LOCAL

Holland is taking its public fiber project to voters. How much could it cost?

Carolyn Muyskens
The Holland Sentinel
Tulips line the entrance to Holland Civic Center Place.

HOLLAND — City of Holland voters will decide in August whether to support building a municipal-owned fiber optic network capable of providing high speed internet throughout the city.

If approved, the measure would authorize the city to issue up to $30 million in bonds to fund the buildout.

Holland Board of Public Works would build a fiber network reaching every home and business in Holland, but it would be up to individuals to decide whether to hook up to it — for a fee — and pay for internet service provided on the fiber network. 

As an open-access model, internet service providers like Comcast and Spectrum could use the municipal network of fiber optic cables, capable of internet speeds up to 10 gigabits per second, to deliver internet, television and phone services to customers. Holland Board of Public Works is also expected to offer its own internet service as an option.

The idea behind a municipally-owned broadband infrastructure, as pitched by HBPW and city officials, is that communications technology today is as vital as water and sewer service, and a publicly-owned system ensures every part of the city has access to high-speed internet. An open-access network will provide competition and choice between internet service providers with a lower cost of entry to the Holland market, the city says. 

Wednesday, Holland Mayor Nathan Bocks called the proposed investment in fiber "as important and groundbreaking" as Holland's decision to form a community-owned electric utility in the 1890s.

More:What we know so far about Holland's plan for citywide fiber

More:Holland's $8.4M in COVID relief may pay for fiber, firefighters

More:BPW pitches plan to offer high-speed internet to every home in Holland

HBPW's most up-to-date estimate for the cost of the public network is $24 million, but detailed engineering and bidding will not take place until after voters endorse the plan in August.

The $24 million figure includes the backbone network of fiber-optic cables running past every address in Holland, but not the cost for individual homes or businesses to hook up to the network and use the service.

With supply chain issues still plaguing the economy and prices of goods and labor rising, HBPW is asking voters to approve up to $30 million as a buffer for market forces.

If the project hits the upper limit of $30 million, taxpayers can expect an estimated 1.5-mill debt service tax in the first year of the millage.

Over the 25-year life of the bond the millage rate would drop, HBPW said, resulting in an average annual millage of 1.12 mills.

For a person with a home valued at $200,000 and a taxable value roughly estimated at $100,000, the tax burden of the fiber millage would be $112 per year.

Property owners will only be taxed based on the debt service required to pay back the actual bonds issued. If the eventual bond amount is lower than $30 million, the tax rate will be lower too.

Holland City Council is considering reducing the bond amount by paying for some of the project with local government aid Holland received through the American Rescue Plan Act. The council is looking at contributing $4.2 million of the $8.4 million it received to the fiber project.

If the millage is approved by voters, construction would start in 2023 and take two to three years to complete.

Homes that want to use the fiber service will have to pay for the connection from the network to their homes at a cost of $820. HBPW is planning to offer payment plans to spread the cost of the drop — the connection to the home — over several years.

An estimate of what monthly internet service might cost for someone subscribed to Holland Board of Public Works' internet on the city's proposed municipal fiber network.

A household subscribed to HBPW fiber internet service could pay $42 for 1 gigabit internet service, according to cost estimates presented to council.

The cost breaks down to a $7 monthly installment to pay off the drop, $28 for operations and maintenance costs of the fiber network and $7 for internet service.

The figures are based on a take rate, the percentage of eligible customers that hook up to city fiber, of 51 percent or approximately 8,230 customers.

A cost study of the fiber plan found operations and maintenance for the fiber system would cost HBPW $3 million annually, a figure covering technicians and support labor, repairs and maintenance to the system and business management activities.

Because many of those costs are fixed costs, if the take rate is low, the cost per customer will be higher and likely will be passed on in higher service charges to those who subscribe. Conversely, if the take rate is high HBPW as a nonprofit utility will pass those savings on to customers.

Holland City Council approved a resolution Wednesday to place the measure on the Aug. 2 primary election ballot.

Holland city residents will be hearing a lot more about Holland City Fiber, what the city is calling the initiative, as HBPW rolls out a public education campaign about the millage vote and fiber project.

A website, hollandcityfiber.com, provides a project timeline and answers to frequently asked questions.

A public information session about the project will be held at 6:30 p.m. Monday, April 25, in the Herrick District Library Auditorium, 300 S. River Ave.

HBPW offers shared gigabit internet service to the downtown area in a pilot project that today serves about 200 customers.

The utility has been installing and maintaining fiber-optic communications networks for  for 30 years, primarily for large-scale educational and industrial customers around the greater Holland area.

— Contact reporter Carolyn Muyskens at cmuyskens@hollandsentinel.com and follow her on Twitter at @cjmuyskens.