Fiber to home and business grant completed what did it cost pud? by The Newport Miner

M iner Community Newspapers 421 S. Spokane Ave •  Newport, Washington 99156

• Newport Miner • Gem State Miner • Miner Extra • Horizon • Printing Services This story involved a government project and the common cost over run. But we felt it was extremely important for our readers to understand how this could happen and what steps, if any, were taken to avoid the over run. We were, of course, looking for the smoking gun – corruption. Understanding this complex story was important because it involved a large sum of public funds and could have hindered the critical public project of installing the first and vital fiber optics network in the community. It could have caused increased power rates for everyone. A potential criminal investigation, civil lawsuit threats and public officials fearing scandals made gathering the necessary information from a four-year process difficult. We used a time consuming process of public records requests, interviews and researching our past stories to investigate. The Pend Oreille Public Utility District received a $27.2 million federal stimulus grant to install fiber to the premises in south Pend Oreille County in 2010. The project began shortly after the PUD received the grant and by 2012, budget issues became a concern. When the grant portion ended in September 2013, the fiber project was sitting at about $37.4 million in costs. The PUD originally reported it was on budget, then reported it was about $1.9 million over budget and at grant closing, was $3.3 million over budget. I submitted a public records request to the PUD basically asking for all the contracts, chain of command, change orders, disciplinary memos and financial reports about the project. Our request was for these documents in any form from print to email. The PUD complied with the request and a meeting was held with The Miner publisher, PUD general council, and myself. We reviewed boxes of files. I compiled this story using the public records received from the PUD, past Miner archives, interviews both on and off the record and extensive Miner news stories on the fiber project. The information was organized into a detailed timeline explaining who was in charge of the project, when leadership changed and noted several dated memos expressing concern with the project being over budget, as early as 2012. In the end, after boiling all this information down, it was clear that there wasn’t enough oversight, the project was larger than proposed and there wasn’t any criminal activity. The smoking gun wasn’t there but that was important for the people to know. -Desireé Hood Reporter Title: Fiber to home and businesses grant completed: What did it cost PUD? Subheads: Additional work and problems cost PUD another $3.3 million Where is CNS today? Timeline

509-447-2433 • Fax: 509-447-9222 • E-mail: theminer@povn.com • www.pendoreillerivervalley.com

The Newport Miner THE VOICE OF PEND OREILLE COUNT Y SINCE 1901

Wednesday, March 5, 2014

www.pendoreillerivervalley.com

Volume 111, Number 5 | 2 Sections, 16 Pages 75¢

Actual Costs

2010

2013

$34,072,297 PUD Cash $4,842,792

$37,406,852 Overrun $3,334,555 PUD Cash $4,842,792

In Kind $1,971,667

Feder F Fe Federal Fede ede de d er er ra all Grant a Gr G ran r ant an $27,257,838 $27,25 $27 $ $27, 27,2 2 25 57,838 7,8 838 38

Additional work and problems cost PUD another $3.3 million BY DESIREÉ HOOD OF THE MINER

NEWPORT – The Pend Oreille Public Utility District fiber to the premise project in south Pend Oreille County was originally estimated to cost $34.1 million but when the grant portion was completed to more than 3,795 premises it had raised costs

Actual Miles built by end of project 608

Estimated Miles of fiber to build in 2010

500

220 Miles

135 Miles

Under Un Under nd de d er g gro ground round rou r ound o d Connections Co Conn C on o onn nn ne n ec e ect ections ctio c ctions tions

365 Miles

388 Miles

Overhead O Over Ove ver er rh hea ead e ad d Connections Co C Conne onn onne n e ec ctio c ctions ttio tions iions on o ns

to $37.4 million. The money came primarily from a $27.2 million federal stimulus grant that required the PUD to extend the system to the entire south county and connect at least 960 premises,

BY DON GRONNING OF THE MINER

NEWPORT – A proposed rezone of more than 430 acres in the north part of Pend Oreille County could eventually lead to an equestrian themed development, with as many as 80 residential lots clustered in a portion WHAT’S NEXT: PEND OREILLE COUNTY PLANNING COMMISSION: meeting to consider the rezone is Tuesday, March 1, 6 p.m. at Cusick Community Center

CNS budget for 2014 is $1.48 million $815,000 in expenses $350,000 in capital projects $200,000 in debt payments (repaying internal loans for construction) Total expenses $1.37 million Total revenue $1.48 million Rest of the cash goes to debt or other capital projects. Currently 1,077 requests for service through three Retail Service Providers 902 premises are connected Fiber has been run to 3,795 premises out of 4,181 requests

Timeline • 2009: Bob Geddes is PUD General Manager.

On cost and budget monitoring

Neighbors concerned about traffic, water, lifestyle changes

Where is CNS today?

