HomeMy WebLinkAbout02-24-20 City Commission Packet Materials - C13. Amend 1 to Dark Fiber Lease with Bozeman FiberCommission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Assistant City Manager
SUBJECT: Authorize City Manager to Sign Amendment #1 to Dark Fiber Lease
Agreement Between The City of Bozeman and Bozeman Fiber.
MEETING DATE: February 24, 2020
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Authorize City Manager to Sign Amendment #1 to Dark Fiber Lease
Agreement Between The City of Bozeman and Bozeman Fiber.
BACKGROUND: The City’s Strategic Plan and Commission Resolution No. 5031 include
designating broadband as essential infrastructure. The City has supported the creation of
community-wide broadband services described in the Bozeman Fiber Master Plan and Feasibility
Study. The City has also supported these services through cooperative purchase with the School
District, and long-term lease of services as a dark-fiber customer of Bozeman Fiber, Inc.
• On August 24, 2015 the City entered into an interlocal agreement with Bozeman School
District #7 for cooperative lease of dark fiber services, and
• On February 8, 2016, the City entered into a long-term lease agreement for Dark Fiber
services from Bozeman Fiber, Inc. (BFI).
Bozeman Fiber has recently requested that the City make pre-payment of a portion of our lease
amount that would be due on July 1, 2020. This partial pre-payment is needed to assist BFI with
cash-flows this spring. While their customer numbers continue to grow, they are behind the
financial position that was projected in the original Master Plan. They believe that they will not
need advances in the future.
The pre-payment amount is equal to 40% of our annual lease fee. The pre-payment would be
approximately 120 days in advance of its original due date. In consideration of this prepayment,
BFI has offered a 5% discount (savings of $934.25).
BFI is also making a similar request and offering a similar discount arrangement for School
District #7. Through the interlocal agreement, School District lease payments come to the City
of Bozeman. Under this Amendment, we will immediately pass along any pre-payments that we
receive to BFI.
UNRESOLVED ISSUES: None.
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ALTERNATIVES: Do not make the prepayment.
FISCAL EFFECTS: On March 8, 2020 the City will make a prepayment for dark fiber services
out of the General Fund of $17,750.75 (payment of $18,685 less $934.25 discount). The
remainder amount of $28,020 will be paid according to the original contract terms, on July 1,
2020.
Because this is a pre-payment of FY21 expenses under an existing contract, it will be recorded as
such and not require a budget amendment for the current year.
If they city receives any pre-payment amounts from School District #7 under a similar
arrangement, we will immediately pay those to Bozeman Fiber, as well.
Attachments: Amendment #1 to Dark Fiber Lease Agreement
Report compiled on: 2/13/2020
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