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SR-101-003-04-05 (6) e .- J City of Santa Monica'" City Council Report City Council Meeting: April 25, 2q~6 Agenda Item: ~ To: From: Subject: Mayor and City Council Jory Wolf, Chief Information Officer Dark Fiber Lease Agreement with Google Inc. and Dark Fiber Leasing. Recommended Action It is recommended that the City Council authorize the City Manager to negotiate and execute an agreement with Google Inc. for the lease of dark fiber in an amount not less than $9,636 for one year, with two annual renewal options. It is also recommended that the City Council authorize the City Manager to negotiate and execute dark fiber lease agreements with other interested parties should those opportunities exist. Executive Summary The City of Santa Monica has built a Municipal Fiber Network (MFN) for delivering voice, video and data communications to City facilities. The MFN has an abundance of unused fiber strands, called dark fiber, which could be made available for lease. By leasing dark fiber, the City will provide businesses in Santa Monica with the ability to install high speed networks, connect their offices in Santa Monica or to connect their offices to other businesses in the city and beyond. Leasing of dark fiber will generate financial returns for the development of the MFN and stimulate economic growth. 1 An ad was placed in a local publication to announce the opportunity to lease dark fiber from the City and to solicit interest. Thus far, Google Inc. has expressed interest in leasing dark fiber from the City, but it is likely that other businesses will wish to do the same. Staff recommends that the City enter into a lease agreement with Google Inc. in an amount not less than $9,636 for one year, with two annual renewal options tied to the Consumer Price Index. Staff also recommends that the City negotiate and execute dark fiber lease agreements using established lease rates with other interested parties should those opportunities exist. Discussion Backqround Like many municipalities, Santa Monica has built an MFN for enhanced delivery of government services, improving performance and lowering costs of telecommunications services for City facilities and to stimulate economic growth. The MFN contains a sufficient amount of unused dark fiber that could be leased to local businesses. Leasing of dark fiber to local businesses is common for cities and public utilities that have fiber optic assets. Locally, these cities and public utilities include the City of Anaheim, City of Pasadena, City of Glendale, City of Burbank, Los Angeles Department of Water and Power, and City and County of Los Angeles. Leasing of dark fiber will provide local businesses with the ability to install high speed networks that connect their offices in Santa Monica or connect their office to other 2 businesses in the city and beyond. In addition, leasing dark fiber will generate financial returns for the development of the MFN and will stimulate economic growth. Standard dark fiber lease rates have been established and are modeled after rates in cities of comparable size. They begin with a three mile minimum charge, followed by additional charges per linear foot of fiber optic cable. A building entrance fee is also charged if a path needs to be constructed between the business point and demarcation, and the closest pull box. Contractor/Consultant Selection In March 2006, an ad was placed in the Los Angeles Times soliciting interested parties to contact the City if they are interested in the leasing of dark fiber. To date, the Information Systems Division has received interest from one vendor, Google Inc. City staff has reviewed the request and recommends that the City enter into a dark fiber lease agreement with Google Inc. and to negotiate and execute dark fiber lease agreements with other interested parties should those opportunities exist. BudgetlFinanciallmpact Revenue account 01223.407780, "Dark Fiber Lease," has been established to capture revenues generated from dark fiber leases. 3 Prepared by: Phil Tong, Senior Administrative Analyst Approved: Forwarded to Council: ry. olf Chief Information Officer Information Systems 4 Reference Contract No. 8578 CCS