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HomeMy WebLinkAbout04.09.2001 (2)• • COUNCIL WORK SESSION April 9, 2001 4:30 p.m. Council Chambers Members present: Mayor Roof , Anders, Jordan, Krizek, Murphy, Gronen, Getty, Berry. Moved by Getty, seconded by Jordan that the Agenda, as proposed, be approved. Ayes: Seven. Motion carried. Dan Mills, Consultant with SFT, Inc. and Project Manager for the Telecommunications Project for the City of Waterloo, stated that the Telecommunications Task Force Committee is recommending that the council accept the proposal from Cedar Falls Utilities (CFU) and to prequalify CFU as a partner for the project and proceed with contract negotiations. Gary Chambers, Chairperson of the Telecommunications Task Force, reported that the Telecommunications Task Force Committee was formed in cooperation with the Chamber of Commerce and the City of Waterloo. The Task Force mailed out a survey to 1,100 businesses and received an 18 percent positive response from businesses wanting Internet access. Mr. Chambers stated that the Task Force was formed to look at business connections for high speed data access. Mr. Chambers reported that the Task Force mailed out Request for Qualifications (RFQ) to over 40 businesses and received a proposal from two companies, Cedar Falls Utilities and Cedar Valley Broadband (VGM & Associates & Vectron Communications Services). Each company made a presentation to the Task Force, and then the Task Force met to discuss the proposals and presentations. After significant discussion and consideration, the Task Force unanimously chose to accept CFUs proposal. Mr. Chambers reported that the Task Force is looking at the following timeline: complete negotiations with CFU by May 15, council approval of the contract on May 21, hold a public referendum on June 26 and start implementation of the project by August I, 2001. Mr. Chambers stated that the Task Force prepared a conceptual design of the backbone, but the final project could be different depending on negotiations with CFU. Dave Martin, with CFU, stated that the Telecommunications Task Force put together a RFQ, and CFU took the time to answer questions in a direct manner. Rick Giarusso, Manager of Business Development at CFU, stated that to proceed the City of Waterloo and CFU would have to approve a 28E Agreement organization to operate the network and provide maintenance of the network. In addition to the annual lease payment of $330,000, the City and CFU would share revenue. Mr. Giarusso reported that high speed Internet for businesses near the backbone is the immediate plan, and then CFU would offer Telecommunications Management to business customers. CFU would operate and maintain the city's network. Mr. Giarusso reported that CFUs long-term plan is to extend high speed Internet to all areas in the city and competitive cable and telephone services. Mr. Giarusso reviewed the following benefits to the city: CFU offers competitive rates, CFU has a good reputation of customer service, this project will focus on Cedar Valley business development, CFU is developing and promoting advanced business services, and CFU is an experienced team. Mr. Giarusso reviewed the following benefits to customers: quality, excellent service, reliable performance, competitive prices, choice of providers, community based, locally -controlled, and stability. Mr. Giarusso reported that CFU has the following vision: Integrated Services package to customers, voice, video and data service to commercial and residential customers, customer benefits from competition. Mr. Giarusso stated this would benefit the entire Cedar Valley economy. Council Work Session April 9, 2001 Page 2 Mr. Giarusso stated that the first step is installing the fiber backbone, then hooking businesses to high speed data transmission. Mr. Giarusso stated that CFU is interested in providing services to the residents, but CFU cannot invest capital dollars in Waterloo to do the build out. Mr. Giarusso stated that other entities are willing to provide the capital. Mr. Giarusso reported that CFU did the entire build out in Cedar Falls five years ago at a cost of $9 million. He reported that the Waterloo would need to establish a Municipal Communications Utility which he believes would need minimal staff. Councilperson Anders asked if this type of proposal has been done before, and Mr. Giarusso responded that this is new ground for CFU although they have worked with other communities. Mayor Rooff stated that CFU already has customers in Waterloo and asked if CFU was talking about new and existing customers. Mr. Giarusso responded that this would be up for negotiations, but that CFU does have