Community Developments Investments (November 2018)
U.S. Bank: NMTC Helps Expand Internet Access in Appalachian County in Ohio
ShutterstockOhio’s covered bridges, like this one in Ashtabula County, attract tourists to an area where rural businesses and residents do not have reliable internet access.
Letty Ann Shapiro, Community Development Expert, OCC
U.S. Bank invested approximately $3.2 million under its public welfare investment authority to help expand and modernize an existing broadband network for 2,000 residents and businesses in rural Appalachian communities in northeastern Ohio.
U.S. Bank’s investment supported GreatWave Communications, a 120-year-old telephone company, transition into a 21st--century provider of phone, internet, cable, and fiber-optic networks in rural communities. “The company reinvented itself as a broadband internet provider,” according to Christian Siebeneck, chief executive officer of GreatWave Communications and GreatWave Broadband Services, LLC.
The GreatWave project was financed, in part, with New Markets Tax Credits (NMTC), which are designed to provide safe, stable financing to businesses in low-income areas across the country. U.S. Bank’s investment in the GreatWave project went to rural LMI communities in the cities of Ashtabula (population 18,000) and Geneva (population 6,000). These cities are located in Ashtabula County, Ohio, which hugs Lake Erie and is 194 miles northeast of Columbus. Tourists know Ashtabula County as home to 17 covered bridges, including the longest and the shortest in the nation.
Ashtabula County is designated as severely distressed by the Appalachian Regional Commission. Like many distressed rural areas, Ashtabula County has a high concentration of LMI residents and has struggled to retain and attract the residents and businesses—and high-speed broadband investment—needed to fuel the kind of economic prosperity enjoyed in Ohio’s metropolitan areas. The city of Conneaut (population 12,708), also in Ashtabula County, for example, has struggled with an aging telecommunications infrastructure that made many essential services unreliable, such as dispatch of emergency medical, fire, and police services.
The county’s distressed designation and demographics made the $9.5 million cost of the GreatWave project eligible for NMTC financing. Two local community development financial institutions (CDFI), the Ohio Community Development Finance Fund and the Development Fund of the Western Reserve, provided $5 million and $4.5 million, respectively, in NMTC allocation. U.S. Bancorp Community Development Corporation, a wholly owned subsidiary of U.S. Bank, made the approximately $3.2 million NMTC investment on behalf of the bank.
GreatWave used the NMTC funding to upgrade its fiber-optic network to build out into new service areas, known in the industry as the “last mile,”1 to provide phone and internet services to an additional 50 businesses and 600 residential customers per year. The Finance Fund supports community organizations working to improve the quality of life for LMI individuals and communities. Western Reserve is a private nonprofit managed by the Development Finance Authority of Summit County. Western Reserve enables investments that target eligible low-income communities in northeastern Ohio.
The CDFIs providing the NMTCs were brought together, like pieces in a puzzle, by Advantage Capital Partners, a venture capital and small business finance firm providing growth capital to economic development efforts. Jeremy Degenhart, principal, Advantage Capital Development Corp., said that the firm raises private institutional capital from investors to finance businesses in areas underserved by traditional sources of risk capital.
GreatWave’s technological transformation came about slowly. In 1990, the company became one of the first to be 100 percent digital. In 1991, nine Ashtabula County high schools connected to the local branch of Kent State University on an interactive fiber-optic network, the first such network in Ohio that was made possible by a joint effort with three other telephone companies serving Ashtabula County. In 1999, GreatWave began construction on its most ambitious project, an $18 million hybrid fiber-coaxial system (a combination of fiber-optic cable and coaxial copper core lines) providing telephone, broadband, and video services to core area customers. In 2013 GreatWave expanded its fiber network to provide connectivity directly to homes and businesses.
Today, GreatWave is Ashtabula County’s primary telecommunications provider and serves 2,000 telephone customers, 1,650 cable television subscribers, and 3,200 broadband internet users. Continual expansion of the network and the company’s growth are moving forward together. “We are currently focused on serving business and residential customers in the cities of Kingsville, Ashtabula, and Geneva,” Mr. Siebeneck said.
Most importantly, GreatWave’s transformation is giving distressed Appalachian communities a better chance to compete in the digital economy, spur development, and prepare students for jobs and life in the 21st-century economy.
James E. Hockaday, city manager of Conneaut, told the Community Development Financial Institutions Fund that “there are few cities in Ohio or the country that can claim to have a completely wired fiber-optic network capable of gigabit dedicated service. It is a unique asset that this city is proud of and we hope to see GreatWave continue to grow and prosper around this new technology.”2