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HomeMy WebLinkAbout2012-07-10 - AGENDA REPORTS - DARK FIBER OPTIC STRANDS LEASE (2)CONSENT CALENDAR DATE: SUBJECT: DEPARTMENT: Agenda Item: 9 CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval: Item to be presented by July 10, 2012 Kevin Tonoian APPROVAL OF THE LICENSE AGREEMENT TO LEASE CITY -OWNED DARK FIBER OPTIC STRANDS Administrative Services RECOMMENDED ACTION City Council: 1. Approve the License Agreement with Freedom Telecommunications, Inc. 2. Authorize the City Manager, or designee, to execute all documents, subject to City Attorney approval. BACKGROUND Santa Clarita maintains a fiber-optic network encompassing more than 70 miles of City -owned infrastructure along all major roadway thoroughfares throughout the City. This network's primary purpose is to support our Traffic Operation Center which, among other things, is responsible for managing our traffic signal interconnection system. The City's fiber optic network has been incrementally constructed over the past ten years as a result of various state and federal grant funds. Our network is comprised of 96 strands of bundled fiber, with each strand capable of transporting immense amounts of data at high speeds. The City utilizes less than one third of the total fiber strands for internal operational needs, leaving these remaining unactivated strands, referred to as "dark fiber," available for other uses. The availability of excess dark fiber presents Santa Clarita with the opportunity to lease a portion of these capital assets to the private sector to generate additional operational revenues. Cities including Pasadena, Burbank, and Santa Monica all lease a portion of their dark fiber or fiber bV P 01 OWED conduit space to private companies seeking to expand their data network systems while minimizing the need for costly and invasive construction of such networks. The potential leasing of excess dark fiber is a continuation of the City's overall business model to leverage the utility of our fiber network. During the last four years, staff has used City -owned fiber to provide high-speed data connections between multiple City facilities which have enhanced network performance, eliminated the need for leased data service, and resulted in significant operational savings. In 2011, City staff was approached by Freedom Telecommunications, Inc. (FTI) with an interest in utilizing a small number of City -owned fiber strands along a short segment of our fiber optic network. Specifically, FTI is seeking to lease City fiber strands along a portion of Sierra Highway to close a gap in their regional fiber network, which extends throughout Southern California north to the Antelope Valley. FTI is a Federal Communications Commission (FCC) Certified Competitive Local Exchange Carrier incorporated in the State of California and has "last -mile" fiber optic connections to expand the availability of cost-effective, high-speed data connections through developing a regional fiber network. FTI maintains agreements with multiple agencies, including Los Angeles Department of Water and Power, Southern California Edison, San Diego Gas and Electric, AT&T, Verizon, and numerous cities in Southern California, including Burbank, Lancaster, and Palmdale. Staff has prepared a Fiber Licensing Agreement which would allow FTI to interconnect their fiber infrastructure to the City's fiber-optic network. The initial terms of this proposed agreement is for one year and regarded as a "proof -of -concept" approach to help staff evaluate the potential long-term benefits of engaging in the business of leasing portions of City -owned dark fiber to other private or public entities. The proposed agreement establishes an annual value of $960 per leased mile of fiber, per fiber strand. This value was established through researching how other municipalities value their fiber infrastructure and reflects the rural area where the connection will be established and the limited tenure of the proposed agreement. In addition to generating additional general fund revenues, the City may elect to pursue some portion of compensation derived from the leasing of dark fiber in the form of in-kind services. Such services could include gaining access to high-speed data service to support internal operation needs at below retail market cost. Further, the City could leverage its excess dark fiber in exchange for vendors to extend their existing private infrastructure into various Santa Clarita business parks to increase the availability of competitive data services to our business community. As staff evaluates this business concept, going forward the City may be able to generate additional revenue or in-kind benefits for leasing our fiber assets. To this end, the proposed Licensing Agreement includes provisions which authorize the City Manager to administratively —12— increase the amount of dark fiber leased to FTI and/or extend the term of this agreement for five additional years. ALTERNATIVE ACTIONS Other action as determined by the City Council. FISCAL IMPACT An increase in estimated revenues for the current fiscal year is forecasted to range from approximately $10,000 to $50,000 