‘At the end of the day, CNS failed badly at this important task.’ CNS Staff Memo

Proposed rezone first step towards development

How the project grew from estimated to reality

Estimated Costs

How fiber to 3,795 was paid for

Fiber to home and businesses grant completed: What did it cost PUD?

to design project. They say about 500 miles of fiber cable. - PUD Fiber Optic Network Infrastructure: Integration, Engineering, Design and Construction Management • April 2010: PUD receives $27.2 million Broadband Technology Oppor-

- PUD Organizational Overview

• 2009-2010: Community leaders meet for Community Connect Committee meeting to discuss fiber and funding options. - Meeting minutes

SEE PUD, 2A

• 2010: ID Consulting Solutions hired

SEE TIMELINE, 2A

Teck Mine getting prepped for zinc shortage BY DESIREÉ HOOD OF THE MINER

METALINE FALLS – In late December, Teck Mining Company was approved for a small program to help get the Pend Oreille Mine ready to start up. It includes rehab work and other tasks required for startup because analysts predict a zinc shortage in upcoming years. A feasibility study is being done and David Godlewski, vice president, environment and public affairs for Teck, said the study should

be done by the end of March, however, he said delays are common on these processes. This would start the process for a possible startup at the mine, the first discussion of starting the mine again since it suspended operations in 2009. About 75 employees remained employed as the mine was placed on “care and maintenance,” the Teck website states. “Too early to tell,” Godlewski said about the outcome of the feasibility study. Godlewski said the feasibility study would give Teck the scale of

the operation and see if it is economic to reopen the mine. The mine produces 2,200 tons of zinc, zinc concentrates and lead concentrates that are shipped to Trail British Columbia to be turned into metal and then shipped to the appropriate buyers. Teck could add about 150 people for employment in the north end of Pend Oreille County if and when its starts up again. When operating at full capacity, the mine can employ more than 220 people.

of the property, along with commercial activities and a marina/ dock on the Pend Oreille River. That has some people who live near the proposed development concerned. The area proposed for development is just north of the Serendipity Golf Course, divided by LeClerc Road N., south of the Ione Bridge. Concerns range from worry over the lack of consideration of the cumulative impacts of the development to an individual household’s worry over contamination of its sole source of drinking water. Glen Cash Sr. is representing Wasatch and Associates, the Utah company that wants to develop the project. Cash owns Intermountain Land Surveyors, located in Priest River. He has applied to the county for a rezone of 436 acres from NR 20 to R5, or natural resource designation, with lots no smaller than 20 acres, to rural designation, with lots no larger than five acres. A cluster development is planned, meaning the lots could be smaller than five acres and clustered in a part of the property, with the rest of the land remaining open space. Cash sees a staged development called Mountain Springs Ranch, built 10 or 20 lots at a time. “No way are we going to build 80 all at once,” he said. The phased development will depend on the market and will take some time, he said. He said there would be no major construction until next season. There are two partners involved in Wasatch and Associates, Cash said. Jay Henrie is a semi-retired engineer from the Bureau of Reclamation and Vincent Hansen is a doctor. (See a guest column by Cash on page 4A.) While the pair have built a small condo, they’re not developSEE DEVELOPMENT, 8A

B R I E F LY Chamber Award nominations sought NEWPORT – The “Chamber Awards of Distinction” nominations are due Saturday, April 19 at 4 p.m. The categories for this years contest include Business of the Year for demonstrating the values of the Greater Newport Area Chamber of Commerce, Event of the Year, Community Partner of the Year for the non-profit organization that consistently supports the Newport area, Best New Member for the new business that demonstrates the values of the chamber, Citizen of the Year, Best Customer Service and Best Storefront. Nominations can be mailed to the Chamber Office, P.O. Box 2006, Newport, WA, 99156. They can be emailed to info@

CLASSIFIEDS

newportareachamber.com or dropped off at the Visitor’s Center Wednesdays through Saturdays from noon to 4 p.m.

For more information, see www.pendoreilleco.org or call the commissioners’ office at 509-447-4119.

Participate in local government by volunteering

Spring forward March 9

NEWPORT – Pend Oreille County is looking for volunteers for positions on several county boards for people interested in participating in local governmental. The Board of Equalization, Capital Facilities Committee, Hotel and Motel Lodging Tax Advisory Committee, the Noxious Weed Control Board and the Pend Oreille County Library Board Trustee are all looking for volunteers. 5B-8B

NEWPORT – One of the signs spring is coming is the start of daylight savings time. People are reminded to set their clocks ahead one hour Saturday night, with daylight savings time kicking in at 2 a.m. Sunday, March 9. It will continue until Nov. 2. People are also reminded this is a good time to change the batteries in their smoke detectors .

OPINION

RECORD

SPORTS

LIFE

POLICE REPORTS

OBITUARIES

PUBLIC NOTICES

BE LOOKING FOR SPRING SPORTS PREVIEW THIS MONTH

FROM PAGE ON E

| MARCH 5, 2014

The Newport Miner Serving Pend Oreille County, WA

Fred J. Willenbrock Publisher

Michelle Nedved Managing Editor

J. Lindsay Guscott Advertising Consultant

Cindy Boober

Advertising Consultant

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Advertising Consultant

Don Gronning Reporter

Desireé Hood Reporter

Pandi Gruver Production

Charisse Neufeldt Production

Susan Willenbrock Operations Manager

Jeanne Guscott Office Manager DEADLINES

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POSTMASTER: Send address changes to Newport Miner, 421 S. Spokane Ave., Newport, WA. 99156. Telephone: 509-447-2433 E-mail: theminer@povn.com

