At their Feb. 19 regular meeting, the Jefferson County Board of Commissioners unanimously approved a $200,000 bridge loan request, with 5 percent interest, from the Northwest Open Access Network (NoaNet), of which the PUD is a founding member and part owner.

NoaNet was formed by several public utility districts in Washington in 2000, with the mission to bring high-speed telecommunication services to unserved and underserved communities.

NoaNet operates a fiber network totaling more than 3,300 fiber miles throughout Washington state, connecting the local PUDs and other independent communications networks to each other, and to the major carrier connection points in Seattle and Spokane.

NoaNet was responsible for the federal grant that brought the Jefferson County PUD its first fiber-optic network, installing approximately 25 miles of fiber optic cable, which the PUD took ownership of in 2014. NoaNet has managed this fiber-optic network for the PUD since that time.

NoaNet is seeking $1.56 million from its members to cover anticipated revenue shortfalls in the early stages of the organization’s upcoming contract to provide 911 services in the state of Washington, a contract currently held by CenturyLink.

“They’re looking at a $3 million investment over a five-year period of time, getting an $8 million net,” said Ken Collins, the PUD’s member representative on the NoaNet board. Collins said the business model for NoaNet “is such that they have to put out capital once they sign a contract to build up to a point that they can provide service to a particular customer. They don’t get anything back until they actually begin providing the service.”

He added, “For the life of this loan until it’s paid back, we’re looking at a little under $100,000 in revenue, plus $10,000 a year from the loan. This gives us some working capital for doing fiber extension, because previously, there really wasn’t anything available to us for broadband.”

Collins requested that the NoaNet loan request be added to the Feb. 19 BOC meeting agenda because it “seemed like an opportunity we should not pass up.”

Collins credited his own experience in running a small business with teaching him the necessity of making an investment before one can expect a return.

In the public comment period, a member of the public countered that providing 911 service is “a big risk,” given that penalties are assessed whenever there are outages. Another attendee cited “a couple of terms that seemed frightening,” relating to questions such as “Who gets paid back first?”

PUD Commission Chair Jeff Randall told the audience he’d previously expressed similar concerns, due to the vagueness of NoaNet’s stipulated expenses.

“It was clear we were taking a much secondary position to other existing creditors,” Randall said.

Randall reported that NoaNet has outlined its expenses more, and touted Collins’ conversations with NoaNet as providing further clarity.

“It wasn’t that long ago that there were board members talking about pulling out completely” of the PUD’s contract with NoaNet, Randall said. “I just appreciate how we’ve evolved our relationship with NoaNet. It’s not this antagonistic lack of trust.”

PUD District 3 Commissioner Dan Toepper said he’d followed this issue prior to his election as a PUD commissioner, and thus felt comfortable supporting the loan request.

A final audience question asked whether there is a conflict of interest in Collins serving as both a PUD commissioner and as a board member of NoaNet.

Randall explained that Collins is the PUD’s representative on the NoaNet board, for which he receives no financial remuneration.

PUD legal counsel Joel Paisner echoed Randall, noting that Collins has no shares of stock in NoaNet, nor does he have a business that benefits from NoaNet.