HomeMy WebLinkAboutStaff Report 336-08Ci ager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER
AUGUST 4, 2008
DEPARTMENT: ADMINISTRATIVE
SERVICES
CMR: 336:08
ADOPTION OF BUDGET AMENDMENT ORDINANCE FOR FISCAL
YEAR 2008-09 TO PROVIDE AN ADDITIONAL FIBER OPTICS FUND
APPROPRIATION OF $300,000 FOR LEGAL AND TECHNICAL
CONSULTANTS TO SUPPORT THE ULTRA-HIGH-SPEED
BROADBAND SYSTEM NEGOTIATIONS;AUTHORIZATION TO
CONTRACT FOR LEGAL SERVICES WITH THE LAW FIRM OF
DAVIS WRIGHT TREMAINE LLP IN THE AMOUNT OF $100,000 AND
AUTHORIZATION TO CONTRACT WITH THE LAW FIRM OF
SPIEGEL & MCDIARMID, LLP IN THE AMOUNT OF $50,000
RECOMMENDATION
Staff recommends that the Council:
1) Adopt the attached Budget Amendment Ordinance ("BAO") for Fiscal Year 2008-09 in the
amount of $300,000 to provide an additional Fiber Optics Fund appropriation for legal and
telecommunications consultants to support the Ultra-High-Speed Broadband System
negotiations.
2) Authorize entering into a contract for legal services with the law firm of Spiegel &
McDiarmid, LLP in an amount not to exceed $50,000 for services related to Fiber to the
Premises negotiations. ,
3) Authorize entering into a contract for legal services with the law firm of Davis Wright
Tremaine LLP in an amount not to exceed $100,000 for services related to Fiber to the
Premises negotiations.
BACKGROUND
On July 14, 2008, staff presented the 180 Consortium’s conceptual business plan for a fiber to
the premises network in Palo Alto to the City Council. Based on its business model, the 180
Consortium concluded that there is a sound business case for building an Ultra-High-Speed
Broadband System in the City. The Council directed staff to expedite negotiations with the 180
Consortium by entering into a Letter of Intent ("LOI") by September 2008 that would lead to the
execution of app~?opriate contracts, and thereby enable the timely construction and operation of a
citywide, open-access fiber to the premises network as envisioned in the City’s RFP. The
CMR:336:08 Page 1 of 4
Council also directed staff to return on August 4, 2008 with a request for funds necessary to
provide the legal and technical expertise needed for expedited negotiations.
DISCUSSION
In accordance with Council direction, staff will negotiate the key terms and conditions of one or
more contracts that will be embodied in a LOI with the 180 Consortium by September 2008.
Following the Council’s approval of the LOI, it is anticipated that the parties would negotiate
and execute final agreements by October 2008. Staff is proposing that Council approve a BAO
in the amount of $300,000 to provide for the legal and technical telecommunications expertise
necessary to negotiate the LOI and final contracts in an expedited manner.
Staff intends to retain experienced telecommunications legal counsel Tim Lay with the law firm
of Spiegel & McDiarmid (in an amount not to exceed $50,000), and Suzanne Toller, with the law
firm of Davis Wright Tremaine LLP (in an amount not to exceed $100,000), to support contract
negotiations with the 180 Consortium.
Tim Lay is a law partner with Washington, DC-based Spiegel & McDiarmid. He specializes in
representing local governments across the nation in telecommunications, cable television,
franchising, municipal broadband, rights-of-way, tax, property, antitrust and constitutional law
and other federal law matters. He presently represents the Kentucky Municipal Utilities
Association on municipal broadband matters. Mr. Lay graduated from the University of
Tennessee with highest honors; after he graduated magna cum laude from the University of
Michigan Law School, he clerked for the Hon. John Godbold, Chief Judge of the U.S. Court of
Appeals for the Fifth Circuit. ~
Suzanne Toller is a law partner with San. Francisco-based Davis Wright Tremaine LLP and is
also the chair of the firm’s Telecommunications Practice group. She represents communications
clients before the Federal Communications Commission and state Public Utility Commissions on
a broad range of regulatory and legal matters, and develops public policy positions and
legislative strategy on telecommunications issues. She also represents clients in local permitting
actions, transactional matters and in civil litigation, including wireless cell site construction and
breach of contract matters. Ms. Toller graduated from the University of California, San Diego
and the Harvard Law School. Ms. Toller’s regular rate is $470 per hour. We were able to
negotiate a discounted rate (less 8%) of $432 per hour.
In addition, staff will utilize Columbia Telecommunications Corporation (CTC), a
telecommunications engineering firm based in Kensington, Maryland (in the amount of
approximately $25,000). CTC has extensive experience assisting public sector clients
nationwide with community broadband networking, including assessing broadband technical
requirements, network planning and deployment. In the past, CTC has provided technical
consulting services to the City on the development and construction of the Joint Powers’
Institutional Network and the Comcast cable system upgrade.
