01/17/2012 - City Council Finance Committee FINANCE COMMITTEE MEETING
JANUARY 17, 2012
12:00 -2:00 P.M.
CITY HALL CONFERENCE ROOMS 2A &B
AGENDA
I. AGENDA ADOPTION
ea, II. REVIEW PHASE II FIBER PLANS
P 10 III. CEDAR GROVE UPDATE
IV. OTHER BUSINESS
V. ADJOURNMENT
Agenda Memo
Finance Committee Meeting
January 17, 2012
II. REVIEW PHASE TWO FIBER PLANS
ACTION TO BE CONSIDERED:
Receive update on Phase I fiber /duct extension;
Reaffirm direction for Phase II Fiber build as to projected cost and routing;
Direct staff to prepare necessary RFP to determine pricing with results to come back to
the full City Council for consideration and award
FACTS:
D On November 9, 2010 the Finance Committee heard a presentation regarding consultant's
findings relative to two specific broadband strategies in furtherance of the City Council's
technology goals.
➢ Those two strategies were endorsed by Council resolution on January 4, 2011.
D One of the strategies was to conduct a feasibility study to attract a colocation/data center
to Eagan. The second strategy, outlined by consultant Andrew Cohill, of Design Nine, is
to extend City fiber and duct to business areas of Eagan for open access use by any
provider offering telecommunications services to Eagan businesses.
➢ For the two projects it was outlined that City costs could be $2.5 -3 million over
approximately 3 years, but also revenue generation. The Finance Committee indicated in
2010 comfort with at least $2 million.
On June 2, 2011 Mr. Cohill and Director of Administrative Services Van Overbeke
presented first year budget items for the fiber project and a procurement schedule and
briefly reviewed projected second and third year procurement amounts and schedules.
D Based on Finance Committee review of the pro formas, it was determined that a
preliminary funding commitment through the 4 year of the project will be needed using
non -tax dollars. However, only a year one (Phase I) commitment of approximately $1
million was sought at this time.
D June 21, 2011 the Eagan City Council approved the funding commitment for the Phase I
fiber extension and authorized preparation and issuance of RFPs for construction.
D On September 20, 2011 the Eagan City Council awarded the installation and maintenance
work to the low bidder and Phase I work commenced shortly thereafter. Now that actual
costs have been incurred, the number projection for future phases are more accurate.
D Communications Director Garrison will be joined (via Skype) by consultant Andrew
Cohill to provide an overview of the Phase I work, the proposed routing and expenditures
for Phase II and discussion with the Committee about their recommendations going
forward.
ATTACHMENTS: 3
• Eagan Fiber Project Summary Qp
• Proposed Phase II Routing eq •
• Copy of Draft Executive Summary of Colocation Feasibility Analysis with underscored
comments relating to the City's fiber extension strategy
P
DESIGN NINE
broadband archiceaure + engineering
January 13, 12
Eagan Fiber Project Summary
Phase 1 Work Completed to Date
• Six miles of new fiber and duct construction.
• Two and half miles of fiber installed in existing duct.
• Forty -five handholes installed.
• Network planning and network architecture design completed.
Phase 1 Work Remaining
• Pulling fiber in duct.
• Ordering network equipment.
• Configuring and testing network equipment.
• Installing drops to businesses.
• Signing up service providers and setting up provider services.
Phase 1 Expenditures
• Original proposed expenditure was $2.5 -3 million. Proposed Year One expenditure was $1.243 mil-
lion.
• Phase One fiber /duct construction award was $526,466, representing a bid 30% below initial esti-
mates.
• Balance remaining on Phase One expenditures for drops to businesses, generators, building improve-
ments, network equipment, customer premises equipment, and configuration/testing is estimated at
$716,000 (remaining in the initial Phase One request).
• Annual maintenance for fiber /duct will be approximately $15,000 /year. This includes locates and
break fixes.
Phase 2 Proposed Expenditures
• The Phase 2 fiber expansion is estimated at $1,035,000, and this will include nine miles of fiber, in-
cluding Cedar Grove, MVTA, and Route 13. This amount includes additional drops to businesses and
additional network equipment.
Timeline for Service Availability
• Late summer, 2012.
Future Expansion Options
• More drops from fiber backbone to individual businesses along existing fiber routes.
• Completion of additional fiber loops to increase fiber redundancy in case of cuts or damage.
