Consideration and Approval of Contracts:  (1) Design Build Services Contract, (2) City Conduit Lease Agreement, (3) City Fiber Network Maintenance Agreement, and (4) Fiber License Agreement, all with Wecom, LLC.
 

1. Approve (1) Design Build Services Contract, (2) City Conduit Lease Agreement, (3) City Fiber Network Maintenance Agreement, and (4) Fiber License Agreement, all with Wecom, LLC.
2. Authorize the City Manager to execute the necessary documents.

Following a competitive solicitation that was issued in 2024, the City selected to work with Wecom, LLC ("Wecom"), a leading internet service provider, to construct a City fiber network.  On September 3, 2024 the City Council approved a Design Build Services Contract with Wecom for initial design.  The Design Build Services Contract was not executed, however, as negotiations continued regarding a series of agreements. 

City staff is proposing that the City Council consider approval of the following contracts with Wecom:
 
1.  Design Build Services Contract:

• Wecom will design and construct a combined aerial and underground fiber network for the City to support critical municipal operations and enhance public services (City Network).
• The City Network will connect our City Facilities, our traffic signals, our water infrastructure, and other Smart City infrastructure with fiber.
• City will pay Wecom $2 million (City's cost to construct would be significantly more).
• City will lease excess conduit and inner duct capacity to Wecom as partial consideration.
• City will offer a credit against the annual license fee for a Fiber License Agreement as partial consideration.

2.  City Conduit Lease Agreement:

• City will lease excess conduit and inner duct capacity to Wecom for 20 years.

3.  City Fiber Network Maintenance Agreement:

• Wecom will maintain the City Fiber Network for 20 years.
• Wecom will assist with utility location markings for the City Fiber Network.
• City will reimburse Wecom if fiber is damaged due to City's own actions.

4.  Fiber License Agreement:

• City is issuing a license to Wecom for use of the public rights-of-way for 20 years. 
• Wecom will have the right to construct and operate a fiber network within City public rights-of-way.
• Wecom will not be required to build out the entire City at a set schedule.
• Wecom will pay an annual license fee equal to 2% of gross revenues from providing internet services.
• Wecom will receive a credit against the annual license fee during the initial years of the license term.

Project Name: Fiber and Broadband
Direct Cost: $2,000,000
Account Number Budgeted: 001-09-402-6321-1-4407 and 001-01-014-0044-1-4407
Additional Financial Impact and Consideration:

• Reduced revenues from right of way license agreement. There will be no fees for the first 3 years. This will step up to 1.5% of gross revenues over the next 7 years. Finally, after year 10, it will step up to the full 2% of gross revenues.
  • There is a provision in the contract that, should micro-trenching be approved in our City Code prior to the community fiber build, Wecom would step immediately to the 2% of gross revenues.
• This agreement includes a 20-year emergency maintenance agreement where Wecom will fix broken City fiber at no charge to the City.
• Should the City attempt to build this network separately and at our own expense, we estimate it could cost as much as $20 million. There are significant savings to both Wecom and the City in sharing construction costs and collocating infrastructure in existing conduits.

City Council has allocated ARPA funding and General Fund funding over the past several years for the specific purpose of bringing fiber and better broadband access to the community. This aligns with those goals.

On September 3, 2024 City Council approved award of a Design Build Services Contract to Wecom (which was not executed due to continued negotiations after such date).

1.  Approve Contracts as proposed.
2.  Do not approve one or more of the Contracts as proposed, and direct staff to negotiate different terms.
3.  Approve Fiber License Agreement only, but with no credit against the annual license fee, and direct staff to negotiate different terms for the other Contracts and/or a different credit against the annual license fee.  Approving the Fiber License Agreement would allow Wecom to begin seeking permits to work in the public rights-of-way. 

On January 27, 2024 and February 3, 2024, a Request for Statements of Qualifications (RSOQ) for Fiber Network Provider services was published in the Arizona Daily Sun and was posted on the Purchasing PlanetBids web site on January 15, 2024. On March 15, 2024, the City of Flagstaff received three Statements of Qualifications that were responsive to the requirements of the RSOQ for providing Fiber Network Provider services for this project. A selection committee of six members independently reviewed and evaluated those statements in accordance with the evaluative criteria established in the RSOQ. The evaluation committee consisted of City staff and local professionals. Based on numerical evaluation of the statements received, WeCom received the highest ranking and was deemed the most qualified among those submitting proposals to provide Fiber Network Provider services. The selection committee final scores were:
WeCom - 506
Allo - 411
Entry Point - 350

 

High Performance Governance
Sustainable and Innovative Infrastructure
Robust and Resilient Economy

While this project doesn't directly support the Regional Plan, it is needed for connectivity of much of the results of the Regional Plan being implemented.

Better internet would allow for more remote work capabilities, which can reduce miles driven.

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