Staff also will hire a consultant to undertake a Fiber Optics Fund Rate Study for the purpose of
establishing a new bulk fiber rate (in the amount of approximately $25,000) and potentially a
consultant to expedite the work needed for compliance with the requirements of the California
CMR:336:08 Page 2 of 4
Environmental Quality Act (in the amount of approximately $25,000). The remaining funds of
$75,000 will enable staff to obtain additional consulting assistance on an "as-needed" basis to
facilitate expedited LOI and contract negotiations. This level of budgetary authorization
available will avoid delays should staff find additional consulting resources are needed to fast-
track negotiations.
RESOURCE IMPACT
A BAO is necessary to transfer $300,000 from the Fiber Optics Fund Rate Stabilization Reserve
to the Fiber Optics Fund operating budget. The BAO will reduce the Fiber Optics Fund Rate
Stabilization Reserve from $ 3.098 million to $ 2.798 million.
The negotiation of the LOI and final agreements will also require the continued devotion of
significant staff time from the City Attorney’s Office, the Administrative Services Department,
and the Utilities Department and, to a lesser extent time-wise, the Public Works Department and
the Planning and Community Environment Department. Staff plans to return to Council at mid-
year with a BAO to transfer this salary and benefit cost from the General Fund and the Electric
Fund to the Fiber Optics Fund.
POLICY IMPLICATIONS
This report is consistent with Council directior~.
EVIRONMENTAL IMPACT
The actions covered by this report do not require review under the California Environmental
Quality Act.
ATTACHMENT
Attachment A: BAO
CMR:336:08 Page 3 of 4
PREPARED BY:
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
\,~,~ ~.~ L~_.~,~.’,~
JOSEPH S~)~CCIO
Dep~y Director, Administrative Services
~st~ervices
Interim Deputy City Manager
CMR:336:08 Page 4 of 4
ORDINANCE NO.
ATTACHMENT A
ORDINANCE OF TH~ COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR FISCAL YEAR 2008-09 TO PROVIDE
ADDITIONAL FIBER OPTICS FUND APPROPRIATION OF $300,000
FOR LEGAL AND TECHNICAL CONSULTANTS TO SUPPORT THE
ULTRA-HIGH-SPEED BROADBAND SYSTEM NEGOTIATIONS.
The Council of the City of Palo Alto does ordain as follows:
SECTION I. The Council of the City of Palo Alto finds
and determines as follows:
A. Pursuant to the provisions of Section 12 of Article III of
the Charter of the City of Palo Alto, the Council on June 09, 2008
did adopt a budget for fiscal year 2008-09; and
B. Staff presented to the City Council on July 14, 2008, the
180 Consortium’s conceptual business plan for a fiber to the
premise network in Palo Alto; and
C. Council has directed staff to expedite negotiations with
the 180 consortium by entering into a Letter of Intent (LOI) by
September 2008;
D. Specialized Broadband system legal and technical expertise
is needed to assist with the Letter of Intent (LOI) negotiations
and completion of the final contracts in an expedited manner; and
E. The adopted budget for fiscal year 2008-09 did not
incorporate expenses related to the Ultra-High-Speed Broadband
System; and
F. City Council authorization is needed to amend the 2008-09
budget to make additional appropriations of $150,000 for legal
expense; $25,000 for telecommunication engineering consultants;
$25,000 for a Fiber Optics Rate Study; $25,000 for a consultant to
expedite a California Environmental Quality Act (CEQA) study; and
$75,000 for additional consulting services to expedite contract
negotiations.
SECTION 2. The sum of One Hundred Fifty Thousand Dollars
($150,000) is hereby appropriated to lega! expense in the Fiber
Optics Administration Functional Area in the Fiber Optics Fund.
SECTION 3. The sum of Twenty-Five Thousand Dollars ($25,000)
is hereby appropriated to rate study expense in the Fiber Optics
Administration Functional Area in the Fiber Optics Fund.
SECTION 4. The sum of One Hundred Twenty-Five Thousand Dollars
($125,000) is hereby appropriated to other contract services
expense in the Fiber Optics Administration Functional Area in the
Fiber Optics Fund.
SECTION 5. The Fiber Optics Fund Rate Stabilization Reserve is
hereby reduced by Three Hundred Thousand Dollars ($300,000) to Two
Million Seven Hundred Ninety-Eight Thousand Dollars ($2,798,000).
SECTION 12. As specified in Section 2.28.080(a) of the Palo
Alto Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
SECTION 13. As provided in Section 2.04.330 of the Palo Alto
Municipa! Code, this ordinance shall become effective upon
adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
~BSENT:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney Director of Utilities
Department
Director of Administrative
Services