and will be dependent upon the actual number of fiber miles leased by the City to FTI. ATTACHMENTS Fiber Licensing Agreement =11 LICENSE AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND FREEDOM TELECOMMUNICATIONS INC. Contract No. THIS LICENSE is made and executed this day of 20 , between the CITY OF SANTA CLARITA, a municipal corporation ("CITY"), and Freedom Telecommunications Inc., a California nonprofit corporation ("LICENSEE"). RECITALS: A. CITY has constructed and continues to augment and enhance within the City of Santa Clarita an optical fiber backbone network ("Fiber Optic Network") to facilitate the provision of high-speed, state-of-the-art telecommunications services by prospective users in both the public and private sectors. B. CITY has unactivated strands of optical fiber in its Fiber Optic Network that it desires to license for the exclusive use by LICENSEE to provide telecommunications services between two of the LICENSEE's premises in the City of Santa Clarita. C. CITY and LICENSEE desire to enter into this License Agreement to set forth their mutual understanding and agreement to install, operate, maintain, and pay for LICENSEE's use of unactivated strands of optical fiber in CITY's Fiber Optic Network. THE PARTIES AGREE AS FOLLOWS: 1. LICENSED FIBER A. The property of the CITY that is subject to this License Agreement consists of a total of 4.72 miles of six (6) individual, unactivated optical fiber strands in CITY's Fiber Optic Network ('Licensed Fiber") that will be connected to LICENSEE's facilities on or adjacent to LICENSEE's premises located at Sierra Hwy west of Friendly Valley Pkwy, Santa Clarita, California, and to LICENSEE's facilities on or adjacent to its premises located at Sand Canyon Rd north of Thompson Ranch Rd, Santa Clarita, California. B. The route of the Licensed Fiber, and the locations of the connection points referenced above in paragraph A, are more specifically identified in the attached Exhibit A. C. At any time during the term of this License Agreement, the LICENSEE may request additional strands of optical fiber in CITY's Fiber Optic Network. CITY may, in its sole discretion, license additional strands of optical fiber to LICENSEE, upon payment of such rates, fees, and charges as may be agreed upon by the parties. The City Manager, or designee, is authorized to license the lease of additional strands of optical fiber to LICENSEE to an amount Fiber License Agreement FTI Page I of 10 _/ not to exceed $100,000 in annual revenues and execute all documents, subject to City Attorney approval. 2. USE OF PROPERTY. LICENSEE may, during the term of this Agreement, use the Fiber Network for the purposes of connecting LICENSEE's facilities to six (6) strands of unactivated optical fiber in CITY's Network. 3. INSTALLATION OF LICENSEE'S SYSTEM A. The parties expressly acknowledge and agree that, in order to protect and to maintain the integrity of CITY's Fiber Optic Network, the CITY will plan check, permit and oversee the installation of all aspects of the LICENSEE's interconnection to the CITY's Fiber Optic Network. B. Effective upon the effective date of this License Agreement, CITY grants to LICENSEE a right of entry to CITY's premises to install Licensed Fiber and interconnection facilities. LICENSEE's exercise of this right of entry is subject to such advance notification as may be mutually agreed upon by the parties. C. The Licensed Fiber will be connected to LICENSEE's premises located at Sierra Hwy W/O Friendly Valley Pkwy, Santa Clarita, California via spliced conduit. LICENSEE shall have exclusive use of six (6) strands of unactivated optical fiber in CITY's Fiber Optic Network during the Initial Term and any Renewal Terms, subject to the provisions of this Agreement. D. LICENSEE is responsible for acquiring all permits associated with this project as required by City. A City representative shall be present at the time of the work and shall be notified 48 hours prior to any work. E. LICENSEE shall be responsible for construction to create a pathway between the Licensed Fiber and its facilities located at Sierra Hwy west of Friendly Valley Pkwy and at Sand Canyon Rd north of Thompson Ranch Rd, Santa Clarita, California. LICENSEE and CITY shall identify locations, construction practices, and methods for interconnecting conduit by CITY and LICENSEE. Conduit provided by LICENSEE shall be a minimum of two inches (2") in diameter, Schedule 40, installed with no bends of less than thirty-six inches (36") radius and a minimum of thirty six inches (36") cover from the vault to the building. It is the LICENSEE's responsibility to splice for continuity fiber optic strands along the pathway. F. Construction Fiber Integration: Any or all fiber integration, including all necessary permitting and inspection -related costs, must be completed by LICENSEE or contractor in possession of a C-10 License in good standing with the State of California. Fiber License Agreement FTI Page 2 of 10 G. City Fiber Splicing required on the Route: Any or all fiber splicing, including all necessary permitting and inspection -related costs, must be completed by LICENSEE or contractor in possession of a C-10 License in good standing with the State of California. H. Once Lateral Conduit is available between CITY's Fiber Optic Network and LICENSEE's facilities, LICENSEE will manage installation of the fiber interconnection. M1912-9961 A. Except as provided in Section 5, the term of this license will begin on July 2012 and end on July 2013. B. Upon mutual written agreement between the parties, this License may be renewed for up to five (5) additional years. The City Manager, or designee, is authorized to execute all documents, subject to City Attorney approval. 