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State funds remain in place for high-speed internet project in Nevada County

John Paul, CEO of Spiral Internet, said a San Francisco company assured him last year that it would invest the $12 million he needed for a high-speed fiber optic network in Nevada County.

That’s why Paul told the community he’d secured the private investment critical to almost $17 million in state funds awarded to his company in December 2015 by the California Public Utilities Commission.

With a total of about $30 million, his Bright Fiber company could break ground on the first of three projects that would bring a gigabit connection here.

“They were very interested,” Paul said. “At that meeting, they said, ‘We are absolutely going to do this project.’

“I felt, yeah, this is going to happen,” he added.

According to Paul, his would-be investor, Table Rock Infrastructure Partners, said Bright Fiber needed a chief financial officer. Saying he accepts people at face value, Paul took on — and later watched leave — three CFOs. He couldn’t trust them, he said. One led him to believe he’d draw investment dollars to the company. It never happened.

Coupled with this issue was the San Francisco company that appeared to back away from its initial offer. It had assigned a junior partner to the project. Communication began to dwindle, Paul said.

The $12 million wasn’t going to materialize.

“By December, I realized I needed to reach out to someone who knew how to do this,” Paul said.

He’d made contact with Race Communications, a Bay Area company, over the years. He reached out and a discussion began, which led to an offer early this year, he added.

Another company then expressed interest. That paused discussion with Race Communications for about four months as Paul explored the possibility, which time constraints halted. Paul said he then immediately called Race and accepted its offer. He signed an agreement about two weeks ago that’s contingent upon approval by the state utility commission.

It’s unknown when that approval could occur. Race declined further comment, other than its statement from last week.

“Upon approval, Race Communications will host a town hall where we will invite the public and the press and provide further information on the project at that time,” said Ally Hetland, with Race, in an email.

Paul said that under the agreement Race will purchase Bright Fiber, which also will receive the state funding for the gigabit project. Paul said he’ll receive reimbursement for over $150,000 he’s personally spent on the project. He’ll maintain control over Spiral Internet, his local internet service provider.

“My bottom line from the beginning — I want to get this built,” Paul said.

The project

Tim Corkins, interim executive director of the Nevada County Economic Resource Center, said his organization helped Paul secure the state funding for the project. Corkins slammed Paul’s management of the project, arguing that he failed to get the private investment required for the state funding. That required groups like his to step in to save it.

“We helped him get it,” Corkins said of the almost $17 million.

Paul disputes that, saying Nevada County officials assisted him before Bright Fiber received the funding but that the ERC had no involvement. Paul delivered presentations to the ERC about the project, but never enlisted their aid.

Last month the Grass Valley and Nevada City councils, and the Nevada County Board of Supervisors, passed resolutions in support of high-speed internet service.

“It was just to show support to companies like them that are willing to come forward and spend money on broadband projects,” said Supervisor Ed Scofield, chairman of the board.

Assistant CEO Alison Lehman in a statement said the project is in good standing with the utilities commission, and that progress continues to move forward.

Paul said the state funds remain intact, as do the $119 payments people made for their first month’s service. He dismissed rumors that any funds were misappropriated.

Corkins also said the state funding is secure.

“We’re fine,” he added. “You show you’ve got something going, you’re OK.”

Looking back, Paul said he’d approach the past several months differently. His communication about the project waned as the project stalled.

“I’m a human being,” he said. “I got paralyzed.

“My shame came out,” he added. “I thought I’d pull it off.”

To contact Staff Writer Alan Riquelmy, email ariquelmy@theunion.com or call 530-477-4239.

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