HomeMy WebLinkAbout4 Broadband Business Planning Agenda Item # '�'{
DONNER
Public Utility District
Memorandum
To: Board of Directors
From: Alan Harry, Director of Telecommunications Services
Date: May 2, 2003
Subject: Broadband Business Planning—consideration of a contract for the sale and lease
of District owned conduits
Summary
Aggregate Networks, District General Counsel and Touch America Legal Counsel have successfully
completed the drafting of agreements pertaining to the sale and lease of District owned conduit received as
part of the District's work with Williams Communication. These documents are in the final stages of legal
review, and will be available at the Board's regular meeting of May r, 2003.
History
On October 16'", 2002, the District Board directed General Manager Holzmeister to enter into a Brokerage
Agreement with Aggregate Networks for the sale of District owed conduit.
As part of the Williams Communication project, completed approximately two years ago, the District was to
receive 16.5 miles of two 2"conduits.
In May of last year the District received a Bill of Sale from Williams, deeding over the conduit to the District.
In January of this year the District approved a Letter of Intent (LOI)with Sierra Touch America for the sale
and lease of this conduit.
The LOI provides the following.
I"Conduit
$500,000 for the outright purchase of the conduit,paid in cash at closing.
2""Conduit
$500,000 for an Indefeasible Right of Use(IRU. The initial term is twenty(20)years,with two(2)ten-year renewal
options.
0 Page 1
The TDPUD will finance this at a rate of I0°/q over a five(5)year period. Payments shall be made monthly in
accordance with the agreed fixed-monthly payment schedule, attached.
Metro Dark Fiber
Within a STA conduit,the TDPUD shall retain two(2)strands of dark fiber in perpetuity. The TDPUD shall also
retain the right for up to five(5)years to purchase up to two(2)additional strands of dark fiber throughout the 17-mile
conduit stretch in Truckee.
If the TDPUD does not exercise its Option to Purchase within the five years,then that right shall convert to a renewing
Right of First Refusal. The cost of the fibers shall be the lesser of$68,500 for each fiber through Truckee or the then
current Most Favored Nation*dark fiber rate.
Long-Haul Dark Fiber
Touch America shall upon closing,provide two(2)strands of dark fiber from the Sierra Touch America Truckee,CA
Op Amp site to the Touch America Sacramento,CA POP,or other Sacramento-area POP,hand hole or manhole of the
TDPUD's choice to be determined prior to closing. The two strands shall be in the form of a twenty-year IRU with
two(2)ten-year renewal options,at no additional charge to the TDPUD.
All fiber obtained by TDPUD from Sierra Touch America,shall be monitored and maintained by Sierra Touch
America at Sierra Touch America's sole cost and expense.
Re-generation services shall be made available to the TDPUD by Sierra Touch America at a cost of$250 per month
per re-generation site.
Collocation
Sierra Touch America shall also provide collocation space in each STA POP at no additional cost or expense to the
TDPUD.
Closing Costs&Procedure
All transaction costs(including documentation fees,escrow fees,legal fees,title fees,insurance charges,and other
related costs directly attributable to this transaction)shall be paid for by Touch America at closing,in addition to the
above-stated acquisition fees. The amount of these fees shall not exceed$15,000 unless prior approval is obtained
from STA.
New Information
At your regular meeting of May 7, Staff and General Counsel will provide the Board with the final
documents for the sale and lease of District owned conduit.
This item does require Board action in the form of approving or disapproving the negotiated agreement.
Recommendation
It is recommended that the Board approve the Agreements between the District and Sierra Touch America,
and authorize General Manager Peter Holzmeister to execute same.
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Loan Calculator with Extra Payments
.._... ....... ._...... .. ....
Enter Values Instructions
Loan Amount
Annual Interest Rate ` "IQi
Loan Period in Years - Must be between 1 and 30 years.
Start Date of Loan .3,G €
Optional Extra Payments If your extra payments vary, enter them In the table below.
