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HomeMy WebLinkAboutStaff Report 2408-3377CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, December 16, 2024 Council Chambers & Hybrid 5:30 PM     Agenda Item     16.Approval of Contract C24191871 Amendment Number 1 Effective July 1, 2024 with Equinix, LLC in the Amount of $1,246,793 to Extend the Term for an Additional 2 Years Through June 30, 2029 for Fiber Licensing Agreement (Attachment A); and Authorization to Increase Contingency Amount by $75,000 for a Total Not to Exceed Amount of $1,954,923; CEQA Status – Not a Project City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: December 16, 2024 Report #:2408-3377 TITLE Approval of Contract C24191871 Amendment Number 1 Effective July 1, 2024 with Equinix, LLC in the Amount of $1,246,793 to Extend the Term for an Additional 2 Years Through June 30, 2029 for Fiber Licensing Agreement (Attachment A); and Authorization to Increase Contingency Amount by $75,000 for a Total Not to Exceed Amount of $1,954,923; CEQA Status – Not a Project RECOMMENDATION Staff recommends that City Council: 1. Approve and authorize the City Manager or their designee to execute amendment number 1 to contract C24191871 effective July 1, 2024 with Equinix, LLC to extend the lease of fiber optic access and termination services at the Palo Alto Internet Exchange (PAIX) for an additional two years through June 2029 for a total not-to-exceed amount of $1,246,793, broken down as follows: a. $396,135 to lease a fiber optic cage to support Fiber-to-the-Premises for an additional two years from July 1, 2027 through June 30, 2029; b. $850,658 to lease a fiber optic cage to support the City’s dark fiber licensing program for five years from July 1, 2024 through June 30, 2029; and 2. Authorize the City Manager or their designee to approve and execute any amendments to the agreement for additional services that may develop during the license period for a total not-to-exceed amount of $181,900 for FTTP ($109,900) and the City’s dark fiber licensing program ($75,000). BACKGROUND The City of Palo Alto established a Fiber Optic Utility in 1996 following the design and construction of a dark fiber optic backbone system throughout the city. Operated by the City of Palo Alto Utilities Department (CPAU), the Fiber Optic Utility licenses backbone connections to local businesses and telecommunications resellers requiring access to advanced broadband telecommunications service. There is a highly competitive Palo Alto commercial fiber optic marketplace served by multiple telecommunication companies and Internet Service Providers (ISPs). Many of these entities control independently owned overhead and/or underground fiber optic systems. These systems are also accessed by third-party ISP-service resellers using leased capacity on the fiber optic networks. Those CPAU fiber optic licensees wishing access to the internet outside of Palo Alto must have their CPAU fiber optic service connected to the data center (SV8) currently owned by Equinix LLC and located in Palo Alto. This neutral data center, designated as Equinix SV8, is independent of any one ISP or telecommunications carrier affiliation, and serves as an internet exchange point (IXP) providing the physical infrastructure through which over 70 ISPs and content delivery networks (CDNs) exchange internet traffic between their networks. Originally constructed by the Digital Equipment Corporation in 1996 as one of the first IXPs in the world, it was (and still locally) called the “Palo Alto Internet eXchange (PAIX).” The City has been leasing fiber optic access and termination services at PAIX since the inception of the fiber network. For CPAU dark fiber optic licensees to access the telecommunications services provided by commercial fiber optic vendors or ISPs of their choice, the licensee, or their third-party provider, must install privately-owned electronic equipment to “light” their leased dark fiber optic cable for on-site data use, building-to-building (campus) communications, or to access internet service outside of Palo Alto. The City Council provided direction to staff to proceed with Phase 1 of the fiber to the premises (FTTP) expansion project on December 19, 2022 (Staff Report 148001). In Phase 1, FTTP would be built out in selected areas of the city and expand gradually. On November 7, 2023 , staff presented an update on plans related to advancing a FTTP pilot program and construction alignment with Electric Grid Modernization to the Council’s Finance Committee. Upgrading overhead lines in 90% of Palo Alto neighborhoods through electric grid modernization and piloting the build out of Palo Alto Fiber to the home supports a reliable, sustainable and connected community. ANALYSIS Equinix provides fiber leasing and telecom cages that support the City’s dark fiber optic licensing program and the Fiber-to-the-Premises (FTTP) project. Previously, the City had two separate contracts with Equinix for each program. The original lease agreement for dark fiber licensing was established in 1996 when the City built the dark fiber backbone. On November 27, 2023, Council approved a new license agreement with Equinix to secure a dedicated space for the infrastructure required to operate FTTP (Staff Report 2310-21292). This Amendment extends the FTTP project contract by an additional 2 years, making it a total of 5 years, and consolidates the separate dark fiber lease program under a single contract with the same term. 1 Staff Report 14800https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82067 2 Staff Report 2310-2129 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82590 For the dark fiber licensing program, the City leases four “cabinets” (vertical racks sited next to each other, each capable of holding multiple termination/switching boxes in stacked configurations). The Equinix fiber licensing agreement includes contingency funds of $75,000 for potential Service Orders that might be required for expanded CPAU fiber optic ductwork (“innerducts”) and cable configuration changes within PAIX during the term of the contract. This contract will also fund the lease cost for one additional cabinet which will increase CPAU’s fiber optic termination and switching capacity within PAIX by 20 percent. This additional capacity will provide sufficient PAIX resources for all projected CPAU customer growth scenarios within the term of the proposed contract. For FTTP, a data center is required to provide internet services. Equinix is the best option to serve as the Data Center and is designated as one of two fiber huts or aggregation point which can serve up to 15,000 customers. A private cage will provide a secure space for the infrastructure required to operate the fiber and internet service provider (ISP) for FTTP. In addition, staff recommends contingency funding of $109,900 for additional services such as additional power, cross connects to peer with other ISP’s and fiber cables. This capacity is recommended to ensure flexibility as the City begins Phase 1 of the FTTP build out and any unforeseen issues in this new line of service. Benefits of a private cage with racks vs racks in an open or shared share: •Scalability - Dedicated space to support the infrastructure for FTTP and new backbone. •Privacy/Security – Only people that are approved by the City will be allowed access. •Reliability – Reduced likelihood of damage to infrastructure by third parties. •Efficiency – Full control of cross connects and cable management between racks. This agreement is exempt from the City’s solicitation requirements under the “sole source” exception in PAMC Section 2.30.360 (d): Because of its geographical location, PAIX is the only economically and physically viable co-location internet facility or data center available to CPAU and its fiber optic licensees. The nearest alternative IXP data center site is in the City of Santa Clara. Connection to the Santa Clara site from Palo Alto would require miles of multiple underground conduits through several municipal jurisdictions. Such construction would be prohibitively expensive, be significantly less secure than the current Palo Alto location (greater risk due to construction and contractor dig-ins in other jurisdictions, requiring Palo Alto to contract with remotely-sited, third-party repair fiber repair companies), and limit fiber optic utility connectivity to customer sites back in Palo Alto. FISCAL/RESOURCE IMPACT Funding for revision number 1 of this agreement is included in the FY 2025 Adopted Fiber Optic Fund budget. Subsequent years are subject to the annual budget process and appropriation of funds. If the pilot is successful and the FTTP project continues, this will become an ongoing cost with funding in subsequent years subject to Council’s approval of each fiscal year’s budget appropriation. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Account Name : CITY OF PALO ALTO Account Number : 110002 Currency : USD PREPARED BY:PREPARED FOR: Order Number : 1-240725154517 Order Valid Until : 13-Feb-2025 Reza Fazlollahi Anthony Enerio Version #: 5 rfazlollahi@equinix.com anthony.enerio@cityofpaloalto.or g Agreement #: 00036759.0 Initial Term (Months): 60 Renewal Period (Months): 12 Non-renewal notice (Days): 90 IBX: SV8 Address: 529 Bryant Street, Palo Alto, CA, 94301, United States Section C: Product/Element Changes Qty UoM Action Serial #Total Charges NRC Current Price MRC Amended Price MRC Effective DateProduct Code Product Description SPC00005 Secure Cabinet With Circuit Based Power 1 Each Update 1_1514349 0.00 7,152.16 7,152.16 01-Jan-2025 CAG00001 Cage - 5 Cabinets - 1 kVA - PEC Cap- 11.52 PEC 11.52 PEC Update 8B055-10678681 -0.00 0.00 01-Jan-2025 SPC00002 Private Cage With kVA Based Power 1 Each