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03102011CouncilMinutes-WS CITY OF AMMON CITY COUNCIL MINUTES – WORK SESSION THURSDAY, MARCH 10, 2011 AGENDA: CITY OF AMMON 2135 SOUTH AMMON ROAD CITY COUNCIL AGENDA – WORK SESSION THURSDAY, MARCH 10, 2011 – 4:30 P.M. DISCUSSION ITEMS: 1.Fiber Optic Implementation and Rates (Bruce P.)* 2.Misc. MINUTES City Officials Present: Councilmember Dana Kirkham Councilmember Lee Bean Councilmember Brian Powell Councilmember Rex Thompson Councilmember Sean Coletti Councilmember Russell Slack City Clerk Leslie Folsom City Engineer Lance Bates City Planner Ron Folsom City Officials Absent: Mayor Steve Fuhriman DISCUSSION ITEMS: Councilmember Kirkham opened the meeting at 4:38 p.m. at 2135 South Ammon Road, in the Mayor’s absence. 1. Fiber Optic Implementation and Rates (Bruce P.)*: Bruce Patterson addressed the Council and went through the history of what the City has been through for fiber. The history of fiber was to look to service the SCADA building at a 20 year cost of $370,000. The primary motive was to take care of our business first. We talked about how we can leverage what we have left. He stated we made some assumptions. He explained it is all converging on being IT based (phones, internet, etc). The public has an insatiable need for more bandwidth, since people enjoy system speeds. The services start to consume it. The last assumption is that if we put this infrastructure in then it will be a monopoly, as a community they will pay for it one time and be able to use it for the future. It needs to be built to support everybody. The infrastructure has one source. As far as capital costs, the City will hope to get the entire infrastructure for the community. Fiber optic with active Ethernet was the decision we made to move forward with. Bruce Patterson explained we will follow a path. Idaho Falls is only a ring, whereas we have points on the ring to branch out to customers. Idaho Falls has sold its space and cannot open up to the home. Councilmember Bean asked if the City wants to be the transporting agent. Bruce Patterson said yes and the key to our success is flexibility. Councilmember Bean asked if this will be cheaper for the City to light it. Bruce Patterson said it should be cheaper for them to have us light it, they would provide the signal and we would repeat it. Councilmember Slack said there are 96 dark fibers inside of the fiber bundle and each fiber can carry two colors of light. Bruce Patterson said you can have multi-plex or course-wave (8). Dense weight is up to 80. Councilmember Slack said the revenue that can be generated off one piece of dark fiber needs to be considered, whereas, the City will have to consider the loss of revenue, if we sell one dark piece of fiber. He feels it needs to be priced accordingly. Bruce Patterson explained you can do a lot on a single fiber. Bruce Patterson talked about theOSI (Open Systems Interconnection) model. It has seven layers in a network– layer one is the physical layer – the fiber and the equipment, layer two is the first step in conveying information between end points - the data link, layer three is where you start to get logical addressing, this is where Council Minutes 3-10-11 Page 1 of 3 the host or the service starts to takes place. We can offer dark fiber or layer 2. He explained the City is one step from not being even lit, since we are only doing layer two. We can control the size of the pipe, once we do that, everything else is under their management. They call the service provider if they have any problems, not us. Bruce Patterson explained the costs are the fiber plant (fiber that runs from the location to the home). There is an economy of scale, like a subdivision. Bruce Patterson said the prices he is presenting are for existing neighborhoods. New will be less than that. Councilmember Kirkham asked how we will handle neighborhoods wanting fiber. Bruce Patterson stated he has not figured that out yet. He explained Brigham City has a model for helping neighborhoods accomplish this. The total onetime cost per home is $2650. This includes the equipment outside the home, the installation, the meter, etc. Councilmember Bean asked if the end user pays the entire fee. Bruce Patterson said yes. It was discussed that you would have to get to the subdivisions first. He explained he is picking places where we have well houses and we can feed a subdivision from the well house. Councilmember Powell said you can create and manage a fiber district like a lighting district. Councilmember Bean asked if a well would become a distribution link. Bruce Patterson stated yes. Bruce Patterson said you could create a fiber district to handle the costs. Councilmember Bean asked what he could use from this line. Bruce Patterson said a computer and then pick your options and the City will turn the constituent service on. The home would have to be plugged into our system. Councilmember Slack said everyone who wants to connect to the City will have to connect to our line. Ron said you can go to Utopia.com and see what options they offer. Bruce Patterson said we have to have it paid for since we cannot pass any of the billed costs to the service provider, since they don’t own the line. The service provider loves this, because he has no cost until the customer signs up. Bruce Patterson stated the City’s costs are fixed. It was discussed the City could offer package offers with the service providers. The service part is the $25 monthly fee, which includes $10 M&O and $15 replacement costs. The estimate for longevity for the fiber is 50 years. Using the replacement costs, we would be able to replace all of that. Bruce Patterson talked about charging the service provider by the size of pipe. Ideally, we would want competition on the network. Bruce Patterson said you hear a lot about the cloud. The big companies will win. All the companies want a connection into the City. Councilmember Powell said he sees Google as a major player. Bruce Patterson said 80% of our residents have internet at a good speed, as per a survey that BYU-Idaho did for us. Councilmember Powell asked what happens with the commercial companies, like a call center, that want to lease. Bruce Patterson said he believes we will lease end point to end point – this will stop them from turning it into their own business. The City will have to be flexible to see what makes the most sense. Bruce Patterson gave an example: The City offers a dark fiber ring and the School District leases a ring, a business leases a ring with internet, and a medical community leases a ring with a business to connect their offices. What happens to the model that the City has when someone comes along and says they are going to put all the equipment on there to provide division multiplexing and they say they will cut the leasers costs by 30% and they keep 10%, because they can do that. The City wouldn’t have to allow it, but they will need to say that in their lease. Bruce Patterson feels it easier to say if you want the ring, then we light it. The service providers will sell themselves. A business will have to pay to get the wires to their business and pay the cost up front. This is why he would like the flexibility, so we can get the lines through the City. Councilmember Powell asked if you had to go a mile to get to a business and when other businesses come along, then they can get some money back. It was discussed this is a lot like the sewer line. Councilmember Powell inquired about speeds. Bruce Patterson stated he is trying to work through this with the service provider. He thinks 20meg might be about $70. It was discussed that you could get phone, internet, etc on that. Robert said HD is between 4 and 10meg per second. 