Scheduled Monthly Payment S 10,623.52
Scheduled Number of Payments 60
Actual Number of Payments 60
Total Early Payments S -
Totolinterest $ 137,411,34
Totals $ 637,411.34 - 637,411.34 $ 500,000.00 $ 137,411.34 $ -
Payment Beginning Scheduled Extra Total Ending
No. Date Balance Payment Payment Payment Principal Interest Balance
. ,, . ..�...._ _._-_ ., ._�. ----86 � 4,166.67 '$ 493,543.14
2 07/01/2003 493,543.14 10,62352 10,623.52 6,510.66 4,112.86 487,032,48
3 08/01/2003 487,032.48 10,62352 10,623.52 6,564,92 4,058.60 480,467.56
4 09/01{2003 480,467.56 10,62352 10,623.52 6,619,63 4,003,90 473,847.94
5 10/01/2003 473,847,94 10,62352 10,623.52 6,674.79 3.948.73 467,173.15
6 11/01/2003 467,173,15 10,62352 i 10,623.52 6,730,41 3,893.11 460,442.73
7 12/07/2003 460,442.73 10,62352 70,623.52 6,786,50 3,837,02 453,656.24
8 01/01/2004 453,656.24 10,62352 `' 10,623.52 6,843.05 3,780.47 446,813,18
9 02/01/2004 446,813.18 10,62352 10,623,52 6,900.08 3,723,44 439,913.10
10 03/01/2004 439,913.10 10,62352 '<:` 70,623,52 6,957,58 3,665.94 432,955,52
11 04/01/2004 432,955.52 10,62352 0,623,52 7,015.56 3,607.96 425,939,96
12 05/01/2004 425.939.96 10,62352 10,623.52 7,074.02 3,549.50 418,86594
13 06/01/2004 418,865.94 10,62352 10,623,52 7,132.97 3,490,55 411,732,97
14 07/01/2004 411,732.97 10,62352 ->' 10,623,52 7,192.41 3,431.11 404,540,55
15 08/01/2004 404,540.55 10,62352 :' 70,623.52 7,252.35 3,371,17 397,288,20
16 09/01/2004 397,288.20 10,62352 10,623.52 7,312.79 3,310,74 389,975,41
17 10/01/2004 389975.41 10,62352 10,623,52 7,373.73 3,249.80 382,601.69
78 11/01/2004 382601.69 10,62352 - 10,623,52 7,435,17 3,188,35 375,166.51
19 12/01/2004 375,166.51 10,623 52 ` ' 10,623.52 7,497.13 3,126,39 367,669,38
20 01/0112005 367,669.38 1062352 10,623.62 7,559.61 3,063,91 360,109,77
21 02/01/2005 360,109.77 10,62352 10,623.52 7,622,61 3,000,91 352,487,16
22 03/01/2005 352,487.16 1062352 „" 70,623,52 7,686.13 2,937,39 344,801.03
23 04/01/2005 344,807.03 70,62352 =�= 10,623.52 7,750.18 2,873,34 337,050,85
24 05/01/2005 337,050.85 1062352 ^; 10,623,52 7,814.77 2,808,76 329,236,08
25 06/01/2005 329,236.08 10,62352 ' 10,623,52 7,879.89 2,743.63 321,356.20
26 07/01/2005 321356.20 10,62352 s 10,623,52 7,945,55 2,677.97 313,410,64
27 08/01/2005 313,410.64 10,62352 `l 10,623,52 8,011.77 2,611.76 305,398.87
28 09/01/2005 305,398.87 10,62352 :< 10,623,52 8,078.53 2,544.99 297,320,34
29 10/01/2005 297,320.34 10,62352 10,623.52 8,145,85 2,477.67 289,174,49
30 11/01/2005 289,174.49 10,62352 .;: 10,623,52 8,213.73 2,409.79 280,960.76
31 12/01/2005 280,960,76 10,62352 :'. 10,623.52 8,282.18 2,341.34 272,678.57
32 01/01/2006 272,678.57 10,62352 10,623.52 8,351.20 2,272.32 264,327.37
33 02/01/2006 264,327,37 10,62352 10,623.52 8,420.79 2,202,73 255,906,58
34 03/01/2006 255,906.58 10,623 52 10,623.52 8,490.97 2,132,55 247,415.61
247.415.61 10,62352 10,623.52 8,561.73 2,061.80 238,853.88 35 04{01(2006
36 05101l2006 238,853,88 M623 52 10,623.52 8,633.07 1,990,45 230,220.81
