The URL can be used to link to this page

Home My WebLink AboutPACKET Town Board 2026-06-23 Part 4 of 4 The Town of Estes Park is committed to providing equitable access to our services. Contact us if you need any assistance accessing material at 970-577-4777 or townclerk@estes.org. Report To: Honorable Mayor Hall & Board of Trustees Through: Town Administrator Machalek From: The Trailblazer Broadband Team - Director Bergsten, Superintendent Lockhart, Manager Stiner & Manager Smith Department: Utilities - Power & Communications Division Date: June 23, 2026 Subject: BEAD Risk Report & Recommendation Objective: To provide the Town Board with a brief overview of the Broadband Equity, Access, and Deployment grant opportunity, compare the BEAD-funded buildout option with a locally controlled staff-recommended buildout plan, and request direction on whether to accept the BEAD award or decline the award and use previously earmarked local match funds to continue Trailblazer Broadband’s remaining Phase 4 buildout. Present Situation: Trailblazer Broadband began construction in 2019 with the long-term goal of bringing high-quality, locally owned fiber internet service to all Power & Communications customers within the Estes Valley service area. Construction paused in 2023 due to lack of available funding, with approximately 18% of the buildout remaining. The remaining locations are the lowest-density and highest-cost areas of the service territory. The BEAD program is a federal grant program designed to help providers extend broadband service to rural and high-cost locations that are often not economically attractive for private internet service providers. Trailblazer initially pursued BEAD funding because the original grant framework appeared aligned with prior federal grant terms the Town had successfully managed, and Trailblazer was preliminarily awarded funding. Under the direction of the current federal administration, previously announced BEAD awards were rescinded for review and the grant process was reopened under revised terms. Trailblazer submitted under the revised process; however, the application window reopened before the full final agreement was available for review. Subsequent draft agreements were reviewed by Town counsel, who identified significant concerns. Staff and counsel met with the Colorado Broadband Office to discuss those concerns. Some issues were addressed, but CBO indicated much of the agreement language is pass-through federal language with limited opportunity for modification. The final draft agreement released in April 2026 resolved many issues that were inconsistent with municipal limitations; however, the inclusion of Exhibit G and related federal award requirements created a level of long-tail compliance, reimbursement, and clawback risk that staff and Town counsel believe materially changes the risk profile of accepting the award. The current staff analysis compares two options: 1. BEAD Grant Plan: Accept BEAD funding and build only BEAD-eligible locations first. 2. Staff Recommended Local Plan: Decline BEAD funding and use the same previously earmarked local match funds to build higher-density, higher-interest areas first, many of which are not BEAD eligible. The current staff analysis (Attachment 1) shows BEAD provides access to up to $5.74 million in potential federal reimbursement with a required $1.917 million local match, while the internal plan uses the same $1.917 million directly for locally controlled construction. Proposal: Staff recommends declining the BEAD award and proceeding with the staff- recommended local buildout plan using the funds previously set aside for the BEAD match. The staff-recommended plan allows Trailblazer to maintain local control over project scope, phasing, construction pace, cost management, and customer rollout. Rather than being limited to BEAD-eligible locations, the staff plan prioritizes higher-density areas closer to town and areas with stronger organic customer interest. These areas are largely non-BEAD eligible, but are expected to generate active customers sooner and create a stronger foundation for continued reinvestment into later phases of the remaining buildout. Based on the current comparison: Item BEAD Grant Plan Staff Recommended Local Plan Phase 4 portion locations* remaining unbuilt locations next portion of Phase 4 construction locations only - may pass by ineligible locations without grant funding including non-BEAD eligible, higher density areas; remaining locations sequenced in the future federal