Those who are eagerly anticipating fiber-optic Internet service upriver may be in for a disappointment.

A federal grant to the Skagit Public Utilities District for the installation of a fiber network in Concrete is in jeopardy. An official from the Rural Utilities Service of the U.S. Department of Agriculture told the PUD earlier this month that the federal agency will not extend the Aug. 26 deadline for the $440,000 grant. Concrete has high-speed Internet service now and is no longer eligible for the grant, according to the USDA.

The agency re-evaluated the grant’s eligibility because “there was such a long lag time” since the grant had been issued, “and no progress was made on deploying the service,” said Wes Lannen, a USDA field representative, in a July 9 e-mail to the PUD.

The USDA made funds available in June 2006 but never received any reimbursement requests, USDA spokesman Phil Eggman said.

Together, the PUD and a second grant recipient, the Upper Skagit Library District, have spent $170,000 on the project. Both expected this money would be repaid by the grant. Now they’re unsure whether they will get their money back.

“We haven’t received a dime from the feds on that grant, which leaves us a little bit concerned,” PUD Commissioner Robbie Robertson said.
Eggman said the USDA’s Rural Development office is willing to work with the PUD, if it can show that the money was spent on the grant project.
The project and its delays have long been a source of frustration for the Library District.

Former director Margaret Studer said she’s been unable to learn the reason for the delay or who is to blame.

“It was a matter of finger-pointing back and forth between PUD and (Rural Utilities Service) people,” Studer said. “We had big meetings with PUD, with a lot of promises that it was going to happen then and there.”

Ken Kukuk, who retired as general manager of the PUD a year ago and is now running for PUD commissioner against Al Littlefield, said the Rural Utilities Service is responsible for the delay. He and other PUD officials said the federal agency rejected local funds that were offered to match the federal grant.

Eggman of the USDA could not confirm whether matching funds were an issue in October 2006, as the PUD claims.
As a result of the federal agency’s decision, the grant was in limbo for 14 months, PUD officials said. Then Skagit County came through with the needed matching funds with a $500,000 grant to the PUD in December 2007.

“We couldn’t move forward without matching money. That’s due diligence. You’re working with public money,” Kukuk said.

Even with the grant in doubt, the PUD decided to get some of the work done. The utility district installed conduit for the fiber-optic cable underneath Main Street in Concrete, because the street was already dug up for another project, Kukuk said.

The PUD also finished design and engineering for the project, to include an Internet tower that could potentially provide high-speed Internet to the entire town. The PUD had planned to install the tower on top of the old cement silo at the west entrance to town, said Gary Chrysler, the PUD’s information systems administrator.

The PUD has spent about $150,000 so far. The utility was awarded $630,000 for the project, including $190,000 from another county grant.
The library district has already spent about $22,000, Studer said, for a copy machine, computer upgrades, new software and other expenses.

If the grant falls through, more than money might be lost, Studer said. Voters approved the Library District, which was formed in 2003, with the understanding that it would include a computer center at the Concrete library.

“If they lose this grant, it’s huge,” Studer said.

“It’s a shame it has strung on this long. People have been really excited waiting for it,” she added.

PUD planning engineer Scott Spahr said the work could be finished in a few months, if only the PUD could get the extension.

The USDA rejected the PUD’s request for the extension because Verizon upgraded its Internet service in Concrete after 2005, when the grant was transferred to the PUD. Before then, Verizon’s service wasn’t fast enough to meet the USDA’s definition of broadband, said Chrysler of the PUD.
The grant is only intended for communities that have no access to broadband Internet.

Still, PUD officials say the grant is justified. Many homes and businesses in Concrete can’t get Verizon’s DSL service, which is available a limited distance from Verizon’s Concrete office, Chrysler said.

“We could definitely enhance the availability of broadband that is there at this time,” Chrysler said.

Fiber would also be faster than DSL, which is carried over telephone lines. DSL can provide connection speeds of up to 7 megabytes per second. Fiber theoretically has no upper limit to its speed but operates at speeds approaching 50 megabytes per second.

A related project, to string fiber from Mount Vernon to Concrete, has also been cast into doubt by the USDA’s decision not to extend the grant deadline.

“We’d have to look to other funding” to finish the line, Chrysler said.

But money is available to run the line as far as Hamilton, where Janicki Industries will use the fiber-optic system at its new manufacturing plant.
Fiber should be available in Hamilton in the next month, Spahr said.

There may be a way out of the grant impasse. The PUD and the Rural Utilities Service will have a telephone meeting sometime next week, at the request of U.S. Rep. Rick Larsen.

“Our goal is to bring both parties to the table to see if a solution can be found,” said Amanda Mahnke, Larsen’s spokeswoman.

“It sounds promising,” Spahr said of next week’s meeting. “We’re definitely hoping for the best, and we’re not giving up on it yet.”