National Grid has completed make-ready. Verizon has approved two licenses (out of 17) but the estimated final completion date is still December 31, 2020. This is the main schedule driver. Based on this date, we anticipate starting construction of the distribution network in April, 2021. We plan to complete four “path preparation” projects this summer to be ready to install the distribution network: Tower Road, Warner Hill Road, Heath Stage Terrace and Hawk Hill Road. Construction of the network equipment room is nearly complete; electronics could start being installed later this year. So far, the project remains on budget. We are planning for town borrowing in FY21, although we plan to delay the borrowing as long as possible to reduce the cost to the town.
Schedule
National Grid has completed its make-ready work. Verizon’s estimated completion date remains December 31, 2020. WG+E that we plan for 60-90 days after this date for inspection and mitigation of any unfinished make-ready work. Thus construction of the distribution network is estimated to start around April 1, 2021.
Based on this, we might be able to have some customers connected to our first fiber service area (FSA) by June 2021. Our distribution network will likely be built in five phases, each taking 2 to 3 months with some overlap. We still hope to wrap up construction by the end of 2021, but it is now looking likely that some parts of the town will not be done until early 2022.
Utility make-ready work
Make-ready work by National Grid is complete. We have received two licenses (out of 17) from Verizon. We are working on all other required path-preparation to be ready if Verizon should finish make-ready work in Charlemont earlier than expected.
Budget
The town received an initial advance of $438,000 from the last-mile contingency fund to cover a portion of our make-ready “overage”. We expect the state to reimburse the town for additional make-ready costs out of this fund, including much of the cost of the extra path-preparation construction projects (Hawk Hill Road, Heath Stage Terrace, West end of Tower Road, Warner Hill Road). Based on this, the overall project remains on budget.
An expense tracking report is available here:
https://drive.google.com/file/d/1EQ-03EIGP5oC08cE_WgjhAcYgamYeQ8B/view?usp=sharing
Financing
Our delayed town borrowing until FY 2021. The broadband construction account will have a small deficit at the close of the fiscal year, likely under $2000, due to additional unanticipated make-ready costs at the Long Bridge. This amount will reduce free cash for FY21 but will increase free cash by the same amount in FY22 since we will do a town borrowing in FY21.
We anticipate the town will begin significant town borrowing in Fiscal 2021 to finance the path-preparation projects and the beginning of the construction of the distribution network and construction of drops to some homes and businesses. We are engaged with Unibank to evaluate different financing strategies. Currently, the plan is to pay for as much as possible out of current year (FY21) receipts to delay the borrowing until as close to the “kick-off” of the distribution network build as possible. This will reduce interest costs and the total debt service to the town over the life of the borrowing. The town’s ability to do this will depend on tax receipts for FY21 and the treasurer, finance committee and I will be monitoring this closely.
A spreadsheet showing our current cash flow projections for FY21 is available here:
https://drive.google.com/file/d/1LQsNJJCrPrf_53lNmc3AQGPBPdGK5GbZ/view?usp=sharing
Distribution Network
We completed procurement for the construction of the distribution network and selected TriWire as the distribution network contractor. Construction on the distribution network will “kick-off” as soon as make-ready is fully complete.
Path Preparation Projects
Most of the preparation for the distribution network consists of make-ready work by the utilities. There are several places in town, however, where we need to do path-preparation construction projects to be ready to install the distribution network. We plan to complete the following path-preparation projects this summer.
Tower Road (west end)
We are planning to install 8 town-owned utility poles along the west end of Tower Road to connect existing utility lines and avoid an expensive railroad crossing. All designs and permitting are complete. We will do this work through the inter-governmental agreement with WG+E.
Warner Hill Road
We are planning to install underground conduit on a half-mile section of Warner Hill Road to connect the utilities on the lower part of the road to the utility poles at the top of the hill. We solicited bids for this work and Danek Excavating was the low bidder. We are in the process of awarding the contract.
Heath Stage Terrace
Heath Stage Terrace has underground utilities. We solicited bids for underground distribution conduit and TriWire was the low bidder. The bids came in $12,000 over our expectation, however, meriting further consideration of this solution. We asked residents on the road to commit to taking service, and some 65% of residents have done so. The town needs to decide how to proceed on this road.