reimbursement plus $1.917M local match local funds Primary sequencing driver Federal eligibility and grant- defined location list interest, year-round residency indicators, and construction efficiency conversion expected in lower-density and more seasonal areas activity expected in higher-interest, more year-round areas eligible locations, reimbursement process, milestones, and compliance obligations budget, pace, priorities, phasing, and customer rollout compliance, reimbursement, and potential clawback exposure grant compliance exposure; preserves flexibility for future funding opportunities *Location totals in the report are based on current GIS/buildout planning data. Attachment tables use cabinet-level pass/electric meter data as planning indicators and may not sum directly to BEAD BSL totals. The staff-recommended plan reaches fewer locations in the next portion of Phase 4 construction than the BEAD plan; however, the purpose of the local plan is to make the strongest near-term use of already-allocated local funds. Attachment 1 provides the supporting planning indicators used in staff’s comparison, including organic interest, estimated residency patterns, anticipated take-rate potential, and construction efficiency by area. Staff’s analysis indicates the locally controlled plan sequences construction first in areas more likely to convert into active, full-time, year-round customers sooner. Neither the BEAD grant nor the staff-recommended local plan will complete the full remaining Trailblazer buildout. Under either approach, completion will require phased construction supported by future revenue, reserves, and potential future grant or partnership opportunities. The remaining locations not included in the first local buildout phase would become the next portion of Phase 4, including higher-cost and lower- density areas along the broader Highway 7 corridor between Taharaa Mountain Lodge and downtown Allenspark and the area east of downtown Allenspark off Taylor Road. Remaining Buildout Strategy if BEAD is Declined As neither the BEAD grant nor the staff-recommended local plan will complete the buildout, completion will require phased construction supported by future revenue, reserves, and potential future grant or partnership opportunities. Staff recommends using the funds previously reserved for the BEAD match to complete the next portion of Phase 4 construction in areas with higher density, stronger demonstrated customer interest, and greater year-round residency indicators. This sequencing is intended to make the best near-term use of already-allocated local funds by prioritizing areas most likely to generate active customers sooner. The supporting data is not intended to serve as a formal net revenue projection. Rather, it compares the best available indicators for responsible buildout sequencing, including organic customer interest, estimated year-round residency, anticipated take-rate potential, and relative construction efficiency. Staff’s analysis indicates that the locally controlled plan prioritizes areas with stronger demand and more year-round service potential. By contrast, a BEAD-first approach would direct local match funds into BEAD- eligible areas first, including some of the lowest-density and more seasonal areas remaining in the buildout. This distinction is important because seasonal or part-time customers generally generate less annual revenue and have historically had a lower take rate than full-time, year-round customers. Staff reviewed customer power meter usage as a residency indicator to better understand how buildout sequencing may affect future revenue growth. Areas with a higher percentage of seasonal or part-time occupancy are expected to generate revenue more slowly than areas with stronger year-round residency, even when those areas are more expensive to build, potentially further delaying completion. While BEAD would provide access to potential outside reimbursement, it would also create additional long-term administrative and compliance costs that could reduce revenue available for future construction. The staff-recommended plan avoids those added grant-management risks and obligations, preserves local control, and allows the Town to responsibly pursue future funding opportunities that may better align with municipal operations and the remaining buildout needs. Staff’s intent is to continue the buildout by first serving areas with lower initial construction cost most likely to generate sustainable, year-round customer activity, then using future