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We welcome letters to the editor. Letters should be typed and submitted to The Miner and Gem State Miner office no later than 5 p.m. Friday for publication the following Wednesday. No letter will be published unless it is signed by at least one individual, even if the letter represents the view of a group. The letter must include a telephone number and address for confirmation of authenticity. Letters should be no longer than 300 words. The Miner reserves the right to edit to conform to our publication style, policy and libel laws. Political letters will not be published the last issue prior an election. Letters will be printed as space allows. HOW TO CONTACT US

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THE NEWPORT MINER

PUD: Grant required PUD to bring fiber to entire south county FROM PAGE 1

with PUD cash and in kind services making up the rest. There were many costly management issues and problems associated with a project this size but the bulk of the additional costs were a result of additional work the PUD completed. The cost to the PUD went more than $3.3 million over the original estimated costs. The PUD had budgeted to spend $4.84 million and after adding in the $3.3 million, the PUD total cash contribution came to $8.17 million. The good news is that with the project mostly completed and generating revenue, PUD managers believe they can pay most of this back, maintain the system and save for future rebuilding. They even see the possibility of extending it to the north county. Looking at public records and stories in The Miner during the project helped paint a picture that includes a lack of knowledge about the scope of the project starting with the original contract from July 2010, and documents showing mismanagement at various levels. Engineering the project was CHR Solutions, based out of Texas. They were originally only hired for the Environmental Assessment portion of the contract, but later were signed on as the full engineering firm for the project. This meant they oversaw the project by completing some of the construction work, hired and managed sub-contractors to complete construction and oversaw the invoices for the project that were sent to the PUD for payment to all the contractors working on the project. They were un-

der the management of CNS, which was ultimately under the PUD manager and Board of Commissioners.

Cost of project A community group of citizens, PUD staff and PUD Board of Commissioners determined they should expand the system backbone the PUD had already built. Then the staff had the job of determining how to pay for it and what it would include. The original cost estimate was about $34.1 million for the fiber to the home build-out in south Pend Oreille County and was largely funded by a $27.2 million National Telecommunications and Information Agency (NTIA) Broadband Technology Opportunities Program (BTOP) federal stimulus grant, which ended Sept. 30, 2013. With every federal grant, a match from the entity is required, in this case 20 percent. About $4.84 million was added in cash from the PUD as part of the original cost estimate match. Another $1.97 million was added for parts of the fiber system the PUD had already built and the federal government credited the PUD for its match. Once work was started, the Community Network System (CNS) completed more work than originally estimated and ended about $3.3 million over budget. With the addition of the added cash to pay for the cost overrun, the PUD investment jumped to about $8.17 million in cash. The PUD spent its own money on the project and submitted invoices to the grant authority at

the Department of Commerce to reimburse once the work was completed. Reports were sent to the grant administrator and he reviewed them and the progress of the work. The grant required the PUD to bring fiber to the entire south county and hook up at least 960 premises. However, the PUD completed fiber to about 3,795 premises whether they requested service or not. This construction goal was established when the PUD felt it had plenty of funding. The PUD had estimated that there were 5,000 premises but only 4,100 signed consent forms. According to PUD General Manager John Jordan, the PUD was not made aware of the cost overruns until April 2013. Jordan told the board in July 2013 that the cost overrun was caused by a lack of detailed record keeping. He said the PUD should have seen the overrun coming. “It’s a tracking thing,” Jordan said to the board in July 2013. “No one in the district is trying to spend anything or hide anything. Until the middle of April, the district absolutely did not realize that an overrun was coming.” However, in a memo sent to Jordan in March 2012, then CNS Manager Joe Onley writes about engineering costs, “The burn rate of being up to $3.3 million, 85 percent of the agreed $3.9 million, is of concern. The project timeline is near 66 percent and by budget in the area of 30 percent. Forewarning, this may potentially subject us to a Performance Improvement Plan (from the federal government).” SEE FIBER, 7A

TIMELINE: Miner submitted a Freedom of Information Act request FROM PAGE 1

tunities grant from the Department of Commerce National Telecommunications and Information Agency funded by the American Recovery and Reinvestment Act. This was part of a $7.2 billion stimulus package available to rural communities. - CNS website

• April 2010: Request for qualifications goes out, getting four responses. PUD employees including then Chief Financial Officer John Jordan, then CNS Manager Joe Onley and Contracts and Public Information Officer Eileen Dugger rated the four, choosing CHR Solutions as the engineer. - PUD Internal email

• June 2010: PUD hired CHR Solutions. - PUD Internal email

• December 2010: CHR and PUD write Environmental Assessment, changing the scope of work, adding 30 additional miles of fiber. - Environmental Assessment

• December 2010: Geddes segregates CNS into own budget for better accounting of project funds. He said he wants CNS to be self-sustaining in future. - The Miner Newspaper

• December 2011: Geddes leaves the PUD. PUD Auditor April Owen is Interim General Manager. - PUD Organizational Overview

• Early 2012: Issues start arising with costs. - PUD memos

• March 2012: Onley states the “burn rate” is causing concern. - Memo to Owen

• March 2012: CHR Sr. Project Manager Samuel del Castillo asks for $1.9 million for additional costs. The scope of work grew by 23 aerial miles, 85 underground miles and 16 additional hubs. - CHR Notice of Proposed Change

