sr-062210-1lCity Council Meeting: June 22, 2010
Agenda Item: ~ ~ L
To: Mayor and City Council
From: Jory Wolf, Chief Information Officer
Subject: Lit Services Lease Agreement with Ocean Ave LLC d/b/a Fairmont
Miramar Santa Monica
Recommended Action
Staff recommends that the City Council:
1) Authorize the City Manager to negotiate and execute atwo-year agreement
with Ocean Ave LLC d/b/a Fairmont Miramar Santa Monica for the lease of Lit
Services, in an amount not less than $13,440 per year with two annual
renewal options.
2) Authorize the City Manager to negotiate and execute Lit Services 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 that is available for lease. Response to the City's
current Dark Fiber leasing program has identified an opportunity to optimize the MFN to
provide additional services to Santa Monica businesses. While a number of
organizations within Santa Monica have leased dark fiber through the City of Santa
Monica, a growing number of Santa Monica businesses and Internet Service Providers
(ISPs) have expressed interest in a City option for Lit Services to complement the City's
current dark fiber offering. Lit Services include the provisioning, equipment installation,
management, and support of all services required to multiplex dark fiber to allow
network connections to multiple parties over a single pair of fiber optic strands. By
leasing Lit Services, organizations can implement disaster recovery solutions, high-
speed network connectivity, and transport large data files to alternate locations. or to
business partners: In addition, the City may utilize the infrastructure to obtain
competitively priced bandwidth, connect networks with regional, municipal, and county
networks for public safety, and for disaster recovery. Leasing of Lit Services will
generate financial returns for the continued development of the MFN and stimulate
economic growth by offering acutting-edge network infrastructure to attract and retain
technology and tech-centric organizations. One organization that operates the historic
Fairmont Hotel Santa Monica, Ocean Ave LLC d/b/a Fairmont Miramar Santa Monica,
has requested a Lit Services option due to their growing need to increase bandwidth for
operations and to accommodate international diplomats and global executive guests
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with higher technology requirements. City staff has reviewed the request and
recommends that the City enter into atwo-year Lit Services lease agreement with
Ocean Ave LLC d/b/a Fairmont Miramar in an amount not less than $13;440 per year,
with two annual renewal options. Staff also recommends annual price adjustments to
the second year of the Initial Term and each annual renewal option according to the
Consumer Price Index, and recommends that the City negotiate and execute Lit
Services lease agreements with other interested parties should those parties exist.
Background
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 spur economic growth. The MFN, with registered service
mark "Santa Monica City Nets"'", contains an amount of unused dark fiber for leasing to
local businesses. On April 25, 2006, Council authorized the City Manager to negotiate
and execute dark fiber lease agreements with Google Inc. and other interested parties
should those opportunities exist. The City's dark fiber lease offering has obtained a
growing demand from large corporations and technology centric organizations.
However, a large number of small and mid-sized corporations do not need the
bandwidth capacity of dark fiber and have rather expressed an interest in obtaining Lit
Services from the City to establish network connections to ISPs and to transport data.
Discussion
In an effort to utilize current technology to offer advanced telecommunications solutions
and reduce costs for the City, staff deployed a 10 Gigabit Fiber Optic Network capable
of obtaining internet services from over 160 ISPs. By offering Lit Services for interested
parties to connect to a number of ISPs, Santa Monica organizations may reduce the
construction costs typically required for a new ISP selection at a commercial building, to
the benefit of all building tenants. In addition, Santa Monica businesses may have the
opportunity to obtain wholesale rates due to the increased purchasing power of a group
selection. Finally, the City will have the ability to allocate its dark fiber assets more
efficiently, by utilizing a single pair of dark fiber to serve multiple businesses.
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Standard Lit Services lease rates are established and modeled after the City's existing
Dark Fiber lease rates with additional Lit Services costs factored into the lease rate. In
addition, construction costs and a connection fee are applicable to the first Lit Services
connection at a commercial building.
Financial Impacts & Budget Actions
Revenue account 01243.407781, "Lit Services Lease," was established to capture
revenues generated from Lit Services leases. Staff forecasts revenues for Lit Services
to meet or exceed $75,000 in Fiscal Year 2010-11.
Prepared by: Gary Carter, Administrative Analyst
Approved:
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~~ Jory Wolf, Chief Information Officer
Information Systems Department
Forwarded to Council:
Rod Gould
City Manager
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Reference Contract No.
9232 (CCS).