A St. Paul consulting firm is being cut loose from the $70 million high-speed broadband project it helped bring to Lake County in the Arrowhead region of Minnesota.
The move follows revelations in December that the head of that firm, National Public Broadband, had led a similar project in Vermont which has a long history of financial troubles.
The Lake County Commission voted Tuesday to end contract negotiations with National Public Broadband, or NPB. NPB was hoping to manage the county's ambitious project to bring fiber optic service to every residential and commercial building in Lake and eastern St. Louis counties.
The total cost of the project is $70 million. NPB had done the groundwork which brought in $66 million in federal dollars last September through the U.S. Department of Agriculture's Rural Utility Service. The county needs to come up with the remaining fund.
The partnership between the consultant and the county clouded in December, when NPB CEO Tim Nulty was linked to a project in Burlington, Vermont, which is buried in debt amid accusations of mismanagement.
Lake County Commissioner Paul Bergman worried about the connection when it became news in December. He said the linkage hurt Lake County's project.
"When the things in Burlington became apparent, it was just like a huge 'pause button' was pressed," said Bergman.
Nulty could not be reached for comment Wednesday, but in December, he said he had left the Vermont project before its finances went south. County Commissioner Bergman said Burlington's troubles nonetheless played a role in the decision to ditch NPB.
"It made the board members take a closer look at the whole deal, and we scrutinized it a whole heck of a lot more," he said.
The troubles in Vermont led Lake County officials to demand an "out clause." They wanted the right to terminate their management agreement with NPB at any time, without cause, and without penalty. But the consultant wouldn't agree to those terms, and the two parties could not agree on some of the financial terms of the contract.
Chris Swanson is CEO of PureDriven in Two Harbors, a company specializing in Internet projects like web pages. He said the problems with Burlington Telecom divided Lake County residents.
"When that became known that there was problems with the Burlington project, and we have the CEO of National Public Broadband involved -- even if he's not directly involved, I want to be careful to say that -- it still puts this question mark in people's minds," said Swanson.
Christopher Mitchell with the Institute for Local Self Reliance in Minneapolis, which helps communities with infrastructure, said Lake County made the right move, since commissioners lacked faith in National Public Broadband.
"These projects are incredibly difficult. There's a reason that no one else wants to build fiber to the home networks up there," said Mitchell. "And there's going to be problems along the way. If they're not going to trust each other and they can't re-establish that bond, then it does make sense for them to seek new partners."
Time is tight. Under federal rules, the project must be in place within three years of the award last fall. But Mitchell says the current delay is not insurmountable.
"It's certainly unfortunate. And it'll set them back a little bit. But the real problem with building these kind of networks in Minnesota is winter, basically," said Mitchell. "If they can get going pretty quickly and get some serious work done over the course of the summer, then they'll still be on track to do well."
Lake County will also be looking for a new construction contractor, since it's dropping Ledcor Technical Services along with NPB.
Commissioner Bergman said the project is still in good shape.
"I can truthfully say, and there will be more information coming out here shortly, that it definitely is not in trouble," he said.
Bergman said county officials could talk to new potential project managers as early as this week, and he says a groundbreaking is still in the cards this spring.
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