• April 2012: Jay Pickett hired as General Manager. Owen returns to auditor and senior manager of financial planning. - PUD Organizational Overview

• April 2012: Onley states a severe dislike for CHR. Asks that PACE Engineers be allowed to finish the underground project and wrap-up phases. - Memo from Onley to Board of Commissioners

• February 2014: CHR Marketing and Sales Operations Kevin Kutcher said throughout the project, clear, clean and concise communication with Onley contributed to some challenges. - Miner interview

• June 2012: Onley asks the board

to increase the CHR spending cap to cover the additional $1.9 million in expenses. - PUD Board of Commissioner meeting minutes • June 2012: PUD works to raise spending cap. Sends negotiation settlement about CHR employees getting promotions. PUD position was not all the employees qualified for promotions and the original contractual hourly rates should apply for those employees. CHR agrees, credits PUD more than $118,486. - PUD letter to CHR

• June 2012: CHR finishes most overhead connections. Subcontractor PACE still installing underground connections and met spending limit. More than 38 percent of fiber project had underground connections, a fact PUD did not know when it made original contract. The EA states 30 percent underground. - PUD Internal email

• July 2012: CHR accepts amended PUD contract to change the scope of work, adding the additional miles of fiber cable and adding CHR as the general contractor for the whole project, not just the Environmental Assessment portion. CHR credits PUD $118,486 for overpayment on monthly invoice. - Letter to the PUD from CHR

• July 2012: Onley states the work CHR has done is bad and asks Jordan to dismiss CHR from the project midstream. He states the information CHR had provided was like “putting the fan belts on in the wrong position on a car.” PUD did not grant request. CHR was still the general contractor until the grant portion ended Sept. 30, 2013. - Memo to Jordan from Onley

• July 2012: Onley recommends signing invoices regarding costs and change in scope of work. The board approves and Pickett signs off. CHR engineering cap raised from $3.9 million to $5.9 million by the board with four additional payments of $500,000 to be used if needed, which the PUD eventually used. Jordan wrote a memo to PUD Commissioners before the meeting at Box stating, “Most of the driver for increasing the cap is underground engineering work being performed by PACE, a subcontractor to CHR.” - Board meeting minutes from Box Canyon Dam

• July 2012: Jordan writes the project is projected to finish 20 percent below grant. He states the district is “optimistic” it can complete all work within the grant area. - Internal email from Jordan to Onley for a “bond official statement”

• July 2012: Pickett leaves the PUD. Owen again serves as Interim General Manager. - PUD Organizational Overview

• October 2012: CHR paid more than $5.3 million. Onley noted the “burn-rate” was high and they were less than two months away from needing another increase by the board of commissioners. - Memo to PUD Interim General Manager April Owen and Jordan from Onley • October 2012: Jordan named PUD General Manager. Owen is moved to Assistant General Manager. - PUD Organizational Overview

• November 2012: Onley said the “pending cliff” had been reached and more funds are needed. He requests $1.5 million, or three of the board approved $500,000 stipends from July 2012. Total paid to CHR is more than $5.9 million. - Memo to Jordan and PUD staff from Onley

• December 2012: Board of commissioners approves $1.5 million. - Memo to Jordan from Onley

• Late 2012-Early 2013: CNS investigated under anonymous whistleblower complaint. Investigation was closed March 2013 with no findings. - Memos between Jordan and Onley

• March 2013: BTOP grant deadline arrives. PUD granted an extension until Sept. 30, 2013. - The Miner Newspaper

• May 2013: The board approved the final $500,000 increment during regular board meeting. Raised engineering cap to more than $7.9 million. - Memo to Jordan from Onley

• May 2013: Onley states, “After this April 2013 payment, there is an Engineering/Inspections budget balance remaining of $4,126.09. After this approval we are off the cliff.” CHR had been paid more than $7.7 million. - Memo to Jordan from Onley

• June 2013: The district chose a more expensive option for engineering the fiber system, choosing preengineered lengths of fiber to save on the cost of splicing as the system was built. Where the original estimate for the engineering work was $3.9 million, it ended up costing closer to $8.2 million after the changes to the project. - The Miner Newspaper

• June 2013: CNS staff state, “At the end of the day, (CNS) failed badly at this important task. Knowing where one stands on costs versus budget is a fundamental project management skill and one where we failed, which resulted in badly misleading the District’s Board of Commissions on this project.”