Hawk Hill Road
A half-mile section of the lower end of Hawk Hill Road currently has underground utilities. We solicited bids for underground conduit installation on this section. Subsequent to receiving the bids, National Grid informed the town that they are considering replacing the underground utilities in this area, which are direct-buried cable, with utility poles. We are working with National Grid, Verizon, and the residents to understand what will happen here. If utility poles are installed, we will be able to use those, saving the town risk and some money. If no utility poles are installed, we should be able to proceed with the underground conduit project. Danek Excavating was the low bidder on this conduit installation.
Long Bridge RR Crossing
After investigating many options, we arrived at a solution with National Grid. They created an aerial crossing at the public way on Route 8A as part of utility make-ready and this was included in our make-ready costs. The state (EOHED) is in agreement with this as the best solution. The make-ready work is complete and we are starting the permitting process with the railroad.
Other Ongoing Projects
Town Hall Exterior
Danek Excavating completed the exterior conduit and vault installation last fall. We asked them to hold off on remaining site restoration work until National Grid finished installation of a new guy pole, installation of the network air conditioning system and possibly the new generator. They will eventually complete the remaining site restoration work, including repair of potholes in the driveway where the conduit crosses, repairing the asphalt on the walk in front of the town hall and reseeding and regrading the lawn around the vault.
Town Hall Interior
Construction on the network equipment room in the basement of the town hall is nearly finished. The smoke/fire alarm still needs to be installed and a couple of other small things before we close out the contract.
West Hawley Road
There is one house on West Hawley Road where the utilities reach the house via a non-public-way railroad crossing. We are currently evaluating alternative solutions for this house, including a potential wireless extension of the distribution network.
Neighboring town agreement with Rowe
The fiber swap agreement with Rowe has been finalized and we are awaiting votes and signatures from both towns.
Operational Accounting and Budget
We will hopefully be commending operations in late FY21. The town has decided to use Enterprise Fund accounting for the fiber network operating budget. To put this in place, town meeting will need to approve a warrant article to create the enterprise fund and to accept the projected budget for FY21. Copies of both are available here:
https://drive.google.com/file/d/1tnpjdT_cX0EP9NZlTeAUjoyUYoBt41uY/view?usp=sharing
https://drive.google.com/file/d/12MSt63v2-iY4eXl2q_ZK_mz60CQc7ASt/view?usp=sharing
The projected operating budget is highly dependent on the timing of network completion. The Enterprise Fund accounting provides some flexibility to run an operational deficit in the first year of operations which is covered by revenue from the subsequent year. In addition, we are planning to cover certain start up (“establishment”) expenses out of borrowing proceeds in the first year, including pole leases, insurance, etc.
Charlemont Connect website
We continue to communicate project status from our web site www.charlemontconnect.org, dedicated to the fiber network project. We are posting to this website regularly to communicate status and engage with residents. There is also a mailing list signup for email notifications.
Glossary
Aerial License Agreement. The master contracts between the town and the utilities (separate contracts for National Grid and Verizon) covering the terms for leasing space on the utility poles.
Customer Connections / Drops. Cabling from the nearest distribution network tap (MST) to a network interface box on the outside of the house or building, then inside to another small unit (ONT) which is connected to a wireless (or optionally non-wireless) router that provides internet service. A “cold drop” includes just the cabling to the outside of the house without any inside wiring.
Distribution Network. The main fiber-optic lines running from the network equipment room in the basement of the town hall and along most of the roads in town. The distribution network terminates at “taps” (called MSTs) located on utility poles near each serviceable house or structure.
ISP / Internet Service Provider. A company that provides internet service on a network and performs functions like billing and customer support. The town will contract with a third-party internet service provider to provide service to residents using the town network.
Make-Ready Work. This is work to prepare a “path” for the distribution network to run throughout the town. Most of this work is done by the utilities (National Grid and Verizon) to make space on existing utility poles. In some cases, the town may perform make-ready work by installing new underground conduit (e.g. near the town hall or on Hawk Hill Road) or new utility poles (e.g. on the west end of Tower Road) to create a cost-effective path for the distribution network.
MLP / Municipal Lighting Plant. A legal entity created by the town to allow the town to supply internet service to residents. It is called a lighting plant because the applicable state laws were originally written to allow towns to create local electric utilities. The MLP functions much like a town department.
Utility Pole Lease. The town will lease 12 inches of space on most of the utility poles in town to allow us to run the fiber network throughout the town. We will pay an annual lease fee per pole.