Caribou Utilities District won’t accept hospital donation amid controversy

1 year ago

CARIBOU, Maine — The Caribou Utilities District will move forward with its broadband expansion project without a donation from the controversial local hospital district board.

Last week, Caribou city councilors voted 5-to-2 to oust two Cary Hospital District board members for trying to donate $250,000 on behalf of the hospital to the Caribou Utilities District, a quasi-municipal entity seeking funds to build a citywide, high-speed, dark-fiber network. 

Members of the utilities district board of trustees agreed Monday to not pursue further funding from the hospital district board and instead work to improve public perception of their broadband project.

For nearly three years, the CUD, Caribou’s Business Investment Group and the Houlton-based Pioneer Broadband have discussed potential avenues for bringing high-speed internet to the city’s most rural, underserved regions. After an ARPA-funded study revealed more than 5,100 potentially underserved households, the local partners concluded that a five-year “outside-in” approach could bring dark fiber connections to Caribou’s rural regions first and work its way to the more heavily served downtown business district.

But Caribou leaders have simultaneously been exploring potential partnerships with the internet companies Consolidated Communications and Spectrum, who both have said they want to expand high-speed broadband in Caribou.

That latter company caused controversy last month when councilors learned of anti-utilities district ads that targeted Caribou residents and claimed that the project would burden taxpayers.

City councilors publically endorsed the utility district project this year but have not yet decided if they will formally partner with Consolidated or Spectrum. Either partnership would put them in competition with the utility district broadband network, which has so far signed on Pioneer Broadband and the Biddeford-based Great Works Internet as providers.

Caribou city councilor John Morrill (center) discusses the Caribou Utilities District’s broadband project while CUD Trustee Nancy Solman (left) and Business Investment Group member Paul Powers look on. (Melissa Lizotte | Aroostook Republican)

Spectrum’s actions prompted the utility district board of trustees to hold a special meeting Monday in which they sought to clarify their relationship with the ousted hospital district board members, Tim Todd and Bryan Cullins, and the district’s most recent broadband funding sources.

Trustee Nancy Solman said that she and colleagues did not realize that Todd and Cullin were violating city rules regarding conflicts of interests when they contacted the utilities district about a potential donation.

Todd owns and operates R.L. Todd & Sons, an electrical contracting company, and is one of three vendors who have agreed to assist the utility district after construction of the fiber poles. The utility district’s current broadband business plan lists Todd and Cullins as additional community partners under “finance, procurement and community outreach,” and identifies them as hospital district board members.

Utilities district trustees also addressed a concern that City Councilor John Morrill brought up just after the council’s vote on the hospital board.

In November, the utilities district voted to transfer $200,000 from its wastewater division to the broadband division, which the state Legislature approved through a utilities district charter amendment in March. 

The $200,000 will help the district purchase fiber, obtain pole permits and install fiber poles for phase one of the project, estimated to cost $1.3 million.

Morrill had questioned whether the utilities district fund transfer was legal.

“There seem to be a lot of alternative methods to fund [the broadband project],” Morrill said during the Nov. 28 city council meeting.

Utilities District General Manager Hugh Kirkpatrick said Monday that the district has done several other “intercompany loans” to pay for past projects.

In 1989, it purchased the former Caribou Waterworks and borrowed funds from the wastewater division to build a new garage for the just established water division. The utilities district will pay themselves back for that loan in 2024 or 2025, Kirkpatrick said. 

The district  borrowed from the wastewater division again in the early 2000s to add a conference room to the main office. It paid off that loan in 2019, Kirkpatrick said.

He also said that the district’s recent 6 percent, or $5, water rate increase will not fund the broadband project and is not connected to the $200,000 wastewater loan.

“[Broadband] will not affect water rates,” Kirkpatrick said. 

In addition, the utilities district has applied for a $1.6 million Connect the Ready grant from the Maine Connectivity Authority, which trustees and supporters said would fund 60 percent of the project’s first two phases. 

The district has sought other funding sources to put themselves at the front of the line for future state and federal grants, hence the need to borrow or accept donations from reliable sources, said Trustee Jan Murchison.

“We are also seeking a bond with Pioneer Broadband so that we share the risk in case the project doesn’t work out,” Murchison said.

The trustees’ explanation prompted those at Monday’s meeting to suggest that the utilities district present its project to the community in clearer terms.

“You have to remember that $200,000 is not what most people see in their lifetime. When they hear about you borrowing money [from wastewater] right as their rates go up, they’ll think [broadband] is raising the rates,” said Caribou resident Gail Hagelstein. “You need to clarify these things.”

For now, said Morrill, the city council has opted to not vote on a potential broadband partnership and instead see what grant funding might be available to both the utilities district and the city.

“I think we all agree that [the utility district’s plan] is a phenomenal concept, but how it has been presented might not have been done in the right way,” Morrill said. “At this point, we need to step back and see where the cards fall.”