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HomeMy WebLinkAbout10 Sale or Lease of District owned conduit TRUCKEE DONNER Pulol�icl4lJtflity District Staff Report To: Board of Directors From: Alan Harry, Director of Telecommunications Services Date: September 25, 2002 Subject: Consideration of an agreement for services related to the sale or lease of District owned 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 this year the District received a Bill of Sale from Williams, deeding over the conduit to the District. It has been the intent of the Board, and District Staff, to sell and/or lease a portion of the conduit. In that the sale of this asset is much like that of other District assets, IE Real Estate, it is proposed that the District contract with a person or group that specializes in the sale and/or lease of telecommunications facilities. Staff has been in contact with Aggregate Networks regarding the locating of financing for the District's Broadband project, and amongst other things the preparation of a Pilot Project, and has learned that their expertise includes the marketing and sale of telecommunication facilities including conduit, dark fiber, cellular towers, and cellular tower sites. As such, it Is the opinion of staff that Aggregate Network's understanding of the District, and experience in the sale of telecommunication facilities would be of great assistance in the sale and/or lease of it's conduit. Aggregate Networks and District Legal Counsel have prepared a Brokerage Agreement, attached, for Board review and action. It is recommended that the Board direct it's General Manager to approve the attached Brokerage Agreement for the sale and or lease of a portion of the District's Broadband Conduit. •Page 1 Brokerage Agreement This Brokerage Agreement (the "Agreement"), dated this day of September 2002 is entered into by and between the Truckee Donner Public Utility District ("TDPUD"), and Aggregate Networks, LLC, an Illinois limited liability company ("Aggregate"). TDPUD and Aggregate may hereinafter be referred to individually as a "Party", or collectively as the "Parties". Recitals WHEREAS, the TDPUD is the owner of certain facilities, which include certain conduit, ducts, manholes pull boxes and splice cases (collectively the "Facilities") which were obtained from Williams Communications, LLC, d/b/a Vyvx, Inc. in California, which cover lands extending approximately sixteen and one half(16.5) miles along the route in Truckee, California described and depicted in Exhibit_ attached hereto (the `Route"). WHEREAS, Aggregate is in the business of brokering, structuring and negotiating transactions to lease, sell, swap or provide indefeasible rights of use (IRU's) of conduit(s), duct(s), and dark and lit fiber. WHEREAS, the Parties desire to set out their rights and obligations with respect to the disposition of some or all of the TDPUD's assets along the Route. NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises of the Parties and other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, each Party consents to Aggregate being appointed the exclusive Broker of Record for the disposition of the Facilities under the conditions set forth herein: TERM The term of this Agreement shall be for six (6) months from the date of execution. If negotiations, evidenced by written documentation, involving the Facilities have commenced during the Initial Term and are continuing at the time that the Initial Term would otherwise expire, then the Term shall be automatically extended until the earlier of: 1) the termination of such negotiations or the consummation of the transaction, or 2) ninety (90) days from the date of the original expiration of the Initial Term, as indicated above. Either Party shall have the option to terminate this Agreement after ninety (90) days from commencement of this Agreement, upon fifteen (15) days written notice to the other. The term "transaction" as used herein shall include any arrangement acceptable to the TDPUD which grants to a third party the right to purchase, lease, IRU, use, occupy, possess, swap, or barter for some or all of the Facilities. SERVICES Aggregate shall perform the following services on behalf of the TDPUD: 1) Assessment of the Network Assets to be disposed of 2) Definition of which Network Assets are to be disposed of 3) Marketing of the Network Assets to the appropriate parties 4) Conduct negotiations with interested parties 5) Structuring the transaction(s) 6) Facilitating and finalizing the transaction(s) 7) Any other services reasonably necessary to close the transaction(s) COMPENSATION TO AGENT TDPUD agrees to pay Aggregate a fee in accordance with the Fee Schedule attached hereto as Exhibit A, under the following circumstances: a) The Network Assets or any part thereof is leased, sold, IRU'd, swapped, used, occupied or bartered for prior to the expiration of the Initial Term as a result of Aggregate's efforts; or b) Within ninety (90) days after the expiration of the Term, or if a Transaction is consummated beyond the ninety (90) day period with a party Aggregate had already negotiated with during the