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Fiber project tabled

Legal opinion needed for bonding

October 10, 2012
By Fritz Busch - Staff Writer , The Journal

GAYLORD - After more than 90 minutes of discussion Tuesday before a standing-room only crowd, the Sibley County Board tabled action on the RS Fiber project.

Minneapolis attorney Robert J.V. Vose of Kennedy & Grave, representing RS Fiber - the project designed to provide phone, cable and broadband internet service in Sibley and Renville counties - said Oppenheimer, the project's bond underwriter, requires legal opinions from local counsel for the RS Fiber Joint Powers Agreement and a project Debt Service Shortfall Agreement.

That's where the rub comes. No legal opinions on those two agreements have been received.

Article Photos

Staff photo by Fritz Busch
Arvid Schwartz of Green Isle speaks about the RS Fiber project Tuesday at the Sibley County Board meeting, held jointly with Renville County commissioners.

The law firm Dorsey & Whitney, LLP, Minneapolis was sought to clarify if Sibley County has the authority to participate in fiber project financing with revenue bonds to be issued by the Renville-Sibley County Fiber Joint Powers Agency, a Joint Powers Agreement (JPA) among the counties and their 11 cities. The City of Arlington opted out of the project earlier this year.

Bonds would be payable primarily from projects revenues and would be additionally secured by a Debt Service Shortfall Agreement (SA) between the Agency and Wells Fargo Bank, National Association, as trustee for the bonds, in case project revenues were insufficient to pay bond debt service.

According to an Oct. 2, letter to the Sibley County Board and County Attorney David Schauer, Verlane L. Endorf of Dorsey & Whitney wrote that the law firm is unable to reach the certainty necessary to express an opinion that the JPA and SA would, if challenged, be upheld in the courts.

The letter further stated that the lack of an opinion does not mean that the law firm believes that the County is legally prohibited from project participation.

Endorf wrote that one possibility to resolve the issue would be to seek special legislation to clarify transaction authorization.

"Dorsey & Whitney won't render an opinion, but that's not to say the project can't be done," said Vose. "We anticipate you'll be able to get an opinion. ... But it's not possible to make bonds without a legal opinion. You could approve the project contingent upon a legal opinion. We're optimistic there is such a bond counsel out there."

Sibley County Economic Development Director Tim Dolan said he would contact the board as soon as he is able to get a legal opinion.

Several Sibley County residents spoke about the project.

"Rural kids need the same access to education that town kids have," said Gibbon Mayor Chuck Gatton. "Agriculture producers need it too."

Cairo Township farmer Jacob Rieke said fiber optic communications are coming of age.

Arvid Schwartz of Green Isle said the fiber project is vital.

"We can't isolate ourselves from the rest of the world," Schwartz said. "We have a vast natural resource - land. It produces a lot, but we need connection to the outside world. Exert leadership and take risks. Sibley East Public Schools just bought new learning tools - iPads."

Schwartz said his healthcare provider invited him to sign up with a virtual doctor, but he can't due to lack of internet capacity.

"We all assume risks and pay taxes," Schwartz said. "That's what leaders do. They take us to places we didn't think we should go. Nobody thought the (Minnesota Prairie Line) railroad would work, or the Heartland Corn Producers (HCP) ethanol plant."

Commissioner Bill Pinske said all commissioners favor the project as long as legal issues are solved.

Commissioner Jim Swanson said he would not approve fiber project bonding if the resolution was contingent on a favorable legal opinion.

"I'd be leery about who was making decisions then," Swanson said.

Renville County Commissioner Bob Fox agreed it would be nice to get a legal opinion before proceeding with the project.

(Fritz Busch can be e-mailed at



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