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HomeMy Public PortalAboutMinutes_City Council Special Meeting_07262022 CITY COUNCIL SPECIAL MEETING IONA CITY HALL JULY 26,2022—6:00 P.M. PRESENT: Mayor Dan Gubler, Council President Rob Geray, Council Member Michael Thompson, Council Member Peter Wadsworth, Council Member Evan Mann and City Clerk/Treasurer Keri West. ABSENT: Public Works Director Zech Prouse and City Attorney Andrew Rawlings. VISITORS: Rebekah Brinkerhoff, Joel Brinkerhoff, Daniel Parrish, George Swanson, Jared Stowell, Larry Smith and Donna Smith. Mayor Gubler welcomed everyone and Council President Geray led the Pledge of Allegiance. A roll call was taken by Clerk West to open the meeting. ITEMS OF BUSINESS: Discussion and Approval of Use of American Rescue Plan Act (ARPA) Funds — Mayor Gubler stated the City has received a significant amount of funds from the American Rescue Plan Act (ARPA). He continued and stated the Council has held discussions and meetings previously on how to use those funds. Mayor Gubler stated a portion of those funds have been spent on the tennis court project. He continued and stated it has been discussed to use the remaining $450,000 to install fiber internet throughout the City. Council President Geray asked the total amount of ARPA funds received. Clerk West confirmed the City has received $506,336. Council President Geray stated he views the ARPA funds as funds that were somewhat unexpected and not part of the normal operating budget. He continued and stated the ARPA funds were distributed with the intention of installing fiber internet or improving other types of infrastructure. Council President Geray stated he thinks using the funds for a project to install fiber internet throughout the City is an appropriate use of those funds. All Council Members agreed. Mayor Gubler asked if anyone from the audience is opposed to the City using the funds for this purpose. No response. Mayor Gubler stated there are other grants available for small communities to install fiber internet,but Iona does not qualify. Mayor Gubler entertained a motion. Council Member Mann made a motion to approve the use of the American Rescue Plan Act funds not to exceed $450,000 for the general improvement and installation of fiber optic internet. Council Member Wadsworth seconded the motion. All in favor. Motion carried. Review and Discussion of Fiber Internet Proposals and Approval of Best Candidate for Fiber Internet Project — Mayor Gubler stated the City has received 4 responses to our advertised Request for Proposal (RFP) for the fiber internet project: Silver Star, Fybercom, Direct Communications and Rucon Engineers. He continued and stated he requested the City's engineering firm to review the proposals and create an analysis to compare them. Mayor Gubler stated they have done that, and the Council Members have those comparisons in front of them. Kevin Harris with Forsgren and Associates approached the podium and stated he performed the analysis of the proposals as requested by Mayor Gubler. He continued and stated he is not on the selection committee and confirmed that is the Mayor and City Council. He stated on the RFP that each section was assigned a maximum number of points possible. Mr. Harris stated it is up to the IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 selection committee on how they would like to score those points in each section. He continued and described the various sections of the RFP and what was required in each section. Mr. Harris began his review of the comparative analysis of the 4 proposals. He stated Silver Star indicated on their pro forma report that they felt $450,000 was not an adequate amount for the City to contribute for a project of this size. He continued and stated they are requesting the City to contribute an approximate total of$1,000,000 to the project. Council President Geray stated Fybercom's bid was less than the $450,000 that was advertised. Mr. Harris confirmed. He then said Rucon Engineer's bid was an alternative proposal and cannot be input into the same matrix for scoring. Mr. Harris stated their proposal was for a completely different type of system and they requested the City Council to meet with them to learn about their approach. Mayor Gubler stated their proposal was based on a"City ownership"model, similar to the City of Ammon. Mr. Harris stated he felt Direct Communications had a more complete proposal than the other candidates. He then stated Fybercom's proposal was lacking a few elements, including specifying their Project Manager and a pro forma report. Clerk West stated the City had received some concern from a few of the candidates regarding the requirement to submit detailed financial reports. She continued and stated the City Engineer, Dave Noel, had stated if the candidate did not want to provide those reports, they could choose to secure a bond for the entire project plus an extra 12 months after the project is completed. Clerk West clarified that would explain why a candidate did not provide their pro forma report. Council President Geray stated Fybercom did indicate bonding in their proposal. Mr. Harris confirmed. Mayor Gubler stated the City's intent with the RFP was to compare, as best as possible, apples to apples on the various elements of the project including total cost to the City, cost of connection, costumer's monthly fee for service, etc. Council Members began discussing monthly service