- CNS Cost Overrun Narrative by CNS staff

• June 2013: Jordan states the $1.9 million overrun came as a surprise to the Board of Commissioners. He states that an April 15 analysis projected the overrun at less than $200,000. - PUD Board meeting

• June 2013: Onley removed as CNS manager. Robert Fritz, who is currently the CNS Supervisor, was given position at this time. Onley would temporarily work on the CNS system but would be reassigned to a different department once the project “ramps down.” - Internal email to all PUD employees from Jordan

• July 2013: Jordan tells Board of Commissioners he was not aware of the cost overruns until April 2013. Said the issue was a “tracking thing.” - PUD Board meeting

• September 2013: BTOP grant deadline arrives. No further extension given. - The Miner Newspaper

• November 2013: CHR paid more than $8.17 million. The original engineering cap was $3.9 million. This put the engineering costs at more than $4.27 million over the original estimated costs. - Memo to Fritz from Onley

• January 2014: PUD Commissioner Curt Knapp gives The Miner a letter about the Office of Inspector General for the United States Department of Commerce visiting the PUD on a whistleblower complaint. The letter does not state who the whistleblower is or what OIG is investigating regarding the BTOP grant. Whether or not the OIG finds the complaint valid will not be known for several months. - Letter to PUD from Office of Inspector General

• January 2014: The Miner Newspapers submits a public records request with PUD regarding the CNS project. The PUD complied with the request for information. - The Miner Newspaper

• January 2014: The Miner Newspapers submitted a Freedom of Information Act (FOIA) request with the Department of Commerce regarding the whistleblower complaint. No response as of Monday, March 3. - The Miner Newspaper

• February 2014: PUD is still awaiting the outcome from the OIG investigation. They have not received details of the complaint from the OIG office. - Miner interview

• February 2014: Onley is moved to the Information Technology GIS mapping project. His title is now GIS Engineer. - Email from Jordan

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L A ST W E E K

Daylight aylight Savings D avings time time begins begins

Wednesday Thursday Showers

Showers

43/36

47/32

Friday

Saturday

Partly sunny, chance showers

Mostly cloudy, chance showers

45/30

45/33

Sunday

Mostly cloudy, showers

46/30

Monday

Partly sunny, chance showers

43/26

Tuesday

Mostly cloudy

44/32

Source: National Weather Service and Accuweather.com, Newport, WA

www.twitter.com/MinerNews

L A ST YEAR

Feb High Low Precip. Snow 25 28 18 .06” 1.5” 26 39 12 - 27 40 11 - 28 38 28 .03” Mar 1 37 12 - 2 14 11 - 3” 3 20 12 .22” 4.0”

Source: Albeni Falls Dam

Last year at this time the weather was rainy and warm. The temperatures were warming up and looking toward spring’s arrival. The high for the week was at 49 and the low was 26.

THE NEWPORT MINER

MARCH 5, 2014 |

FIBER: PUD matched about $8.17M FROM PAGE 2A

A CNS Cost Overrun Narrative was given in June 2013 by CNS staff in response to the extra charges. “At the end of the day, CNS failed badly at this important task. Knowing where one stands on costs versus budget is a fundamental project management skill and one where we failed, which resulted in badly misleading the District’s Board of Commissions on this project,” the memo states. The final close out paperwork for the grant is required to be completed by March 31. Marketing and Sales Operations for CHR Solutions Kevin Kutcher said CHR did not handle the final close out paperwork on the CNS project although they are still the engineer of record.

PUD cash

resulted in a corrected estimated total project length of 556 miles. “This more accurate project length represents an approximate 30 mile or 5.7 percent increase from the original project estimate,” the EA states. The EA also states the PUD came to the estimate because of several factors. “A preliminary determination of buried or aerial installations was accomplished using a combination of District electrical utility records, field reconnaissance, and existing GIS data. Through careful consideration of geographic characteristics, environmental features, habitat, socio-economic factors, available right-of-way, summary data on potential sites of historical or archaeological significance, and competitive cost data, a proposed combination of underground and aerial cable installations has been determined.” In summary, many of the straight routes became much longer. Changing the scope of work during the project included about 23 more miles of overhead connections and about 85 more miles of underground connections. The original estimate stated 365 miles of overhead and 135 miles of underground cable. The total miles as of February 2012 sat at 388 miles of overhead connections and 220 miles of underground cables with the addition of 16 hubs making the total hub count jump from 23 to 39. CHR Sr. Project Manager Samuel del Castillo approached the PUD in March 2012 with a Notice of Proposed Change document, stating they had spent the cap, or spending limit, of more than $3.9 million because of the change in scope. Estimated costs for CHR are listed as more than $2,391 for preparing each additional hub. For aerial connections, the cost is about $1,426 per mile and underground connections, handled primarily by subcontractor PACE Engineers, are listed at about $3,855 per mile. These costs, with outstanding charges to PACE for previous work, would raise the cost of the project about $1.9 million. With the scope of work changing throughout the project, the costs increased accordingly, which makes the overrun technically not an overrun but additional expenses for work as the project grew in size.