37 06/01/2006 230,220,87 10,62352 10,623.52 8,705.02 1,978.57 221,515.80
38 07/01/2006 221,515,80 10,62352 10,623.52 8,777.56 1.845.96 212,738.24
39 08/01/2006 212,738.24 10,62352 ; 10,623.52 8,850,70 1,772.82 203,887,53
40 09/01/2006 203,887.53 10,62352 10,623,52 8,924.46 1,699,06 194,963,07
41 10/01/2006 194,963.07 10,62352 - 10,623.52 8,998,83 1,624,69 185,964,24
42 11/01/2006 185,964.24 10.62352 10,623.52 9,073,82 1,549.70 176,890.42
43 12/01/2006 176,890,42 10,62352 10,623.52 9,149.44 1,474.09 167,740.99
44 01/01/2007 167,740.99 10,62352 '„ 10,623.52 9,225,68 1,397.84 158,515.31
45 02/01/2007 158,515.31 10,62352 f` 10,623.52 9,302.56 1,320.96 149,212.75
46 03/01/2007 149,212.75 10,623.529 10,623.52 9,380.08 1,243.44 139,83266
Payment Beginning Scheduled Extra Total Ending
No. Date Balance Payment Payment Payment Principal Interest Balance
....,._—..._.
47 04(O7/2007 139,$32.66 �10,62352 �, ,c- -;� 10,623.52 9,458.25 1,16527 130,374.41
48 05/01/2007 130,374,41 10,62352 -`= 10,623,52 9,537.07 1,086.45 120,837,34
49 06/01/2007 120,837.34 10,62352 10,623.52 9,616,54 1,006,98 111,220,80
50 07/01/2007 111,220.80 10,62352 10,623,52 9,696,68 926,84 101,524.12
51 08/01/2007 101,524.12 10,62352 ` 10,623.52 9,777,49 846.03 91,746.63
52 09/01/2007 91,746.63 10,62352 - 10,623.52 9,858,97 764.56 81,887,66
53 10/01/2007 81,887.66 10,62352 „' 10,623.52 9,941.13 682.40 71,946,54
54 11/01/2007 71,946,54 10,62352 10,623.52 10,023,97 599,55 61,922,57
55 12/01/2007 61,922.57 10,62352 10,623,52 10,107,50 516.02 51,815.07
56 01/01/2008 51,815.07 10,62352 =' 10,623.52 10,191.73 431.79 41,623.34
57 02/01/2008 41,623.34 10,62352 10,623.52 10,276.66 346.86 31,346.68
58 03/01/2008 31,346.68 10.62352 s 10,623.52 10,362.30 261.22 20,984,38
59 04/01/2008 20,984,38 1062352 " 10,623,52 10,448,65 174,87 10,535,72
60 05101/2008 10,535.72 10,62352 10,623,52 10,535,72 87.80 (0,00)
May 02 03 02: 19p p' 2
Sierra Touch America, LLC
1802 North Carson St.
Suite # 160
Carson City, NV 89703
775-841-0550
February 14,2003
Aggregate Networks
650 Warrenville Road
Suite 103
Lisle, IL 60532
ATT:Laurance Lewis
Dear Mr.Lewis,
Enclosed is the original agreement between Truckee Donner Public Utility District and Sierra Touch
America,LLC for the purchase of conduits.
If you have any questions,please contact me.
S' ely,
Don Sherrer
Sr.Project Manager
Sierra Touch America
May 02 03 02: 19p p' 3
February 3, 2003
Don Sherrer
Senior Project Manager
Sierra Touch America, LLC
1802 North Carson Street, Suite 160
Carson City, NV 89703
Re: Touch America's Acquisition of
Truckee Donner PUD's Conduit
Dear Don:
On behalf of our client: the Truckee Donner Public Utility District (the "TDPUD"), we are
submitting the following binding Letter of Intent ('LOI") to Sierra Touch America. If this
LOI is acceptable to Sierra Touch America, then a document will be drafted which
incorporates the following business terms and conditions, upon approval of these terms
by the Board of the TDPUD.
