W.D.M. raises budget for conduit network, citing construction disruptions
Plus a look at how citywide broadband could expand in Iowa
SARAH BOGAARDS Apr 6, 2022 | 7:07 pm
7 min read time1,627 wordsBusiness Record Insider, Real Estate & Development, Tech & Innovation
After Mediacom filed a lawsuit against the city in December 2020, the future of West Des Moines’ initiative to construct a citywide conduit network capable of delivering broadband internet to all residents was left in question.
Now the project is moving forward; settlement negotiations began in September 2021 and a settlement agreement was reached in January. The city agreed to pay Mediacom $595,000 and agreed to allow the company and other internet service providers equal access to the conduit network.
The network will be distinct as it provides space for more than one provider to access West Des Moines’ rights of way, but the city is first navigating hiccups in the supply chain and with contractors that are, in turn, demanding a higher budget.
Following the announcement of the settlement agreement, the West Des Moines City Council held a special meeting on Jan. 24 proposing an amendment to its Economic Development Digital Enterprise Urban Renewal Plan to raise the not-to-exceed cost of constructing the conduit network to $60 million because of “increases in construction costs due to supply chain demands,” according to the amendment.
This is an increase from the $50 million not-to-exceed amount originally outlined in the urban renewal plan approved by the council in July 2020.
Tim Stiles, West Des Moines’ finance director, said in an interview that the city set the upper limit at $50 million because officials believed at the start of the project that the amount would be more than enough to complete the project.
“Honestly, we were hoping the $50 million was just ‘let’s put it up there so we don’t have to amend it,’” Stiles said. “It’s the not-to-exceed amount, so we said, ‘Well, let’s make it a higher amount just so we don’t have to go through the whole process again.’”
Of the original $50 million limit, the city was initially authorized to borrow up to $42.8 million in general obligation urban renewal bonds.
The amendment, which the council approved after a required public hearing at the city’s Feb. 21 council meeting, now allows the city to borrow up to $60 million in urban renewal bonds. The council also approved allocating $7.6 million of the city’s American Rescue Plan Act funds to help finance the project and defray the total amount borrowed.
Stiles said he will recommend that the city use up the ARPA funds before incurring more debt through bonds. The ARPA funds are also a contributing factor in the city not anticipating a need to borrow the maximum amount of $60 million, he said.
Supply chain, contractor troubles hit budget
According to the amendment, the need to amend the budget was driven by supply chain issues that disrupted the project in 2021.
The amendment stated that raising the not-to-exceed amount for the project was driven by supply chain issues that disrupted the project in 2021.
West Des Moines City Engineer Brian Hemesath said the colored conduit pipes that residents have seen being installed across the city were available for the most part last year.
But despite ordering them in advance, the vaults, which serve as access points for broadband providers installing their cables, were delayed, stuck on stalled container ships abroad.
“We really thought we were doing our due diligence in ordering these. … It ended up that we just did not have very good luck with it,” Hemesath said.
The delays and limited supplies caused “fragmentation” in how the project progressed, Hemesath said.
Contractors’ usual processes were disrupted, costing them more money and making it more difficult to find subcontractors who wouldn’t leave when the materials ran out.
Other issues with contractors arose that Hemesath said perhaps caused greater cost setbacks than the supply chain disruptions.
He said one contractor had difficulty keeping to the timeframe and delivering the quality the city was looking for, which meant paying consultants to spend more time overseeing and inspecting their work.
Consultants also had to do more outreach than the city expected to ensure contractors returned to restore residents’ properties efficiently and effectively after completing construction.
As the project has shaped up to involve “more coordination than we ever thought,” Hemesath said the city now knows the staffing requirements and what it needs to have set aside for consulting fees.
“This is a new project for the city. We are used to building roads, sewers, storm sewers, culverts, bridges, those are our bread and butter and those are the things that we were really good at,” he said. “I’m not saying we’re bad at building conduit networks, we’re just doing what we would do on some of those other projects and then finding out that that may not be the right thing and we’re adjusting as we go.”
On the supply side, Hemesath said this year the situation is reversed — vaults are accessible again, but conduit pipes have an estimated delivery time of at least 12 weeks.
The city worked that reality into its timeline, but it shouldn’t pose as much of a problem. Many of the same contractors are bidding on the project, and he said that is probably partly due to them having conduit stockpiled and knowing they can get more.
Hemesath said the city has a new schedule and is working in phases to have the conduit network completed by September 2023.
Solving the problems of today and tomorrow
West Des Moines’ difficulties during the construction phase may be a sacrifice for the sake of future benefits, however.
Iowa-based Community Broadband Action Network works with communities in 12 states on improving broadband access and digital literacy. Co-founders Curtis Dean and Todd Kielkopf said there is incentive for cities to install conduit because space in their rights of way is limited and networks that can accommodate multiple providers keeps them from filling up.
“If communities aren’t able to manage their rights of way proactively, they might get to a point where they just say [to providers], ‘There is no room, you can’t install this conduit through our right of way in this area,’” Dean said. “We’ve talked with a number of communities where maybe it’s not the whole city, but there are communities that have areas where the rights of way are already full or clogged.”
Hemesath said the city is trying to avoid that exact situation.
“Our rights of ways are full of utilities, and that’s really the reason why we’re doing what we’re doing is to make more room in the rights of way for [providers] if they want to put their communications cables in the ground in the city of West Des Moines,” he said.
This future-proofing will be important as technologies like 5G internet and other smart city features that require conduit emerge, Kielkopf said. He said if communities’ rights of way are too full, future providers may hesitate bringing services to that area.
“If you can lower that premium by being forward thinking in conduit planning and technology planning in general, you’re really solving a problem for 20 to 30 years,” he said.
With the legal issues resolved, Dean said more local communities may choose to pick up on the model West Des Moines is following, such as Waterloo, which is currently designing a fiber-to-the-home network for the city and deciding how best to engineer it.
“I think that a lot of communities in Iowa were very closely watching how the whole West Des Moines case came out and probably were interested in the model, but wanted to make sure that it got through the legal process … so now the same terms should be able to be available if a community wanted to be proactive on their own,” he said.
Dean said the city of Dubuque has been building a conduit network piece by piece over the last several years, installing stretches of it during each of the city’s road projects. It attracted providers that wanted to lease space in the network and ultimately led to a commitment from Cedar Rapids provider ImOn to help build out the network to every home and business in the city.
Dean and Kielkopf, who both have municipal backgrounds, said this model is not necessarily the best broadband solution for every city.
Almost 30 of its member communities have used city-owned and -operated municipal telecom utilities to deliver internet in addition to other utility services, some since the 1990s. It provides the community and its leaders control over day-to-day decisions, but, Dean said, “there are a lot more communities out there that just want to solve the problem.”
“They don’t want to build a utility, they don’t want to build an internet provider company, they just want to solve a problem.” Allowing private providers to run fiber through the city’s conduit is an answer that “achieves the same end of better broadband service for the community.”
But smaller cities stand to face different problems than West Des Moines.
Kielkopf said it could be difficult to find a provider that is willing to enter a lease agreement and let go of control over the construction of the network as well as what they are able to charge for service. The other hurdle is in the financing and proving that there is enough demand in their city for broadband services to support any borrowing required.
And even with enough demand for services, smaller or more rural cities may struggle to secure the bonds or loans because they could be relying on a single provider’s creditworthiness to obtain the funding and only their revenues to pay back the debt.
A bill in the Iowa Legislature this session could change that, however. It would designate broadband conduit as an “essential corporate purpose,” opening avenues of financing other than taxable bonds or loans based on revenue only, Dean said.