City Broadband Redux I

Last night American Fork City held a Broadband Public Hearing for input and discussion on the proposal to declare the system, hardware and some fiber surplus; thereby enabling the City to send out RFPs (Requests for Proposals) to interested parties "for sale, lease or other legal disposition" for all or a part of the city owned Broadband system. Personally, I am an advocate and user of AFCNet, but as you will see a Realist as well. The following is the skinny, the low-down, the inside scoop, the ______________ (insert your own term).  The minutes will be posted soon on www.afcity.org. See also a related article in the Herald today :

• The overwhelming majority of the attendees were Broadband supporters, including some current ISPs and former ones. They, including some residents expressed concerns that any action to dispose of the Broadband was premature, not well thought out and that marketing fiber to businesses was the answer. There was some good and as usual some not so good discussion (but isnt that what Public Hearings are supposed to be....Free Speech at its finest, right?)
• Unfortunately, that Tech Train has left the station some time ago and practically speaking, the shortfalls cannot be made up, in spite of the pleas of some residents last night to give it more time. The estimated numbers just don't add up, (stay tuned for more on this with future postings), suffice it to say, there are some council members that want answers as to why we are in the state we are in.
• In the later Council mtg, the Council voted unanimously to declare the system, hardware and some fiber as surplus. We also authorized staff to prepare an RFP (Request for Proposals) to "purchase, lease, or other legal disposition" of the surplus property. NOTE: Surplus does not mean excess property, junk or unwanted property. It is a statutory requirement enabling us to put out to bid the items in question. It will provide a great opportunity to see what the system is worth on the market.
• Our RFP has some stipulations, including but not limited to: 1. That the city has first right of refusal in case of a resale proposal; 2. There be a seamless transition, (no interruption of service); 3. That there be citywide buildout; 4. That ISP contracts be honored; 5. That Broadband city employees be hired; 6. That the fees be fixed for 1 year (we were uncertain whether to set a ceiling or floor for fees), but may allow the market to dictate price. There may be other provisions set out in any sales and/or lease agreement.
• IMPORTANT......THE COUNCIL MAY REJECT ALL BIDS, THUS RETAINING OWNERSHIP. WE CAN THEN ENHANCE THE SYSTEM AND AGRESSIVELY MARKET THE FIBER TO BUSINESSES.

Reality is......we are facing a potential 35% property tax hike and a water bond election, both may be necessary for the city.  We do have 2.5 million in reserves, which begs the question; "How much in reserve do we need?" Query: How can we justify to the citizens the need for a secondary irrigation water system bond, increase in property taxes and continue to carry a yearly 1.2 mill. subsidy of the broadband?

Your comments, paradigm shifting thoughts and "out of the box" ideation are encouraged and welcomed.

Comments

[hair extensions]

I think you've made some truly interesting points. Not too many people would actually think about this the way you just did. I'm really impressed!

From Shirl: Thank you.

[Daniel Zappala]

I'm not a resident of American Fork -- but I'm a big supporter of municipalities providing a broadband backbone, so that there is competition among ISPs. Comcast's prices are outrageous in non-UTOPIA cities because they do not have serious competition. I'm just curious as to why American Fork started their own fiber system instead of joining UTOPIA.

[Mark Steele]

Shirl,

Thanks for the update on the City Broadband. It seems to me the City Council and Mayor are walking the right line on this, looking for ways to make the system viable. Keep it up!

On another topic, can you give me an idea of what’s happening on another issue that’s taking years to decide: expansion of the city cemetery. If I remember correctly, the options were purchase of the Binch or Deveraux/Beck/Bromley etc. properties (no agreement to do so from any of those parties), purchase other property somewhere in the city (where’s the money to come from), create a second cemetery using other city property over by the development center, or expand into the Filly field immediately south of the cemetery.

My own preference is Filly Field. It has the negatives of losing some recreation land, and that area is a little cramped with the rec center expansion. But there are several positives: the city already owns the land, it maintains for another decade or two the integrity of having a single cemetery, and if I remember correctly when the city received the land from the school district, it was originally intended to become part of the cemetery.

So that’s my opinion, but of course I don’t have all the facts or opinions. Could you let me know which way discussions are trending on how to deal with th existing cemetery getting full soon.

Thanks, Mark Steele

Response from Shirl: As far as the cemetery is concerned, we found additional unclaimed plots as well as the area which has some fill and other debris in the northwest area. Both give us additional plots to carry us another 2 years. We are still looking at other options. Adjacent neighbors are not interested in selling. Fillly field is a possibility but the council and staff feel that handcuffs us with Fitness Center expansion and/or parking. We are looking to the south as well as the Development Center area, but nothing definitive. Thanks for your input. If there are other changes, we will keep you informed. I do think we all want to keep the cemetery in one place as much as possible and secondly, to use city property we already own.

[Kent Savage]

Thanks for the update and thanks for your work on the council.

