Communications Union Districts FAQ

 

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  1. What is a Communications Union District (CUD)
  2. Is there a map of current Communications Union Districts?
  3. What are some reasons for creating a CUD?
  4. How many towns should be in a CUD?
  5. How are CUD boundaries determined?
  6. What is the cost to the taxpayer and town in order to be part of a CUD?
  7. Can a town use funds derived from taxes to pay for any expenses incurred by or in support of a CUD, including feasibility studies, cost assessments, legal counsel retention, grants, build-out or make-ready costs?
  8. Is the taxpayer or town liable for CUD losses or insolvency?
  9. If tax dollars cannot be used to fund the launch of a CUD, how can the CUD can be initially funded?
  10. How does a town join a CUD?
  11. What language must a town include on the town meeting warrant or vote on at a select board meeting?
  12. What are the next steps after towns vote to create a CUD?
  13. Can a town withdraw from a CUD?
  14. Can a town apply a special assessment to finance a build for the town?
  15. How does a CUD operate? Are there examples of bylaws?

COMMUNICATIONS UNION DISTRICTS (CUDs)

  1. What is a Communications Union District (CUD)

    A CUD is a Communications Union District, allowing two or more towns to bond together as a municipal entity for a means of building communication infrastructure together. For more information see Title 30: Public Service, Chapter 82: Communications Union Districts in Vermont state statutes. Other types of municipal districts include Solid Waste Districts, Consolidated Sewer Districts, Emergency Medical Service Districts, Natural Resources Conservation Districts, and Consolidated Water Districts.

  2. Is there a map of current Communications Union Districts (CUDs)?

    Map of Current Communications Union Districts (CUDs)

  3. What are some reasons for creating a CUD?
    • Aggregate demand – Mixing dense and less dense towns makes the project more attractive to providers (with more negotiating power for the CUD).
    • The entire region can benefit rather than creating a digital divide with town-by-town buildout by different carriers.
    • Funders are familiar with municipal districts.
    • Efficiency – Network design, construction, and operation can all be more efficient when planned together from the onset.
    • Town boundaries are less important than roads, topography, and settlement patterns.
    • Risk mitigation – Individual towns are not on the hook.
    • Additional funding opportunities – Easier access to federal and state grants and loans that require providing services to those least served.
    • You don’t have to reinvent the wheel – Lessons learned and resources can be shared.
  4. How many towns should be in a CUD?

    At least two towns are required to start, but there is no limit. Member towns do not need to be contiguous.

  5. How are CUD boundaries determined?

    Some questions/issues to consider:

    °What is the critical mass? You need people, area, subscribers; more towns = increased negotiating power.

    °What towns in your area typically work well together on projects?

    °Topography and geography – Are towns connected by roads?

    °How many representatives sitting at a table is too many?

  6. What is the cost to the taxpayer and town in order to be part of a CUD?

    Nothing. Neither the taxpayer nor the town is required to pay anything in relation to a CUD. Section 3056(a) of Title 30 states that the “district shall not accept funds generated by a member’s taxing or assessment power.” This means that a CUD cannot accept funds derived from a local options tax to finance a CUD. A CUD must fund its operations by bonds backed by the revenue derived from the project, grants, or gifts.

  7. Can a town use funds derived from taxes to pay for any expenses incurred by or in support of a CUD, including feasibility studies, cost assessments, legal counsel retention, grants, build-out or make-ready costs?

    No.  A CUD, as a municipal organization, must obtain funding via grants, gifts, or loans backed by revenues derived from the operation of the CUD or the CUD itself.  See 30 V.S.A. § 3056 for more detail.

  8. Is the taxpayer or town liable for CUD losses or insolvency?

    No.  CUDs are obligated to ensure that any and all costs related to revenue losses or curtailment or abandonment of services are not borne by the taxpayers of CUD members

  9. If tax dollars cannot be used to fund the launch of a CUD, how can the CUD be initially funded?

    The CUD can be initially funded with revenue bonds, loans, grants, gifts or any source of funding not generated by a member’s taxing authority.  Loans must not be backed by anything other than revenues derived from the operation of the CUD or the CUD itself.  See 30 V.S.A. § 3056 for more information.

  10. How does a town join a CUD?

    A town can join a CUD in two ways. Under 30 V.S.A. § 3051, the initial CUD must be established through a Town Meeting Day vote, where all initial member towns vote to form the municipal organization. After the initial CUD is formed a member town can be added through a selectboard vote or another Town Meeting Day vote. See 30 V.S.A. § 3082 for more information. Note: During the COVID-19 State of Emergency, a CUD can be created by the selectboard vote of two towns.  A town meeting vote is not required. See Act 119.

  11. What language must a town include on the town meeting warrant or vote on at a select board meeting?

    Under the provisions of 30 V.S.A. § 3051 (b), a proposition using substantially the following language shall be submitted to the voters of each town: “Shall the Town of [insert municipality] enter into a communications union district (CUD) to be known as [insert name of CUD], under the provisions of 30 V.S.A. Ch82?”

    [Insert name of CUD] is a municipal entity, made up of 2 or more towns, with the specific purpose to build out, maintain, and operate broadband infrastructure in order to provide a last-mile, Fiber-to-the-Home (FTTH) network for [Insert name of region(s)], which will provide high-speed internet (up to 100mbps) to all residents in member communities. Membership in the CUD poses no financial risk to the Town of [insert municipality] or individual taxpayers within [insert municipality], and any and all costs associated with the investment in communications infrastructure are not borne by the taxpayers of district members. All towns that approve this ballot measure will become members of the CUD and each member town must appoint a representative to the CUD board of directors.

  12. What are the next steps after towns vote to create a CUD?
    • Each select board will need to appoint a resident of the town and an alternate to the CUD board, using a CUD board appointment resolution (Sample Resolution). Board members will be responsible for speaking on behalf of their residents and reporting back to the select board on a regular basis on the progress of the CUD.
    • The CUD board holds its first meeting and reviews materials to bring themselves up to speed on work done so far, and build an understanding of pending decisions the board will need to make in order to continue moving the process forward.  At the meeting, the board shall elect from among its appointed representatives a chair and a vice-chair, each of whom shall hold office for one year and until his or her successor is duly elected. The board will then file with the Secretary of State a document attesting to the vote by towns to create the Communications Union District.
    • The CUD develops and/or adopts bylaws. 
    • The CUD files a Trademark with the Secretary of State.
  13. Can a town withdraw from a CUD?

    Yes. In order to withdraw, the CUD member must publicly warn its voters of its intention to withdraw and subsequently hold a vote. A CUD member can only withdraw if a majority of its voters vote to withdraw from the CUD. The vote must be held at an annual or special meeting of the town or city.

    The town member must then give other CUD members notice of the vote to withdraw and hold a meeting to determine if it is in the best interest of the CUD to continue operating. Another vote by the CUD must then be held to either withdraw the town member or dissolve completely.

    See 30 V.S.A. § 3081 for more information.

  14. Can a town apply a special assessment to finance a build for the town?

    Possibly. A special assessment can be used to fund a CUD only if it will serve a limited area of the town. In other words, if the entire town will be served by the CUD, a special assessment cannot be used. Furthermore, any tax or assessment on property requires advanced authorization of the General Assembly. See 30 V.S.A. § 3056 (b) for more information.

  15. How does a CUD operate?  Are there examples of bylaws?

    A CUD is a municipal organization.  Each town sends a delegate or an alternate to meetings of the CUD.  Operating procedures and powers are detailed in 30 V.S.A. Chapter 82