McComb’s proposed fiber optics network may soon be headed to its final resting place.
An order to rescind McComb selectmen’s June decision to partner with Mainstream Fiber Networks for a $13 million fiber optic network will likely be on next week’s city board agenda.
At a work session meeting Tuesday, selectmen and the mayor agreed on the measure after hearing Jackson attorney Larry Harris say that McComb or other municipalities involved could not legally issue bonds the way Mainstream proposed. Most selectmen seemed in agreement about the halt.
“My idea is that we put the brakes on it,” Selectman David Myers said.
Mainstream has proposed that McComb, Magnolia and Summit form a regional body that would issue $13 million in bonds for the network. The company says that no one municipality would be liable for the bonds if the project failed.
However, Harris disagreed. He said if the city gets involved in the project as it’s set up, McComb would be have to repay the loan if the project failed.
Harris, the attorney for the Mississippi Municipal League, said state law only allows governments like municipalities, counties, school districts and some levy districts to issue public debt. The city would have to pass a bill in the state Legislature for the regional authority to issue bonds, Harris said.
“No. 1, you don’t have the authority to do it,” said Harris.
Mainstream CEO Terry Drury said this morning that’s not the case.
“What we have is a difference in opinion between the attorneys,” Drury said.
He said the regional authority is a separate corporate entity that can issue bonds that do not hold McComb or other municipalities accountable. He said the bond underwriter has already guaranteed that.
“We wouldn’t do it otherwise,” Drury said.
He said the project has nothing to do with whether the authority can issue public debt.
“I’m not talking about public debt. We never have,” Drury said, adding that Mainstream would prefer the city not to incur any debt.
He said it’s common for municipalities to form separate entities and issue bonds and he ensured that McComb would never be tied to the bonds.
Harris said he was originally contacted by Magnolia city attorney Wayne Dowdy after Mainstream pitched the proposal to city aldermen.
Selectman Wade Lamb said he understood the bonds could be issued without a problem and he was surprised to hear otherwise.
“I’m hearing stuff today that I’ve never heard before,” Lamb said.
A similar rescind order died for a lack of a motion after an Aug. 14 meeting. In June selectmen voted to proceed with the system that would wire McComb, Magnolia and Summit with high-speed Internet, telephone and cable television.
However progress halted days later when Patterson, who had yet to sign the engineering and design contract, convinced the board to hold off on the project. He reminded the board on Tuesday of that fact and added the city could have been out of $98,000, the cost for the engineering and design phase.
Harris, who has represented the city in the past, is also working with McComb regarding the financing of the state-mandated wastewater treatment plant. He said if the city issues bonds for that project, there’s no doubt the money will be paid back from customer bills because the city is the only one to offer that service. With the fiber optic project, there’s no subscriber guarantee.
Harris said he’s never been personally involved in a telecommunications project, but municipalities that are interested in it either fund and maintain the project by themselves or allow a private company to fund and maintain it without the city’s financial backing. He said he believes the latter is how cable television operates in McComb.
Myers asked why Harris hadn’t been invited to speak before the city approved $24,000 for a fiber optic network feasibility study with Mainstream. Patterson said ultimately, city administrator Sam Mims should have invited Harris earlier since Mims is responsible for briefing the board on contracts.
Myers said it isn’t just Mims’ responsibility, it is city attorney John “Bubber” White’s job as well.
White responded that as soon as he received the engineering and design contract, the catalyst to the whole project, he notified city officials that they needed an expert to review it.
Myers called the $24,000 spent on the study a mistake. He said had the board heard from Harris before the study, it would not have happened.
Patterson noted that years ago when the city approved the feasibility study, Selectman Bob Maddox was the only one to oppose it.
“My kudos to you,” Lamb said to Maddox.
