SOUTHWICK — With the town’s High Speed Internet Committee reviewing revenue projections and financial modeling for the construction of the town’s proposed broadband network over the past several months, it has become unclear if the project is financially feasible, but Select Board member Doug Moglin still believes the numbers will work.
“Can the revenues from [customer receipts] pay its own way and pay down the debt? If it can’t, we’ll stop, but I don’t think we’re at that point,” Moglin told board members Jason Perron and Diane Gale at their Aug. 12 meeting.
“We want to be much more sure than we are at this point,” he added.
In May 2023, Town Meeting approved a $3 million bond, proposed by Moglin and approved by the Select Board, to begin building a townwide broadband network.
Before the project could start, Town Meeting had to approve articles at two separate meetings creating a municipal light plant, which it did in November 2022 and in May 2023. Since the Town Meeting votes, a broadband committee created by the Select Board has been meeting regularly.
“This has been a very deliberative and drawn-out process,” Moglin said Monday.
The committee’s first major decision was choosing Westfield Gas & Electric subsidiary Whip City Fiber last January to build out the network. Since then, the committee has been working through the financials of the project and in July discussed some preliminary figures. During that July meeting, the committee was presented with a spreadsheet detailing how much money would be needed to move the project forward.
“As we enter this phase, we’ll be looking at expending real money and start to look at spending against the [American Rescue Plan Act] allotment and or drawing on the first bond authorization from the town,” Moglin said.
In April 2023, the Select Board approved using $900,000 of ARPA funds — federal coronavirus relief aid that expires at the end of this year — for the project.
The total buildout cost of the network is projected to be $7.1 million, according the information presented during the July 16 meeting of the committee.
Other costs include $302,000 in “up-front” funds for make-ready work, $103,000 annually for maintenance and salaries, and $75,485 for the installation of the network’s “hut,” which is the secure facility that will house the network’s servers and equipment.
If the network is built out to include the entire town, as has been promised, the committee has estimated that there would be 3,685 subscribers who would be charged $85 monthly with an activation fee of $100, of which $28 would be collected by Whip City Fiber.
The first financial challenge facing the committee was that Whip City Fiber increased its estimate for the cost of make-ready work, which is primarily preparing the utility poles where the fiber-optic cable will be hung, by $2 million to $4.43 million.
Moglin said because of that change, the committee has asked Whip City Fiber representatives to meet again with the committee, and the town’s Finance Committee “to go through the numbers.”
“The committee wants to report back to this board that we’re on sound financial footing and that when execute this, we’re going to retire the bonds within the useful life of this project,” Moglin said on Aug. 12.
To cover the cost of the complete buildout, the committee has tentatively included in its financial projections seeking bond authorizations of $3 million for fiscal years 2025, 2026 and 2027.
The expectation is the customer receipts will pay off the bonds.
“At the end of 10, 11 or 12 years, and we decide we don’t want to do this anymore and we’ve paid down the bonds, no harm, no foul,” Moglin said.
He also said that during the meeting with Whip City Fiber, the committee wants to get a more “detailed knowledge” of what other towns that have built their own networks have done, specifically West Springfield, which is currently building a network using Whip City Fiber.
Moglin also pointed that Whip City Fiber’s expansion into the Hilltowns can’t serve as a model for the Southwick’s project, because there was no other internet provider for the region. In West Springfield, as in Southwick, there is an existing cable television provider that offers high-speed internet.
Moglin did give the board something of a warning about starting the project.
“Once you take that step, you’re committed … you’re committed to all of it,” he said.
When finishing his update on the committee’s activities for the board, Moglin laid out where the process is now.
“We want to be sure as the stewards of the taxpayers’ money. It’s a ginormous amount of money with downside risk. We think we’re going to be successful, but we want to be sure.”