Update 4-230473911175 0.00 13,248.00 13,910.40 01-Jan-2025 POW00001 AC Power 14.4 kVA Update 4-230473911189 -6,624.00 6,955.20 01-Jan-2025 CAG00001 Cage - 6 Cabinets - 14.4 kVA - Liquid Cooling - No 14.4 kVA Update 082025-22661481 -6,624.00 6,955.20 01-Jan-2025 ECX00001 Equinix Fabric Metro Port 1 Each Update 4-194785470989 0.00 115.76 121.55 01-Jan-2025 CC00001 Cross Connect 1 Each Update 4-205898365286 0.00 425.43 425.43 01-Jan-2025 ECX00015 Equinix Fabric Virtual Connection Product 1 Each Update 22252695 0.00 231.53 243.11 01-Jan-2025 ECX00015 Equinix Fabric Virtual Connection - SV - SV - 1 Gbps - AWS Direct Connect - High Capacity 1 Each Update 4-195545328567 -231.53 243.11 01-Jan-2025 Section Total 0.00 21,172.88 21,852.64 IBX: SV8 Address: 529 Bryant Street, Palo Alto, CA, 94301, United States Section D: Continuing Services Qty UoM Serial # Unit Pricing Total Charges Effective DateProduct Code Product Description NRC MRC NRC MRC EXT00006 Innerduct 1 Each 22903912 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167789 ----01-Jan-2025 EXT00006 Innerduct 1 Each 22903918 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167806 ----01-Jan-2025 CC00001 Cross Connect 1 Each 1_1531336843 --0.00 0.00 01-Jan-2025 CC00001 Network Cable Connection - Single-Mode Fiber - Z-side IBX- SV8 1 Each M13324101 ---0.00 01-Jan-2025 CC00001 Cross Connect 1 Each 1_1531345602 --0.00 0.00 01-Jan-2025 CC00001 Network Cable Connection - Single-Mode Fiber - Z-side IBX- SV8 1 Each M14057067 ---0.00 01-Jan-2025 EXT00006 Innerduct 1 Each 22903895 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167805 ----01-Jan-2025 i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 1 of 6 IBX: SV8 Address: 529 Bryant Street, Palo Alto, CA, 94301, United States Section D: Continuing Services Qty UoM Serial # Unit Pricing Total Charges Effective DateProduct Code Product Description NRC MRC NRC MRC EXT00006 Innerduct 1 Each 14689530.--0.00 1,628.91 01-Jan-2025 EXT00002 Innerduct Element 1 Each 14689530 ---0.00 01-Jan-2025 EXT00006 Innerduct 1 Each 14689531.--0.00 1,628.91 01-Jan-2025 EXT00002 Innerduct Element 1 Each 14689531 ---0.00 01-Jan-2025 EXT00006 Innerduct 1 Each 22903921 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167708 ----01-Jan-2025 EXT00006 Innerduct 1 Each 22903886 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167705 ----01-Jan-2025 EXT00006 Innerduct 1 Each 22903925 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167728 ----01-Jan-2025 EXT00006 Innerduct 1 Each 22903931 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167742 ----01-Jan-2025 EXT00006 Innerduct 1 Each 14689529.--0.00 1,628.91 01-Jan-2025 EXT00002 Innerduct Element 1 Each 14689529 ---0.00 01-Jan-2025 EXT00006 Innerduct 1 Each 22903916 --0.00 0.00 01-Jan-2025 EXT00002 Innerduct Element 1 Each 167787 ----01-Jan-2025 PS00004 Configurable Accessories 1 Each 1_1511117304 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0705:122350 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each CP:0705:112870 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each CP:0705:112869 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 4-206690746756 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0708:1252596 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 1_1511117303 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0704:122349 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each CP:0704:137356 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 4-206690809836 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0708:1252595 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 4-206689457686 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0708:1252597 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 1_1511117305 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0707:112871 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each CP:0707:110503 --0.00 -01-Jan-2025 i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 2 of 6 IBX: SV8 Address: 529 Bryant Street, Palo Alto, CA, 94301, United States Section D: Continuing Services Qty UoM Serial # Unit Pricing Total Charges Effective DateProduct Code Product Description NRC MRC NRC MRC CC00001 Patch Panel 1 Each CP:0707:122351 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 1_1511117306 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each PP:0708:191979 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each PP:0708:191978 --0.00 -01-Jan-2025 CC00001 Patch Panel 1 Each PP:0708:191155 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 4-206688776746 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0708:1252594 --0.00 -01-Jan-2025 PS00004 Configurable Accessories 1 Each 4-206690490516 --0.00 0.00 01-Jan-2025 CC00001 Patch Panel 1 Each CP:0708:1252593 --0.00 -01-Jan-2025 Section Total -4,886.73 Section Total NRC MRC Section C:Product/Element Changes 0.00 21,852.64 