Letter: CUDs do not obligate taxpayers
Editor of the Reformer,
A recent AP story on Communication Union Districts (CUD) seemed to suggest that CUDs could burden town taxpayers with debt for building out internet service. This is not the case. State law specifically prohibits spending taxpayer monies on communications infrastructure. Joining a CUD will not raise taxes, ever.
Shortly after Vermont Public Radio published Howard Weiss-Tisman's excellent segment on the many Vermont towns exploring the formation of communications union districts to expand broadband coverage to our most rural reaches, the Associated Press produced its own story, referencing the VPR piece. Unfortunately, the AP version, which can be found in a number of media outlets around the state and beyond, contains a sentence that is likely to cause significant confusion. So we, the Southern Vermont CUD Task Force, wanted to speak up in the region's papers of record to help clarify. Citing VPR, the AP article correctly states that CUDs are considered "municipal organizations," similar to a water district. However, it goes on to claim that CUDs "allow the town or city to borrow money or apply for grants and loans." In the minds of many readers, this could sound like a pathway to taxpayer revenue. It is important that we make clear how and why this is not the case.
By statute, a CUD is empowered to borrow money by issuing revenue bonds that are repaid with subscriber fees. If the CUD defaults, the creditors can only go after the CUD's assets: cash on hand, the fiber wires, and whatever other property it owns. The assets of the towns the CUD serves are not at risk, because there is a firewall between the CUD's finances and the finances of the member towns.
We hope the public will be relieved to know that CUDs are expressly forbidden from seeking or accepting funds from general obligation bonds that are paid with tax money and obligate a town's taxpayers. Like other municipal organizations, including towns, CUDs do have the potential to access funds from a number of resources, including planning grants, the Vermont Municipal Bond Bank, and loans from the Vermont Economic Development Authority, among others. But the CUD must stand on its own two feet financially, and provide the residents and businesses in its member towns with connectivity and service that is both capable and competitive. If this sounds like a good change of pace, we hope you'll drop us a line, and remember to vote Yes on the Southern Vermont CUD in March!
On behalf of the Southern Vermont CUD Task Force,
Bennington, Jan. 16
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