Minnesota Cities Magazine
More from Sep-Oct 2016 issue

Ideas in Action: Collaborative Effort Brings Fiber-Optic Broadband to Rural Region

City of Excellence Award logoBy Andrew Tellijohn

The Minnesota College of Osteopathic Medicine wants to open a four-year graduate school in the small city of Gaylord. It hopes to recruit students from rural Minnesota and surrounding states, educate them in a rural community, and provide graduate residency opportunities— and ultimately job placement—in similar areas, where good health care is often lacking.

While it’s not yet a done deal, local civic leaders are cautiously optimistic the project will move forward. If it does, it’ll be one of the first tangible economic development victories spurred, in part, by the region’s RS Fiber Cooperative efforts to improve high-speed internet access to the area.

Gaylord (population 2,300) is one of 10 cities and 17 townships involved in the RS Fiber Cooperative, named after Renville and Sibley counties—located to the west of the Twin Cities metro area. The project aims to spread high-speed, fiber-based internet capabilities to residents, businesses, schools, health care providers, agricultural producers, and others in the area.

The initiative received a 2016 City of Excellence AwardMark Erickson, City of Winthrop, with infrastructure at RS Fiber from the League of Minnesota Cities. The cities involved in the project are Brownton, Buffalo Lake, Fairfax, Gaylord, Gibbon, Green Isle, Lafayette, New Auburn, Stewart, and Winthrop.

It all started with one city
The initiative actually started with former Winthrop Mayor Dave Trebelhorn, who simply wanted to bring high-speed internet to his small city of 1,400. He had no idea eight years ago that it would lead to the possible development of a medical school. In fact, Trebelhorn isn’t much of a computer or internet user himself.

But the retired farmer’s wife uses the computer to file taxes for a small business, and he knows his children and grandchildren will only be using such technology more and more. As such, he recognized that high-speed internet would be necessary for rural cities like Winthrop and Gaylord to compete for business and effectively educate children in the 21st century. So, when Winthrop hired Mark Erickson as its city manager in 2008, Trebelhorn asked him to look into it. “I had no idea what fiber could do,” Trebelhorn says. “Mark said we’ve got to do fiber.”

They went to the Winthrop City Council with the idea and received their support. Eventually they learned Winthrop was too small to do such a project alone, but that ended up being just the beginning of a long journey.

Erickson, now director of the Winthrop Economic Development Authority, then began the task of finding a partner and collaborating with surrounding communities in an effort to build a coalition that could bring fiber to the region. Three years later, in February 2011, Renville and Sibley counties and eight city councils formed the RS Fiber Joint Powers Board.

Opening doors
“The fiber project opened the door” for the medical school, says Gaylord Mayor Don Boeder. “Otherwise, they would not have looked at us.”

That’s true because the college’s medical library services would be available online, and all classroom lectures are recorded for internet delivery. And since the medical school wants to collaborate with rural hospitals throughout Minnesota, high-speed internet service is vital.

In years past, attracting such a development would have been far-fetched. Several factors came together to allow the small city to compete for the facility, including the construction of a new elementary school, leaving the old building for the medical school to renovate. But the RS Fiber initiative, Boeder says, was the largest factor.

Mark Erickson of Winthrop, Gaylor Mayor Don Boeder, and financial advisor Philip Keithahn standing next to RS Fiber signThe impact could be huge. Boeder sees the medical school bringing to the region hundreds of new residents via about 600 students, 100 new jobs, and many more visitors with parents coming to town. That should spur the development of restaurants, hotels, and housing projects.

Challenges to project completion
It was clear that high-speed internet access was critical to the area, but the fiber project didn’t happen overnight and faced many challenges along the way.

Philip Keithahn, a local banker, financial advisor to RS Fiber, and now chief financial officer for the proposed medical school in Gaylord, says one of the biggest obstacles was figuring out the right financial structure. Initially, the cities and Renville and Sibley counties were going to borrow the entire $70 million for the project upfront, planning to issue revenue bonds to fund it. An unfavorable bond market along with the risk each city would have to assume in that scenario made it unworkable.

Then a group of community and rural leaders involved in the project created the RS Fiber Cooperative, which was modeled after rural electric cooperatives in the 1930s. At that point, Sibley and Renville counties withdrew from the joint powers board, but 10 cities and 17 townships remained.

Shortly thereafter, a public finance consultant proposed establishing a public/private financing approach. The involved cities and townships issued general obligation tax abatement bonds and offered the proceeds to the cooperative as an economic development loan.

Nearly as important as tweaking the funding strategy was choosing the right operations and management partner for the project. The joint powers board brought Hiawatha Broadband Communications (HBC) into the project early and it was that partnership, and guidance from the company, that helped RS Fiber work through many problems.

HBC brought with it nearly 20 years of experience running fiber-to-the-home networks in 13 communities in the state. The company also recommended splitting the project into two phases. The first phase started last year and involves building fiber to the homes in cities. It also provides air broadband wireless service to rural households. The rural service comes from towers connected to the fiber backbone, which will eventually connect all the cities.

The revenue generated from those services, along with the bond proceeds from the townships and other financing sources, will eventually allow the cooperative board to build fiber to every farm in the 750-square-mile RS Fiber footprint.

Another challenge was keeping the public up to date and informed about the benefits a fiber project of this magnitude could bring to the area. RS Fiber board members held more than 150 public meetings. The grassroots effort resulted in the majority of area residents expressing support for the project. That level of buy-in contributed greatly to its ultimate success.

Though the challenges were many, Erickson credits the leadership of all the entities involved for staying committed through it all.

“What amazed me was the leadership and vision shown by the other nine city councils,” Erickson says. “For a small [city] council of 400, 800, or 1,000 people to see this as something that needed to be done and to stick with it for five or six years, it was impressive leadership and vision from all the mayors and councils in all the communities.”

Benefits for area residents
While the medical school in Gaylord is a huge project that illustrates the potential that comes with an improved internet infrastructure, the benefits go far beyond that into the day-to-day lives of the area’s residents.

Brownton City Councilmember DougSign about the RS Fiber Cooperative Block represented the city at several RS Fiber Joint Powers Board meetings. Brownton is a bedroom community of roughly 700 people and doesn’t have many businesses. That’s not likely to change because of high-speed internet, he says, but it will bring other benefits that are greatly needed.

For example, Brownton has many elderly residents with health issues. “Maybe they’ll be able to hook up to their doctors more easily,” Block says.

Students in the area will also benefit, Keithahn says. “Many schools provide their students with iPads, but some kids don’t have affordable internet access at home, so they have to do homework in grocery stores, restaurants, or libraries with limited hours of operation,” he says.

Hospitals and clinics will be better able to do virtual medical diagnosis. Police, fire, ambulance, and other emergency service providers will be better able to communicate with instant connections during natural disasters. Businesses and cities will benefit from having the technology they need to compete from a rural headquarters.

“Cities will have the ability to compete for business with metro communities,” Keithahn says. “It’s not just the cost of labor and land that is important to a business or a homeowner, but it’s the cost of internet access. One thing I’ve learned over the last 30 years is that the biggest cost is the opportunity cost of a person’s time. Not having to wait for something to download or upload, being able to run multiple applications at the same time, all of that is … saving time.”

Learn more about the RS Fiber Cooperative at www.rsfiber.coop.

Andrew Tellijohn is a freelance writer based in Richfield, Minnesota.

Read the Sept.-Oct issue of Minnesota Cities magazine