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Home My WebLink AboutA4. Res 4658 Broadband Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager David Fine, Economic Development Specialist SUBJECT: Resolution 4658 - Conduit Licensing Policy MEETING DATE: January 11, 2016 AGENDA ITEM TYPE: Action. RECOMMENDATION: Adopt Resolution 4658 Recommended Motion: I hereby move to adopt Resolution 4658 establishing policies regarding the leasing or licensing of broadband infrastructure. BACKGROUND: On January 26, 2015 the City Commission unanimously approved Resolution 4576 adopting the Bozeman Fiber Master Plan and Feasibility Study (the “Plan”). As described in the Ownership and Management section of the Plan, the Plan recommended that “[s]ome passive assets like conduit and handholes could be built and owned by the City of Bozeman and leased to [Bozeman Fiber] and/or other providers in return for recurring lease payments” (pages 57-58). Both the Downtown and Midtown TIF districts have recently amended their Urban Renewal Plans and annual budgets in order to execute urban renewal projects to install conduit within these districts and to make that conduit available to local providers. The Districts’ amended plans and amended budgets were presented to and approved by the City Commission in the second half of 2015. In addition to the conduit that is scheduled to be installed in the two TIF districts in Summer 2016, the City already owns empty conduit on North Montana as part of the fiber connection project led by the City’s IT Division to connect fiber between City buildings. The conduit to be installed within the TIF districts and the conduit currently in North Montana Avenue will have excess space beyond that needed by the City for its broadband internet requirements that can be licensed or leased to local providers in support of the economic development goals of the two TIF districts and the City. Because the City owns conduit in North Montana and will soon own conduit in the two TIF districts, Staff believes it is advisable to formulate and adopt general policies now – in advance of any negotiations with local providers – to govern future licensing or leasing of these 168 infrastructure assets. Exact terms and conditions of a license or lease can be negotiated in each agreement, and each agreement will be presented to the Commission for approval. The attached Design Nine report entitled, “City-Owned Conduit Management” dated December 28, 2015 covers Uses of City Conduit, Maintenance Responsibilities, Pricing and Billing and Marketing. The report identifies three main city responsibilities that will result from leasing conduit: • Unscheduled maintenance for conduit breaks • Maintaining a GIS-based inventory of City conduit assets • Locating and marking conduit infrastructure in advance of construction projects As the report describes, these tasks could be contracted to qualified third party vendors or performed by City staff. UNRESOLVED ISSUES: 1) Terms and conditions of the license or lease (to be developed prior to commencing invitation to license vacant conduit) ALTERNATIVES: As recommended by the City Commission. FISCAL EFFECTS: Negligible fiscal effects will accrue from the establishment of this policy. However, the City will have operations and maintenance costs associated with conduit. These costs will be addressed in the licensing process. Design Nine’s December 28, 2015 report estimates lease rates for our conduit to be placed between fifty cents to two dollars per lineal foot. Fees associated with conduit licensing would be structured to cover the new costs associated with maintaining this conduit infrastructure. Excess revenue from conduit leasing would accrue to the City to fund future expansion of the conduit system. As a point of reference, there will be 16,556 linear feet of 7 way innerduct conduit installed in Downtown and Midtown urban renewal districts. Licensing 1 of the 7 ducts in this complete length of conduit for $1 per linear foot would produce $16,556 annually toward maintenance costs; licensing 3 of ducts would produce $49,668 annually for maintenance at the same charge per linear foot. Attachments: 1. Resolution 4658. 2. City-Owned Conduit Management. 2015. Design Nine. Hyperlinks: 1. Bozeman Fiber Master Plan and Feasibility Study (Commission Resolution 4576) Report compiled on: January 4, 2015 169 Resolution 4658, Broadband Infrastructure Page 1 of 2 COMMISSION RESOLUTION NO. 4658 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ADOPTING GENERAL POLICIES FOR THE LEASE OR LICENSE OF CITY BROADBAND INFRASTRUCTURE WHEREAS, the Bozeman City Commission adopted the Bozeman Fiber Master Plan pursuant to Commission Resolution No. 4576 to further the economic development of the City; and WHEREAS, the Bozeman Fiber Master Plan recommended a limited role for the City to include the installation of broadband infrastructure owned by the City; and WHEREAS, City-owned broadband infrastructure may have excess capacity beyond that needed by the City; and WHEREAS, the sharing of broadband infrastructure through leases or licenses may reduce costs and encourage economic development; and WHEREAS, the City Commission desires to adopt a set of general policies to implement the Bozeman Fiber Master Plan’s recommendations for the development of broadband infrastructure. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, that The Bozeman City Commission hereby adopts the following policies regarding the leasing or licensing of broadband infrastructure: 1. If the City of Bozeman installs broadband infrastructure including but not limited to conduit, handholes and fiber, and such infrastructure has excess capacity beyond that needed by the City, the City may make such excess capacity available on an equal access basis for community-based and private sector broadband networks. 170 Resolution 4658, Broadband Infrastructure Page 2 of 2 2. When the City installs broadband infrastructure the City may lease or license such infrastructure for the benefit of the community. Leasing or licensing of broadband infrastructure will further the public interest by reducing the cost of deployment of broadband networks, and creating an incentive for broadband providers to invest in network upgrades within the City. 3. Access to the City’s broadband infrastructure must be granted by a lease or license agreement developed by the City which shall govern the terms of the use and fixes the compensation to be paid to the City. 4. The City may encourage through specific lease or license terms the development of open-access broadband networks. 5. Nothing herein is intended to limit the private deployment of broadband infrastructure. 6. Proceeds from leasing and licensing may be used to maintain, upgrade, and expand such City-owned broadband infrastructure. 