Owner/Lessor: Truckee Donner Public Utility District
Purchaser/Lessee: Sierra Touch America, LLC
Assets to be Acquired: Two (2) two-inch conduits throughout Truckee, CA
Acquisition Structure & Cost: 1s` Conduit- $500,000 for the outright purchase
of the conduit, paid in cash at closing.
2"d Conduit- $500,000 for an Indefeasible Right
of Use (IRU). The initial term is twenty (20) years,
with two (2) ten-year renewal options.
The TDPUD would finance this at a rate and at
terms to be determined after a review of Touch
America's financials and creditworthiness for a five-
year period. One option will be at a "Prime+ %"
floating rate, while the other option will be fixed at a
higher rate, reflecting the added interest-rate risk
associated with long-term financing and to be set at
closing, matched with like term Treasuries.
Metro Dark Fiber
Within a STA conduit, the TDPUD shall retain two
(2) strands of dark fiber in perpetuity. The TDPUD
shall also retain the right for up to five (5) years to
purchase up to two (2) additional strands of dark
fiber throughout the 17-mile conduit stretch in
Truckee.
May 02 03 02: 19p p. 4
Sierra Touch America—TDPUD L01 If the TDPUD does not exercise its Option to
Page 2 Purchase within the five years,then that right shall
February 3,2003 convert to a renewing Right of First Refusal. The
cost of the fibers shall be the lesser of$68,500 for
each fiber through Truckee or the then current Most
Favored Nation* dark fiber rate.
Long-Haul Dark Fiber—Touch America shall upon
closing, provide two (2) strands of dark fiber from
the Sierra Touch America Truckee, CA Op Amp
site to the Touch America Sacramento, CA POP, or
other Sacramento-area POP (William's or AT&T
POP's), handhole or manhole of the TDPUD's
choice to be determined prior to closing. The two
strands shall be in the form of a twenty-year IRU
with two (2)ten-year renewal options, at no
additional charge to the TDPUD.
All fiber obtained by TDPUD from Sierra Touch
America, shall be monitored and maintained by
Sierra Touch America at SierraTouch America's
sole cost and expense.
Re-generation services shall be made available to
the TDPUD by Sierra Touch America and the cost
for those services will be pre-negotiated and stated
in the Parties final Agreement.
Colocation —Sierra Touch America shall also
provide colocation space in each STA POP at no
additional cost or expense to the TDPUD.
* Most Favored Nation rates are the rates currently
being charged to Touch America's customers who
get the products and/or services at the lowest rate
Touch America offers.
Closing Costs &
Procedure If Sierra Touch America agrees to these terms,
then we will begin moving towards a formal closing
of this transaction. As Earnest Money and to
officially have the TDPUD take the conduit off the
market, Sierra Touch America shall deposit
$65,000 in an escrow account to be determined by
the TDPUD, within ten (10) business days from the
execution of this Agreement. The closing shall take
place no later than April 30, 2003 at a location to be
mutually agreed upon and reasonably near
Truckee, CA.
P. 5 r;
Mai 02 03 02: 19P
z
Y
r
Touch America—TDPUD LOI
Page 3
February 3, 2003
All transaction costs (including documentation fees,
escrow fees, legal fees, title fees, insurance
charges, and other related costs directly
attributable to this transaction) shall be paid for by
Touch America at closing, in addition to the above-
stated acquisition fees. The amount of these fees
shall not exceed $15,000 unless prior approval is
obtained from STA.
This Letter only addresses the business terms of the contemplated transaction and is a
non-binding. This draft LOI has not been approved by the Board of the TDPUD, and any
final agreement between the Parties must be approved by the Board of the TDPUD.
These terms shall be incorporated into a mutually-agreeable contract and will not be
binding until it is signed by both Parties.
Sincerely,
Laurance P. Lewis
Aggregate Networks
I agree with the terms stated herein, and evidence this by signing below.
Sierra Touch America Touch America
Title: YR
Title:%i"/ i
Date: �/-�/�3 Date: - -------