The Anacortes City Council approved establishing a $4.5 million line of credit with SaviBank Jan. 19 to finance continued installation of fiber optic cable for the city’s broadband internet service and cover any shortfalls in the city’s 2021 budget.
That’s nearly $2 million more than the $2.6 million line of credit discussed this past fall during budget deliberations; that amount was cited at the time as the amount needed to keep the budget balanced while completing installation of fiber optic cable.
City Finance Director Steve Hoglund said the line of credit was increased to cover a shift in work this year — from areas that require use of utility poles to areas requiring more costly underground boring.
Administrative Services Manager Emily Schuh said the city is awaiting a $2.25 million Public Works and Economic Adjustment Assistance grant from the U.S. Economic Development Administration. That money can only be used toward the cost of installing fiber optic cable in commercial and economic development areas. Installation in that area — A Avenue east to the city limits — will instead be done in 2022.
“We needed to be sure we were being thoughtful in terms of what our funding sources are,” Schuh said.
The interest rate on the line of credit is 1.75%. The city will use it as needed, city Finance Director Steve Hoglund said. Money borrowed must be repaid by Jan. 31, 2024, according to city documents.
Hoglund told the council Tuesday that paying for money drawn from the line of credit is built into the 2021 budget. Tuesday’s vote, he said, “is kind of housekeeping, I guess, as far as a $4.5 million loan can be housekeeping.”
The line of credit provides the city more flexibility than a loan or a bond, in that the city can draw — or borrow — what it needs when it needs it, Hoglund said.
The council will receive periodic updates on the level of indebtedness incurred on the line of credit, he said.
Council member Bruce McDougall said if the city drew the full amount, the monthly payment would be $16,000. It takes 300 broadband customers to pay off that amount, and the utility is expected to have more than twice that number of new customers by the end of 2021.
Since March 2020, when the fledgling broadband internet utility – called Access – started, it has grown from nine customers and $1,191 in monthly revenue to 524 customers with monthly revenue of $36,050.25.
By the end of 2021, installation of the utility’s backbone – the fiber optic cable to which customers connect — will have passed 4,753 premises, according to an Access report provided at Tuesday’s meeting. By the end of 2022, the utility will have passed 6,388 of the city’s 7,600 premises.
“We’re seeing our revenue continue to grow every month,” Schuh said.
Broadband internet is available in much of a swath, from north to south, of the central part of Anacortes. This year, installation will be expanded west of Anacopper Mine Road, making high-speed broadband available to 2,300 premises. In 2022, the network will be expanded from A Avenue east to the city limits, passing 1,815 additional premises.