Form revised: December 6, 2011

 

 

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

CBO Analyst/Phone:

Information Technology

Erin Devoto/3-7937

Jennifer Devore/5-1328

 

Legislation Title: AN ORDINANCE relating to private party use of the City’s fiber optic cable network; authorizing the Chief Technology Officer to enter agreements allowing private parties to use the excess capacity of the City’s fiber optic cable network for providing high speed internet services and for other lawful purposes; amending Ordinance 117981 to allow agreements for private use; creating a fund for the financial transactions associated with private use; providing for an interfund loan; and amending the 2012 budget, Ordinance 123758, by adding a new budget control level and increasing appropriations; all by a three-fourths vote of the City Council.

 

 

Summary of the Legislation:  This legislation authorizes the Chief Technology Officer/Director of the Department of Information Technology (Director) to enter into agreements authorizing  private parties to use the fiber optic cable network’s excess capacity for purposes of providing high speed internet services and other lawful purposes; authorizes the Director to negotiate amendments to existing fiber sharing agreements to allow for private use; amends the existing ordinance (117981) governing the fiber optic network to allow private use; creates an enterprise fund for the financial transactions associated with these private uses; and amends the 2012 budget, Ordinance 123758, by adding a new budget control level, providing an interfund loan and increasing appropriations.

 

Background:  The Department of Information Technology (DoIT) manages fiber installation, maintenance and financial reimbursements for a fiber partnership consisting of approximately 20 government entities.  The network has excess capacity in some locations and the City of Seattle, with consent of affiliated partners, wishes to make this excess fiber available to private parties.  Numerous residents and businesses have told us that they do not have adequate access to high speed internet service. The City of Seattle, along with its fiber partnership, can encourage the availability of faster internet speeds for customers and increase competition among service providers by making its excess fiber capacity available to private parties. Availability of increased internet speeds is vital to the economic and educational growth of our city.

 

The proposed Council Bill authorizes the Director to execute rental or license agreements, not to exceed ten years, for use of excess fiber owned by DoIT, and excess fiber owned by  any fiber partner, at its request,  or excess fiber owned by another City of Seattle department with the approval of that department’s director or superintendent. The Director may reimburse the fiber partner an agreed upon share of the use fee and ensure that the City receives an equitable share of the use fee for any City-owned excess fiber.

 

The Council Bill also creates a new fund, the Fiber Leasing Fund, to manage operating, maintenance, and capital costs related to agreements with private parties for the use of the excess fiber, including costs for City administration.  The new fund will receive an interfund loan from the DoIT Operating Fund for $50,000 to be repaid within three years with revenues from the private party usage of the excess fiber.  Additionally, the legislation creates a new budget control level and appropriates budget authority to the new BCL.

 

Please check one of the following:

 

 ___     This legislation does not have any financial implications.

 

 

__X_   This legislation has financial implications.

 

 

Appropriations: 

 

Fund Name and Number

Department

Budget Control Level*

2012

Appropriation

2013 Anticipated Appropriation

Fiber Leasing Fund (TBD)

Information Technology

City Fiber (DE9000)

$50,000

$50,000

TOTAL

 

 

$50,000

$50,000

*See budget book to obtain the appropriate Budget Control Level for your department.

 

Appropriations Notes: 
The intent of this legislation is to create opportunities for a new type of partnership/business at no net cost to the City, but there are no specific projects scheduled at the time of this legislation. These projects will be managed by DoIT and all costs and revenues will run through the new Fiber Leasing Fund.  Therefore this legislation is requesting a minimal level of initial appropriation for the new fund being created by this legislation.  This initial appropriation authority will allow DoIT the flexibility to move forward with any projects which may be initiated with the intent of requesting supplemental changes if larger projects with greater expenditures occur.  Since this is a new area of business for DoIT, there is not a history of data on which to project future revenue or expenditures at this time. 

 

 

Anticipated Revenue/Reimbursement Resulting from this Legislation:

 

Fund Name and Number

Department

Revenue Source

2012

Revenue

2013

Revenue

Fiber Leasing Fund (TBD)

Information Technology

Initial Loan from Information Technology Fund (50410)

$50,000

0

TOTAL

 

 

$50,000

0

 

Revenue/Reimbursement Notes:

Over the long term, revenue within this fund will be generated from leasing and installation fees paid by the private parties who enter into contracts to use available excess fiber capacity.  Initial “seed” money will be loaned to this fund from the DoIT Operating Fund (50410).  This seed money will allow DoIT to cover any upfront costs which may be incurred prior to reimbursement being received from the lessee of the fiber.  For example, individual projects may include some initial project planning and connections costs.  Over time, it is anticipated the new fund will pay back the loan to the DoIT Operating Fund.  Until the loan is fully repaid, the new fund will pay appropriate interest on the loan to the DoIT Operating Fund. 

 

 

Total Regular Positions Created, Modified, or Abrogated through this Legislation, Including FTE Impact: 

 

Position Title and Department

Position # for Existing Positions

Fund Name & #

PT/FT

2012

Positions

2012

FTE

2013 Positions*

2013 FTE*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

* 2013 positions and FTE are total 2013 position changes resulting from this legislation, not incremental changes.  Therefore, under 2013, please be sure to include any continuing positions from 2012.

 

Position Notes: N/A

 

 

Do positions sunset in the future? 

 

 

Spending/Cash Flow:

 

Fund Name & #

Department

Budget Control Level*

2012

Expenditures

2013 Anticipated Expenditures

Fiber Leasing Fund (TBD)

Information Technology

City Fiber (DE9000)

$50,000

0

TOTAL

 

 

$50,000

0

* See budget book to obtain the appropriate Budget Control Level for your department.

 

Spending/Cash Flow Notes: 
As there are no specific projects planned at this time, there is not a spending plan to be provided.  Additional appropriations will be made through future legislation. 

 

 

 

 

 

Other Implications: 

 

a)      Does the legislation have indirect financial implications, or long-term implications?

No

b)     What is the financial cost of not implementing the legislation?  

There is none

 

c)      Does this legislation affect any departments besides the originating department? 

Under this legislation, if Departments who own unused fiber (such as SCL and SPU) choose to lease out that fiber, they could receive reimbursement from private parties. 

 

d)     What are the possible alternatives to the legislation that could achieve the same or similar objectives?  

None

 

e)      Is a public hearing required for this legislation? 

No

f)       Is publication of notice with The Daily Journal of Commerce and/or The Seattle Times required for this legislation?

No

g)      Does this legislation affect a piece of property?

No

h)     Other Issues:

None

 

List attachments to the fiscal note below: None