revenue, available reserves, and other funding opportunities to support construction into the remaining higher-cost areas while maintaining Trailblazer’s current customer service levels and internal resources. Advantages: Proceeding with the staff-recommended local plan would: ● Preserve local control over construction timing, project phasing, scope, and cost management. ● Use funds already earmarked for the project without adding BEAD reimbursement or clawback exposure. ● Prioritize higher-density and higher-interest areas first, the majority of which are not BEAD eligible. ● Generate customer revenue sooner to support continued buildout into harder-to- serve areas. ● Avoid BEAD’s extensive long-tail federal reporting, documentation, audit, and compliance obligations, which would add a grant-specific compliance layer beyond Trailblazer’s existing federal, state, municipal, and internal operational requirements and extend beyond the construction and funding period. ● Reduce risk to current Trailblazer operations and customer service quality by avoiding the need to redirect staff capacity toward grant administration. ● Maintain flexibility to pursue future state, local, or federal funding opportunities that may better align with municipal limitations and local priorities. ● Continue progress toward the Town’s original goal of completing the Trailblazer buildout without assuming a risk profile that staff believes is disproportionate to the expected benefit. Disadvantages: ● Declining BEAD funding would mean the Town would not access up to $5.74 million in potential federal reimbursement currently associated with the award. ● The staff-recommended local plan also reaches fewer locations in the first portion of Phase 4 than the BEAD plan. BEAD would allow construction to more BEAD- eligible rural and high-cost locations first; however, those locations include areas with lower density and more seasonal residency indicators, meaning lower historic take rates, and lower expected revenue potential. ● Neither option completes the full remaining buildout. Both paths require a second portion (sub-phase) to reach the remaining unbuilt areas. The primary mitigating factor is that the staff-recommended plan is expected to create earlier revenue from areas with higher demonstrated demand, improving Trailblazer’s ability to continue reinvesting in the remaining buildout from a stronger position. BEAD Grant Risk Considerations While Power & Communications and Trailblazer have successfully managed prior federal funding, staff and counsel identified several concerns with the BEAD agreement that are materially different from prior grant experiences. Key concerns include: ● Termination risk: The State may terminate the agreement at any time at its sole discretion. In that event, the Town would only be entitled to payment for work delivered and accepted as of the notice to terminate. ● Term uncertainty: There remains concern regarding how the initial two-year agreement term aligns with the four-year project completion period and longer term compliance requirements subject to audit and review. ● Exhibit G compliance burden: Exhibit G incorporates numerous federally mandated requirements that the Town would be required to administer throughout the project and, in some cases, well beyond construction closeout. Failure to meet these requirements presents significant risk of non- reimbursement, breach, or clawback. ● Breach and clawback exposure: Failure to meet any term of the federal award may constitute a breach of the agreement. If the Town is unable to cure the breach, potential damages may include return of grant funds. ● Administrative cost exposure: Internal administrative costs are predominantly not reimbursable under BEAD, and staff anticipates significant outside grant management support would most likely be necessary to manage the level of reporting and compliance required. ● Operational burden: BEAD compliance would require substantial staff and consultant capacity over the life of the grant, potentially limiting Trailblazer’s ability to maintain current service levels and continue organic buildout work. ● Limits Future Funding Opportunities: Accepting BEAD may limit our ability to apply for better-fitting, more manageable future funding opportunities due to the agreement's restrictions. Under the staff plan, the Town avoids BEAD’s extensive long-tail compliance burden, which would convert existing and developing operational practices into federally mandated requirements subject to documentation, audit, reimbursement