MLP Coop Debt Authorization and Individual Town Network Construction

The town of Washington passed its Last-Mile Fiber debt authorization using the “MLP Coop” version of the motion, as did several other WiredWest towns. This motion included the following language: “such project to be carried out by the Town’s Municipal Light Plant acting as a member of a cooperative of such Plants formed under Chapter 164, Section 47C of the General Laws.”

During the process of getting the “green light” letter on our debt authorization, our bond counsel, Rick Manley, raised a question about this cooperative language and whether that authorization might be considered invalid now given the changes to the ownership model.

Our exploration of this question with bond counsel, and our defense, focused on 1) a close reading of the language in the motion and 2) clarification about our Town’s intentions and plans for our last-mile fiber project.

A careful parsing of that key phrase of the debt authorization shows that the active agent in the project was declared to be the MLP — “such project to be carried out by the Town’s MLP” — which we are in fact currently doing. And this MLP will be “acting as a member of a cooperative,” which we are also committed to doing at every possible turn. The exact nature and role of that cooperative may be in flux, but our intention and commitment has not changed.

Although Washington is fully engaged in our individual Town Readiness Assessment with MBI and going through the motions of the standalone sustainability exercise, we remain committed to a regional network model. We have never really wanted to own the assets within our borders. Our town is too small to maintain and administer such a network on our own, nor can it be sustainable in such a fashion. We remain active members of WiredWest; and at the earliest opportunity, we look forward to pledging our portion of the network to a cooperative and participating in a regional operating model.

As one key piece of evidence offered to counsel to support our position that the project has not fundamentally changed, I dug up the Business and Financial Model diagram from the Dec 11, 2014, joint presentation to towns by MBI and WiredWest. This shows that, from the inception, funds were going to flow from towns directly to a CapEx Fund to finance construction and not pass through the agency of the WiredWest cooperative for this phase of the project. To the extent that we communicated any of the nitty-gritty to the voters of our town, it would have reflected that flow chart. We believe, in good faith, that despite some adjustments in our approach, we are still undertaking this project with essentially the same goals and intentions that our citizens approved with the debt authorization.

On the whole, our explanation was persuasive and we received our green light letter, along with subsequent approval from DOR. For other towns with Rick Manley for bond counsel, this should hopefully pave the way.

Given MBI’s current individual Town Readiness Assessments and the emphasis on individual town ownership of network assets, the public can perhaps be forgiven for the misperception that all of the WW towns are now each “going it alone.”

From a very practical standpoint, to the extent that MBI obstructs further efforts of towns to organize cooperatively they run the risk of invalidating some of these debt authorizations.

It is important for WW towns that passed a “coop” version of the debt authorization to remain mindful of each step they take and how that aligns with the objective (and perception) of achieving a regional network operated by a cooperative of MLPs. Even though Washington is checking off the box for Model D “Independent Municipal Network” in its Readiness Submission (as did Rowe) as a proforma ploy to quickly clear this initial hurdle, we are making sure that the rest is laced with our clear intention to steer toward a regional cooperative operating model.

— Kent Lew
Town of Washington Finance Committee Chair
Alternate Delegate to WiredWest
MBI Town Readiness Alternate Contact