HomeMy WebLinkAbout01.04.2001COUNCIL WORK SESSION
January 4, 2001
9:15 a.m.
Council Chambers
Members present: Mayor Rooff, Anders, Krizek, Gronen, Getty, Berry.
Members absent: Jordan, Murphy.
Moved by Getty, seconded by Gronen that the Agenda, as proposed, be approved. Ayes: Five.
Absent: Jordan, Murphy. Motion carried.
Members of the Telecommunications Task Force presented an overview of the Fiber Optic
Backbone Network. Dan Mills, Project Manager with SFT, Inc., and Chairperson Gary
Chambers reviewed the network with the council.
Mr. Chambers reported that in April 2000 Mayor Rooff requested the Chamber of Commerce's
assistance in exploring the possibility of a city -owned fiber optic network. In May 2000 Mayor
Rooff met with Irshad Ansari of SFT to assist in evaluation of a network. Mayor Rooff formed
the Telecommunications Task Force in May 2000 and the first meeting was held in June 2000.
In May 2000 a market survey was sent out to over 1,400 businesses and 17.7 percent responded
favorably. A project plan was developed and finalized in October 2000 by SFT, Inc. and
approved by the Telecommunications Task Force in November 2000.
Project implementation began in December 2000 with the following objectives: Make advanced
telecommunications services available to Waterloo businesses; enhance the city's competitiveness;
attract and retain high-tech industries; encourage competitive market conditions; retain a greater
portion of telecommunications revenues in the local economy; and manage Waterloo's
telecommunications future.
Benefits include: help economic development efforts; expand city operations; increase operational
efficiencies; extend educational services; significantly enhance the overall quality of life for all
residents; provide new job opportunities; and improve quality, lower costs, expand product
offerings.
The project elements include: conceptual network design, economic evaluation, Request for
Qualifications, partner/provider selection and negotiations, capacity lease agreements, approval
and implementation.
The conceptual fiber backbone design includes: 38 miles of fiber; three loops covering the city;
six radial extension in key industrial areas; 144 fibers in backbone; potential tie-in capabilities to
AT&T, MCI, McLeod and CFU; supporting city, government, industrial and commercial
segments; and expansion capabilities for residential services.
The economic evaluation includes: a 15 year project life; network equipment, labor and design
costs estimated from the conceptual design; annual operating costs estimated; financing and debt
service projections; revenue requirements identified; capacity lease costs estimated; and project
cash -flow projected.
The total estimated cost for the project is $3.3 million, which will be financed with revenue bonds.
There is a $610,000 average annual revenue required for positive cash flow. The revenues will be
generated through capacity lease agreements with private telecommunications providers. No city
or tax generated funds will be required.
Requests for Qualifications (RFQs) will be mailed out on January 9, 2001, and all responses must
be received by the city by February 16, 2001. A project review meeting will be held on January
23, 2001. Outside firms will be requested to submit proposals to lease capacity on the network.
All responses will be reviewed by the Telecommunications Task Force. Selected firms will be
requested to provide a presentation, and all selected firms will be pre -qualified for the project.
Council Work Session
January 4, 2001
Page 2
Negotiations with the selected/pre-qualified firms will include: final network design elements;
fiber allocations; revenue guarantees to the city; implementation timelines; payment terms;
ownership structure; operational support; and contract terms.
A public referendum will be held which will allow the city to move forward with a revenue bond
issue, the network design and construction, execution of the lease agreements and operational
implementation. All contract terms will be finalized prior to city council and voter approval.
Contracts will be executed after passage of the referendum.
SFT, Inc. has completed a market study, the Executive Project Summary, Conceptual Design,
Economic Development and the RFQ development. The RFQs will be reviewed on February 20,
2001, with a firm selected by March 7, 2001. Council approval is expected in May with a public
referendum to be held on June 15, 2000.
Mr. Mills stated that the city is positioning itself in the proper way. If fiber is not in place, there is
no incentive for a company to pay for the fiber backbone. There are several scenarios that could
happen: The city could retain ownership and lease to other companies or a company may want to
build and own the entire project and reserve certain fibers, or the city could own the fibers and
lease the backbone and generate revenue. Mr. Mills stated that the fiber backbone will address
the concerns of businesses and hopefully a firm will be interested in providing cable to residents
and include other applications such as Internet, telephony services, etc.
Councilperson Anders asked how we will get the citizens to support the referendum. Mr.
Chambers stated that we could point out what happened in Cedar Falls, that the cost to hook onto
the Internet is cheaper in Cedar Falls because of the competition. Mayor Rooff stated that we will
have to point out that competition will lower costs, the potential of revenues and expansion of the
tax base.
With no further business before the council, it was moved by Berry, seconded by Anders that the
meeting be adjourned at 10:00 a.m. Ayes: Five. Absent: Jordan, Murphy. Motion carried.
Nancy Eckert
City Clerk