12/03/2007 - City Council Communications Committee
AGENDA
COMMUNICATIONS COMMITTEE MEETING
MONDAY
DECEMBER 3, 2007
5:00 p.m.
CONFERENCE ROOMS 2A & B
1. UPDATE ON CONDUIT PRICING & POLICY
RECOMMENDATIONS
A. Time Warner Telecomm Interest
B. Review suggested lease and sale pricing
C. Review suggested policy regarding installation, sale or lease of City
conduit
II. UPDATE ON BECT - (verbal reports)
A. FCC Ruling
B. Facility Location
C. Partnership discussions
D. Qwest application
E. Statewide franchising bill
III. OTHER UPDATES (as time allows)
A. Multi-city/County broadband discussions
B. Web site and Web streaming statistics & trends
C. Other?
IV. ADJOURN
Agenda Information Memo
December 3, 2007
Communications Committee Meeting
5:00 p.m.
1. UPDATE ON CONDUIT PRICING AND POLICY RECOMMENDATION
BACKGROUND:
A. Time Warner Interest
• The City of Eagan has been approached by Time Warner Telecom (TWT)
with interest in conduit the City installed along the Highway 149 construction
route
• As a result of the Communication Committee's previous direction to develop
policies and pricing as a first step to recouping its conduit investments, and
because of the interest of TWT, the City retained professional advice to value
our conduit investment for both leasing and sale.
• TWT has since indicated they are not interested in leasing at this time and
prefer to purchase two of the six conduits the City installed along the
Highway 149
B. Review suggested lease and sale pricing
• Eagan invested approximately $132,000 for 11,451 linear feet of conduit
along Highway 149, and another $250,000 on the 11.5 mile ISD 196 route in
southern Eagan to help "future proof' Eagan for a potential fiber ring, and to
encourage additional broadband services and revenue for the City.
• The City's consultant, Elert & Associates, recommends for lease pricing that
Eagan establish rates below what it would cost the service provider to install it
themselves, while noting that because of "supply and demand" even holding
on to the conduit over a longer period of time makes it more valuable if the
right of way becomes fuller.
• The consultant recommends setting lease process as the median between what
it cost the City to install and what it would cost the interested party to install
on their own, accounting for maintenance and other factors. "This will allow
the City to get a relatively quick return on its investment," but also set the
price at a point where service providers might choose our pathway over
installing their own conduit.
• Staff recommends lease pricing be recalculated every three years.
• Because Time Warner likes to own its assets, TWT offered to purchase two
conduits at a cost of $3.00 per foot, for a total of $68,706 for the two conduits.
• The City's consultant recommended a counter offer of $3.25 per foot, for a
total of $74,425
• Further, the sale of two conduits along 149 would leave the City with four
conduits, making them more valuable.
I
• The same general principle applies of pricing to recover Eagan's costs in a
sale, knowing these costs just for permitting alone-will be below what it
would cost the service provider to install conduit on their own.
• Finally, the consultant recommends the City take steps to ensure TWT or any
future buyer do not damage the remaining conduits and that we are protected
if they do.
• Staff additionally recommends that the City retain the right of first refusal
should the sold conduit ever be re-sold or abandoned.
• Other appropriate protections have been suggested by the City Attorney.
• A draft contract is being drawn up to reflect these considerations.
• Staff also recommends that no sale be authorized unless the City
Administrator determines (on advice from the IT Manager and Tech Working
Group liaison) that the conduit is not needed for city government specific
needs or as part of a larger citywide fiber ring or fiber strategy.
• According to the City Attorney, the City Council would then need to take
formal action to declare the conduit to be sold as surplus property
• In the case of TWT's interest, the staff is comfortable selling the two conduits.
DISCUSSION & PUBLIC POLICY QUESTIONS:
• Should the City sell any of its conduits?
• Should any limitations be placed on the sale of conduits?
• How often should sale or lease pricing be updated?
• The city has received praise for having the foresight to install conduit in strategic areas.
Some other cities (Portland, OR for example) are routinely doing this. With regard to
future conduit installation, is the goal to break even, make a profit, or is the goal of high
speed connectivity important enough to the community to justify installation if
appropriate funding sources can be identified?
ATTACHMENTS:
None.
Agenda Information Memo
December 3, 2007
Communications Committee Meeting
5:00 p.m.
1. UPDATE ON CONDUIT PRICING AND POLICY RECOMMENDATION
BACKGROUND:
C. Review suggested policy regarding installation, sale or lease of City conduit
• The Communications Committee of the City Council has asked for drafting of
appropriate policies to be drafted to govern the installation of additional
conduit in the city beyond what is needed for City-government-specific use.
• The goals of such a policy would be to:
a) Take appropriate steps to ensure Eagan's technology infrastructure
remains competitive;
b) To ensure the City does not miss important opportunities to install or
upgrade that infrastructure;
c) And to position Eagan as an attractive opportunity for the provision of
world class ultra high speed telecommunications.
• Attached is a draft policy to get Eagan started on the first two bullet points.
WHAT OTHER CITIES ARE DOING & ADDITIONAL CONSIDERATIONS:
• Some cities, particularly in the West, require advance notification to nearest
neighbors and the City whenever trenches in the public rights of way are to be
open, so that if Lockheed for example, were to be installing fiber, Unisys or
the Community Center might be notified to see if they too needed to do any
installation.
• Most of the cost of installation is associated with digging and opening the
trench. Shared opportunities make high speed fiber installation cheaper.
• Eagan Planning Commission members have indicated an interest in having
some authority to add a condition to approval for new developments that they
install conduit infrastructure ensuring that high speed fiber could eventually
be extended to that facility.
• Loma Linda, California takes this even further, requiring fiber be installed to
all new homes and businesses, per city specifications. If inspected and
certified, the City indemnifies the contractor with an insurance policy and the
city in turn gets ownership of that "last mile" connection and the homeowner
has been proven to have a higher value for their home when reselling.
DISCUSSION & PUBLIC POLICY QUESTIONS:
• Are the terms of the conduit policy appropriate?
• Should any additional considerations be added?
• Should any limitations be placed on the sale of conduits?
ATTACHMENTS:
See suggested conduit policy on page
4
DRAFT Conduit Policy
To further the City Council's goal of pursuing world class broadband access for Eagan's
residents and businesses, an important means to achieving that connectivity is the
installation, where appropriate, of conduit capable of carrying high speed fiber optic
broadband.
It shall be the policy of the City of Eagan that when City Engineers prepare their annual
work plan concerning roadway work in the city that may result in open right of way
trenches, and their five year CIP, that the information regarding the streets and locations
be relayed to the City Administrator for a decision about whether a bid alternate should
be included to obtain the cost of installing conduit for fiber optics along that route. The
IT Manager and the City's liaison to the Technology Working Group will assist the
Administrator with providing an expeditious answer regarding whether there is a City
need for fiber or conduit along these routes.
If the installation of conduit appears to be indicated either for City-government-specific
needs or as part of an overall fiber optic ring that could enhance service to Eagan
residents and businesses, a bid alternate should be included as part of the contracting bid
specifications.
When the results of that bid alternate are known, the City Council, or if it prefers to refer
the matter to its Public Works Committee, or the Tech Working Group, shall recommend
whether the bid alternate costs are needed, justified and should be accepted.