5. TERMINATION. CII It, CITY may terminate this License at any time without cause, upon written or verbal notification. Termination will be effective 90 days following notification, unless CITY specifies otherwise. LICENSEE may terminate this License at any time in writing at least thirty (30) days before the effective termination date. By executing this document, LICENSEE waives any and all claims for damages that might otherwise arise from CITY's termination under this Section. Upon termination, LICENSEE will remove all personal property and improvements from Property within twenty-one (2 1) days. Property will be left in a clean and orderly fashion. 6. COMPENSATION. A. In exchange for the lease of the CITY's Fiber Network as described in Section I and identified in Exhibit A, LICENSEE agrees to pay CITY an annual sum of $960.00 per fiber strand per mile for the term of this License. Payment Option Alternative — In lieu of remitting payment amount as calculated in Section 6 (A), at the CITY's option LICENSEE may provide partial compensation by providing CITY with one or more Internet Circuits configured to terminate at Santa Clarita City Hall from a commercial grade carrier. Fiber License Agreement_M Page 3 of 10 _( _ ii. The Payment Option Alternative amount will be derived by subtracting the actual annual cost incurred by LICENSEE to provide the Internet Circuit from the total lease amount as identified and calculated in Section 6 (A). iii. LICENSEE anticipates a delivery interval of not more than 30 business days from point of order. B. At their sole cost, LICENSEE will compensate CITY the fully burdened hourly rate for all inspection work associated with interconnection of LICENSEE'S facilities to CITY'S Fiber Optic Network. 7. TAXES AND ASSESSMENTS. LICENSEE shall pay all possessory interest taxes, and other taxes, fees, and assessments attributable to LICENSEE's use of the Licensed Fiber and the operation of LICENSEE's System. 8. ACTIVATION. LICENSEE has sole responsibility for the activation of the Licensed Fiber and interconnection facilities and for the payment of all utilities that are required for such operation. 9. REPAIR. A. If CITY's fiber optic infrastructure is damaged during LICENSEE's fiber optic interconnection, it is LICENSEE's responsibility to repair and restore the fiber optic network within four hours of the damage. B. If any emergency or unscheduled repairs are determined to be attributable to the fault of the LICENSEE, or of its employees or agents, the LICENSEE shall pay all such repair costs incurred by LICENSEE or by CITY. C. LICENSEE shall provide to CITY, its employees, agents, contractors, and subcontractors, access to its premises to the extent required to inspect, maintain, and repair the Licensed Fiber and interconnection facilities located within the CITY's right of way. D. CITY shall contact LICENSEE's designated representative in the event of accidental or unscheduled service disruption to coordinate emergency repair work and/or to inform the LICENSEE of the nature, extent, and expected duration of that work. 10. RELOCATION OF CITY'S FIBER OPTIC NETWORK. A. Should all or any portion of the CITY's Fiber Optic Network be relocated during the term of this Agreement, in all circumstances LICENSEE shall be responsible for all costs to relocate their interconnected facilities. B. In all non -emergency situations, CITY will give LICENSEE a minimum of 60 - day notice of CITY's intention to relocate its Fiber Optic Network. Fiber License Agreement FTI Page 4 of 10 7— 11. TITLE TO THE FIBER OPTIC NETWORK. LICENSEE acknowledges and agrees that title to CITY's Fiber Optic Network, including the Licensed Fiber and associated interconnection facilities, will at all times remain exclusively with the CITY. LICENSEE shall assert no adverse claim to such title. 12. ASSIGNMENT. LICENSEE will not be permitted to assign this License or any interest therein. 