Prior Lake is moving toward its goal of developing a communitywide fiber-optic network, but with a far less ambitious approach than one contemplated by the city a year ago.

The city, Scott County and Integra have worked out a cost-sharing agreement to build and operate an extension of the county’s fiber backbone. It would run along County Road 21 from the intersection at County Road 42 to the intersection of County Road 27.

Prior Lake’s city hall, police station and library already have fiber. The extension will bring high-quality fiber to four remaining city buildings — two fire stations, a maintenance building and the water treatment plant. Lateral lines off the extensions will go to several business areas near those city buildings.

At about $315,000, the cost is a fraction of a huge fiber-optic project the city was considering last year after getting the results of a consultant’s study on the costs and benefits of a communitywide network.

That project would have resulted in a far wider array of high-speed telecommunications services to homes, businesses, schools, health care providers and local government facilities. But it would have cost about $28 million and required bonding of about $35 million. City officials decided that upfront cost was too high.

“Our objective hasn’t changed. It’s how we’re trying to get to it,” said City Manager Frank Boyles. “Rather than try to take on the whole thing at one time, with that massive cost, we’re trying to chunk it down, do an incremental approach.”

Mayor Ken Hedberg said the extension project lays the groundwork for a broader expansion of communitywide telecommunications services in the future. “This is the next logical step,” he said.

County Administrator Gary Shelton said the extension is part of an ongoing process to install fiber along major transportation routes so that traffic can be managed remotely.

Prior Lake will pay about $160,000, the county will pay about $109,000 and Integra will pay $48,000 under the cost-sharing arrangement. The county will own the backbone along the county road; the city will own the lateral lines to its buildings. Integra, which already provides some telecommunications services to the city, would own the fiber going to businesses.

Boyles said the city will pay for its share with funds that already had been budgeted for extending fiber to the four buildings. Work on the extension is expected to be done by the end of this year, he said.

Expanding the fiber-optic network is a key part of Prior Lake’s overall strategy to stimulate its economy. Attracting and maintaining more high-tech businesses is part of the effort to increase and diversify the city’s workforce.

Prior Lake’s public and private labor force totaled about 7,900 at the end of 2012, a decline of about 600 from peak years in the mid-2000s, according to the Minnesota Department of Employment and Economic Development. The department’s data show that close to half those jobs are in the leisure and hospitality sector, mostly at Mystic Lake Casino and Hotel.

Boyles said the ability to test the waters with a more limited fiber project will give the city a clearer picture of precisely how expanding telecommunications can contribute to economic development.

Hedberg said that “by being able to extend [fiber] to several different business areas, we’ll be able to find out how much of a market there is.”

Michelle Choudek, a vice president at OnSite Engineering and Forensic Services Inc., said she sees significant benefits for her company from the fiber extension.

OnSite, which provides a variety of services to investigate fires, power failure and accidents, is in Prior Lake’s Deerfield Business Park — one of the areas that will get the new lateral fiber lines.

Choudek said the new fiber will enhance the company’s ability to handle large documents, photos and other materials for clients, including companies outside the United States.

Choudek said she also believes other firms — even less tech-oriented ones — are likely to discover ways high-quality fiber can help their business.

“I think of it like a smartphone. When they first came out, a lot people would ask why they would want a computer in their hand. Now they can’t imagine how they got along without one.”