HomeMy WebLinkAbout2023-12-12; City Council; ; Conduit and Fiber License Agreement with Netly Fiber Holdings, LLC., to Grant a License for the Use of City-Owned Conduit in Exchange for Fiber-optic CableCA Review GH
Meeting Date: Dec. 12, 2023
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Maria Callander, Director of Information Technology
maria.callander@carlsbadca.gov, 442-339-2454
Subject: Conduit and Fiber License Agreement with Netly Fiber Holdings, LLC., to
Grant a License for the Use of City-Owned Conduit in Exchange for Fiber-
optic Cable
Districts: All
Recommended Action
Adopt a resolution authorizing the City Manager to execute a conduit and fiber license agreement
with Netly Fiber Holdings, LLC.
Executive Summary
The City Council approved the creation of the Carlsbad Digital Information Network in 2019 to
modernize the city’s data and computer systems infrastructure. The second phase of that
project involves providing upgraded network capacity for the city’s traffic management system.
The City Council is now being asked to approve a license agreement that establishes the
foundation for a mutually beneficial relationship between the city and Netly Fiber Holdings,
LLC, or Netly. This agreement will give Netly access to portions of the city’s underground
conduit lines in exchange for the city having dedicated access to Netly’s fiber-optic cable lines.
While this agreement initially applies to only one stretch of Rancho Santa Fe Road, the
agreement could be amended to add additional area and allow the city to use Netly’s fiber-
optic cabling in other locations around Carlsbad. The access to city-dedicated fiber-optic cable
increases the capabilities of the city’s digital network and will help to meet the city’s
anticipated future traffic signal management needs.
Government Code Section 37380 provides the authority for the city to lease or license property
that it holds or controls, including conduit, however the City Council must approve the license
agreement.
Explanation & Analysis
Background
The City Council approved a pilot project to install a new traffic management system in the
Capital Improvement Program budget for fiscal year 2010-11. This system required data
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network connectivity between traffic signals and a centralized control system at the Faraday
Administration Center to allow staff to centrally manage and monitor the system.
The network initially used a series of wireless communication devices and later copper wiring,
similar to the landline phone wiring one would find in a residential property. This copper cable
was installed in underground conduits.
Using copper wiring was not the leading practice then, and the wiring falls far short of meeting
the needs of today’s all-digital environment. The current practice is to deploy fiber-optic cabling
for data networks. The fiber-optic cable can carry much larger amounts of data more quickly
along with a far greater ability to be expanded as data needs increase over time.
The city chose to deploy wireless communication devices and copper cable because of cost
concerns at the time. However, this decision created long-term deficiencies, such as:
• The inability to provide the data capacity needed for modern traffic systems
• Incompatibility with robust and modern network device technology
• Inability to utilize the traffic management network for other technological applications
Unfortunately, the costs to install fiber-optic cabling are now far more than they would have
been in 2010-2014, when most of this network was being implemented. However, the existing
underground conduit running under streets around the city can still be used to deploy fiber-
optic cabling.
The City Council approved the development of the Carlsbad Digital Information Network on
Dec. 17, 2019, along with the purchase of equipment and services necessary to support the
network. The initial phase of the project was completed in March 2022, and has proved to be
very beneficial, as staff reported to the City Council in an update on Sept. 22, 2020.
The second phase of the project is intended to expand the network used for the traffic
management system. Several improvements have already been completed, but one remaining
issue is the replacement of the obsolete copper wiring.
Proposed agreement
The City Council is being asked to approve a new license agreement for conduit and fiber-optic
cable with Netly,1 a company that installs fiber-optic cables to then lease access to those cables
to internet service providers. These providers typically serve residential customers. Netly has
recently begun to expand into various parts of the city to install conduit and fiber-optic cable
for its customers. The proposed license agreement would allow Netly to use already installed
conduit owned by the city in exchange for use of city-dedicated fiber-optic cable at no cost to
the city.
By allowing Netly to use the existing city-owned conduit, there would be less need to perform
construction activities on city streets, which can degrade their integrity and impact on the
1 Netly is managed by a company known as Ubiquity Management, LLC, but the agreement is with its public utility
and asset-owning subsidiary, Netly. Ubiquity was the managing company behind Netly at its inception. Netly
received a certificate of public convenience and necessity, from the California Public Utilities Commission that
allows Netly to act as a utility and install infrastructure in the public right-of-way.