capital invested to serve those customers. Councilperson Anders asked when the fiber backbone is constructed how close does a business have to be before they have to pay additional costs, and Mr. Giarusso responded it would depend on the location of the business to the backbone. Mayor Rooff stated that he was under the impression the business community would pay for the project. Mr. Chambers responded that the survey asked what businesses were paying today, and if businesses could justify the cost. Mr. Chambers stated that the Task Force proposes the city authorize them to enter into negotiations with CFU and the negotiations would include what part would be funded by the city and what part would be funded by the businesses. Mr. Chambers stated that the plan includes 144 fibers, CFU is requesting only 48 fibers of the 144 fibers, and the other fibers could be leased out to other businesses in town. Mr. Mills stated that the Task Force will negotiate with CFU and come back to council with costs for payback to come from lease revenues. Mr. Mills commented that there should not be any cost to the taxpayers. Mr. Mills stated that the total cost for the backbone is $3.5 million, with $660,000 required annually for operation and debt service. CFUs proposal guarantees an annual revenue of $330,000. Mr. Mills stated that the negotiations will look at this and take into account the number of fibers CFU already has in the city. Mr. Mills stated that the goal is to limit the city's financial exposure and bring in broadband services to the city. Mr. Mills stated that the Task Force will bring back a contract that will meet city council approval and referendum approval. Councilperson Krizek stated that CFUs proposals would deduct maintenance and operation costs from the annual lease payment, and she asked if this proposal would generate enough revenue. Mr. Mills responded that is what the Task Force will negotiate with CFU, and that the original proposed $3.5 million cost included the cost for the city to operate and maintain the backbone. Mr. Giarusso stated that CFUs proposal is based on 200 customers. Mr. Mills noted that the Task Force's survey heard from 198 businesses. Councilperson Jordan stated that he was not comfortable with this and does not feel he has enough information. Councilperson Murphy stated that he has a problem with this, that maybe one could be cheaper than the other. Councilperson Murphy stated he is concerned saying CFU is better when we won't know until we get a price. Mr. Mills stated that the city received two good strong proposals. The committee's task was to go forward with only one company, and they chose CFU because they gave more flexibility during the negotiation process and the Vectron proposal was more rigid. Mr. Mills stated that both proposals were about 50 percent short of the required $660,000 annual revenue, but CFU was willing to negotiate. Mr. Mills stated that we cannot negotiate with both companies. Councilperson Anders questioned how much the city has paid for a consultant. City Clerk Nancy Eckert responded that in November 2000 the council approved an agreement with SFT, Inc. to be the consultant on the project at a cost of about $48,000. Ms. Eckert stated she was unsure of the • • Council Work Session April 9, 2001 Page 3 amount paid to the consultant four years ago. Mr. Mills commented that his role as the consultant was to assist the committee in the selection process. Mr. Chambers stated that Mr. Mills was the facilitator, and that the Task Force as a committee put together the RFQ. Mr. Chambers stated each member studied the two proposals for about three weeks, and after much discussion voted unanimously to go with CFU. John Friel, President of the Forbin Project, Inc./Forbin Group, stated that he has concerns that CFtJ is strictly looking at business customers. Mr. Friel stated that when they looked at the goals of the Task Force they included residential customers. Mr. Friel stated that CFUs proposal does not address the resident of Waterloo, and that the VGM/VCI - Cedar Valley Broadband includes a full build out in Waterloo. Mr. Friel stated that CFUs proposal does not address voice. Mr. Friel distributed a comparison of services offered by the two companies. Councilperson Berry commented why have a committee and consultant if we do not listen to their recommendations. Councilperson Berry stated she relies on the experts. Councilperson Anders stated that the city already has an investment with the consultant. With no further business before the council, it was moved by Getty, seconded by Anders that the meeting be adjourned at 5:27 p.m. Ayes: Seven. Motion carried. Nancy Eckert City Clerk