Title
Adoption of Resolution Authorizing the City Manager to: (1) Execute a Professional Services Agreement and a License Agreement (the “Agreements”) With XG Communities, LLC, a Delaware Limited Liability Company DBA 5 BARS Communities (“5 BARS”) Each for a Term Of Five Years With Four Five-Year Extensions for Wireless Telecommunications Facilities Consulting, Marketing and Management and Services for City Assets in Exchange for a Thirty-Five Percent (35%) Share of Generated Revenue and (2) Execute Auxiliary Documents and to Perform Any and All Acts Necessary or Desirable to Permit 5 BARS to Perform the Services. (Information Technology 2611)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Adoption of Resolution to Authorize the City Manager to: (1) Execute a Professional Services Agreement and a License Agreement (the “Agreements”) With XG Communities, LLC, a Delaware Limited Liability Company DBA 5 BARS Communities (“5 BARS”) Each for a Term Of Five Years With Four Five-Year Extensions for Wireless Telecommunications Facilities Consulting, Marketing and Management and Services for City Assets in Exchange for a Thirty-Five Percent (35%) Share of Generated Revenue and (2) Execute Auxiliary Documents and to Perform Any and All Acts Necessary or Desirable to Permit 5 BARS to Perform the Services.
BACKGROUND
The use of wireless data communication is growing rapidly and the expectations of continuous data connectivity from residents, businesses, and visitors are on the rise in all segments of society. The traditional approaches to increase capacity, such as large stand-alone cellular towers, are no longer adequate to meet the increased demand for wireless data. As wireless carriers look to densify existing networks, it is estimated that the wireless industry will deploy hundreds of thousands of small cells in urban areas.
The wireless industry sponsored California Senate Bill (SB) 649 will limit local control over small wireless telecommunications facilities or cell sites. This legislation, if approved, will directly limit a city's ability to control its public infrastructure, including but not limited to street and park lights, city buildings, and traffic signal lights. SB 649, as written, will grant telecommunication companies the right to install wireless telecommunications facilities or cell sites on public infrastructure and takes away a City's ability to object over the time, place and manner of the installation. SB 649 will also establish a monetary limit on how much local agencies can charge telecommunication companies (approximately $250 per pole per year), which is substantially low given the amount of staff hours that will be needed to issue permits and inspect wireless telecommunications facilities being installed.
The City of Alameda has opposed SB649 and submitted a Letter of Opposition to Assembly Member Bonta on July 20, 2017, as shown in Exhibit 1. Approximately 120 other cities are opposing the legislation as well, including the League of California Cities. Please refer to the following link: <http://www.cacities.org/Top/News/News-Articles/2017/June/120-Cities-and-Counting-Oppose-Legislation-Strippi?utm_campaign=website&utm_source=cacities.org&utm_medium=email>
Some cities are turning to a public‐private partnership model to provide a well‐engineered and professionally managed approach to small cell deployment that maximizes the overall benefits to a city’s diverse neighborhoods, businesses, and telecommunication providers. The drivers behind a public‐private partnership are to:
• Maintain control of City owned assets and generate revenue for the City
• Lower visual impact and control aesthetics in the community
• Create a long-term solution for wireless connectivity
• Reduce visual blight in crowded areas
• Maximize the use of underutilized City assets
In February 2016, the City of Sacramento, through a Request for Qualifications (RFQ), invited interested parties to demonstrate their knowledge and expertise in the development of the City's wireless telecommunication infrastructure. After a comprehensive process, 5 BARS was chosen as the most qualified responder bringing extensive industry knowledge and technical expertise to this effort. (See Exhibit 2 for list of RFQ respondents.) The agreement between the City of Sacramento and 5 BARS includes a cooperative purchasing section that allows other public agencies to piggyback and enter into a similar agreement with 5 BARS (Exhibit 2). Additionally, 5 BARS has been awarded a national cooperative contract by the National Intergovernmental Purchasing Alliance (IPA). The National IPA is a cooperative purchasing organization dedicated to the public sector assisting agencies and institutions to streamline the tedious, expensive request for proposal (RFP) process while satisfying requirements for transparency by offering a comprehensive portfolio of awarded contracts. Staff is recommending that the City piggyback on the competitive selection process already done by the City of Sacramento and the National IPA to award this contract to 5 BARS on substantially similar terms and conditions. The Agreements have been modified slightly by the City Attorney to provide additional protections to the City. Other than Sacramento, the cities of Berkeley, San Jose, Roseville, West Covina, Irvine, and Fresno are in negotiations or have entered into contract with 5 Bars.