13. INDEMNIFICATION. LICENSEE agrees to and shall defend, indemnify and hold CITY, its officers, agents, employees, and representatives harmless from all suits and causes of action, claims, charges, damages, demands, judgments, civil fines, and penalties or losses of any kind or nature whatsoever, arising out of this Agreement for all claims of any kind including without limitation, for damage or claims for damage for personal injury, including death, and claims for property damage which may arise directly or indirectly from this Agreement or damage to LICENSEE's fiber optic lines and cables, except and to the extent caused by CITY's willful misconduct or criminal acts. This indemnity and obligation to hold harmless shall apply regardless of whether or not CITY prepared, supplied, or approved plans or specifications or inspected any of the work or improvements installed and constructed pursuant to this Agreement. Specifically, LICENSEE agrees to defend, indemnify and hold harmless CITY, and its officers, agents, employees and representative from the following damages or claims for damages, including any damages or claims for damages resulting from: (1) any damage or claims for damage to LICENSEE's fiber optic lines and/or cables caused by any excavation or work performed by CITY at or near the location of LICENSEE's facilities, (2) any indirect, special, punitive or consequential damages (including, but not limited to, any claim for loss or services) to LICENSEE, or any other person arising from any damage to LICENSEE's fiber optic lines and/or cables; and, (3) any damage or claims for damages resulting from damage to LICENSEE's fiber optic lines and/or cables caused by third persons. In no event shall CITY be liable, under any theory, to LICENSEE for any damage to LICENSEE's fiber optic lines and/or cables caused by any excavation or work performed by CITY at or near the location of LICENSEE's facilities except and to the extent caused by CITY's willful misconduct or criminal acts. CITY shall not be liable, under any theory, to LICENSEE for any indirect, special punitive or consequential damages (including, but not limited to, any claim for loss of services) nor shall CITY be liable, under any theory, for damage to the fiber optic lines and/or cables caused by any other persons. The provisions of this section shall survive the termination of this Agreement. Fiber License Agreement FTI Page 5 of 10 o O 14. INSURANCE. A. Before commencing performance under this License, and at all other times this License is effective, LICENSEE will procure and maintain the following types of insurance with coverage limits complying, at a minimum, with the limits set forth below: Type of Insurance Commercial general liability Workers compensation Limits (combined single) $1,000,000.00 Statutory limits B. Commercial general liability insurance will meet or exceed the requirements of the most current ISO Forms. The amount of insurance set forth above will be a combined single limit per occurrence for bodily injury, personal injury, and property damage for the policy coverage. Liability policies must be endorsed to name CITY, its officials, and employees as "additional insureds" under said insurance coverage and to state that such insurance will be deemed "primary" such that any other insurance that may be carried by CITY will be excess thereto. Such insurance will be on an "occurrence," not a "claims made," basis and will not be cancelable except upon thirty (30) days prior written notice to CITY except for nonpayment of premiums which may be cancelable upon ten (10) day notice. C. LICENSEE will famish to CITY duly authenticated Certificates of Insurance and Endorsements evidencing maintenance of the insurance required under this License and such other evidence of insurance or copies of policies as may be reasonably required by CITY from time to time. Insurance must be placed with insurers with a current A.M. Best Company Rating equivalent to at least a Rating of "A:VII." Certificate(s) must reflect that the insurer will,provide thirty (30) day notice of any cancellation of coverage. LICENSEE will require its insurer to modify such certificates to delete any exculpatory wording stating that failure of the insurer to mail written notice of cancellation imposes no obligation, and to delete the word "endeavor" with regard to any notice provisions. D. Should LICENSEE, for any reason, fail to obtain and maintain the insurance required by this Agreement, City may obtain such coverage at LICENSEE'S expense and deduct the cost of such insurance from payments due to LICENSEE under this Agreement or terminate. In the alternative, should LICENSEE fail to meet any of the insurance requirements under this agreement, City may cancel the Agreement immediately with no penalty. E. Should LICENSEE'S insurance required by this Agreement be cancelled at any point prior to expiration of the policy, LICENSEE must notify City within 24 hours of receipt of notice of cancellation. Furthermore, LICENSEE must Fiber License Agreement FTI Page 6 of 10 - 9- obtain replacement coverage that meets all contractual requirements within 10 days of the prior insurer's issuance of notice of cancellation. LICENSEE must ensure that there is no lapse in coverage. 15. WAIVER OF DAMAGES. In no event will a party be liable to the other party for any direct, consequential, incidental, indirect, liquidated, or special damages, or for lost revenues, lost profits, or inconvenience incurred by a party, attributable to or arising out of the performance or nonperformance of any provisions of this License Agreement, even if the party seeking to impose liability has informed the other party of the possibility of those damages. 