rates for each candidate. Mayor Gubler stated he has reviewed the proposals and the analysis provided by Forsgren and feels that Direct Communications is the best candidate. Council Member Wadsworth asked why. Mayor Gubler stated their upfront cost and the cost to the patron after installation seem to be the most economical option. He continued and stated Fybercom would be his second choice. Council President Geray stated he believes the Rucon Engineering model is not the route the City wants to take for this project. All agreed. He then asked which companies were represented tonight. He then confirmed there are representatives from Direct Communications, Fybercom and Silver Star in the audience. Council President Geray asked Daniel Parrish with Direct Communications what their installation fee would be. He stated he understands that there is no fee for the drop to the house, but is there an additional fee for connection/installation for the consumer to pay to begin their service. Mr. Parrish stated there are no additional or activation fees to the consumer if they elect to allow installation during the initial construction phase. Mayor Gubler asked all three companies in the audience, once the drop has been made to the house, is there anything else that needs to be installed into the house or can it be connected to the existing coaxial in the house. Mr. Parrish stated they will install a box on the side of the house that will convert the fiber to a Cat 5 ethernet connection inside the home. That will then go to a router that is either provided by the company or purchased by the customer. He continued and stated from there it will go out to existing lines. Council Member Wadsworth asked Fybercom representatives to answer the same question. Jared Stowell with Fybercom confirmed theirs would be a similar process. He also stated the fiber cannot be connected to existing coaxial lines. Mayor Gubler stated many homes in Iona are much older and only have coaxial. Mr. Stowell stated if those homes have phone lines, they most likely have Cat 2 IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 5 cable. Council Member Wadsworth asked if there are older homes that do not have Cat 5 cable, but want to connect to the fiber system, is the fee for installation going to increase for those patrons. Mr. Parrish stated the vast majority of those homes will have wireless inside the home that is hard lined into the home to a specific device. Council Member Wadsworth asked about the router that is required to connect to the new fiber system and its additional cost to the customer. Mr. Stowell stated Fybercom will lease it to the customer for $11/month, or the customer could purchase their own for approximately $200. Council Member Wadsworth stated if the City pays to have fiber dropped to all of the homes in the City, the customer will still need to pay for the upgraded router. He continued and stated Fybercom is charging an activation fee of$125 to each customer, Silver Star is charging$99 and Direct Communications is not charging an activation fee. However, each customer will still have to pay to use the new service because they will need to purchase a router if they don't already have one. All candidates confirmed this is the case. Council President Geray stated that is standard in any internet format. All agreed. Council President Geray then asked if the routers would be compatible between fiber companies, or if each company requires their own. All representatives stated routers would be compatible. Mr. Stowell stated there are many people that already have routers that will be compatible with the fiber network and will not need to purchase a new one. Council Member Thompson stated Fybercom is requesting the City to contribute $398,000 for the project. He asked if there are any additional fees to drop it to the house, not including the $125 activation fee to the customer. Mr. Stowell confirmed there are no other fees. Council Member Mann asked Fybercom how they are able to propose such a lower amount than the other companies. Mr. Stowell stated they are already in nearby neighborhoods and they already have the budget set aside to install fiber throughout the entire City of Iona. He continued and stated they were already planning on bringing their fiber line into Iona, but when the RFP was announced they felt it would be a good opportunity to subsidize their costs. Mr. Stowell also said they chose to propose an amount under the $450,000 to allow the City to keep those additional funds and use them on other projects. He also stated their proposal includes free fiber service for all government buildings in the City of Iona for an extended period of time. Clerk West stated that would total approximately $28,000, according to their proposal. Council Member Wadsworth stated he is reading through the customer costs on the Fybercom proposal and wants to clarify the installation costs. Mr. Stowell stated residential installation is $125 and business installation is $200. Council Member Wadsworth asked if home-based businesses would be charged the $200. Mr. Stowell stated only if that customer wants a business class set up. He continued and explained the differences between business and residential. Council Member Wadsworth stated he has calculated the overall costs and if the project has a take rate of 100%, Direct Communications is approximately $71,000 cheaper than Fybercom with the installation fees. Council