‘We’re on the right track’: Salisbury officials pleased with progress on Fibrant debt payment

Published 12:01 am Sunday, June 26, 2022

SALISBURY — A little over four years after the city entered a partnership with Hotwire Communications for the company to take over its fiber optic network, Salisbury is making progress toward paying off the debt it took on to build the system.

In December 2008, the city borrowed $33.56 million to build its own “fiber to the home” broadband network called Fibrant. As a result of that investment, Salisbury became a “gig city,” offering upload and download speeds of one gigabit per second. In 2015, Salisbury was hailed as the first city in the nation to offer 10 gigabit speeds.

While the internet was fast, the city’s venture was losing several million dollars per year. In a referendum held May 8, 2018, Salisbury residents overwhelmingly voted in favor of turning the network over to Florida-based Hotwire Communications. After the vote, Fibrant was rebranded as Fision. In taking over the system, Hotwire agreed to pay rent to the city in terms of revenue percentages.

Since then, the venture has become cash positive for the city. Salisbury is receiving about $580,000 in cash flow from Hotwire each fiscal year, according to Finance Director Wade Furches. The city now has a remaining debt principal of $17 million and expects to completely pay off the debt in March 2029 — referred to by Furches as the “magical date.”

“We’re on the right track,” Furches told city council on Tuesday night.

Paying off the debt would free up several million annually for the city to use for other purposes, including capital improvements or lowering the property tax rate.

The 2022-23 fiscal year budget approved Tuesday by council includes a General Fund contribution to the Fibrant Fund of $2.7 million. That’s a reduction of about $245,000, or 8.3%, from the current fiscal year.

“That’s a step in the right direction,” Furches said.

From the beginning, the Fibrant fund has operated on a deficit fund balance. That deficit fund balance has come down every year since Salisbury partnered with Hotwire, Furches said. “We anticipate that the deficit fund balance will go surplus, will turn from red to black, in (the fiscal year).”

“Things with broadband and Hotwire are as we planned when we entered the agreement,” Furches said.

Once the principal debt is paid off, the city will also begin to “focus more” on paying off internal debt. When launching Fibrant, the city borrowed about $7.2 million from its water and sewer fund. Salisbury has paid that debt down to $5.6 million and plans on making a $300,000 debt payment to the water and sewer fund in the upcoming fiscal year.

For Council Member David Post, progress being made on both the external and internal debt is evidence that the partnership with Hotwire is paying off.

“I just think that we made the right decision a few years ago,” Post said.

City Manager Jim Greene Jr. said Fision has been a “tremendous asset for the City of Salisbury.” Mayor Karen Alexander commented that the city’s robust internet infrastructure was crucial during the pandemic.

“It really showed up how important it was during COVID for our students who were on one-to-one devices,” she said. “They had access when so many communities, our county, other counties, other cities did not have that. While it was a big tough decision for previous councils, I think our councils since then have made great strides in setting the ship straight and it’s paying off.”

About Ben Stansell

Ben Stansell covers business, county government and more for the Salisbury Post. He joined the staff in August 2020 after graduating from the University of Alabama. Email him at ben.stansell@salisburypost.com.

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