• Potential Phase 3 expansion to reach southern and southwest Eagan and other areas not reached by
the earlier phases.
design nine, inc. • 2000 kraft drive, suite 2180 • blacksburg, va 24060. 540.951.4400 • info @designnine.com • www.designnine.com
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DRAF
4 City of EaQall
Midwest's Premier Carrier Neutral Data Center
Feasibility Study Final Analysis
and Conclusions
S
JONES L ANG °' , FIVE 9 s ..�
a ALLE 6 DIGITAL Communications
LAS .., �...,, �., Commun ca o ns
b
Date: December 27, 2011
To: Tom Garrison,
Director of Communications
City of Eagan, Minnesota
From: Doug Hollidge, Five 9s Digital, LLC
Ken Walsh, Jones Lang LaSalle
Christine Isaacs, XO Communications
Mark Feil, XO Communications
EXECUTIVE SUMMARY
The following information and conclusions are a culmination of the efforts of Jones Lang
LaSalle, XO Communications and Five 9s Digital ( "Team "). The Team was engaged by the
City of Eagan to accomplish the following goals:
a. Determine if Eagan is a viable location for a Carrier Neutral Data Center.
b. Determine the optimum location for the data center within the City of Eagan.
c. Solve the actual and /or perceived "single point of failure" fiber connectivity issue
facing the region.
d. Provide conceptual design and budgeting studies for a multi- tenant "purpose
built" data center capable of accommodating small, medium and large
company space requirements.
e. Justify a general business case for the private development of a multi- tenant
carrier neutral data center in the City of Eagan.
Ultimately through our comprehensive market study and feasibility analysis coupled with our
direct experience in the development of multiple carrier neutral data centers, we found The
City of Eagan to be an excellent candidate for the location of a Tier 3 multi- tenant carrier
neutral data center and future corporate data centers. The City of Eagan currently has
several corporate data centers within its city limits including highly regarded companies such
as Delta, Unisys, and Thomson Reuters. As with other markets in the country that have
experienced "data center clustering," the presence of these well -known corporate data
centers provide an initial validation and "stamp of approval" for the City of Eagan.
In addition to making our selection and recommendation of an excellent site for the planned
Multi- Tenant Carrier Neutral Data Center, our study identified multiple sites that could be
suitable for future new data center initiatives located in the City of Eagan. The City of Eagan
is well situated on the periphery of Minneapolis and St. Paul providing corporations within the
Twin Cities limits some geographic diversity for their data center, colocation, and disaster
recovery requirements.
ten t
1
We have been very impressed with the City of Eagan staff's leadership, City Council and
overall support of its Tech Working Group, which is comprised of key technology staff of
Eagan corporations. The combined group is very unique in our experience and we consider
it highly insightful that a municipality would bring a team like this together for the betterment
of the community. Through the group's efforts in addressing the regional fiber connectivity
risks and the needs of its corporate community for additional fiber provider connectivity, the
City of Eagan and its Tech Working Group has positioned the city very well to address recruit
data center initiatives. Over the past two decades, Eagan has established a very robust
corporate community and, simultaneously, a highly connected and diverse fiber
infrastructure boasting numerous fiber providers and multiple choices for small, medium and
large companies.
In addition to the existing robust fiber connectivity in the city, Eagan has engaged in a_
neutral fiber installation currently underway.with Phase 1 completion scheduled for mid -2012
and a second phase commencement shortly thereafter. This fiber conduit installation has
been spearheaded by the City to provide other fiber providers, not currently in the City of
Eagan, the ability to provide communications services to the corporate and residential
market quickly and affordably by accessing the existing City conduit installation. We feel this
is of great benefit to bringing even more connectivity to the area given the high cost of
undergrouna installation it completed on an individual basis by fiber providers. Ultimately,
the additional connectivity and the City's commitment to the future will be a great benefit to
corporate and residential community in the City of Eagan,
"Today, if a company can't afford private circuits to other cities, they have to go through the
511 Building's route to Chicago," said Rick King, chief operating officer for technology for
Thomson Reuters, a worldwide information publishing company with major operations in
Eagan that's been an advocate for the new data center. The time is ripe to change that
dependence on the 511 Building, he said. "The cost to do a backup Internet route has
dropped tenfold since the middle- 1990s. Redundancy is more affordable now," published in
a Star Tribune article dated December 18, 2011.
In addition to increasing the already robust local connectivity available, the Minneapolis- St.
Paul region currently faces a perceived "single point of failure" redundancy issue.
Although many of the fiber providers offer local redundancy within the region, most providers
connect to the 511 Building located in Downtown Minneapolis before the information is
transmitted outside of the region. This problem can become a very significant regional and
corporate issue if services are interrupted on a short or long term basis in the 511 Building due
to the convergence of fiber traffic at this one important location.
