SR-08-25-2015-3Q
City Council
Report
City Council Regular Meeting: August 25, 2015
Agenda Item: 3.Q
1 of 4
To: Mayor and City Council
From: Andy Agle, Director, Housing and Economic Development
Subject: Economic Development Administration Grant Application
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to execute all necessary documents to apply for an
Economic Development Assistance Program grant for the Commercial
Broadband Economic Development program, accept the grant, and accept all
grant renewals, if awarded.
2. Authorize budget changes as outlined in the Financial Impacts & Budget Actions
section of this report, in the event that the grant is awarded.
Executive Summary
Staff is preparing an application seeking $1.75 million in Economic Development
Assistance Program grant funds for the design and construction of additional community
broadband infrastructure to serve local businesses throughout Santa Monica.
If awarded, the grant would require a local match of $1.75 million, which would be
provided over a four-year period by the City’s Information Systems Department in the
form of in-kind services and funds. Staff recommends authorizing the City Manager to
apply for and accept the grant, if awarded, and accept all grant renewals, if awarded.
Background
In March 2010 (Attachment A), the City launched its CityNet broadband services
(CityNet) in an effort to stimulate economic development and foster local business
expansion and retention. CityNet provides high capacity (100 gigabit per second)
broadband utility service at cost-competitive rates to various businesses throughout
2 of 4
the City. CityNet offers globally competitive speeds while reducing broadband costs by
up to 67 percent by promoting competition in the Internet Services
Provider marketplace.
While many local businesses would like to take advantage of CityNet, the existing
broadband network doesn’t extend to all business corridors in Santa Monica.
Infrastructure costs to expand the network can exceed $100,000 per City block, which
has slowed expansion of the City’s broadband network. If additional funds were
available, the City could leverage its resources to expand the network infrastructure,
thereby increasing the broadband utility service to businesses currently not connected
to CityNet.
The Economic Development Assistance Program (EDAP) Public Works program is
administered by the Economic Development Administration (EDA), U.S. Department of
Commerce, and grants funds to communities to support collaborative regional
innovation, foster job creation, and attract private investment based on various EDA
investment priorities and a competitive grant application process. The EDA awarded
$99 million in grant funding through the EDAP Public Works program in 2015. The
average size of a Public Works investment is $1.4 million and approximately 80 to 150
Public Works projects are funded a year. The expansion of the City’s broadband
infrastructure meets the EDA’s investment priorities by helping attract and retain
employers with its business-class, cost-competitive internet services and by creating
local jobs while promoting new technology.
Discussion
The Information Systems Department (ISD) has identified several businesses in various
parts of the City that have interest in contracting for CityNet service, as demand for the
service continues to grow. However, the City has been unable to address the interest
and increased demand since the broadband infrastructure network is not available in all
areas of Santa Monica. The service is one of the City’s most effective economic
development tools to support the local business community and help create a vibrant,
sustainable local economy. Leveraging outside grant funds would enable the City to
3 of 4
expand the network, provide interested businesses with access to world-class
broadband, and increase the CityNet customer base.
The EDA has advised staff to submit an application as soon as possible, as applications
are accepted and reviewed on an ongoing basis by the EDA. As part of the application
package, the City must demonstrate its willingness to accept the EDAP funding, if
awarded, and its commitment to the project by committing matching funding of at least
50 percent of the total project budget of $3.5 million. The proposed local match would
be $1.75 million, consisting of $400,000 for utility under-grounding and other
construction-related services to be completed by an outside vendor pending the
competitive bidding process, and $1.35 million of in-kind support from existing city staff
salaries, wages, and benefits allocated to the project for engineering design, network
design, permitting, project management, and other construction management
related tasks. Staff plans to submit the application to the EDA within the next six weeks.
The EDA Investment Review Committee will review applications and make funding
recommendations to the Regional Director. The Regional Director will then select
successful applicants and, after initial award notifications are sent and due diligence
requirements are met, EDA will issue the official award document.
4 of 4
Financial Impacts and Budget Actions
The total amount of grant funds requested from the EDA is $1.75 million. If awarded, the
grant requires a 100 percent local match of $1.75 million, which will be appropriated in
the ISD Community Broadband operating budget over the next four years.
The Community Broadband Division operating budget will appropriate $100,000 per
year, over the four-year grant period, for a total of $400,000. The $400,000
appropriation will be used for utility under-grounding and other construction-related
services to be completed by an outside vendor(s) pending a competitive
bidding process. The City’s in-kind support portion of the required grant matching funds
will include $1.35 million from Community Broadband Division staff salaries, wages, and
benefits allocated to the project over the four year project term, for engineering design,
network design, permitting, project management, inspection, and other construction -
management-related services.
If awarded, revenue and expenditure budgets will be appropriated for FY 2015-16 for
the awarded grant amount. If renewals are awarded, budget changes will be included in
subsequent year budgets, contingent on Council budget approval.
Prepared By: Steven Hull, Principal Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. June 22, 2010 Staff Report (web link)