Dec. 12, 2023 Item #9 Page 2 of 22
public. The installation of the fiber-optic cable into a pre-existing conduit will also enable Netly
to deliver services to residents more quickly and with less disruption on major streets.
If it is determined that a license agreement with Netly is not in the best interest of the city,
Netly has indicated it will proceed with construction to install its own conduit, which would
involve digging trenches in the right of way to lay conduit.
If the license agreement is approved by the City Council, Netly would install fiber-optic cable
that the city can use to interconnect traffic signals with the latest network technology, which
will provide more robust communication speeds and capabilities. This agreement will help to
meet the goals of the City Council’s Five-Year Strategic Plan relating to Quality of Life & Safety
and Organizational Excellence & Fiscal Health.
The initial scope of the license agreement would cover only a section of Rancho Santa Fe Road
between San Elijo Road and Olivenhain Road. There is a small segment between the
intersections of Camino de Los Coches and Calle Barcelona where no existing underground
conduit is in place. Netly will have to secure the necessary permitting and then perform
construction activities in this location to complete the underground conduit network and, while
this section of conduit is not subject to the license agreement, Netly would still provide access
to fiber-optic cabling for the city.
Over the next three to five years, Netly is looking to expand its services to the entire city. As it
does so, if there are other areas where city-owned conduit is available and can be used to
expand Netly’s network, the City Manager would have the delegated authority to execute an
amendment to the agreement that would provide for the same arrangement in that part of the
city again at no cost. It is proposed that the City Manager will have the authority to approve
these amendments if Netly moves forward with expansion.
The agreement covers an initial 10-year term and automatically renews for up to two additional
10-year periods, for a total term not to exceed 40 years, if extended. If Netly ceases operations
in the city or decides to abandon its fiber-optic cable infrastructure, Netly will be required to
either remove the cable lines at no cost to the city or transfer ownership of the lines to the city.
After fiber-optic cabling has been installed in city-owned conduit, staff can procure updated
networking technology and complete the process of interconnecting the traffic signal systems.
Fiscal Analysis
The proposed license agreement would have no cost to the city for the term of the agreement.
The initial scope of the license agreement applies to approximately 2.76 miles of conduit. If the
city did not take advantage of Netly’s existing fiber optic cabling, staff estimate that the costs to
upgrade the existing copper cabling to fiber in this area could range between $60,000 and
$150,000.
There is additional potential value in this license agreement because it may be amended for
expansion into other areas of the city where the city has conduit and Netly wishes to install
fiber. Staff estimate that changing all of the copper wiring used to connect the city’s traffic
signals for fiber-optic cable citywide could range in cost from $3 million to as much as $9
million. There are numerous factors that could lead to cost variability, which is why the
estimate has such a broad range.
Dec. 12, 2023 Item #9 Page 3 of 22
The city’s Strategic Digital Transformation Investment Program includes current and future
funding in support of the city’s digital information network. Additional costs, if necessary,
related to the buying and implementing of necessary network equipment and contractor costs
to complete connectivity inside the traffic management infrastructure would be funded
through this program.
Additionally, staff may request funds for the installation of fiber-optic cable through the annual
budget process to cover parts of the city where there is no overlap between city-owned conduit
and the areas where Netly wishes to install its cabling.
Options
1. Adopt the resolution authorizing the City Manager to execute a conduit and fiber license
agreement with Netly Fiber Holdings, LLC
Pros
• No cost access to city-dedicated fiber-optic cable
• Provides additional network capacity for new technology
• Improved traffic signal communication
• Quicker access to high-speed internet services for residents
• Requires much less trenching on local roads, reducing disruption and road
maintenance costs
Cons
• None identified
2. Don’t adopt the resolution authorizing the City Manager to execute a conduit and fiber
license agreement with Netly Fiber Holdings, LLC
Pros
• None identified
Cons
• The city will need to install its own fiber-optic cabling, potentially costing up to a $9
million
• Netly will conduct more road construction activities on city streets
Staff recommend Option 1.
Next Steps
With the City Council’s approval, the City Manager will execute the Conduit and Fiber License
Agreement for with Netly Fiber Holdings, LLC.
