HomeMy WebLinkAbout11 Broadband Business Implementation Agenda Item #
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Memorandum
To: Board of Directors
From: Alan Harry, Director of Telecommunications Services
Date: June 10, 2004
Subject: Broadband Business Implementation: Phased Construction
Summary
Over the past five years the District has evaluated the provision of Broadband services
concluding that the construction and launch of a fiber to the user, FTTU, broadband system
is both financially viable and will serve as a much needed economic development tool within
the Truckee Tahoe region.
To date the District has received all necessary regulatory approvals, including Nevada
County LAFCo Certification and Cable Television Franchises, and has the green light to
move ahead, secure project financing, construct the system and launch the services.
Project financing is underway. In October of 2004 the District approved Resolution 2004-45
including all of the required financial documents to secure $24 million through the sale of
Certificates of Participation. This financing is to be repaid only by the revenues generated
from the new Broadband division.
New Information
Today only one small issue remains as a bump in the road for the project. Soon after
Nevada County LAFCo Certified the District's request to provide Broadband services
Cebridge Connections, the new cable television operator in Truckee, filed a suit against
Nevada LAFCo alleging that they did not have the authority to approve the District's request.
As such staff and Broadband financial consultants are investigating the purchase of an
insurance policy to cover the "risk" of the suit. This policy would provide COP buyers a level
of security as the District moves forward to construct the system prior to the suit being heard
and acted upon by the Nevada County Superior Court.
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Staff has also been investigating the opportunity to construct a first phase of the overall
project in order to provide the COP buyers an additional sense of security and the Truckee
Community an understanding as to what the FTTU system will be capable of providing.
To that end staff has located a portion of the District's service area that reaches commercial,
governmental and residential customers. This proposed phase begins at the corner of
Northwoods Blvd to the west and runs east on Donner Pass Road, through Commercial
Row, ending at Assumption Catholic Church. The area's proposed northern boundary is the
new Donner Crest subdivision, and its southern boundary the Union Pacific tracks. A map
has been attached of the proposed Phase One service area for your review.
It is estimated that this Phase One will pass 350 homes, 80 governmental facilities and 200
commercial businesses.
To acquire and retain customers within the Phase One area both video and data services
must be made available. Staff has been in contact with Eagle Broadband, the project's
wholesale video and bandwidth provider, and have been assured that the video and data
headend slated for construction in Reno Nevada will be on-line once the Phase One
backbone and distribution system is constructed and tested.
Staff has evaluated the costs associated with the construction of the proposed Phase One
service area and estimate them to be $650,000, $500,000 in capital equipment and
$150,000 in labor. A detailed breakdown of this estimate is attached.
In moving forward staff and Aggregate Networks, financial consultants to the District's
Broadband project, have prepared a financial model as part of a financing package that will
be presented to financial institutions specializing in short term municipal financing. We will
likely see a financing structured as follows; Leading $500,000, Interest Rate 8%, Term 60
months. By using District crews to install the fiber backbone and distribution system the
District will have approximately$150,000 in equity in the Phase.
All labor costs provided by the District's electric division will be repaid in full upon the receipt
of the proceeds of the projects COPS. As previously stated, Cebridge Connections has filled
a suit against Nevada County LAFCo. It is our belief that this case will be heard during the
next nine to twelve months with a final verdict in favor of the defendant, LAFCo. Full project
financing will likely be completed prior to or closely following the end of this case.
Recommendation
It is recommended that the Board direct staff to move forward in locating the financing
necessary to construct this first phase of the FTTU Broadband system, and return for Board
approval of the financing package and purchase of all necessary electronics, fiber and
ancillary equipment.
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FTTU Phase One
Donner Pass Road; Northwoods Blvd to Trout Creek
Item Quantity Units Cost/Unit Total
Poles
applications 221 ea $94.00 $20,774.00
hardware 221 ea $45.00 $9,945.00
Splicing 468 ea $29.00 $13,572.00
8 Tap
Tap 99 ea $399.00 $39,501.00
Installation 99 ea $150.00 $14,850.00
6 Tap
Tap 1 ea $399.00 $399.00
Installation 1 ea $150.00 $150.00
4 Tap
Tap 10 ea $399.00 $3,990.00
Installation 10 ea $150,00 $1,500.00
LMC, et al 3 ea $10,020.00 $30,060.00
Underground Fiber 27331 ft $2.68 $73,247.08
Overhead Fiber 30029 ft $2.53 $75,973.37
Splice Enclosers 13 ea $684.00 $8,892.00
B3048 Boxes 8 ea $2,060.00 $16,480.00
Risers 7 ea $375.00 $2,625,00
CPE 244 ea $515.00 $125,531.25
Installation 244 ea $250.00 $60,937.50
Network Switches 2 ea $75,000.00 $150,000.00
Circuit Setup and Installation 1 ea $1,500.00 $1,500.00
Total $649,927.20
Potential Subscribe Passed
Government 75
Commercial 200
Residential 350
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