Including the overrun, the PUD matched about $8.17 million in cash and about $1.97 million in in-kind services for what the PUD already built before the grant. According to stories in The Miner from December 2010, the PUD electric system gave CNS $4.25 million to go towards the original $4.84 million in matching funds. PUD Assistant General Manager April Owen said this was a pre-payment for fiber services the electric system will eventually use, not additional funds added by the PUD. Owen said the Electric System uses fiber for communication between people and equipment. The original fiber system was built to communicate between substations on the district’s SCADA system, which monitors the power grid. “CNS uses part of the space on the electric system poles and pays for that usage plus some other miscellaneous charges,” Owen said. “These charges are netted and applied to the amount that CNS owes to the Electric System. The balance as of December 31, 2013, was $3,635,180, so $614,820 has been paid of the $4.25 million.” Owen said the amount would be paid back in full, but in fiber services used by the electrical system, rather than cash. Whatever CNS owes the electrical system for pole usage and miscellaneous expenses is subtracted from the amount the electrical system would owe for use of the fiber. The remainder is applied to the FlexNAP connectors $4.25 million. “It’s going to take a while to pay it back,” One of the first issues with the project Owen said. SEE FUNDING, 8A Owen said the electrical system would have to buy these services annually if the fiber pre-payment had not happened. She said the electrical system rates were not affected because the money would have been spent buying the services annually anyway. • Vintage Clothes “We would be paying for the • Cottage Collectables services if this loan wasn’t in • Backyard Bits place,” Owen said. “We paid for it early but they will get the benefit of the services for many years.” 304 Main Street • Ione, WA • (509) 442-2209 • Open: 10 - 4 Tues. - Sat. The remainder of the cash, more than $3.3 million in overrun, came from the Box Canyon Dam Renewal and License fund. The PUD borrowed $5.25 million to help cover a $2 milSkin Care Skin Surgery lion short-term loan and make Cosmetics it a 20 year loan and pay some IPL Laser Acne Treatment of the $3.3 million overrun with the remainder of the Box money. CNS will pay this loan Now Serving Colville back in payments as the system starts to pay for itself. Area at Specialty Groups

MOUNTAIN C HICKS

Engineering and Scope of Work In June 2010, the PUD hired CHR Solutions as the engineering company for the project’s Environmental Assessment contract. CHR hired sub-contractors throughout the project to help complete the fiber cable to “approximately 526 miles” and more than 960 premises in south Pend Oreille County. This was the original estimate done by the PUD regarding the scope of the project for the Environmental Assessment, (EA), which has to be done by federal law on all projects this size. Kutcher said CHR was not hired until after the original estimate for approximately 526 miles was given. According to the EA, PUD staff and consultants defined the project area. In order to apply for the grant, an application process was completed that stated the 526-mile approximation. Although the original BTOP Grant anticipated approximately 526 miles of fiber optic cable, during the Environmental Assessment and conceptual design process, the routes changed from estimates. Consideration of environmental issues and potential archaeological resources

DOWN RIVE R EVE NTS WEDNESDAY, MARCH 5

WEDNESDAY, MARCH 12

STORY TIME: 10:30 a.m. - Metalines Library

BASIC COMPUTER CLASS: 11 a.m. to Noon - Ione Library, Call 509-442-3030 For Reservations

WEIGHT WATCHERS: 6 p.m. Weigh in 6:30-7 p.m. meeting Ione Catholic Church METALINE TOWN COUNCIL: 7 p.m. - Metaline Town Hall

COMMISSIONER KISS OFFICE HOURS: 3-6:45 p.m. - Ione Library WEIGHT WATCHERS: 6 p.m. Weigh in 6:30-7 p.m. meeting Ione Catholic Church IONE TOWN COUNCIL: 7 p.m. Clerk’s Office

THURSDAY, MARCH 6 METALINE CEMETERY DISTRICT NO. 2 BOARD MEETING: 10 a.m. - Metaline City Hall STORY TIME: 11 a.m. - Ione Library

Log Hauling

Heavy Equipment

• Self Loaders • Saw Logs - Poles • Short Logs - Pulp

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| MARCH 5, 2014

THE NEWPORT MINER

DEVELOPMENT: Resident says once a rezone is approved there is no going back FROM PAGE 1

ers by trade, he said. “This is their first major project,“ he said. Cash said the goal is to attract “upper blue collar income” buyers, semi retired people. Pend Oreille County Community Development Director Mike Lithgow said that what will be before the planning commission March 11 is just the rezone. Lithgow administratively approved a property line adjustment Feb. 7 to combine two parcels into one. Lithgow said if a rezone is granted, any further development would be subject to review and permitting, including public hearings. He said it was premature to oppose the entire development. “You can’t like or dislike a proposal until it is made,”

Lithgow said. The lack of specificity of what is coming is what has some worried. “Once a rezone is approved, there is no going back,” wrote Mike and Robin Kaminski of Ione, as a comment on the rezone. “This is the appropriate time to address all these impacts, not later at the time of a specific development proposal.” They point out that the applicant didn’t complete a section of the State Environmental Policy Act Environmental application dealing with “non-project actions,” actions that may come from the rezone, such as the development. Indeed, the developments that may come from the rezone should be the basis for making a decision on the rezone, the Kaminskis maintain.

Lithgow said it is expensive for a developer to provide the detailed plans necessary to consider more than what the rezone proposes. Pend Oreille County Development Regulations do not require more for the rezone, he said. Lithgow isn’t required to nor has he taken a position on the rezone or the development. “I’m totally neutral,” he said. The planning commission will make its recommendation to the county commissioners. It will be up to the county commissioners to decide to approve the rezone or not. According to the county’s development regulations, planning commissioners are to consider six different areas when they make their findings.