review, and potential clawback risk. These obligations include federal reporting and certifications, Build America, Buy America (BABA) compliance, environmental and historic preservation requirements such as NEPA/NHPA, cybersecurity and supply chain risk management, low-cost service administration, outage reporting, federal interest filings, and record retention. These requirements far exceed current existing federal, state, municipal, and internal operational requirements and extend well beyond the construction and funding period. Action Recommended: Staff recommends that the Town Board direct staff to decline the BEAD award and proceed with the staff-recommended local buildout plan using the local funds previously reserved for the BEAD match. The recommended next step is for staff to notify the Colorado Broadband Office of the Town’s decision regarding the BEAD award by June 24, 2026, then proceed with finalizing the local Phase 4 buildout scope, budget, construction sequencing, and public communication plan and using the earmarked Town funding to reopen construction. Finance/Resource Impact: The BEAD plan would require use of the $1.917 million local match allocation and would provide access to up to $5.74 million in potential federal reimbursement. However, reimbursement would be subject to eligible costs, accepted work, grant compliance, reporting, closeout requirements, and potential retainage. The BEAD plan would also create additional administrative and compliance costs, some of which are expected to be non-reimbursable. The staff-recommended local plan would use the same $1.917 million in previously earmarked local funds directly for locally controlled construction. This option does not provide external grant funding, but it avoids BEAD reimbursement risk, federal compliance exposure, potential clawback, and anticipated non-reimbursable grant administration costs. Level of Public Interest: Public interest in completion of the Trailblazer Broadband buildout remains high, particularly in unbuilt areas where residents and businesses have continued to request service availability updates since construction paused in 2023. The staff-recommended plan prioritizes areas with stronger demonstrated organic interest and higher expected take rates based on historical data, allowing Trailblazer to bring service to more likely active, year-round residential and commercial subscribers sooner while continuing to work toward the broader goal of completing the remaining service area. Because the remaining buildout affects residents and businesses who have waited several years for service, staff anticipates continued public interest in the timing, sequencing, and funding approach for Phase 4 construction. Attachments: 1. BEAD vs. P&C Internal Plan Analysis & Recommendation 2. BEAD Location & Staff Plan Comparison Maps 3. State of Colorado Grant Agreement for BEAD Summary 4. Revised BEAD Grant Program Guidelines 5. FAQ: NTIA Benefit of the Bargain Round BEAD vs. P&C INTERNAL PLAN TRAILBLAZER BROADBAND Analysis & Review Attachment 1 Cabinet Plus 400Kwh (Feb usage)TB Passes, Total % Estimated 2nd Homes Client Leads (Organic) Leads to Passes Anticipated Yr 1 Customers — 40% FT Anticipated Yr 1 Take Rate of Total Passes Construction Composition Town Area - Not Covered in BEAD** Take Rates are estimated based on historical data East Lane B 23 45 49%28 68%9 50% Eagle Cliff:114 205 44%92 51%46 30% West:68 139 51%50 42%27 19% Glacier:60 162 63%83 44%24 30% Copper Hill B 9 10 10%3 30%4 40% Lockhart Mtn*17 45 62%5 30%7 16%*Expansion will be completed with EPHA housing project HWY 34 - Olympus Heights to east edge of P&C service area Big Thompson:59 133 56%54 41%24 18% Brown Trout:53 118 55%25 22%21 18% Bellevue:79 180 56%70 45%32 18% Ski Rd area/Downtown Allenspark Ski 137 242 43%100 37%55 30% HWY 7 - Lily Lake to Taylor Rd (without Ski Rd area) Big Owl 67 187 64%79 34%27 14% Taylor:128 163 21%55 28%51 31% Longs Peak:108 171 37%77 41%43 25% Tahosa:75 186 60%46 25%30 16% REMAINING CONSTRUCTION AREAS: BY THE NUMBERS Primarily non-BEAD eligible, non grant funded Highest Organic Interest Best Take Rate potential Primarily BEAD eligible Higher interest than other BEAD funded areas Included in both plans BEAD eligible for service Already built to the curb Included in both plans Most BEAD eligible Most Seasonal premises Lowest Organic Interest Cabinet Cost to Build Cabinet TB Passes (Electric Meters), Total BEAD Location Coverage BEAD Coverage % of Passes/Cabinet Staff Plan Coverage % of Passes/Cabinet