Initial Term, either: 1) the Network Assets or any part thereof is transferred to any person or entity with whom Aggregate has negotiated regarding the Network Assets, or: 2) TDPUD enters into any negotiations which lead to the execution of a Transaction within ninety (90) days after the expiration of the Initial Term to any person or entity previously negotiating with Aggregate. ADDITIONAL PROVISIONS a. Cooperation With Agent. TDPUD agrees to provide Aggregate with any and all information reasonably necessary to consummate the proposed transaction. In addition, TDPUD agrees to refer to Aggregate all inquiries of any party interested in obtaining some or all of the Network Assets. b. Independent Contractor. Aggregate is and shall remain at all times an independent contractor. It shall be the sole responsibility of Aggregate to pay any and all expenses, taxes, fees and wages of its employees or agents who participate in any way in the disposition of the Network Assets, unless specifically agreed to in writing by the TDPUD. 2 C. Assignment. Aggregate shall not have the right to assign its rights or delegate its duties under this Agreement unless consented to by TDPUD. Aggregate shall have the right, upon reasonable notice, to assign, convey or otherwise transfer its rights, title, interest and obligations under this Agreement to any entity controlled by, controlling or under common control of Aggregate, or any entity which Aggregate may be merged or consolidated or which purchases all or substantially all of the assets of Aggregate. d. Notices. Any notice of communication to be given relating to this Agreement shall be given by personal delivery in writing, nationally recognized overnight carrier, or by United States Mail, registered or certified, postage prepaid with return receipt requested. Mailed and overnight carrier notices shall be addressed to each party at the addresses set forth below: If to TDPUD: Truckee Donner Public Utility District 11570 Donner Pass Road P.O. Box 309 Truckee, CA 96160 Attention: Alan Harry If to Aggregate: Aggregate Networks, LLC 650 Warrenville Road, Suite 103 Lisle, IL 60532 Attention: Laurance Lewis e. Time. Time is of the essence in this Agreement. f. Successors. The terms and conditions of this Agreement shall be binding on the heirs, successors and assigns of the parties hereto. g. Governing Law & Venue.This Agreement shall be governed and construed in accordance with California law. Any action or arbitration arising out of this Agreement shall occur in, or any claim brought in, Nevada Count, CA. h. Entire Agreement. Each of the Exhibits to this Agreement is incorporated into this Agreement in its entirety by this reference as if set forth in full. This Agreement constitutes the entire agreement between the parties and supercedes any prior oral agreements. No amendment, modification, or extension of this agreement shall be binding unless made in writing and signed by both Parties. 3 ............_..... The undersigned Parties hereby agree to all of the terms and conditions of this Agreement and of said Fee Schedule. Executed as of the date first written above. Truckee Donner Public Utility District By: Its: Date: Aggregate Networks, LLC By: Its: Date: 4 EXHIBIT A Commission Schedule Upon successful completion of a transaction or transactions, Aggregate shall have earned and be entitled to receive a commission equivalent to four percent (4%) of the total value received' by the Sublessor". The fee is to be paid as follows: i. If the Transaction is a purchase or a lump sum IRU, then the entire four percent (4%) fee shall be paid to Aggregate out of the closing proceeds. ii. If the Transaction involves a lease or an IRU with scheduled payments, then Aggregate shall be paid four percent (4%) of the total lease or IRU obligation upon execution of the contract. The Sublesee shall be responsible for depositing an amount equivalent to the 4% fee in escrow prior to execution of the contract. In the event the Transaction is a lease or IRU with renewal options, then Aggregate shall be paid a commission equivalent to 4% of the total value of the exercised option, payment shall be made to Aggregate at the time written notice from the Sublessee is given to Sublessor of its intent to renew. iii. In the event the Transaction is a swap or barter where no actual monies are required to change hands, then the Sublessee shall be required to deposit an amount equivalent to the 4% commission payable to Aggregate upon execution of the contract. The Sublessor may then credit the Sublessee back for this amount in Network Assets or services, at the Sublessor's sole discretion. Sublessor shall also have the option of paying the 4% commission directly to Aggregate upon execution of the agreement. Total Value Received is defined as the total amount of the benefit derived by the TDPUD from the Transaction. In the event of a barter or swap, the value received by the TDPUD would be equivalent to what those products or services received would cost on the open market. That value will be determined by obtaining quotes from reasonably similar companies offering reasonably similar