Who writes your blog articles? The tone and info are great. - Kent

Answer from Shirl.....Thank you for the kind words. At this time I am the sole author, but would consider a "Guest Columnist" at times. Sometimes "bloggers block" is an issue.

[Kevin Barnes]

Thank you for the information.

There are a couple of ideas that I want to express. First, for whatever reason(s, it appears that the city has not done a very good job of marketing and managing AFCNet when there are entities (ISPs) that are behind in their payments.

Second, and most important to me, is that I do not believe that a city should be involved in a business activity that has other providers available, i.e. don’t compete with the business world. Let the city stick with activities that are best done by government. For this reason I have never been a supporter of Broadband and I am personally glad to see that the city is now addressing the issue and I hope we are able to come to a good resolution.

Thanks again for sending me the info and best wishes as you serve.

[David Rodeback]

On the origin of AFCNet's troubles and the prospects of reversing them: The most brilliant surgeon may be hard pressed to repair the damage done by a hack or a quack (in time to save the patient). Likewise, even brilliant management (which I hope someday to see in local government) may struggle mightily to reverse the entrenched troubles left by bad management -- and may easily fail, unless it enjoys plenty of good luck, too.

[David Bradshaw]

I was at the meeting Tuesday and it was a very heated meeting at times.

On the short term (1 - 5 years) it looks discouraging for AFCity Broadband.

On the long term 5+ years away, it looks very promising if...

1) AFCity Broadband starts connecting businesses with fiber.

2) The city leases out the Point of the Mountain fiber.

3) The city upgrades the network to Coax. Airswitch technology doesn't support video ($6 million more though).

I hope nobody makes a serious offer, then AFCity will have an opportunity to make it work.

[David Fletcher]

The broadband network is the service that I care for most in American Fork. It should set the city apart from many others. I still think that if fully marketed it should be a money maker and not a loser and could help to subsidize other services. It would be a shame to give up on it so soon, although I understand the expediency that the Council is facing. Logan is right, if it goes to some of the potential private vendors, it will never be the same.

[Shirl LeBaron]

I will attempt to answer Logan's questions in order and welcome others who may want to chime in. (Disclaimer: These comments and others posted heretofore and hereafter by the undersigned, are the authors viewpoints only and do not represent an official position of American Fork City and/or its governing body individually or collectively) .....
Answer to 1: UTOPIA has already bought 24 of our fibers for 1.5 mill, but funds have not come in yet. We are not sure if they are further interested, but we would not sell them anymore fiber but would consider a lease. The tax hike will not cover the bond payments or broadband expenses. The proposed increase in property taxes of 35-50% is necessary to bring police wages up and repair aging roads, sidewalks and install new infrastructure.
Answer to 2: If no buyers, or we reject the bids, our plan B option is to agressively but economically attempt to make the system more profitable by leasing fiber to businesses and upgrading the system. We will not shut it down and leave ISPs and citizens hanging. Finding the funding would be a challenge. Several companies have expressed interest in putting a proposal to buy and/or lease together. The deadline for RFPs is July 13. There is a concern that there may be a perception that we are conducting a "fire sale" which would affect negotiations. We are not in a desparate situation yet, challenging yes but crisis no.
Answer to 3: There are many factors and I hesitate to be very specific. I am considering requesting a legislative audit to investigate this whole area. This question is being asked by my fellow council members and the body politic such as yourself. We hope to have some answers in due time. Thank you for your interest and being involved in the process.

[Tori Bahoravitch]

I enjoyed your blog about broadband. My thoughts are: I think that given the right technical expertise, marketing expertise, money, and time, the broadband could be a roaring success. HOWEVER, I believe AF city does NOT have ANY of the above, nor will it EVER have any of the above given the frugal nature of the council, mayor, and citizens. The limited money the city has will be spent on other, more important priorities. And I think this is the correct choice. (BTW, a tax increase is sorely overdue, let's go for it and make some long-overdue and critical improvements.)
Tori

[Randy Morris]

The city is taking a prudent first step. Shopping the system to the private sector is timely and wise. Now that we understand the extent of the asset, including the fiber back-bone running the length of the valley, we may be able to capture a significant price.

[Logan Allred]

So if I understand correctly, the broadband has been drifting along in uncertainty, and the only real change is that the water issue is bringing the broadband problem to the forefront finally?

I have some questions:

1. Would UTOPIA a potential buyer, meaning do any of AFCNets assets make sense in their system?

2. If there are no buyers, what then? Do the options come down to shut it down or increase the tax hike to cover it? What do you consider to be the likelihood of a buyer? Is the buyer, knowing the "desperate" situation of the city, likely to be able to take advantage of that in the negotiations?

3. It's all water under the bridge now, but how did it get in the predicament it's in? Is it the council's responsibility to have watched over this project and put together a workable plan, or are there other culpable parties? Not like it matters now, I'm just curious. Was it more a matter of neglect or wishful thinking?

I haven't lived in AF that long, but I'm a big supporter and user of the broadband, so I hope it will stay around in a viable format regardless of the owner, though I lament what will likely happen if it goes to Qwest or Comcast.