DISCUSSION
5 BARS is a premier provider of wireless master and marketing plans for counties, cities, communities and large scale venues. The scope of services to be provided by 5 BARS includes: conducting a Radio Frequency (RF) benchmark assessment to establish the location of coverage gaps within the City; compiling available City infrastructure assets in GIS platform; providing available preapproved sites after coordination with the City; and assisting with batch permitting applications.
By entering into the Agreements with 5 BARS, the City will have in place a third party wireless administrator who will manage the City's permitting process. 5 BARS will coordinate with carriers on behalf of the City for the planning, permitting, installation and ongoing maintenance of a seamless municipal wireless system. 5 BARS will be the point of contact for cell site applications, which will help in streamlining the permit process for all carriers. They will review applications for wireless telecommunications facilities and small cell networks and issue approvals within the specified time required by law, referred to as the “shot clock”. 5 BARS will function as the City's expert technical resource for managing wireless services and the City will have final approval of sites, pricing, permits and guidelines. Additionally, 5 BARS will provide onsite supervision and coordination. This process will assist the City in reducing visual blight and pole clutter while at the same time improving wireless coverage throughout the City and generating revenue with City-owned assets.
5 BARS will recover their investment and program costs solely through revenue sharing generated from wireless carriers. 5 BARS will receive 35 percent of revenues for all new sub-licenses and 25 percent for new sublicenses or amended leases on existing towers that they implement on the City's behalf. The Agreements are for an initial five-year period with four five-year extensions for a potential total contract term of 25 years. There is a termination for convenience clause in the Agreements that allow either the City or 5 BARS to terminate the Agreements on six month’s advance written notice. This provision only affects the Agreements and any sublicenses with third parties carriers would expire at the end of their term or terminate early in the event of default.
5 BARS has the knowledge, expertise and resources to create livable and sustainable smart cities by evaluating carrier priorities, policy requirements, and permitting. Finding a proactive path to protect City assets and secure streamlined permitting is imperative since the Federal Communications Commission (FCC) and State of California (through SB 649) look to pass preemptive legislation, which is intended to reduce local control over rights of way. The Professional Services Contract is attached as Exhibit 3. The License Agreement is attached as Exhibit 4. A Right of Entry to allow 5 BARS or it’s sublicensees to enter City property in order to install telecommunication equipment is attached as Exhibit 5, along with the insurance requirements, which is attached as Exhibit 6.
The City, residents, businesses, and visitors will benefit from better wireless services coverage, revenue generated from better utilization of City assets, and improved management of visual clutter in the rights-of-way. Service providers will benefit from a better managed, timely, and streamlined process for wireless development in the City.
FINANCIAL IMPACT
5 BARS services are provided at no capital investment cost to the City. 5 BARS will recover its investment and program costs solely through revenue sharing generated from wireless carrier marketing program. The revenue sharing will only apply to new lease revenue. Most of the lease revenues generated by this program will be accounted for in the General Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action does not affect the Municipal Code.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (“CEQA”) does not apply to the City Council’s approval of legal documents such as the Professional Services Agreement and the Master License Agreement (“MLA”) and Exhibits, because approval of these documents does not constitute a “project” for purposes of CEQA review. In the case of a third party applying to undertake certain action under the MLA, whether or not CEQA applies will be determined by staff on a case-by-case basis with respect to each application, based on location, supporting structure, and other factors.
RECOMMENDATION
Adopt a Resolution to authorize the City Manager to: (1) execute a Professional Services Agreement and a License Agreement (the “Agreements”) with XG Communities, LLC, a Delaware Limited Liability Company DBA 5 BARS Communities (“5 BARS”) each for a term of five years with four five-year extensions for wireless telecommunications facilities consulting, marketing and management and services for City assets in exchange for a thirty-five percent (35%) share of generated revenue and (2) execute auxiliary documents and to perform any and all acts necessary or desirable to permit 5 BARS to perform the services.
Respectfully submitted,
Erin Smith, Acting Deputy Public Works Director
Andrico Penick, Assistant City Attorney
Carolyn Hogg, Information Technology Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Letter of Opposition to Bill SB649
2. City of Sacramento Community Wireless Broadband Network RFI
3. Professional Services Agreement
4. License Agreement
5. Right of Entry
6. Insurance Requirements