Investment

Duluth scales back proposed investment in Lincoln Park broadband project – Duluth News Tribune

DULUTH — City administration is rethinking an original proposal to use $5 million from Duluth’s Community Investment Trust to help fund a fiber optic network in Lincoln Park

Mayor Emily Larson acknowledged Wednesday she is looking at a variety of different funding options.

“The city is striving to fulfill the grant match opportunities in ways that align with Council. This may include keeping CIT tabled or having it returned to administration in favor of a different funding strategy. We’ll be discussing it in more specific terms tomorrow at the agenda session,” she said in a written statement.

Council President Arik Forsman said: “I and a couple other members of the council asked to scale that back and to also use the state matching funds to pay for that project. So, the city contribution would be dramatically reduced.”

In order to tap the Community Investment Trust, the expenditure would need to be approved by a minimum of seven of the Duluth’s nine sitting councilors, and city administration may well have struggled to reach that level of support.

“My understanding is that the funding would not come from the Community Investment Trust but would come from one-time economic development sources that would traditionally be used for projects like an economic development initiative, such as broadband,” Forsman said.

Initially, the city had sought to use the CIT funds to leverage an additional $4.8 million grant from a state Broadband Redevelopment Program. But that grant request has since shrunk to $3.2 million — a sum that will now be required to proceed with the Lincoln Park pilot.

“So, if those matching funds don’t come through, then those general fund sources would be freed up for other purposes,” Forsman said, referring to up to $4 million in one-time economic development resources that could be used should the state grant request prove successful.

“Certainly, as a councilor, I would not be in favor of a project that leverages all-city money. I think there are too many state and federal resources out there to move forward responsibly without getting some matching funds,” Forsman said.

Duluth’s Community Investment Trust is a one-time reserve that could affect the city’s bond rating if it declines markedly in value. The city has those funds invested and the trust peaked at $36.1 million in October 2021. Since then, the city has withdrawn $4 million to assist with the development of affordable housing, and market declines have reduced the balance further to about $27 million.

“There’s so much uncertainty about what’s happening with the economy, what’s happening with the markets and what’s happening just with the city budget, given our health care negotiations. I wouldn’t want to make any decision to tap the CIT lightly right now,” Forsman said.

After a study and the development of a Digital Access Master Plan, city officials are exploring the option of building an open-access broadband network that could be used by multiple internet service providers, potentially increasing competition, driving down costs and delivering faster service to residents. The proposed Lincoln Park project would help determine if a larger city-wide system would be a wise investment, at an anticipated total cost of $76 million to $79 million.

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