Member Mann stated a take rate of 100% is unrealistic and would estimate closer to 75%. Council Member Thompson asked where Fybercom gets their internet from. Mr. Stowell stated the data centers are in strategic locations throughout the world and none of them are in Idaho. He continued and stated they have 3 large trunk lines from Seattle and Denver. Council Member Thompson asked Direct Communications and Silver Star the same question. Silver Star representative stated they also have large trunk lines that go the data center in Seattle. He continued and stated those lines are leased, but they are working on owning their own line. Fybercom and Direct Communications stated their lines are also leased and it is very rare for a 3 IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 company to own their complete line, unless they are in one of those major cities with data centers. Council President Geray stated Silver Star's proposal indicated their capability to have speeds up to 10gb. He asked the other companies if they anticipate being able to upgrade and offer higher speeds in the future. Mr. Parrish confirmed and stated Direct Communications is currently installing 1gb symmetrical service and 10gb scalable. He explained that means when they are ready to upgrade, they will not need to purchase all new equipment to do so. Mr. Stowell stated their lines are also 10gb capable. Council President Geray expressed appreciation to all three companies for taking the time to submit a proposal and attending the meeting tonight. He continued and stated the higher connection fee and the $1,000,000 commitment from the City on the Silver Star proposal makes it difficult for him to consider them for this project. Council President Geray stated his top 2 would be Direct Communications and Fybercom. However, even with the $50,000 discount from Fybercom, he feels the long-term benefit with Direct Communications is better for the customer. He also stated their proposal was more comprehensive and transparent than Fybercom. Council President Geray also stated he has not had a good impression from Fybercom because of their advertising and such of claiming to already be in Iona. Mr. Stowell clarified they do have a tower on the hill and have many wireless customers in the City of Iona. Council President Geray stated his personal opinion is to move forward with Direct Communications because they have been more invested in the project thus far and their customer fees are much lower. Mayor Gubler asked if anyone from the audience had any questions. Rebekah Brinkerhoff asked all three companies if they offer true fiber or if it would be wireless to Iona and then fiber throughout the City. All three companies confirmed they offer true fiber. Council Member Thompson stated Director Prouse was not able to make it to the meeting tonight, but he did write a letter stating Direct Communications is at the top of his list with Fybercom as a distant second. Council Member Wadsworth asked all companies if they are planning on using micro trenching as their install method. Mr. Stowell stated Fybercom does a directional drilling method. Mayor Gubler stated Direct Communications has already stated and included in their proposal they will use the City's preferred installation method. Council Member Wadsworth stated he does appreciate that Fybercom is all around Iona and feels that may help them provide better service and support. Council Member Mann asked about sourcing materials and how that will impact the project. Mr. Parrish stated Direct Communications said every fiber company is concerned about sourcing materials right now. However, their company purchases hundreds of miles of material every year and meet with various distributors regularly. He continued and stated they currently have enough material in their yard to complete this project. Mr. Stowell stated Fybercom currently has approximately $6 million worth of material in their storage yard. He stated they have already purchased the material for this project because they were already planning to bring fiber to Iona. Council Member Wadsworth asked if Fybercom was already planning on bringing fiber to Iona, what is the City gaining with the $398,000? George Swanson with Fybercom stated it allows them to drop fiber to every home and not just those that immediately sign up for service. Mr. Stowell asked if it would be a benefit to the City if they had both Direct Communications and Fybercom install fiber throughout the City. He continued and stated he would support the City contracting with Direct Communications but also allowing Fybercom to come into Iona with their fiber lines to create competition. Mr. Stowell stated this would require two separate fiber 4 IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 lines and two completely different systems. Council Member Mann asked if the City should contract with Direct Communications and allow Fybercom to come in and install fiber for free. Mr. Stowell stated he loves that option. Council Member Wadsworth asked if Fybercom is planning to install fiber throughout the City at their cost, why would the City spend $450,000 to also bring fiber into the City. Clerk West asked if Fybercom did their original fiber project in Iona without contracting with the City, what would the connection fee be for the residents. Mr. Stowell stated they included the same cost in their proposal; $125 for residential and $200 for businesses. He stated