7. The City Manager may implement this policy through requests for proposals or bids for leasing or licensing of broadband infrastructure. PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 11th day of January, 2016. ___________________________________ CARSON TAYLOR Mayor ATTEST: ________________________________________ STACY ULMEN, CMC City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 171 December 28, 2015 City-Owned Conduit Management Uses of City Conduit The seven way conduit being installed in the TIF districts (see photo to the right) provides the City with substantial versatility in terms of use. The multi-conduit design will easily allow allocating several tubes for City use while leaving the remainder of the tubes for use by third parties (e.g. Bozeman Fiber, other service providers, companies with heavy dedi- cated bandwidth requirement like Oracle, etc.). City uses could include: •Dedicated ﬁber between City buildings and facilities to reduce or eliminate the use of leased lines. •Redundant ﬁber routes between City buildings and facilities to improve City IT services availability (e.g. a ﬁber cut would not cause loss of access to Internet and in- ternal City IT services (e.g. billing, maintenance information, etc.). •Wider deployment of security cameras in public areas for access by the Police De- partment. •Smart lighting control of street lights to reduce power use. •Traffic control to reduce wait times in high congestion areas of the city (and reduce carbon footprint due to extended idling in heavy traffic). Maintenance Responsibilities Conduit and the associated handholes (used for access) have relatively low maintenance; there are no active components (i.e. no network electronics, no electric power). There are no routine physical maintenance tasks, and un- scheduled maintenance (break-ﬁx) is typically damage caused by a third party. Break-ﬁx maintenance could be handled by a qualiﬁed private sector contractor who works on a per incident fee plus time and materials. Once ﬁber cable is in the conduit and handholes, any damage to conduit will likely also include ﬁber cable damage. For third party damages, any City costs in- curred for repairs would be reimbursed by the third party--contractors work- ing in the right of way where damage is most likely to occur have to carry insurance. The City will have to keep track of what conduit tubes have been leased, what sections of conduit/tubes are in use, by whom, and the duration of the lease. This can be done in the City GIS system, could be managed using spreadsheets, and there are also commercial GIS-based products and ArcGIS add-ons speciﬁcally designed to manage conduit and ﬁber assets. The City could also outsource the asset management to a qualiﬁed third party. It should be noted that is not a time-intensive task; data entry of new leased assets is performed once and rarely has to be updated or changed. we build networks that perform DESIGN NINE design nine, inc. ·• 2000 kraft drive, suite 2180 ·• blacksburg, va 24060 ·• 540.951.4400 ·• info@designnine.com ·• www.designnine.com 172 Locates will be the most common task associated with the conduit. When construction is scheduled in some portion of the right of way, the construction ﬁrm will enter a Miss Utility (Montana 811, OneCall) ticket, and all registered users of the right of way will be notiﬁed. The City would then be required to locate (mark) its conduit infrastructure in the construction area of the right of way. The City could take on the task of performing locates. Locating devices can be purchased for as little as $400 and more sophisticated devices can cost $3,000 to $4,000. A can of orange paint to actually mark the routes costs about $6. Only a couple of hours of training would be needed to train a City employee to perform locates. Alternately, there are private sector ﬁrms that perform locates on an as-needed basis, typically for $50 to $100 per locate. Locate costs can vary widely depending on what kind of construction is scheduled. A complete re-build of an intersection might trigger numerous locates over the period of construction. Other conduit routes might not have a locate request for years at a time. Pricing and Billing Lease fees are typically based on the amount of conduit leased (per foot) and is usually calculated on an annual basis. So in a place like Bozeman, with per foot charges ranging from around ﬁfty cents/foot/year to a dollar or two per foot per year, if a third party has leased 3,000 feet of conduit/tube, there would be a single invoice issued once per year for 3,000 * $0.50 = $1,500. Unlike many other types of municipal infrastructure, conduit, priced correctly, can generate revenue for the City for decades. Amenities like sidewalks, parks, playgrounds, greenways, and bike racks generate no direct revenue but are still regarded as worthwhile community investments. Fees for conduit should take into account the original construction cost, the number of rentable conduits/tubes avail- able, the amortization period (e.g. thirty years), and the market conditions in Bozeman. If the lease fees are set too high, there may be no lease requests submitted, and the City will earn no revenue directly and may not garner the indirect economic development beneﬁt of having leasable broadband infrastructure assets. Potential lessees of the conduit/tubes will evaluate the City price structure by comparing those fees to what they would pay to construct their own conduit. They will consider the long term (e.g. 20 year) cost of leasing with the amortized 20 year cost of build- ing their own and thereby avoiding all lease payments. So the lease cost should not be set based strictly on a straight line ROI with the intention of recovering all City costs within ten or twenty years. The economic development value of being able to attract additional competitive service providers and/or large bandwidth users (e.g. a data center, an Oracle management facility) should also be considered. With the multi-tube conduit, if the City, as an example, decides to make four tubes available for private sector/third party use, then at the ﬁfty cents/per foot/year rate, the total per foot revenue potential is actually $2/foot/year. Marketing It will be important for the City to promote the availability of this conduit, both to ensure that service providers are aware there may be less expensive alternatives than tearing up City streets and building there own and as part of broader economic development strategy to attract and retain high tech businesses. we build networks that perform DESIGN NINE design nine, inc. ·• 2000 kraft drive, suite 2180 ·• blacksburg, va 24060 ·• 540.951.4400 ·• info@designnine.com ·• www.designnine.com 173