They are to consider the suitability of the property for uses permitted under the proposed rezone; the extent the proposed rezone complies with the county’s comprehensive plan; the adequacy of sewer, water and other required public services; the compatibility of the proposed change with neighboring land uses; the public need or benefit of the change and whether the proposed amendment complies with the Washington State Growth Management Act. County commissioners are to consider the planning commission’s findings, the comments from residents and business owners and recommendations from interested agencies and departments. Cash said the project planning will go into high gear if

the rezone is granted. The development team will need to make decisions about what is feasible, with the infrastructure and with the market, he said. The owners have had the property for more than 25 years and want to do something with it, including selling the whole thing if somebody wants to buy it, he said. The interest in and opposition to the development has been growing since the legal advertisements for the rezone were published two months ago. Former planning commissioner Susan Hobbs mistakenly wrote in her public comments about the rezone that Wasatch Associates was a large, multi state development corporation. When she realized her mistake, she contacted planning commissioners to let

them know she was in error, she said. Natural resource land is taxed lower than rural land. If the land is removed from that designation, owners are required to pay the county the difference, in this case about $55,000, which is the difference in tax rates for a 7- or 10-year period, Lithgow said, depending on whether the natural resource is agriculture land or timber. Taking natural resource land out of production isn’t something the county should do lightly says Futurewise Spokane director Kitty Klitzke. Futurewise is a statewide public interest group that works, among other things, to protect farmland, forests and shorelines. Klitzke said Futurewise would oppose the rezone.

FUNDING: The NoaNet project ran fiber in the north end of the county FROM PAGE 1

included a product called FlexNAP’s. Kutcher said his company, CHR, was given strict orders to use the product from the minute they were signed on as the engineer. “We were informed that’s what the PUD decided to use,” Kutcher said. Kutcher said CHR is unsure who made the decision to use this product but the company informed CNS early in the project that it would increase the cost on the original engineering estimate. PUD Director of Information Technology Rhonda Thomas said CNS staff and an engineering firm did a “deployment comparison” looking at traditional outside plant installations (OSP) and the flexible access system. “When comparing the cost of installing the two methods, the analysis indicated a savings of $5,700 per mile, or a potential savings of $3.5 million dollars over the entire project. This, along with the fact that we could receive the FlexNAP almost immediately, whereas traditional fiber was 18 to 24 months out.” The FlexNAP product, made by Corning Cable Systems, is said to eliminate 50 percent of deployment time, according to the Corning website. Thomas said the Network Access Points (NAP) were ready for deployment immediately after being placed by the contractor when using this product. “In the deployment of traditional fiber, we would have had to do additional splicing at each NAP to accommodate the feed cable to the associated customer premise and electric department equipment location, approximately 3,322 locations,” Thomas said. Thomas said the deployment process was not issue free. “There were issues with the FlexNAP system, including a substantial increase in the engineering time required. This created an increase in engineering fees but the installation was more efficient and had some cost savings,” Thomas said. Thomas said the plug-and-play functionality of FlexNAP had the greatest advantage at HUB locations. “Splicing was still required when transport fibers were being spliced at cable ends and at locations where distribution cables, utilizing FlexNAP functionality, were being fed off of a backbone cable,” Thomas said.

Miscellaneous issues In July 2012, the PUD amended the contract with CHR to change the scope of work adding the additional miles of fiber cable and adding CHR as the general contractor for the whole project, not just the Environmental Assessment portion. This stated in writing the PUD would agree to work with CHR on a fee for services agreement, where hours are billed hourly and a certain amount of tasks must be completed. During this time, the PUD changed the scope of the project that was actually closer to about 600 miles of fiber cable for installation. An agreement was also made in July 2012 between CHR and the PUD, saying CHR was overbilling the project because their employees had subsequently gotten promotions. The PUD position was that not all of the employees qualified for promotions and the original hourly rates should apply to those CHR employees. CHR agreed and credited the PUD more than $118,486. Struggles with communication between CHR and CNS may have contributed to some of the issues. Onley wrote memos on several occasions stating a severe dislike for CHR and the way they operated. A short time after the PUD and CHR agreed on the settlement, Onley sent a memo to Jordan stating the work CHR had done is bad and asked the company be terminated from the contract midstream. “We believe the project and the District would be best served by dismissing CHR,” Onley writes. He states reasons such as a lack of passion from the CHR group, not following PUD

policies, lack of expertise and most of the work being done by PACE, the subcontractor. The PUD did not grant this request and CHR was still the general contractor on the fiber project until the grant portion ended Sept. 30, 2013. Kutcher said that throughout the project, clear, clean and concise communication with Onley was an issue. “He contributed to some of our challenges,” Kutcher said.

Whistle blower complaints In late 2012 and early 2013, the PUD was investigated by the Office of the Inspector General on an anonymous whistle blower complaint. Don Williams, federal program officer for the Department of Commerce who oversaw the fiber project, made comments to some PUD personnel about the whistleblower complaint but an investigation was not opened and a full-blown audit did not happen. Nothing came out of the anonymous complaint. “(Williams) informed me today that he has closed the OIG investigation with no finding regarding the anonymous grievance. He recommends that we be diligent in monitoring the production units, which we have and will,” Onley wrote to Jordan. An investigator from the Office of the Inspector General, apparently following up on another whistleblower complaint, came to the PUD Wednesday, Jan. 15. He had sent a letter dated Jan. 9, 2014, asking for PUD records, stating the OIG had “credible information” about actions by employees and contractors to the PUD that “could constitute fraud related to funds derived” from the CNS fiber to the premise federal stimulus grant. The letter does not state who the whistleblower is or what the OIG is investigating regarding the National Telecommunications and Information Agency’s (NTIA) Broadband Technologies Opportunity Program (BTOP) grant. PUD Board Chairman Curt Knapp, who said they are fully cooperating with the investigation, gave the letter from OIG to The Miner. It details a long list of documents the OIG investigator was interested in looking at concerning the grant. Whether or not the OIG finds the complaint valid will not be known for several months. The Miner has not received a response to its Freedom of Information Act request for details of what the allegations are and what the OIG has determined. While the investigation is underway, PUD staff members have said they cannot comment.

