In this paper, we deal with an access network design problem of fiber-to-the-home passive optical network (FTTH-PON). The FTTH-PON network design problem seeks to minimize the total cost of optical splitters and cables that provide optical connectivity between central office and subscribers. We develop a flow-based mixed integer programming (MIP) model with nonlinear link cost. By developing valid inequalities and preprocessing rules, we enhance the strength of the proposed MIP model in generating tight lower bounds for the problem. We develop an effective Tabu Search (TS) heuristic algorithm that provides good quality feasible solutions to the problem. Computational results demonstrate that the valid inequalities and preprocessing rules are effective for improving the LP-relaxation lower bound and TS algorithm finds good quality solutions within reasonable time bounds.