Ramsey County is dumping its private sector partner in a fiber optics project that was expected to start next spring and cost more than $28 million in public and private funding.
The County Board will vote Tuesday to ditch Minnesota Fiber Exchange (MFE), which was to be a 50-50 partner in laying fiber-optic cable throughout the county beginning in spring 2013.
Board Chair Rafael Ortega said talks with MFE fell apart over "financial and management" issues, but he declined to detail how the deal broke off after three years of planning.
"It's an important infrastructure piece for the county. It's important to do it right," he said.
"It's just a tough economic time and [MFE] couldn't put together the financing the way we do business."
County spokesman Art Coulson said that Ramsey County was "rebooting the [request for proposals]" and still planned to have "shovels in the ground this spring." Ortega said the timetable may be pushed back to summer.
"We'll get it done," he said.
But St. Paul now is reconsidering its participation as a client of the county's network. It signed on last summer to have the county operate its intranet for internal communications among departments and employees.
St. Paul was to pay Ramsey County roughly $1.5 million a year to operate its intranet. The money was going to be used by the county to help pay the debt on $14 million in county construction bonds.
City Council President Kathy Lantry said Friday the city will have to "start over." It will need a new partner for the intranet soon, since its contract with Comcast expires next year.
"We just need to figure out whether or not this change is going to have an adverse effect on the city's timeline and budget," Lantry said.
The county decided to enter the fiber optics business by building and operating a network with MFE that would then sell cable services to homeowners and businesses, in competition with existing cable providers such as Comcast and CenturyLink.
County officials said the new network would give them long-term control over costs and services. Supporters said it made sense to share construction costs with a private company.
Carver, Scott and Dakota counties have or are building at least partial or entire networks. Anoka County is building one with federal help, and Hennepin County uses a mix of public and private fiber.
Fiber-optic cables transmit information by sending pulses of light through thin strands of glass. Fiber is 17,000 times faster than dial-up systems, and a few hundred times faster than most cable and DSL services.
Cable companies and business leaders have raised questions for months about Ramsey County's entry into the cable business, especially in terms of subsidizing a private partner. The St. Paul Area Chamber of Commerce asked last summer for a detailed cost of the operation, but has yet to get one.
When the Ramsey board voted this summer to move forward on the project, Chief Information Officer Johanna Berg said she would be reporting back with "final numbers in the coming weeks." That report never happened.
Chamber president Matt Kramer said Friday he was "pleased that the Ramsey County Board is revisiting this issue. We believe strongly that thorough due diligence is the hallmark of an open, transparent government."
"We're pleased that the concerns raised in the business community have been heard," Comcast vice president Emmett Coleman said. "At least some of the initial steps have been taken to address those concerns."
Just last week, Coleman had sent a letter to Ortega asking for more information and criticizing a "lack of transparency" over the decision.
"A taxpayer investment of $14 million deserves thorough examination and public vetting before a decision is reached," he wrote.
Coleman is the younger brother of Mayor Chris Coleman, who does not participate in discussions or decisions regarding Comcast or cable franchise agreements because of their relationship.
A call to Minnesota Fiber Exchange was not returned Friday.
Rochelle Olson • 651-925-5035 Twitter: @rochelleolson