RICHMOND, Va. (AP) – The federal government has rescinded $20.2 million in funding to deliver high-speed broadband service to two far southwest Virginia counties because of a contract impasse between an economic development group and a communications company.
The disagreement will cost hundreds of potential jobs and put a crimp in efforts to revive an economically depressed area of the state, said Sunset Digital Communications Inc., which could not reach agreement on a contract with the Lenowisco Planning District Commission.
The deputy director of the planning district questioned the overall impact of the lost funding, and he pointed to a commission resolution citing criticisms of Sunset’s previous work in the region.
“It’s horrible that the funds have been rescinded,” Duane A. Miller said in an interview Wednesday. He said the commission was hopeful it could continue the work with “smaller pots of money” and at a slower pace than anticipated.
The funding involved a $14 million grant and a $6.2 million loan through the American Recovery and Reinvestment Act. It was administered through the United States Department of Agriculture’s Rural Utilities Service.
The funding would have connected 2,500 homes to high-speed broadband service in Lee and Wise counties. The work entailed the installation of 179 miles of fiber optic network, creating 73 direct jobs and what Sunset estimated would be the creation of 375 home-based and small business jobs.
“Lenowisco’s hesitation to sign documents awarded to the partnership in September of last year will mean that this $20 million opportunity will be lost forever,” Paul Elswick, Sunset’s president, said in a news release.
In a letter dated Feb. 25, the administrator of the Rural Utilities Service rescinded the funding and wrote that “Lenowisco is unwilling to move forward with the loan/grant award.”
The agency did not respond immediately to an Associated Press request for additional comment on the prospect of reviving the funding.
Lenowisco, an economic development commission for three southwest Virginia counties, has received funding primarily from the Virginia Tobacco Indemnification and Community Revitalization Commission. The commission is intended to assist rural communities suffering the loss of agricultural and manufacturing jobs.
The commission has worked for years with Sunset, but that relationship apparently has soured.
The resolution approved by the commission March 3 said commissioners had “received numerous complaints from current and potential customers regarding Sunset’s prices and customer service” and that the company has not addressed those complaints.
“The reasons outlined in that resolution were the concerns that we have had and why we spent the last 13 months and 140 face-to-face hours with them trying to work out a new contract.” Miller said.
A Sunset executive said Lenowisco “signed off on the documentation” seeking the grant, then later expressed concerns about the loan.
“Sunset has done nothing wrong but work towards a positive outcome in this effort,” Sunset’s vice president, Ryan Elswick, wrote in an e-mail to the AP on Wednesday. He added that Lenowisco’s “statements regarding our performance are especially damaging, as Sunset and Lenowisco have a significant amount of economic development successes behind us that we are all very proud of.”
Miller said, “We hated what occurred with the money going back. But at the end of the day, we have a fiduciary responsibility to the localities we serve.”