| 2/26/2009 1:27:00 PM | Email this article • Print this article |
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| North St. Paul resident John Frantzen was among the 66 percent of North St. Paul residents who voted against the "Polarnet" referendum last Tuesday. |
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| The day before the vote, the "Vote Yes for Polarnet" snow sculpture was showing the effects of the thaw. |
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'Polarnet' referendum fails
Derrick Knutson
Review staff
Around Christmas - just two months ago - North St. Paul residents were first introduced to the city's proposed fiber-optic network, "Polarnet." Last Tuesday, they voted the project down.
More than 3,000 North St. Paul residents cast ballots on the referendum, denying it by a nearly a 2-to-1 margin, according to information from the city. Sixty-six percent of those who voted opposed the plan, and 33 percent supported it.
Residents were asked to approve $18.5 million in general obligation bonds to finance the project. Polarnet would have been a city-owned utility bringing high-speed Internet, telephone and cable TV service to businesses and households in North St. Paul. Fiber-optic technology transmits data via light impulses over optical fibers made of glass or plastic. This allows for faster data transmission than copper wire or radio wave transmission.
Voter reaction
The $18.5 million price tag was too much for resident John Frantzen. He was one of the 2,049 who voted against the referendum.
"There are plenty of options available," he told the Review after he voted at the Community C enter. "This is a risky venture in these economic times, and it could come back on property taxes."
Frantzen was concerned about the use of general obligation bonds to finance the project. If the city had lost money on Polarnet, it could have feasibly raised property taxes to make up for that loss, and Frantzen said he didn't want it to come to that.
Other cities that have built fiber-optic networks, like Windom in southwestern Minnesota, have used revenue bonds to finance the construction. With revenue bonds, the investors lose if the network fails to turn a profit.
In an interview following the vote, North St. Paul Mayor Mike Kuehn explained that the city did not pursue revenue bonds because of how volatile the bond market is right now, and they would have had a higher interest rate than the general obligation bonds.
"If we had been able to sell the bonds, they would have been 2 to 2.5 percentage points higher than the general obligation bonds," Kuehn said. "We would have had to sign up more residents to pay for it (Polarnet)."
City Manager Wally Wysopal had repeatedly asserted that the risk to taxpayers was minimal, but that wasn't enough for resident Ed Notebaart.
"It's ridiculous," he said after he voted. "In this economy, the thought of even spending that kind of money is ridiculous. I just don't see how it's worth it."
He, like Frantzen, was concerned about taxpayers possibly having to foot the bill for the network.
Resident Joseph Magee was one of the 1,014 residents in favor of the network. The main draw for him was the "telemedicine" aspect of the network, advertised by city officials. With telemedicine, medical information is transferred via telephone, Internet or other networks.
"My wife, she has a medical condition - a tumor in her brain," he told the Review on his way out of the Community Center. "If the doctors needed to get hold of her right away, or they needed to talk and she couldn't make it ... using our computer could be easier and more effective."
Magee was also in favor of having another service provider to choose from with Polarnet.
"There's more options out there (with Polarnet)," he said. "You don't just have to choose Comcast or Dish. I want to fire Comcast, put it that way."
City officials comment
Kuehn said that he was disappointed that voters didn't approve the referendum, but the vote was a "clear indication" of where the residents stand on the issue.
"I think it was impressive to see almost 40 percent of people vote," he said. "It's very clear that people do not want (the possibility) of increased taxes for the services."
He said with a small amount of risk, North St. Paul could have brought a "unique" fiber-optic network to the city that might have helped bolster business development in the area, but he understands the mindset of residents who don't want to take any kind of a financial gamble in the current bad economy, no matter how small that gamble might be.
He added that the city would not be looking to retool the proposal and bring it back to the residents unless they could do so without any financial risk to taxpayers.
For Kuehn, other city officials and members of the North St. Paul business community, it may be back to the drawing board to discuss ways to promote business development in North St. Paul.
He said city officials don't have any specific new plans, but he will be working with the community development task force, which he assembled in August of 2008, to come up with ideas.
"I think it's vitally important that the city work very proactively to expand economic development," he said. "It's vital for our tax base, because we're very dependent on local government aid, and that's very unstable."
Council member Terry Furlong echoed the mayor's sentiment.
"I think the people spoke and that's what we wanted to do - get it out there and have them decide."
He added that Polarnet was a tool that could have been used to facilitate business development in the area, but he didn't view it as a make-or-break type of technology for the city.
"It could have been used to help the city, but now we have to figure out other tools," Furlong said.
City Manager Wally Wysopal, who has, in forums and TV interviews, been the face of the Polarnet project, expressed some dismay about the vote.
"Well, we're disappointed with the results," he said. "We're not defeated, though; we remain committed to finding methods to improve the community through economic development."
He said that media campaigns by opposition groups like the "Freedom Foundation of Minnesota" and the "Coalition for Responsible Broadband Choice," which was backed by the Minnesota Cable Communications Association, had an effect on the outcome of the vote.
"That weighed significantly (in regards to) the adjustment and attitude toward the project," Wysopal said.
As private companies fended off the city's possible foray into what they considered their territory, other government agencies were watching in hopes North St. Paul would succeed, opening the doors to similar publicly-owned services around the state. That opened the issue up to scrutiny from a far wider audience than is drawn to most North St. Paul elections. Wysopal described the ensuing media coverage as "unparalleled in the city's history."
He added that the opposition groups had spent at least $40,000 in their "vote no" campaigns, and they have another eight days to file expenditure statements, so that figure will most likely go up. He said the city spent $4,208 as part of the "educational campaign" to promote Polarnet. He said that included the two open forums at the Community Center and documents that were disbursed by mail informing residents about Polarnet.
Opposition groups' reaction
Tom Steward, from the Freedom Foundation of Minnesota, gave his take on the vote.
"By an overwhelming margin, voters in North St. Paul seem to be endorsing greater government transparency and limited government involvement in their everyday lives," he wrote in an e-mail to the Review. "Hopefully, other cities considering similar measures are paying attention." The Freedom Foundation of Minnesota is an "independent, non-profit educational and research organization" according to its Web site.
The "Coalition for Responsible Broadband Choice" had its reaction to the vote posted on its Web site the day after the ballots had been tallied.
"North St. Paul voters have clearly shown they do not want to risk higher taxes to support a government-owned telecommunications network," the post reads. "The companies serving North St. Paul will continue to invest and bring new services and technologies to this community, and will do so without the burden of competing unfairly with a government-subsidized network."
Derrick Knutson can be reached at dknutson@lillinews.com or at 651-748-7825.
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