that is the same price they have done for all the nearby neighborhoods. Council Member Thompson asked if they ever place liens on properties. Mr. Stowell confirmed they do not place liens on homes, like nearby cities that own their fiber system. Mayor Gubler stated the purpose of this meeting is to determine which company the City would like to move forward with in negotiations during the contract phase of this project. Mayor Gubler asked if the City Council is ready to make a motion. Council President Geray stated this situation is now more complicated knowing that Fybercom is planning on coming into Iona, no matter what. Council Member Mann stated when competition exists the consumer can benefit. Council Member Thompson asked how Direct Communications feels about this new scenario. Mr. Parrish stated he knows it is not realistic to expect they would be the only fiber company waning to do business in Iona. However, he did state they would be two separate lines, which means two construction crews and that could be a huge disruption for the City. Council Member Mann stated they would expect the two companies to follow the same schedule and location. Mr. Parrish stated each company has its own install process and timeline making it difficult for any of them to work together and coordinate location schedules. He continued and said you cannot have two crews on the same street at the same time, but he does agree that competition is good. Council Member Wadsworth stated he is not willing to tell Fybercom they can't bring fiber into the City, which means we could save $450,000 and use it on other projects throughout the City. Clerk West stated if the City contracts with Direct Communications and allows Fybercom to also install fiber, the take rate for Direct Communications will inevitably reduce. She asked Direct Communications if their proposed price to the City will increase with that knowledge. Mr. Parrish said he does not think so, but he would need to do discuss it with his company and the City. Kevin Harris stated when the City contracts with a company, every house has the opportunity to have fiber dropped to their house for free, regardless of whether they sign up for service or not. He continued and stated if Fybercom comes in on their own, the only houses that would have fiber dropped to them are those that are immediately signing up for their service. He continued and stated if those people that decline service want it later they will be required to pay for the drop to the house. Council President Geray asked Fybercom what they typically charge for customers to do that later. Mr. Stowell stated they usually do not charge anything for those customers in neighborhoods, but they charge $5/foot for houses outside of neighborhoods that have driveways over 200 feet. Council Member Mann asked if houses could have multiple fiber boxes. Mr. Parrish confirmed customers can have two boxes and two services. Council Member Thompson is in favor of the simple option to go with Direct Communications with $450,000 all in and the customer does not have any installation fee, possible inflation fees and lower monthly costs. Council Member Wadsworth asked Fybercom about their monthly packages. Mr. Stowell stated they have packages starting at $30/month at lower speeds, but they 5 IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 did not indicate that on their proposal because most of their current customers request the higher speed packages. Council Member Wadsworth asked if Fybercom will continue their plan to bring their fiber into Iona whether the City contracts with them or not. Mr. Stowell confirmed. Council Member Wadsworth stated he does not understand why the City would spend this much money if Fybercom is already bringing the service to the City. He continued and suggested the Council take a step back and decide whether they should reconsider this situation and possibly save the money and allow the people that want fiber to pay the $125 installation fee to Fybercom for their service. Council Member Mann stated the problem he sees is that if the City steps back the residents are required to follow Fybercom's schedule and costs. Council Member Wadsworth stated he thinks most residents would agree to save the money if it meant they had to wait a few more months for fiber service. Mr. Stowell stated they are prepared to start in Iona in September. Council Member Mann asked if Direct Communications is ready to start also. Mr. Parrish stated they have the material and are ready to go also. Council Member Mann stated if the City does not contract with anyone, Fybercom will bring fiber into the City, but will not be dropping it to every house. Mr. Stowell stated they have a lot of marketing tools to communicate with residents including signs, door to door sales and door tags,to determine who wants their service. Clerk West stated if the City takes a step back and does not award a company with the fiber contract, the City is still not getting competition for fiber service. Mayor Gubler stated there are other options for internet. Larry Smith from the audience stated he currently has two cable boxes in his front yard. He then asked if the City has two fiber companies bring service, will there be an additional two boxes in his front yard. Mr. Stowell stated fiber boxes are the size of sprinkler boxes and less intrusive than cable boxes. Council Member Wadsworth asked Fybercom why they have not said anything