Section D:Continuing Services 0.00 4,886.73 Grand Total Monthly recurring charge:$26,739.37 Non-recurring charge:$0.00 TERMS AND CONDITIONS 1. INTRODUCTION This Replacement Order is governed by and incorporated by reference into the applicable Master Country Agreement or other similar agreement between the Parties (ªAgreementº). Capitalized terms used but not defined in this Replacement Order shall have the meaning ascribed to them in the Agreement or shall refer to the values listed at the top of this Order. This order is intended to amend a previous version of Agreement 00036759.0. As of the effective date of this order, Agreement 00036759.0, Order Number 1-22894272368 Version 4 is hereby terminated and replaced with this Order. i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 3 of 6 This Replacement Order replaces and supersedes the Order(s) referenced below (including any Online or Phone Orders related to or incorporated by reference into such Order(s)) and will, as applicable, add those new Products detailed in Section A, terminate the Products detailed in Section B and amend the Products detailed in Section C as further detailed above from the Effective Date stated in the relevant Section. Unless otherwise stated by this Replacement Order, the Products in the Order(s) detailed in Section D remain(s) unchanged. 2. DEFINITIONS `Effective Date' as used in this Order shall be: - For Section A: Product Additions, the date stated above on which the addition to the Licensed Space and Services takes effect or, if no such date is stated above, then the date the Licensed Space is provided or the Services are delivered; - For Section B: Product Deletions, the date stated above on which the termination of the Licensed Space and Services takes effect; - For Section C: Product Changes, the date stated above on which the change to the Licensed Space and Services takes effect; or, if no such date is stated above, then the date the Licensed Space is provided or the Services are delivered of this Replacement Order. `Products' as used in this Order may also be referred to as Licensed Space and Services. PRODUCT TERMS Additional terms and conditions applicable to the Products listed above can be found at the following URL: http://www.equinix.com/resources/product-documents and are incorporated by reference into this Order. 3. INITIAL TERM & RENEWAL PERIOD The Initial Term will commence on the Effective Date and will remain in effect for the Initial Term. 4. POWER LIMITATIONS The maximum amount of electrical power that Customer may draw is stated above as Draw Cap or Qty/UoM in kVA or kW ("Draw Cap"). Customer may not draw more power than the Draw Cap. If Customer exceeds the Draw Cap, Equinix will notify Customer and Customer must reduce power draw to be equal to or less than the Draw Cap within 72 hours (or as otherwise agreed) or Equinix may, in its sole discretion, either charge Customer for the power overage at a maximum of twice the MRC/kVA rate for Licensed Space and power Services above, or suspend Customer©s power Services to return to Draw Cap compliance. i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 4 of 6 5. PRICE AND PRICE INCREASE Customer will pay the Fees for the Licensed Space and Services from the Effective Date. Notwithstanding anything in this Order to the contrary, all Fees for those Products in the Price Increase Terms may be subject to the Price Increase with effect from the date stated in the Price Increase Terms and every twelve (12) months thereafter, except where a change in Equinix's direct electrical supply costs exceeds the Price Increase value listed below then Equinix may change the Fees for power Services by such increased cost. Price Increase Terms First Price Increase Applicable After 12 months All Products Price Increase %5% Renewal Price Increase Terms All Products Price Increase %5% Equinix reserves its right to delay any Effective Date for the Licensed Space and Services under this Order unless Equinix receives a signed copy of this Order before the Effective Date stated above. Order Reference Updates IBX Product Family Order Reference #New Order Reference # SV8 Space & Power 1-217364579733,1-228942723689 1-240725154517 SV8 Interconnection 1-217364579733 1-240725154517 SV8 Services 1-240725154517 i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 5 of 6 CITY OF PALO ALTO Equinix LLC, on behalf of itself and its U.S. Affiliates Signature: Name: Title: Date: Billing Contact Name: Accounts Payable Billing Address: PO BOX 10250 PALO ALTO CA United States 94303-0862 Phone Number: 6503292494 Email Address: tom.auzenne@cityofpaloalto.org Equinix Local Entity Address: One Lagoon Drive, 4th Floor Redwood City CA United States 94065 Signature: Name: Alex Para Title: Commercial Finance Senior Director Date: 25-Nov-2024 i-+);1Lk EQUINIX ORDER Equinix Order Number:1-240725154517(V5)Page 6 of 6