More than four hours of information, financial projections, questions and at times pointed discussion filled the Windom City Council Chambers last night as council members took an extensive look at the future of WindomNet and the proposed sale of the city-owned telecommunications utility to Federated Broadband. The special meeting was called to provide additional information and clarification ahead of Tonights City Council meeting, when the council is expected to determine whether to override or sustain Mayor Hilary Mathis’ veto of the ordinance authorizing the sale.
Council members revisited a 2024 independent evaluation of WindomNet, customer trends, Federated’s proposal, WindomNet’s future operating and capital needs and financial projections under both keeping and selling the utility.
Customer numbers were a major part of the discussion. WindomNet had 1,664 internet customers in August, down from 1,758 one year earlier. Council members agreed the numbers have declined, but disagreed over what those numbers mean for the future of the utility.
Councilwoman Jenny Quade questioned whether continued customer losses, growing competition and future capital needs make retaining WindomNet too great a financial risk. Councilman Jayesun Sherman argued recent service and technology changes have not been given enough time to show results and that uncertainty surrounding the potential sale has also contributed to customer losses.
Telecom Director Jeff Dahna said recent changes include completion of a major system migration and changes to video and telephone services. When asked what could happen if WindomNet were to lose another 400 to 500 customers, Dahna acknowledged expenses would have to be reduced and said options could include eliminating some services or potentially reducing staff.
Finances took up another significant portion of the meeting.
City Administrator Steve Nasby presented a conservative projection assuming recent customer-loss trends continue. Under that scenario, the proposed 2027 budget projects approximately $2.5 million in revenue and about $2.97 million in expenses. Approximately $300,000 of those expenses is non-cash depreciation. Removing depreciation would still leave the projected budget approximately $172,000 negative. However, that projection also includes beginning repayment of more than $1 million WindomNet owes the city’s other enterprise funds. Council members also reviewed what could happen financially if WindomNet is sold. Federated’s current offer is $7.9 million. Using an assumed investment return and continuing to make existing bond payments while leaving the remaining proceeds invested, Nasby’s 20-year projection showed approximately $8.99 million remaining. For comparison, the same calculation resulted in approximately $8.8 million under Southwest Minnesota Broadband Services’ previous proposal and approximately $9.67 million under Midco’s previous offer. Nasby stressed those figures assume the money remains invested and future councils do not spend the principal.
Throughout the night, the divide among council members remained evident.
Those favoring the sale questioned whether the city should accept the financial risk of declining customers, future competition and additional technology investments when a $7.9 million offer is currently on the table. Those favoring keeping WindomNet argued the system has undergone significant changes in recent months, has additional technological capabilities available and should be given time to determine whether those changes can improve its financial position. When posed the question in their professional opinion what would be the correct course of action, city staff did not make that decision for them. Nasby told the council, that he and Finance Director Donna Torkelson could provide projections and financial information, but ultimately the decision of whether to keep or sell WindomNet belongs to the City Council. Quade also stressed that if the Federated sale does not move forward, the council is not simply moving on to another buyer. She said the council currently has a 3-to-2 majority supporting the sale to Federated, but no demonstrated majority to sell to another company. In her view, if the Federated sale fails, the practical result is that WindomNet remains city-owned and the council must then determine how to move forward with the utility, including its finances, customer losses, staffing, technology upgrades and future capital needs. Councilman Scott Benson agreed with that assessment, saying that if the city does not sell to Federated, WindomNet will remain with the city and the council will have to deal with how to move forward.
The meeting concluded with council members reviewing questions submitted by the public before turning to one final question whether Monday night’s information had changed the mayor’s position. Quade asked Mathis whether the concerns and questions outlined when she vetoed the sale ordinance had now been clarified. Mathis said she had received clarification, but the additional information had not changed her mind. She said she had not felt right about the proposed sale from the beginning and does not believe Federated is the right fit for Windom. That led to a pointed exchange between Quade and the mayor over the veto and the council’s existing 3-to-2 vote approving the sale. No action was taken Monday night. The decision now moves to Tuesday’s regular Windom City Council meeting. City Attorney Ron Schrammel clarified that the veto must be acted upon Tuesday. Under the Windom City Charter, four council votes are required to override the mayor’s veto. If the veto is overridden, the ordinance authorizing the sale to Federated would move forward. If the veto is sustained, WindomNet remains with the city and attention turns to how the utility moves forward from here.
The Windom City Council meets Tonight at 6:30 in the Windom City Council Chambers, with the disposition of WindomNet listed as Item Number Eight on the agenda. After more than four hours of additional information Monday night, the numbers have been presented, questions have been asked and positions have been made clear. Tonight, the council will be called upon to decide whether to move forward with the Federated sale, or move forward with WindomNet.