Anticipated Yr 1 Customers — 40% FT Estimated Cost per Anticipated Year-One Customer Construction Composition Town Area - Not Covered in BEAD* East Lane B, Copper Hill B, Lockhart Mtn Trailblazer Covered 100 12 12%100%20 Included Eagle Cliff:$430,681.00 205 2 1%100%82 $5,252.21 West:$195,511.00 139 2 1%100%56 $3,491.27 Glacier:$234,960.00 162 9 5%100%65 $3,614.77 HWY 34 - Olympus Heights to east edge of P&C service area Big Thompson:$265,887.00 133 78 57%100%53 $5,016.74 Brown Trout:$358,907.00 118 90 76%100%47 $7,636.32 Bellevue:$440,550.00 180 53 29%100%72 $6,118.75 Ski Rd area/Dpwntown Allenspark Ski Completed to Curb 242 242 100%100%55 *Curb to Premise Only HWY 7 - Lily Lake to Taylor Rd (without Ski Rd area) Big Owl $729,031.00 187 187 100%Future 41 $17,781.24 Taylor:$673,478.00 163 163 100%Future 51 $13,205.45 Longs Peak:$726,887.00 171 171 100%Future 43 $16,904.35 Tahosa:$706,187.00 186 186 100%Future 30 $23,539.57 REMAINING CONSTRUCTION AREAS: BY THE NUMBERS Lower cost per customer to build Highest Take Rate potential Included in Staff Plan Future build with BEAD Primarily BEAD eligible Higher interest than other BEAD funded areas Included in both plans BEAD eligible for service Already built to the curb Included in both plans BEAD Covered Lowest Take Rate Potential Future build with Staff Plan Highest Cost to Build Planning estimates based on available Trailblazer lead data, February electric usage indicators, and historical take-rate assumptions. Not a formal revenue forecast. Planning indicator BEAD-first approach Staff-recommended plan Why it matters Primary build sequence Builds BEAD-eligible locations first Builds higher-interest, lower-cost areas first Both paths leave locations remaining, so sequencing matters. Use of local match funds Local funds are used to unlock potential reimbursement, subject to significant risk, grant restrictions and compliance Local funds are used directly for locally controlled construction and release pace Staff plan gives the Town more control over where dollars create the greatest near-term benefit. Customer demand signal Includes lower-density areas with lower organic interest Prioritizes areas with stronger organic leads and demonstrated interest Higher demonstrated interest improves the likelihood of customer conversion. Residency / service stability signal Includes areas with more seasonal premises Prioritizes areas with more year-round residency indicators Full-time customers are more likely to maintain year-round service. Take-rate potential Lower anticipated take rate in several BEAD- heavy areas Greater anticipated take rate in higher density areas Better take rate improves the chance of more active subscribers sooner and greater net revenue potential. Build efficiency Includes higher-cost, lower-density areas earlier Prioritizes areas with stronger demand relative to construction cost This maximizes the impact of the already- allocated local funds. Administrative burden Adds long-term grant compliance, reimbursement, and reporting obligations requiring additional funds Avoids BEAD-specific administrative overhead More internal capacity remains available for operations, customer service, and future buildout planning. Path to remaining buildout Future revenue must support remaining buildout while also carrying grant compliance demands Future revenue can be focused more directly on reserves and continued internally paced buildout Staff plan better positions Trailblazer to keep reinvesting locally. Maximizing Local Match Funds While BEAD remains tempting because of the potential outside funding, staff does not believe the benefit outweighs the financial, operational, and long-term compliance risk under the final agreement. The internal plan is the stronger business decision because it reduces exposure, targets higher-return areas first, and keeps Trailblazer positioned to continue expanding service responsibly. Staff’s recommendation is to protect the Town’s investment, build where revenue can begin working sooner, and continue the broader buildout from a stronger and lower-risk position. LAKE ESTES MARYSLAKE LILY LAKE Taylor163 / 128 Ski242 / 137 Longs Peak171 / 108 Big Owl187 / 67 West2 / 68 BrownTrout90 / 53 Bellevue53 / 79 Glacier9 / 60 Eagle Cliff2 / 114 LockhartMountain1 / 17 Tahosa186 / 75 CopperHill B10 / 9 EastLane B1 / 23 BigThompson78 / 59 £¤36 £¤34 £¤36 £¤34 £¤34 £¤36 UV7 UV66 UV7 UV43 UV43 0 1 2 Miles Updated: 6/9/2026 [ Town BoundaryTotal # of BEAD Eligible LocationsTotal # of Full-Time Electric Customers Attachment 2