Minneapolis-based U.S. Bank invested approximately $3.2 million to help expand and modernize an existing broadband network for 2,000 residents and businesses in rural Appalachian communities in northeastern Ohio.
The investment supported GreatWave Communications, a 120-year-old telephone company, transition into a 21st-century provider of phone, internet, cable, and fiber-optic networks in rural communities. “The company reinvented itself as a broadband internet provider,” according to Christian Siebeneck, chief executive officer of GreatWave Communications and GreatWave Broadband Services, LLC.
The GreatWave project was financed, in part, with New Markets Tax Credits, which are designed to provide safe, stable financing to businesses in low-income areas across the country. U.S. Bank’s investment in the GreatWave project went to rural LMI communities in the cities of Ashtabula and Geneva. These cities are located in Ashtabula County, which borders Lake Erie and is 194 miles northeast of Columbus.
Ashtabula County is designated as severely distressed by the Appalachian Regional Commission. Like many distressed rural areas, Ashtabula County has a high concentration of LMI residents and has struggled to retain and attract the residents and businesses—and high-speed broadband investment—needed to fuel the kind of economic prosperity enjoyed in Ohio’s metropolitan areas.
The county’s distressed designation and demographics made the $9.5 million cost of the GreatWave project eligible for NMTC financing. Two local community development financial institutions, the Ohio Community Development Finance Fund and the Development Fund of the Western Reserve, provided $5 million and $4.5 million, respectively, in NMTC allocation. The Finance Fund supports community organizations working to improve the quality of life for LMI individuals and communities. Western Reserve is a private nonprofit managed by the Development Finance Authority of Summit County. Western Reserve enables investments that target eligible low-income communities in northeastern Ohio.
Then U.S. Bancorp Community Development Corporation, a wholly owned subsidiary of U.S. Bank, kicked in a roughly $3.2 million NMTC investment on behalf of the bank.
GreatWave used the NMTC funding to upgrade its fiber-optic network to build out into new service areas, known as the “last mile,” to provide phone and internet services to an additional 50 businesses and 600 residential customers per year.
The city of Conneaut, which has struggled with an aging telecommunications infrastructure that made many essential services unreliable, was one beneficiary of the expansion. City manager James E. Hockaday told the Community Development Financial Institutions Fund that “there are few cities in Ohio or the country that can claim to have a completely wired fiber-optic network capable of gigabit dedicated service. It is a unique asset that this city is proud of and we hope to see GreatWave continue to grow and prosper around this new technology.”
The CDFIs providing the NMTCs were brought together by Advantage Capital Partners, a venture capital and small business finance firm providing growth capital to economic development efforts. Jeremy Degenhart, principal, Advantage Capital Development Corp., said that the firm raises private institutional capital from investors to finance businesses in areas underserved by traditional sources of risk capital.
GreatWave is Ashtabula County’s primary telecommunications provider and serves 2,000 telephone customers, 1,650 cable television subscribers, and 3,200 broadband internet users.