One goal of the City of Eagan and its Tech Working Group was to spearhead the effort to
solve this perceived issue by providing additional direct connectivity outside of the region
without having to pass through the 511 Building. XO Communications, as part of the
feasibility study team, has committed to providing fiber connectivity through the planned
Carrier Neutral Data Center in Eagan and extend a southern long haul fiber route south
connecting to a transwestern fiber link. The solution provided by XO Communications
provides companies and other fiber providers the ability to purchase capacity and have a
much needed redundant path outside of the region. XO Communications committed to
funding the new southern route in June of 2011. We feel this will be a significant asset to the
7
city and the region as the ability for companies to have diverse routes to the long haul fiber
network is somewhat rare except in the largest of cities.
In the same article referenced above, Tom Salonek, CEO of Intertech in the City of Eagan
states, "Our company had an Internet attack this summer, and it brought down our
computers and website," Salonek said. At the time, we didn't have a backup. Until you get
hit by an outage, its hard to measure the impact it would have on your business."
During the market study phase of the process, the team concluded that there is a lack of
new purpose built data center options for consideration of mission critical end users
searching the region. In addition to the lack of data center options, a definitive need exists
to have data center options designed to accommodate the varying space needs of end
users. The proposed new data center, deemed The Connexion, offers features such as:
• Tier III data center design features which offer multiple redundancy capabilities
• LEED Certified building offering long term operational efficiencies
• State of the art design offering the ability to utilize current design technologies by the
end users
• Flexibility and Scalability in size of the private data suites
• Diverse, robust and low cost power availability
• Multiple and diverse fiber providers offering the maximum amount of connectivity and
redundancies
• Reduced man -made threat and natural disaster risk site and design features
As referenced by Brett Severson of Jones Lang LaSalle's Mission Critical Team recently, he
states, "Minnesota is an excellent and growing data center marketplace and The Connexion
Data Center in Eagan will be the first multi- tenant, Tier 3 facility of its kind, purpose -built to
specifically accommodate data center users. It is a much needed solution given the rising
demand the Jones Lang LaSalle's team is seeing for data center space in the Greater
Minneapolis -St. Paul region and the relative dearth of viable data center options available."
Another important factor in determining the viability of a new data center in the City of
Eagan, is the availability of robust power. We found the City of Eagan to have two high
quality power providers in Dakota Electric and Excel Energy. The power companies offer a
robust power infrastructure, high reliability and low cost of power based upon national
averages. Power and diversity are critical components of any decision making process for
data center requirements.
Ultimately, the Team selected by the City of Eagan brought together the critical components
of the feasibility analysis from technical expertise through strategic planning in a
comprehensive study. The end results validated the concepts put forth by the City of Eagan
and its Tech Working Group to increase the fiber connectivity and diversity, solve the single
point of failure issue facing the region, and pave the way to have a privately funded new
and "purpose built" carrier neutral data center available to a large range of end users
locally, regionally, and nationally.
What follows is a final summary written and supporting documentation providing the full
scope of the work completed for the feasibility and site selection analysis for a new Carrier
Neutral Data Center to be located in the City of Eagan.
9
Agenda Information Memo
Finance Committee Meeting
January 17, 2012
III. CEDAR GROVE REDEVELOPMENT REDEVELOPMENT OPTIONS
ACTION TO BE CONSIDERED:
To provide direction to staff regarding financial aspects of potential redevelopment
options.
FACTS:
• In 2011, the EDA approved a Restated Preliminary Redevelopment Agreement to
continue the Authority's relationship with Pratt Development as its master
developer partner, with the addition of Cassidy Turley as a broker for the
property.
• At that time, the Finance Committee and EDA considered the state of the finance
and development economies and some of the factors discussed at the recent ULI
MN presentation about the New Normal and asked the development team to cast a
broader net for business and development prospects that may be attracted to the
development district.
• To that end, the Restated Agreement contemplates more aggressive broker
marketing of the redevelopment area to a wider range of prospective businesses
and developers. It was understood at the time that it was likely that some
prospects that could pay more for land and/or generate significant TIF revenue
could fall at the edges of the City's vision or outside it. In contrast, some
prospects that align most closely with the high density, mixed use vision may
continue to require land price considerations or may not be as market supportable
in the near term. The EDA indicated at that time that it was unlikely to be open to
industrial or single family developments because they diverge the most from the
vision for the area and would not likely generate sufficient land values or TIF
revenues.
• Since that time, Mr. Pratt and Mr. McCaffrey have pursued and qualified several
development prospects of various kinds and, since the possible projects vary in
type, proposed purchase price and potential TIF generation, it is appropriate to get
initial input from the Finance Committee about the options and, depending upon
the Committee's recommendation, take appropriate steps toward a more full
consideration of options by the EDA.
• Since a number of the prospects are at the outset of their consideration or in
various stages of due diligence, specific information about the options will be
presented at the Committee meeting.
ATTACHMENTS: None
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