products or services in the Truckee region. If available, a minimum of two quotes for similar products or services will be obtained, and the assigned value will be the average of the two quotes. If no agreement can be reached by the Parties as to the Total Value Received within 30 days from execution of the Transaction Agreement, then each party hereto agrees to submit to binding arbitration, by a neutral third party regarding the Total Value Received. Under the Co-Occupancy Agreement between TDPUD, Williams, 360 Networks, and Sierra Touch America, any transfer of the Network Assets is deemed to be a Sublease. to Staff Report To: Board of Directors From: Alan Harry, Director of Telecommunications Services Date: September 25, 2002 Subject: Broadband business planning process: Consideration of requesting LAFCo for an extension of time to comply with their conditions for activation of latent powers Truckee Donner Public Utility District received Conditional Approval from Nevada County LAFCo to provide Broadband Services on January 18, 2001. At that time the Commission approved it's Resolution 01-01 specifying those conditions the District must meet prior to receiving a Certificate of Compliance to provide Broadband Services within the District's service area, including a time limit of two years to receive such a Certificate. As part of the Resolution the District was given the ability to request an extension of the two-year time limit. In that the District has not completed all of the items required by Resolution 01-01, the District must request an extension. Attached is a letter to Nevada County LAFCo's Executive Director, S.R. Jones, requesting that our one-year extension request be placed on the Commission's October Agenda. It is requested that the Board approve the attached letter and direct staff transmit it to Nevada County LAFCo. 0 Page 1 75tbAnnev vary p 19T27-200 TRUE\ D 0 E September 26, 2002 SR Jones Nevada County Local Agency Formation Commission 950 Maidu Avenue Setting Standardo ofF.xcellem:e Nevada City, California 95959 Subject: Request for an extension: Conditional Approval dated 1/18/01 Burwteen Offxe 11570 Donner Pass Road Truckee, California Dear SR: btaditaq Aadreo Truckee Donner Public Utility District received Conditional Approval from Post office sox 309 Nevada County LAFCo to provide Broadband Services on January 18, 2001. At Truckeethat time the Commission approved it's Resolution 01-01 specifying those California96160 conditions the District must meet prior to receiving a Certificate of Compliance U,pbane to provide Broadband Services within the District's service area, including a (S30) 587-3896 time limit of two years to receive such a Certificate. As part of the Resolution www.tdpud_org the District was given the ability to request an extension of the two-year time limit. In that the District has not completed all of the items required by Resolution 01-01, it is requested that a one-year extension be granted. Following the Commissions meeting in January 2001, the District began the process of negotiating a Cable Television Franchise with the Town of Truckee, seeking Project Financing, hiring a firm to assist in the design of a hybrid fiber coax broadband delivery system, drafting a Master Services Element for Broadband Services & designing and locating a Risk Mitigation Plan. Below is a summary of activity that has taken place from January '01 to date. January `01 ➢ Nevada County LAFCo gives TDPUD Broadband "Conditional Approval' Sailers Engineering hired to prepare Master Services Element for Broadband Services ➢ District Staff meet with Vectren Communications to discuss Risk Mitigation Plan February `01 District Staff meet with Sailers Engineering to outline Master Services Element for Broadband Services District Staff and District Legal Council meet to outline District BOARD of DiRec7oRs position for negotiation of Cable Television Franchise with Town of Jo¢ephR.Ague,a Truckee and Placer County J.Ronald Henna, ➢ Vectren Communications notified District of personnel changes. ,Tame+A.mum District ends relationship with Vectren Communications Patricia S.Suttan Nebo, Mw G.uuly GENERAL MANAGER Peter L.XoL-zmeister March `01 ➢ District Staff meet with Vectren Communications regarding Tour of Glasgow Kentucky's Municipal Broadband operation, Risk Mitigation &possible CLEC partnership District Staff continue to prepare data for Franchise Negotiations with Town of Truckee and Placer County ➢ District Staff meet with Placer County Telecommunications Staff to discuss Cable Television Franchise ➢ District Staff meet with Town of Truckee to discuss Cable Television Franchise April `01 District Staff continue to meet with Town of Truckee regarding Cable Television Franchise District Board member and Staff tour Glasgow Kentucky's municipal Broadband operation May `O1 ➢ District Staff update Broadband Business Unit Proforma and deliver to Board of Directors ➢ District Staff meet with US Bank to discuss possible financing of Broadband Infrastructure ➢ District prepares, approves and transmits Network Design RFP's. June `01 District Staff meet with Bond Counsel and