Environmental Evaluation
The City Planner finds that adoption of the resolution authorizing a license agreement with
Netly for construction of fiber optic cables within city right-of-way is exempt from
environmental review under the California Environmental Quality Act under CEQA Guidelines
section 15303 (d) New Construction or Conversion of Small Structures and 15304 (f) Minor or
Temporary Use of Land, because it can be seen with certainty that the project will have no
significant negative impact on the environment. Furthermore, the City Planner, through the
process outlined in Carlsbad Municipal Code Section 19.04.060, posted a notice with this
Dec. 12, 2023 Item #9 Page 4 of 22
determination on November 29, 2023. As of the docket date of this staff report, no appeals of
this determination were received in accordance with Carlsbad Municipal Code Section
21.54.140. If an appeal is not filed end of business on December 11, 2023; this determination is
final.
Exhibits
1. City Council resolution
Dec. 12, 2023 Item #9 Page 5 of 22
RESOLUTION NO. 2023-289
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A CONDUIT
AND FIBER LICENSE AGREEMENT WITH NETLY FIBER HOLDINGS, LLC
WHEREAS, the City Council of the City of Carlsbad, California has determined that it is in the
best interests of the city to enter into a Conduit and Fiber License Agreement, or Agreement, with Netly
Fiber Holdings, LLC; and
WHEREAS, the City Council of the City of Carlsbad has received a presentation on
December 12, 2023, concerning the recommendation to execute the Agreement with Netly Fiber
Holdings, LLC, hereinafter referred to as "Netly"; and
WHEREAS, the City of Carlsbad has established and maintains an underground conduit network
primarily dedicated to the traffic signal system within the city; and
WHEREAS, Government Code Section 37380 provides the authority for the city to lease or
license property that it holds or controls, including conduit, subject to City Council approval; and
WHEREAS, Netly is a provider of conduit and fiber networks within the city limits; and
WHEREAS, Netly seeks to license the city's existing underground conduit network for the
purpose of installing and maintaining fiber optic cables; and
WHEREAS, in exchange for the licensed conduit, Netly will install and provide city-dedicated
fiber optic cable for the city's use; and
WHEREAS, the ability to use the city-dedicated fiber will allow the city to expand its network
infrastructure and avoid the construction costs of the city having to install fiber in locations the city is
in need of connectivity: and
WHEREAS the initial scope of the Agreement includes a section of Rancho Santa Fe Road
between the intersections of San Elijo Road and Olivenhain Road, as depicted in Exhibit 'A' to the
Agreement; and
WHEREAS, The City Planner finds that the adoption this resolution authorizing the Agreement
with Netly for construction of fiber optic cables within city right-of-way is exempt from environmental
review under the California Environmental Quality Act under CEQA Guidelines section 15303{d) New
Construction or Conversion of Small Structures and 15304{f) Minor or Temporary Use of Land, because
it can be seen with certainty that the project will have no significant negative impact on the
Exhibit 1
Dec. 12, 2023 Item #9 Page 6 of 22
environment. Furthermore, the City Planner, through the process outlined in Carlsbad Municipal Code
Section 19.04.060, posted a notice with this determination on November 29, 2023; and
WHEREAS, if there are areas where city-owned conduit is available and it is mutually beneficial
to both parties to allow Netly to install fiber that the city can use to improve our network, the parties
would execute amendments to the Agreement to include the additional licensed conduit and fiber
sections; and
WHEREAS, the City Manager will have the authority to execute amendments to the Agreement
to expand the reach of the licensed conduit and city-dedicated fiber locations, subject to approval as
to form by the City Attorney; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the Conduit and Fiber License Agreement (Attachment A) with Netly Fiber Holdings,
LLC is hereby approved.
3.That the City Manager or designee is authorized to execute amendments to the
agreement on behalf of the city, subject to approval as to form by the City Attorney.
4.That the City Manager or designee is authorized to sign all other documents necessary
to finalize, implement and comply with the implementation and execution of Conduit
and Fiber License Agreement, subject to approval as to form by the City Attorney.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 15th day of December, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.
None.
None.
None.
KEITH BLACKBURN, Mayor
Dec. 12, 2023 Item #9 Page 7 of 22
Legend
New Vault
New NFH Conduit
Existing City Conduit
Exhibit A - Rancho Santa Fe Rd.
NFH to build conduit to
complete segment. City
fiber to continue through
new NFH conduit.
NFH to place new 2' x 3'
underground vaults adjacent to
existing City vaults at each signaled
intersection (9 total).
NFH will install splice cases for
demarcation for splicing of city
fiber.
NFH and City to coordinate splicing
at demarcation upon completion of
fiber installation.
DocuSign Envelope ID: B79D6B36-07BD-4E3A-AA8C-6B63AE17D334
Dec. 12, 2023 Item #9 Page 22 of 22