Telecom Appeals Bond Ruling

Bridgewater Telephone Co. has appealed to the Minnesota appellate court a  judge’s decision last month to dismiss the company’s lawsuit against Monticello challenging its $26.4 million bond issue to fund the installation of a fiber-optic broadband communications network.

The company, a subsidiary of TDS Telecom, filed the lawsuit in late May, seeking to have the bonds that were issued earlier in the month declared void. The bond proceeds have sat in an escrow since the lawsuit’s filing and will remain there during the appeal process.

Bridgewater, which is building its own fiber-optic network in Monticello, argued that the city had no authority under state law to issue bonds to fund a business that would provide Internet, cable television, and telephone services. The company also argued that the use of an operating reserve fund to pay for current expenses violated state law.

Monticello — which won voter approval to fund the system with a bond issue in September 2007 — asked the court to dismiss the lawsuit, and attorneys for the city and Bridgewater appeared before Wright County Judge Jonathan N. Jasper to argue their sides in July. The company currently provides cable and phone service to the city.

In his ruling last week dismissing the lawsuit, Jasper concluded that Monticello did have authority to issue the bonds because the project falls under the category of a “utility or other public convenience” under state statutes that govern local governmental bond issuance.

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