SRING POINT HOMEOWNERS ASSOCIATION SPECIAL …

1 SRING POINT HOMEOWNERS ASSOCIATION SPECIAL MEETING REGARDING FIBER-OPTIC CABLE DEER HARBOR COMMUNITY CLUB JANUARY 12, 2015 5:00 7:30 PM Christy Zimlich, Secretary 1-16-2015 MEMBERS ATTENDING: 45 Spring POINT HOMEOWNERS representing 35 SPHA properties attended this information/ discussion meeting regarding the potential for fiber-optic cable installation in Spring POINT , and possible SPECIAL Assessment needed for this purpose. Attending members who signed in: Kenneth Gibbs & Lynnette Wood B4-A Christy & Norm Zimlich 78 Angela Saxe 90/91 Barbara Bedell 44 Trey & Cheryl Holland 47 Millie Vetterlein 92/93 John Carl 62 Rob & Molly Thornber B9-A Bev Madan 56 Jody & Bob Hamaker H Bonnie & Don Ward CH-2 Linda Peth 79 Sharon Oviatt & Phil Cohen 1 Ingrid Kjelstrup 72, 81, B4-A1 Michael Durland B9-A Will & Sudie Gossett CH-3 David & Kathy Dilling CH-1 Katy & Don Breazeal B-3, B-10 Tom & Linda Harris CH-4 Richard Strauss B5-A Julie & John Gottman 16,17 Cheryl Napier B2-B Richard d'Ours B1-B Jerry Noesen Y Jean Soderquist 64 Richard Huffstodt B7-A Chips Carpenter 39 Mike & Sarah Coughlin 40 Laura Conant 34 Rex & Susan Chadwell 35 Bev Polis 31 NON-MEMBERS ATTENDING.

2 Gerry Lawlor, Director Island Network Alan Smith Island Network Bruce Martin, Loan Officer, Islanders Bank (Friday Harbor) Candace Bodenhammer, Branch Manager, Islanders Bank (Orcas) Sandi Friel, Local Realtor INTRODUCTION: SPHA President Bev Polis called the meeting to order and explained the purpose of the meeting as open discussion of the potential of fiber-optic cable installation in Spring POINT , and possible SPHA SPECIAL Assessment needed to do so. She introduced the above non-Member guests. FIBER-OPTIC PROJECT SUMMARY OF NEED & BENEFITS: SPHA Board member Angela Saxe described the initiative under way in the San Juan Islands by Island Network, a fully-owned subsidiary of Orcas Power & Light Company (OPALCO), to install fiber-optic cable to San Juan County communities, and the work of the SPHA Broadband Workgroup with Island Network. She described the current local problems which the initiative would address, including safety and communication issues in Deer Harbor and Spring POINT , problems of residents with their current telephone and DSL provider and recent failures of the CenturyLink underwater cable and service, and slow internet connections.

3 She briefly described how Island Network proposed to address these problems via extension of OPALCO's fiber-optic backbone cable into communities to provide better electric power grid management, enhanced emergency communications, high-speed fiber-optic Broadband internet, and internet-based telephone service. COSTS & ASSESSMENT OPTIONS: SPHA Broadband workgroup member Norm Zimlich presented charts describing the three-tiered costs of the proposed fiber-optic cable and Broadband/Phone service: 1. Middle Mile costs: the cost of installing fiber-optic cable from OPALCO's backbone into the Spring POINT community, to provide the safety, emergency communications, Broadband, and phone capabilities described above. This cost would need to be covered by a SPHA SPECIAL Assessment levied equally on each SPHA property, which could be paid over a 5-year period.

4 2. Last Mile costs: the cost to each individual property of installing the fiber cable from the Middle Mile to the individual home, IF the homeowner chose to do so. Costs vary greatly depending on the distance of the house from the Middle Mile usually the driveway length of each property. A $1500 one-time Incentive discount is offered to early subscribers to offset this cost in whole or part. Over half of SPHA HOMEOWNERS would have little or no Last Mile cost after application of this discount, while a minority would have substantial cost. Individual home loans could be used to offset this cost. 3. Broadband/Phone Fees would be charged monthly to Subscribers, beginning at $95/month including Broadband and phone. This can be reduced by $20 per month indefinitely if the Subscriber chooses this over the $1500 one-time discount. Island Network also offers various options for no-phone Broadband, non-active, and seasonal services.