40meg would not be double, though. Bruce Patterson feels we should have a tiered rate, so the City can get a little more, if they want the higher rates. If they get over 1 gig, there would be an enormous jump. Councilmember Thompson inquired if it is considered proprietary funds. It was discussed we would use it through the roads. Leslie said fiber goes through the roads, so they can be used for road improvement. Bruce Patterson said it will be open access network and cheaper than they can do themselves. He wants to separate the bill from the costs of service and never mix those up. We will run our own business and wait for the demand to get here. He stated we need to be flexible. The School District will be putting out a Request for Proposal for their fiber. He would like to make this a partnership and it would help the City build. It was discussed there is a map of where we will be putting the fiber. Bruce Patterson stated we need to come up with a bandwidth rate table. Credibility is a big issue for the City. Councilmember Thompson asked if there was an advantage running it through the sewer line in Shelley. Bruce Patterson stated it would definitely be an advantage. Bruce Patterson said he hasn’t had time to research it and it has been done in California. He would like duct run wherever it can be. The costs have been going up, since it is based on oil prices. Councilmember Powell Council Minutes 3-10-11 Page 2 of 3 asked when the first phase will be done. Bruce Patterson said by the end of April. Council stated they are very excited about this. Bruce Patterson feels this will be the best investment the City has ever made. 2. Misc.: Councilmember Kirkham has talked with Ted Hendricks and asked the Council if they want the loan increased from 20 to 30 years. Council said yes. Councilmember Powell said it decreases our yearly payment, without increasing the costs to the user. Councilmember Kirkham wants to know, if they want to borrow the additional $5 million. Discussion ensued if it needed to be done now. Councilmember Kirkham stated it needs to be done now, since DEQ has fewer funds than normal. If we say no, then we will move to the bottom of the list. The rate will be less than what we are paying for the funds that we have already borrowed. Council discussed possibly borrowing the money to pay off the loan’s higher interest money. Lance talked about the $2.4million, including the membranes. It was discussed we need to buy the equipment and trucks and how much it will cost to finish up the City’s system. Lance said the City does not have a pipeline from the end of the regional system over to Ammon Road and it is not part of the project. Councilmember Powell asked if it was part of Woodland Hills. Lance said yes and it’s approximately $1 million per mile. Councilmember Powell asked if the $3 million gets us connected and flowing. Lance said yes, using the existing lift stations. A rough estimate would be over a million to get it over to Ammon Road. Lance said the City paid $300,000 to lower the pipe, so the Judy Station could go away. The other million was so the pipeline could be low enough to accomplish this. It was discussed the $300,000 was included in the EIRWWA project, but not the million. Lance explained Forsgren estimated to lower the pipe from due north to come up to Sunnyside would cost approx. $300,000. Councilmember Kirkham said the discussion was to put the $300,000 towards the Woodland Hills and not take Judy off. Lance said his recommendation was to not spend the $300,000 to lower it. Councilmember Bean said you have to do a judicial confirmation, so the City won’t be short. If you don’t use the money, you can pay it back. Councilmember Powell said the question is if you do the judicial confirmation for an additional $5 million, does that keep our rate exactly the same by doing the extension. Councilmember Bean stated if you use the $5 million, no. Councilmember Powell said to remember that if the City extends the loan another 10 years then the interest will raise ¼%. Councilmember Powell said we better double check all the figures and see what it does to the end user sewer rate. He wonders if it will push it beyond the $44.50 per month. Councilmember Kirkham said they think the City is looking at the $5 million to pay down $5 million of the $20 million. Councilmember Kirkham will double check on all the figures with Ted and have him run the numbers and compare with Lance. Leslie said to send the email to her and she will forward the information to the group for full disclosure. Lance asked the Council about the sewer-jetter truck. Council said they want him to see if they can bill it half this year and half next year. Lance is still waiting on the final figure and he is leaning towards the fan operated unit. Councilmember Bean asked Lance about the last EIRWWA meeting, did Husk bring up the new category. Lance shook his head yes. He explained there was no decision or why it came up. Councilmember Bean asked if the Mayor got hold of Kirk Peterson and if he has paid his bill. Leslie said Kirk called her and asked what had happened. She informed Kirk that Councilmember Bean was going to take the issue up at the Regional Board for consideration of a change. Councilmember Bean stated this is happening time and time again and feels it is the Mayor’s responsibility. Discussion ensued on elected officials responsibilities and possible actions, if they continue to fail to follow through on their duties. Councilmember Kirkham motioned to adjourn. Councilmember Thompson seconded. Roll Call Vote: Councilmember Kirkham – Yes, Councilmember Thompson – Yes, Councilmember Slack – Yes, Councilmember Coletti – Yes, Councilmember Powell – Yes, and Councilmember Bean – Yes. The motion passed. The meeting adjourned at 5:44 p.m. _____________________________________ Steve Fuhriman, Mayor __________________________________ Leslie Folsom, City Clerk Council Minutes 3-10-11 Page 3 of 3