to the City about their intentions of coming into the City. Mr. Swanson stated he thought he mentioned it at the Town Hall Meeting earlier this year. Council Member Thompson asked how Fybercom recoups their costs if the City contracts with Direct Communications. Mr. Swanson stated they are confident in their service and competitive model. Mayor Gubler asked who owns Fybercom. Mr. Stowell confirmed he is the owner. He continued and stated they are not afraid to compete and stand by their product. Mr. Parrish stated they all put their information and accolades in their proposals. Kevin Harris informed the Council they can require another meeting and ask the companies to do a presentation. Council Member Mann stated he doesn't think that is necessary. Council Member Wadsworth discussed the other potential projects the City could afford with the ARPA funds. Mayor Gubler stated the ARPA funds have a deadline on when they need to be used. Council Member Thompson asked if roads were an approved use for the ARPA funds. Clerk West stated with the Final Rule for the ARPA funds, any government organization that received less than $10 million can claim their ARPA funds as "lost revenue". She continued and stated she has already completed the initial report and claimed it as such, since the City had not voted on how to use the money before the report deadline. Clerk West stated this means the City has already received the funds and is not required to adhere to any specific regulations on how to use it. Council Member Wadsworth stated he is hesitant to spend money that is not necessary. Council Member Mann stated he believes the benefits of having a contract where the City dictates the timeline outweighs the cost. Council Member Wadsworth asked Council Member Mann if he would like both companies to bring their fiber service. Council Member Mann stated that would be the best case scenario. Council Member Wadsworth did admit contracting with Direct Communications knowing that Fybercom is ready to install fiber in Iona also, does create 6 IONA CITY COUNCIL SPECIAL MEETING—JULY 26, 2022 competition for fiber that many residents have requested. Council Member Mann agreed and expressed frustration that Fybercom has not communicated their intentions with the City prior to this meeting. Clerk West agreed and stated nothing has been mentioned to her, despite numerous emails between herself and Fybercom representatives. Council Member Thompson stated audience member Joel Brinkerhoff is currently an installer for Direct Communications but has also worked for many other internet service providers. He asked him what sets Direct Communications apart from other companies in the area, from the technology perspective. Council President Geray urged him to exercise caution and not answer the question if he is uncomfortable doing so. Mr. Brinkerhoff stated he is a Network Engineer for Direct Communications and gets to see everything behind the internet that the customer doesn't see. He continued and stated he has worked in the wireless industry for years and fiber is the answer for the future of internet. He also stated the companies here tonight all use similar equipment and technology. Council Member Thompson asked his opinion as a resident of Iona. Mr. Brinkerhoff stated as a resident he would rather see City money spent on a fiber network than on concrete. Larry Smith agreed and stated fiber is an asset for all residents in the City. Mr. Smith stated he does not have a preference on which company the City chooses, but he urged the City to contract with a company to guarantee fiber will be installed throughout the City. Council President Geray suggested there may be a compromise with a lesser contract amount with Fybercom and possibly Direct Communications. Mr. Harris stated the City cannot change the parameters of the RFP at this point. Council President Geray stated the City could decline the current proposals and issue a new RFP. He then asked Mr. Smith which company he would choose. Mr. Smith stated if the Council wants to encourage competition, they would need to allow both companies into the City. Mayor Gubler stated the City cannot encourage competition without contracting with one of the companies. Council President Geray stated the only way to do that would be to contract with Direct Communications because Fybercom has said they will be coming anyway. Council Member Wadsworth asked Mr. Parrish if Direct Communications will stand by their proposal cost if they are awarded the contract tonight, knowing that Fybercom is prepared to compete for customers. Mr. Parrish stated they will honor their proposal and are not afraid of competition. Council Member Wadsworth then asked him what their contract requirement is for each customer. Mr. Parrish stated they do not require contracts, as part of their agreement with the City. Council President Geray asked Fybercom about their contract requirement. Mr. Stowell stated everything is subject to change with competition, but typically they would require a 24-month agreement with a$200 cancellation fee. Mayor Gubler entertained a motion. Council Member Wadsworth made a motion to approve Direct Communications as the best candidate for the fiber internet project for the City of Iona. Council Member Mann seconded the motion. All in favor. Motion carried. Meeting Adjourned at 7:54 p.m. COUNCIL AP ROVED: Au st 16, 2022A.)/6/ (-- Dan Gubler, Mayor ATTEST: eri West, City Clerk/Treasurer 7