5 Zimlich emphasized the importance of community support for the installation of the Middle Mile for the community's safety and future developments, which will require the fiber infrastructure. He urged that Members vote for the Middle Mile Assessment, whether or not HOMEOWNERS choose to install Last Mile fiber to their home or subscribe to the Broadband service at this time. Next, Zimlich presented three Alternative standards and costs for the Middle Mile installation which the SPHA Board has been considering, and conducted a straw poll of attendees as to their preference as to where the common fiber should be installed: Alternative A: To every property line (Assessment per property $2,500) Alternative B: To every existing home (Assessment per property $2,135) Alternative C: To existing homes on SPHA roads only (Assessment per property $1,800) After a lively discussion of the implications of these alternatives, attendees voted by show of hands (one vote per owner or owner-pair present).

6 The vote was overwhelmingly in favor of Alternative A, Middle Mile fiber to every property line. (A 22 votes, B 8 votes, C- 1 vote.) LOANS AVAILABLE: Bruce Martin described the two types of loans offered by Islanders Bank for San Juan County HOMEOWNERS , to assist in the installation costs of fiber-optic cable, both Middle Mile and Last Mile costs. 1. Islanders Bank will lend funds to a community organization, such as SPHA, at a five-year current fixed rate of 5%, with a $500 flat loan fee, with no prepayment penalty and no collateral required. SPHA might secure such a loan, for example, to pay Island Network for the Middle Mile fiber installation up front, while some SPHA HOMEOWNERS , at their option, made their assessment payments annually over 5 years to amortize this cost. If a homeowner later chose to pay off his balance in 3 years instead of 5 to save some interest cost, he could do so because the bank loan carries no prepayment penalty.

7 2. Islanders Bank will lend funds to individual HOMEOWNERS in San Juan County for installation of fiber-optic cable to their homes, at a current five-year fixed rate of , with a $100 loan fee. Martin emphasized that this requires a simple one-page application. A SPHA homeowner might take out such a loan, for example, to pay for both his Middle mile Assessment and his Last Mile installation cost combined in monthly installments. This would allow him to claim the $20/month Incentive discount against his monthly Broadband fees, since the loan proceeds would be paying off his entire fiber installation cost up front. STATEMENT FROM FIRE CHIEF O'BRIEN: At the invitation of President Polis, Orcas Fire Commissioner and Spring POINT Member Barbara Bedell read the following statement to SPHA Members from Orcas Island Fire Chief Kevin O'Brien: Orcas Island Fire and Rescue and Opalco are dedicated partners in service.

8 Opalco's initiative to expand broad band services has my full support. I look forward to the day when there is 100% broadband coverage in San Juan County. Enhanced broad band presents an assortment of potential benefits for emergency services including significant improvements in radio and cell phone communications as well as internet based patient reporting and patient monitoring systems. We at Orcas Island Fire and Rescue see a bright future teaming with Opalco to improve emergency communications and overall service to the community of Orcas Island and San Juan County. Kevin O'Brien Fire Chief/CEO, Orcas Island Fire and Rescue REAL ESTATE EFFECTS: At the invitation of President Polis, local realtor and Deer Harbor neighbor Sandi Friel spoke about her experience regarding the effect of internet availability on Orcas home sales. She reported that internet availability is increasingly becoming an important sales factor for prospective buyers.

9 She said that, in her personal experience, lack of internet access has been one of several reasons given by some clients for not buying a specific home. When a home does have internet access, it is definitely a positive sales feature and is now being routinely included in the property description for that home. President Polis relayed a statement to the attendees from TJ DiCaprio, the newest Spring POINT property owner who recently purchased the former Aschoff home, Lot 41. Ms. DiCaprio bought this property with the plan to perform some of her work for Microsoft from the home, for which good internet access is critical. She has since discovered the slow speed of current internet connections, and strongly urges the installation of fiber-optic Broadband. TIMELINE AND ENGINEERING QUESTIONS: Gerry Lawlor displayed a map of the Middle Mile design for Spring POINT (Alternative B) and discussed this briefly with attendees.

10 He explained that it can quickly be re-designed to accommodate whichever Alternative the Spring POINT HOMEOWNERS select. Lawlor emphasized that it is in Island Network's interest, as well as the HOMEOWNERS ' interest, to install both the Middle Mile and last Mile fiber in the shortest and most feasible route. He pledged Island network's individual attention to the wishes of each homeowner to find the shortest route, including chaining of connections between properties where HOMEOWNERS agree. In response to a question about Timeline, Lawlor said that they anticipate only a three- or four-month period for the installation process in Spring POINT . The fiber needs to be installed only 18 inches deep. Overhead wiring and/or surface conduit will not be allowed for code, safety and maintenance reasons. Some county shoreline permitting may possibly be required; in general, HOMEOWNERS will agree to the necessary easements in the process of installing the fiber and/or subscribing to Broadband service.