Mon, Aug 1, 2022 1:29 PM
By Scott McClallen, The Center Square
Holland voters will decide on Tuesday whether to spend $30 million over 25 years on citywide fiber-optic broadband infrastructure.
If approved, the millage would levy up to 1.5 mills, or $1.50 on each $1,000 of taxable valuation, on property owners the first year and 1.12 mills afterward. With voter approval, the Holland Board of Public Works plans to break ground in fall of 2023 to lay fiber-optic cable and finish two years later in 2025.
HBPW says a community-driven fiber network would increase customer choices for high-speed, affordable internet citywide because aging copper infrastructure limits bandwidth and provider competition.
The proposal would allow BPW to provide 1-gigabit internet service speed to customers and provide an open access network to private internet service providers.
Jarrett Skorup, senior director of marketing and communications at the Mackinac Center for Public Policy, called the proposal “a bad deal.”
“The Holland broadband proposal asks all taxpayers to subsidize a network used by a few,” Skorup said in a statement. “The vast majority of government owned networks have failed and, indeed, for this one to be financially viable, it will have to have an unrealistic number of customers sign up.”
Ted Bolema, the executive director of the Institute for the Study of Economic Growth at Wichita State University, says that taxpayers will likely be on the hook for money in addition to the $30 million.
Bolema serves on the Mackinac Center for Public Policy’s Board of Scholars.
In a Grand Rapids Business Journal op-ed, Bolema and Skorup cited a University of Pennsylvania analysis of 15 municipal broadband projects that found “[n]one of the projects generated sufficient nominal cash flow in the short run to maintain solvency without infusions of additional cash from outside sources or debt relief.”
“Similarly, 87% have not actually generated sufficient nominal cash flow to put them on track to achieve long-run solvency,” the researchers wrote. “In addition, 73% generated negative nominal cash flow over the past three fiscal years, leaving them poorly positioned to make up their deficits and causing them to fall farther into debt.”
Simply put, taxpayers might have to pay more than the initial $30 million to keep Holland's broadband infrastructure running and updated as technology advances over the next two decades.
Holland City Manager Keith Van Beek says city residents should decide.
“We had an extended community outreach period with citizens, including a pilot project in our downtown area where a community-owned infrastructure is now available,” Van Beek told The Center Square in an email. “The feedback we received from citizens is that they wanted a choice to have such a network, owned by the HBPW, that current internet providers and other private companies could utilize to provide more choice and competition.”
In 2017, HBPW piloted a shared-gigabit internet service fiber network for businesses and residents in the Downtown Holland corridor, which drew more than 200 customers.
A millage calculator shows what tax increase property owners' can expect if voters approve the project. The amount is based on the taxable value home value.