Fiber project: Officials question cost uncertainty
YATES COUNTY--In 2015, the Yates County Legislature unanimously agreed to install fiber optic internet access in Penn Yan and throughout the county. More than a year later, Monday, June 13, the legislature agreed by a nine to five vote to pay close to $60,000 in additional project costs that were not part of the original agreement. At the meeting, several legislators voiced their concerns about the program. In a follow-up interview, Legislator Elden Morrison criticized the execution of the plan, stating "I have never seen a worse managed project in my entire life."
Morrison was not alone in his criticism, as the fiber network infrastructure project came under debate last week during the meeting of the Yates County Legislature. Some legislators have voiced their displeasure with the uncertain costs associated with the project, the latest of which involved an amendment to the original indefeasible right of use (IRU) agreement signed in May of 2015 with the Southern Tier Network (STN).
The project consists of dark fiber, which is a type of fiber where several service providers are able to lease fiber strands in one sheath to provide customers with network access. The fiber network is intended to allow internet providers in the network to bring services to the area providing faster service while letting many different service providers use and lease the fiber at once.
"I believe this is a bad deal on both fronts, and the way we arrived at the deal is even worse than the deal itself," Morrison said. "We have a lot better options available to us, and it is not like this is an all-or-nothing if we don't pass this the fiber disappears or something. There are much better options available to us. Cleaner options that don't involve the IRU, that don't involve several county machinations as to when a particular contract is signed, and much more transparent to the taxpayer and pretty much everybody."
Morrison added the legislature could have voted the measure down, as there was no legal obligation to pay the extra costs. He said he would have been open to splitting the costs with STN -- who owns the network -- and ECC Technologies -- who manages the network, or just exclusively with ECC, but the legislature just "rolled over for them."
Legislator James Smith contended the county had no legal responsibility for these payments based on the initial signed IRU dark fiber agreement with STN. Smith said he is not sure why the county would agree to become responsible, adding they should have worked toward a direct settlement and not modify an agreement that was signed by both parties.
"It puzzles me why we are pushing so hard to obligate with the change in amendment to the IRU to sort-of retroactively put the responsibility on Yates County taxpayers," Smith said. "It's puzzling. In addition, if Yates County was responsible, then we should operate in accordance with our county purchasing policy as well as county law which requires any service agreement in excess of $20,000 to be put out to bid. I do not believe this went out to bid."
Legislative Chairman Tim Dennis responded by saying he asked the county treasurer and attorney if it needed to be put out to bid, and the answer was no. Morrison said the agreement is very similar to what was submitted Oct. 21, 2015 to the county administrator. Morrison added eight months later, the county essentially has the same deal as before, while "allegedly negotiating this whole time." Smith said after the meeting the dollar figures were exactly the same.
Legislator Mark Morris said he supported the fiber project, but could not support the extra cost to be on the IRU agreement. Legislator Gary Montgomery added he also believed the fiber project should continue, but noted there is too much uncertainty in the potential cost to Yates County taxpayers. He said his first mistake was voting to approve the IRU agreement with STN in May 2015. He said this committed the Yates County taxpayers to a maintenance fee of $190,000 per year for 10 years. Montgomery also cited his discomfort with the revenue projections of the project.
"There is an unquantified assumption that the maintenance fee will be partially, or perhaps eventually totally offset, by fiber revenues," Montgomery said. "There is no guarantee in the amount of revenue. In other words, we have no idea which net costs in fees versus revenues will become the responsibility of Yates County taxpayers."
Montgomery said last week's resolution amends the agreement to address professional services in the amount of $58,986, network support maintenance for $125 per hour and design and construction management "in lump sum per project." Both Montgomery and Legislator James Smith said after the meeting these additional costs were not expected at the time the original agreement was signed. Smith added while he does not anticipate any more unexpected costs, once you reopen the door on a contract that was negotiated in good faith, it makes it harder to avoid in the future.
Montgomery described the professional services, network support maintenance and design and construction management as "undefined" and "unquantified," adding "there is no limit to how much." He said he thinks ECC and STN should work themselves through this deal without involving the Yates County taxpayer in the situation they created. Montgomery said this amendment "would make a bad deal worse," by forcing taxpayers to put more money into the fiber project that was not in the originally approved IRU.
Dennis responded by saying he talked with ECC Director of Broadband Services Andy Lukasiewicz in regards to the $125 per hour operational and support fee. He said this is for issues like if there was a break in the line, adding while it could happen, it is "highly unlikely." The chairman said he asked how much it would cost if it did occur and was told it would be "in the low thousands, $5,000 or less." Dennis also addressed the network support, which only gets billed if there is a problem with the network, not with something that is not working properly on the customer's side. Dennis noted the lump sum design services and construction management fee is recouped from the customer when they sign a contract.
Legislator Douglas Paddock said having the entirety of the agreement between STN and Yates County in one document would be more transparent than having multiple documents. He said it is not exactly the same as the October contract, adding there have been some negotiations. Dennis added while it is very similar, many of the changes were minor, with several changes only involving one or two words.
The vote was later approved during the June 13 meeting in a nine to five vote. Montgomery, Smith, Morrison, Morris and Legislator Terry Button voted against the new agreement.