Investment Banking firm to discuss Broadband financing District evaluates and approves engineering firm to design Broadband Infrastructure July `01 District Staff meet with FSG to determine the type of network design to be used in providing Broadband Services to District customers District Staff continue Cable Television Franchise Negotiations with Town of Truckee August `01 District Staff continue to work with engineering/design firm District picks method of service delivery > District Staff meet with FSG regarding possible Risk Mitigation Plan District Staff visit Alameda Power and Telecom, a municipal provider of High Speed Data and Cable Television Services September `01 Y District Staff meet with Nevada County Telecommunications Staff and CAO ➢ District Staff and Legal Counsel review changes in Federal Regulations relating to Cable Television Franchises October `01 ➢ District picks electronics for Network Operations Center November `01 District Staff and engineering/design firm begin finalizing network design ➢ District staff and Legal Counsel meet with Town of Truckee regarding Cable Television Franchise ➢ District Staff meet with banking institutions regarding Broadband financing December `01 ➢ District Staff and engineering/design firm begin finalizing network design ➢ District staff and Legal Counsel meet with Town of Truckee regarding Cable Television Franchise ➢ District Staff meet with Investment Banking firm regarding Broadband financing ➢ District Staff meet with "Fiber to the Home" (FTTH) electronics provider January `02 District Staff meet with local developers to discuss telecommunication infrastructure to be deployed in "Greenfield Builds" ➢ District Staff conduct franchise negotiations with the Town of Truckee ➢ District Staff tour Grant County Washington's municipal FTTH project ➢ Board enters into contract negotiations with Investment Banking firm to assist in preparation of documents for submittal to potential lenders February `02 District ceases negotiations with Investment Banking firm ➢ District Staff initiates investigation of FTTH build in Truckee ➢ District Staff recommends change in the method of service delivery from HFC to FTTH March `02 District Staff continues due diligence of FTTH opportunity District Staff tours FTTH build in Roseville, California April `02 ➢ District Staff continues due diligence of FTTH opportunity District Staff meet with Aggregate Networks to discuss possible contract to assist in location of Lease Financing, Business Case updates and FTTH opportunities May `02 ➢ District approves contract with Aggregate Networks ➢ District Staff meet with Sierra College regarding broadband needs in Truckee June'02 ➢ District Board votes to provide Broadband Services Staff attends Community FTTH Conference District Staff meet with Aggregate Networks to begin preparation of revised Business Case July `02 District Staff meet with various FTTH electronics providers v District Staff continues preparation of revised Business Case District Staff and Aggregate Networks meet with potential "Anchor Customers", including the Town of Truckee, Tahoe Forest Hospital, Tahoe Truckee Unified School District and Sierra College regarding their specific broadband needs District Staff again meet with Sauers Engineering to revise draft Master Services Element for Broadband Services August `02 District Staff begins to evaluate possible FTTH Pilot Project ➢ District Staff meet with potential Pilot Project partners including fiber providers, electronics providers & service providers District Staff holds first Public Forum. Topic—FTTH Technology ➢ District Consultant, Sauers Engineering, prepare updated Broadband CEQA Negative Declaration and submit to Board and all other related governmental entities for comment District Staff meet with Roseville Telephone to discuss FTTH technologies September `02 ➢ District holds Public Hearing on Broadband CEQA Negative Declaration ➢ District Staff meets with Town Manager regarding Cable Television Franchise As you can see, we have been very busy over the past twenty months. We have completed an HFC system design, found that the cost of a Fiber to the Home design would be not only cost effective, but would provide a greater "future proofing", thus our schedule was set back approximately eight months. We are in the process of finalizing a Master Services Element for FTTH Broadband Services, meeting with the Town of Truckee to finalize a Cable Television Franchise, and working with Aggregate Networks to locate financing that will not in any way encumber District Electric or Water assets or future revenues, thus eliminating risk to the District. In order for the District to complete those tasks necessary for final LAFCo approval it is estimated that a one-year extension is required. Thus we formally request that you place this item on your Commission's October '02 Agenda for action. Thank your very much for your assistance. I can be reached at the numbers below if you have any questions. Very truly yours, Alan Harry Director of Telecommunications Services Truckee Donner Public Utility District Office— 530/582-3951 Cell—530/448-3027