County awards $8.4M winning bid for Lake Connections
The Lake County Board of Commissioners has awarded the highest bid, $8.4 million, for Lake Connections, the county's municipal broadband project, during a meeting Tuesday, Dec. 18, in Two Harbors.
The highest successful bid was the best and final offer from Pinpoint Holdings Inc. in Cambridge, Neb. The board unanimously accepted the resolution to accept the bid; Commissioner Rick Hogenson was absent.
Pinpoint was selected from the final four bidders, which also included Mediacom Communications Corp., Cooperative Light and Power Association and Hanson Communications.
Mediacom's best and final offer of $8.25 million was selected as the backup bid in the event Pinpoint doesn't close the sale.
Each entity had to submit a bid with a $100,000 deposit, which will be returned, except Mediacom's deposit, which will be held until the close of the sale with Pinpoint.
In 2010, the board received a $56 million loan and $10 million grant from the U.S. Department of Agriculture's Rural Utility Service to construct the network. Over three years, more than 1,200 miles of a fiber network was built in Lake County and parts of eastern St. Louis County. Most of the network was completed in June 2015.
In June 2017, the county entered into a deferral agreement with RUS for principal and interest on the condition the county sell the network to a private company or entity. Two months later, the county executed a memorandum of understanding with RUS in which RUS agreed to accept to the sale price of Lake Connections in full satisfaction of the county's debt for construction of the network.
When the deferral agreement was executed, the county owed approximately $48.5 million on the RUS loan.
This means the federal government stands to lose approximately $40 million on the broadband project.
The award of the bid Tuesday was met with little discussion and few questions from the commissioners.
"There's been a lot of discussion to get to this one point," Commissioner Rich Sve said.
Pinpoint Communications Inc. President Tom Shoemaker was in attendance at the meeting.
"I'm happy to be here," Shoemaker said. "We wanted to make sure we were here for the meeting, as we're generally part of the community. It's important to us. We look forward to getting you guys past this hurdle and getting the sale closed."
Pinpoint was the first offer for the network in July. The initial bid of $3.5 million set the baseline price for the network.