NoaNet broadband At the same time the PUD project was being built, another separate fiber project was underway in the county. It benefits the south county project but did not impact project costs. The

Northwest Open Access Network (NoaNet) project ran fiber in the north end of the county, from Metaline Falls, across Tiger Pass and connecting to Colville. It will eventually open the door to broadband service in the north county, but when complete it immediately offers a second route out of the county to Seattle should the main line experience problems. The PUD will get use of the new NoaNet system without charge. The PUD contributed about $335,000 from the CNS budget to the north county construction project. EDITOR’S NOTE: The information for this story was compiled after reviewing public records provided by the Pend Oreille Public Utility District in response to a public records request by The Miner. It also contains information published by The Miner in previous articles and recent interviews.

HOT BOX

Special deadline Tuesdays 2 p.m. HUGE RUMMAGE SALE Saturday March 8th. Newport Hospitality House. Some of everything! New, old and in between. 9:00 to 5:30. (5p) ABANDONED VEHICLE AUCTION Newport Towing. 137 South Newport Avenue. (509) 447-1200. March 11, 2014 at 10:00 a.m. Viewing starts at 9:00 a.m. (5) ROAD ATLAS Current, detailed road atlas, spiral bound with laminated cover. Pend Oreille County, Washington $31.75. Bonner County, Idaho $37.50. Sold at The Miner Newspapers, 421 South Spokane Avenue, Newport. (509) 447-2433. (12HB-alt tf) WASHINGTON AND IDAHO LEGAL FORMS Available at The Miner Newspapers, 421 South Spokane, Newport. (509) 447-2433.(36HB-alt-tf) FREE SEMINAR AVOID PROBATE? WILL OR TRUST? LONG TERM CARE PLANNING Thursday, March 20th, from 11:30 a.m. to 12:30 p.m. at Denise Stewart Law office, 301 South Washington Avenue, Newport. Coffee and cookies provided. Call (509) 447-3242 for reservations as seating is limited. (5HB-3) OPPORTUNITY TO PARTICIPATE IN LOCAL GOVERNMENT Volunteer position available on the following committees: Board of Equalization, Capital Facilities Committee, Hotel/ Motel Lodging Tax Advisory Committee, Noxious Weed Control Board, Pend Oreille County Library Board of Trustee. For more information see www. pendoreilleco.org or call the Commissioners’ Office (509) 447-4119.(5HB-2) COME SEE OUR SELECTION Prom dresses, preowned bridal gowns and formal wear at A- Z Treasures, 317 South Union Avenue, downtown Newport, Washington. (509) 447-0418, (509) 5894493.(5P)

RUSS BELL remodeling, household repairs, additions, floor coverings, carpet repair, restretch and replace. Fellowship Builders Company (509) 671-0937. (3HB-4) POOL TABLE 9’ Olhausen. Needs to be disassembled to move. $500 firm. (509) 671-1849. (5p) 16’ LOWE ALUMINUM Boat and trailer. Newer 15 horsepower Nissan short shaft electric start motor. Fish finder, rod holders, anchor, etcetera. $2500.00 firm. (509) 671-1849. (5p) LARGE INDOOR SALE Saturday only. March 8th. 10:00- 4:00. 215 North Union, Newport. Furniture, antiques, collectibles, primitive. Fun and funky stuff! (5p) PEND OREILLE COUNTY DEMOCRATIC PARTY 2014 CAUCUSES Saturday, March 8, 2014, 10:00 A.M. to 12:00 P.M. in three locations: Ione Community Center, 208 Blackwell Street, Ione; Camas Wellness Center, 1821 LeClerc Road, Cusick; Pend Oreille Playhouse, 240 North Union Avenue, Newport. For more information: Gayle, (509) 710-6493. (5) CATTLE PASTURE WANTED Must be fenced and have water source. 10-70 Pairs. $15-$20 per pair per month. (509) 939-8831/ (509) 9545668. (5HB-4p) DOES YOUR DOG RETURN WHEN YOU CALL HIM? We can fix that! Spring obedience class forming now at LuckyUs Ranch Boarding and Grooming. (509) 4473541. Call to reserve your space! (5) OLDTOWN AUTO SALES We buy clean used cars and RV’s. See our complete inventory online at www.oldtownautos.com.(51HB-tf) FREE HOT DOGS! Come join Oath Keepers for discussion of the constitution. Saturday, March 8, 5:30 p.m., Hospitality House, Newport.(5p) Miner want ads work.