Politics & Government

Kentucky House leader calls for investigation of troubled state broadband project

This Sept. 16, 2016 file photo shows Republican Kentucky Gov. Matt Bevin, right, and U.S. Rep. Hal Rogers discussing the status of the statewide broadband network at the state Capitol in Frankfort, Ky.
This Sept. 16, 2016 file photo shows Republican Kentucky Gov. Matt Bevin, right, and U.S. Rep. Hal Rogers discussing the status of the statewide broadband network at the state Capitol in Frankfort, Ky. AP

The leader of the Kentucky House of Representatives called for an investigation Monday of a troubled public-private partnership to wire all of Kentucky for high-speed broadband access.

The Kentucky Wired project is running years behind schedule, resulting in tens of millions of dollars in cost overruns over its initial $324 million budget, said House Speaker Pro Tempore David Osborne.

The legislative investigation will be independent of an investigation state Auditor Mike Harmon's office has been conducting since January of the project. Harmon's investigation is expected to be completed this summer.

Created by former Democratic Gov. Steve Beshear and Republican U.S. Rep. Hal Rogers in 2015, Kentucky Wired was supposed to have delivered high-speed internet access to all 120 counties by this year.

Osborne has filed a resolution urging the state legislature's Program Review and Investigation Committee to investigate the project. The panel is made up of Democratic and Republican members from the House and Senate.

"The state, specifically taxpayers, need to know the details behind the contract for Kentucky Wired and the specifics concerning delays and additional costs to date, in an impartial and unbiased manner," Osborne said in a news release. "Allegations and innuendo have swirled concerning the contract and the intentions behind it. I expect this investigation to confirm the grounds for drafting the contract in the manner it was, and to discover any mistakes that were made to ensure the state does not commit the same errors, if any, ever again.”

Republican Rep. Lynn Bechler of Marion, who co-chairs the Program Review and Investigations Committee, said his committee will try to determine what went wrong with Kentucky Wired.

“If what’s happened with Kentucky Wired happened in the private sector, there would be consequences. Unfortunately, the state is still on the hook for what might have been a bad agreement," Bechler said. "Nonetheless, we are responsible for discovering what took place and why, and proactively moving to prevent this from happening again."

The project calls for private partners to build most of the infrastructure and then lease access to private internet providers or cities, who would actually connect customers to the internet.

That relationship would generate revenue for the state while paying off the private partners’ initial bonds.

Today, the project is estimated to have only 708 of 3,400 miles of cable completed because of delays in accessing existing utility poles, and there is no revenue to make payments to the private companies involved, said Osborne.

So far, the delays have resulted in nearly $90 million in costs to the private companies involved, and the state has only provided $8 million in penalties to them. Over the next two years, Kentucky is facing payments to the private partners to the tune of nearly $68 million, said the House leader.

The Kentucky Communications Network Authority, the public partner in the project, this year requested that lawmakers provide the $68 million coming due and give it the authority to borrow $110 million to pay future penalties for the delays. After initially balking, lawmakers provided the money.

If the state opts out of the project, Osborne said, there’s an estimated cost of nearly $500 million

"After many meetings and much feedback, including a hit to credit ratings if ceased, it has become apparent that there is little choice for Kentucky but to move forward with the Kentucky Wired project," he said.

Related stories from Lexington Herald Leader