Grove City Council is being asked to appropriate $2,719,000 from the general fund to cover additional costs for the city's project to construct a municipal fiber-optic network.

In October, council appropriated $4,781,000 to pay for the design and construction of the network.

At its July 6 meeting, council held a first reading of an ordinance to appropriate the additional funds.

The extra money is needed in large part to pay for make-ready costs that are higher than originally estimated, said Todd Hurley, the city's director of information services.

The make-ready costs Hurley quoted in the fall totaled about $400,000. That cost now stands around $2.1 million, he said.

When he presented the project and its estimated costs last year, Hurley said, he noted his biggest concern was the uncertainty of the make-ready costs and that they could be higher than estimated.

The make-ready item primarily refers to the payments the city must make to utility companies to hang cable for the fiber-optic network on their poles, he said.

Most of the poles involved in the project belong to American Electric Power, Hurley said.

The city is looking to hang cable on 1,446 AEP poles, 232 poles that belong to AT&T and 22 poles belonging to the Columbus Division of Power, he said.

"So we have to submit a proposal to them – 'Hey, we want to hang cable on your poles' – and they come back and tell us a make-ready cost," Hurley said.

The final make-ready cost AEP quoted turned out to be much higher than the original estimates, he said.

"What we are dealing with, really, are the only vendors we can deal with," city administrator Chuck Boso said. "There are really no negotiations possible with them."

Hurley said final make-ready cost estimates are still pending with AT&T.

The initial estimate of $156,000 relating to the AT&T poles "was conservative" and may well end up being closer to $100,000, he said.

The final cost figure will be determined over the next 30 days, Hurley said.

Council will hold a second reading and public hearing on the ordinance at its Monday, July 17, meeting, but plans to wait to vote on the measure until its Aug. 7 meeting.

The delay will allow time for the AT&T make-ready costs to be finalized and enable council to vote on a measure with more-concrete numbers, said Jeff Davis, chairman of council's finance committee.

Council President Roby Schottke said he found the increased costs to be "very disturbing."

Approving a project before the actual costs are determined isn't the way the city generally does business, Schottke said.

"It's not the way we should be doing business," he said.

He said he also was concerned that the number of years before the city will see a return on its investment is now estimated to have grown from a little more than eight years to at least 12 years.

Hurley said this is the first time he's had to come back to council and ask for additional funds for a project.

"It burns me to have to ask for this," he said. "I agree 100 percent with (Schottke's) concerns.

"This didn't cost us any additional money," Hurley said. "What it cost us was knowing the ready costs up front."

If he had to do it over again – and what he will do in the future – would be to ask council for funds to pay the cost of doing the engineering that would have identified the true make-ready costs earlier, Hurley said.

Township partners

The network will provide fiber-optic connectivity to the southwest corridor of Franklin County, including the entire South-Western City School District.

The new system will deliver a tenfold increase in capacity for the participating entities.

The school district and Jackson, Prairie and Pleasant townships have agreed to be partners in the project and the Solid Waste Authority of Central Ohio has presented a letter of intent.

SWACO has had agreements in the past with entities in which the planned projects did not come to fruition, Hurley said. The agency has indicated it will wait until it sees the fiber-optic network project truly is proceeding before it will make a final commitment.

"The moment we run string by their facility, I will go down there and talk to them," he said.

The city has obtained a $2 million low-interest loan from the Franklin County Infrastructure Bank for the project.

The city will use a municipal bond to finance the project and reimburse the general fund, Boso said.

The debt payment will come from annual payments made by each partner that will be served by the network.

The length of the debt will be longer than originally expected, Boso said – probably about 14 years instead of 10.

No other future projects will be impacted because the general fund will be reimbursed, he said.