16. FORCE MAJEURE. If either CITY or LICENSEE is delayed in or prevented from the performance of any act required under this License Agreement by reason of acts of God, governmental restrictions, regulations or controls (except those reasonably foreseeable in connection with the licensed uses contemplated by this License), or by any other cause that is without fault and beyond the control of the party obligated (excluding financial incapacity), then the performance of that act will be excused for the period of the delay, and the period for the performance of that act will be extended for a period equivalent to the period of that delay. Nothing in this section shall excuse LICENSEE from the prompt payment of any installation costs, license and maintenance fees, taxes, or any other charges that are required of LICENSEE under this License Agreement. 17. PROHIBITED ACTIVITIES. LICENSEE is prohibited from engaging in any of the following activities during the term of this License Agreement and CITY shall have the power to terminate this License Agreement in event any of the following occur: A. Any activity that encroaches upon or interferes with the CITY's rights-of-way, public utility easements, or public service easements that are used in connection with the operation of the CITY's Fiber Optic Network including the Licensed Fiber and interconnection facilities; and/or B. Any activity that interferes with the CITY's rights and obligations to design, construct, operate, monitor, manage, maintain, repair, or modify the Fiber Optic Network. 18. BREACH OF AGREEMENT. The violation of any of the provisions of this License will constitute a breach of this License by LICENSEE, and in such event said License will automatically cease and terminate. 19. WAIVER OF BREACH. Any express or implied waiver of a breach of any term of this License will not constitute a waiver of any further breach of the same or other term of this License. Fiber License Agreement FTI Page 7 of 10 `�U 20. ENTRY BY CITY AND PUBLIC. This License does not convey any property interest to LICENSEE. Except for areas restricted because of safety concerns, CITY and the general public will have unrestricted access upon Property for all lawful acts. 21. NOTICES. Except as otherwise expressly provided by law, all notices or other communications required or permitted by this License or by law to be served on or given to either party to this License by the other party will be in writing and will be deemed served when personally delivered to the party to whom they are directed, or in lieu of the personal service, upon deposit in the United States mail, certified or registered mail, return receipt requested, postage prepaid, addressed to LICENSEE at: or to CITY at: City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 Attn: Either party may change its address for the purpose of this Section by giving written notice of the change to the other party. 22. ACCEPTANCE OF FACSIMILE SIGNATURES. The Parties agree that agreements ancillary to this License and related documents to be entered into in connection with this License will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature will be treated in all respects as having the same effect as an original signature. 23. GOVERNING LAW. This License has been made in and will be construed in accordance with the laws of the State of California and exclusive venue for any action involving this License will be in Los Angeles County. 24. PARTIAL INVALIDITY. Should any provision of this License be held by a court of competent jurisdiction to be either invalid or unenforceable, the remaining provisions of this License will remain in effect, unimpaired by the holding. 25. ENTIRE AGREEMENT. This instrument and its Attachments constitute the sole agreement between CITY and LICENSEE respecting Property, the use of Property by LICENSEE, and the specified License term, and correctly sets forth the obligations of CITY and LICENSEE. Any agreement or representations respecting Property or its licensing by CITY to LICENSEE not expressly set forth in this instrument are void. Fiber License Agreement FTI Page 8 of 10 26. CONSTRUCTION. The language of each part of this License will be construed simply and according to its fair meaning, and this License will never be construed either for or against either party - 27. AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this License and to engage in the actions described herein. This License may be modified by written agreement. CITY's City Manager, or designee, may execute any such amendment on behalf of CITY. 28. CONFLICT OF INTEREST. LICENSEE will comply with all conflict of interest laws and regulations including, without limitation, CITY's conflict of interest regulations. 29. COUNTERPARTS. This License may be executed in any number or counterparts, each of which will be an original, but all of which together will constitute one instrument executed on the same date. [SIGNATURES ON NEXT PAGE] Fiber License Agreement_FTI Page 9 of 10 IN WITNESS WHEREOF, the parties hereto have executed this contract the day and year first hereinabove written. FOR LICENSEE: By: Print Name & Title Date FOR CITY OF SANTA CLARITA: KENNETH R. PULSKAMP, CITY MANAGER By: City Manager Date: ATTEST: By: City Clerk Date: APPROVED AS TO FORM: JOSEPH M. MONTES, CITY ATTORNEY By: City Attorney Date: Fiber License Agreement FT] Page 10 of 10