City Council

MAY 23, 2016 The City Council of the City of Idaho Falls met in Special Council Meeting (Council Work Session), Monday, May 23, 2016, at the City Council Chambers in the City Annex Building located at 680 Park Avenue in Idaho Falls, Idaho at 2:00 p.m. There were present: Mayor Rebecca L. Noah Casper Councilmember Barbara Ehardt Councilmember Ed Marohn Councilmember Thomas Hally Councilmember John B. Radford Councilmember David M. Smith Councilmember Michelle Ziel-Dingman Also present: Kerry McCullough, Public Information Officer Brad Cramer, Community Development Services Director Krisi Staten, Idaho Falls Downtown Development (IFDDC) Executive Director Chris Fredericksen, Public Works Director David Richards, Water Superintendent Jackie Flowers, Idaho Falls Power Director Mark Reed, Generation and Operations Superintendent Randy Fife, City Attorney Kathy Hampton, City Clerk Mayor Casper called the meeting to order at 2:00 p.m. with the following: Mayor’s Report and Action Items: No items at this time. Other Announcements and Calendar Items: May 23, Bike ride to celebrate National Bike Month May 24, City Governance Team Welcome Reception for Fluor Idaho May 28-30, Field of Honor Memorial events, Council roles on May 30 May 31, Community Appreciation Reception for outgoing Idaho Clean-up Contractors May 31, Grand opening of Smithsonian Institute’s Museum on Main Street Exhibit: Water/Ways at the Idaho Falls Public Library July 4 Parade, City entries will be grouped together, Mayor and Councilmembers will be collecting items for the Idaho Falls Food Bank City Council Reports: Councilmember Hally indicated a proposal has been received for the Kelsch property (the old Saving Center property). He reminded the Councilmembers of the Association of Idaho Cities (AIC) conference in June, and Utah Associated Municipal Power Systems (UAMPS) conference in August. Councilmember Radford stated the Department of Transportation recently performed their annual review/audit of Targhee Regional Public Transportation Authority (TRPTA). There were approximately 35 findings, with lack of administrators considered a critical finding. Councilmember Dingman stated Coffee with a Cop was recently held, despite the unfavorable weather. The Police Department’s Fraternal Order of Police (FOP) recently awarded approximately $5000.00 in local scholarships. Councilmember Ehardt had no items. 1  MAY 23, 2016 Councilmember Smith stated he will be attending meetings in the near future in Washington, DC, to lobby the lawmakers on behalf of the American Public Power Association (APPA). Councilmember Marohn indicated the Idaho Falls Redevelopment Agency board will proceed with discussion regarding the Kelsch property expansion. He briefly reviewed the Field of Honors schedule for the elected officials. Community Development Services presented the following item: IFDDC Business Improvement District (BID) Update and Outline of Program: Director Cramer indicated the current agreement with the IFFDC requires a yearly report for current expenditures as well as anticipated revenues and expenditures. He then turned the time to Ms. Staten. Ms. Staten stated due to lower expenses and additional event sponsors the IFDDC budget is doing okay. She indicated the mission of the IFDDC is to promote, beautify, and revitalize the downtown area. She reviewed beautification projects including clean-up and community art, family and adult events, and marketing/advertising, including the collaboration with hotels/motels for promotion of local restaurants and cultural links. Ms. Staten indicated the IFDDC goal is to work in conjunction with the City and align with City goals for the downtown area. Brief discussion followed. Director Cramer stated the purpose of the BID is to allow a percentage of business property owners’ taxes to be allocated to the IFDDC to manage downtown projects. Public Works presented the following item: Water and Wastewater Billing Changes: Director Fredericksen stated although it can be difficult to allocate appropriate costs to users without a meter system, the intent is for customers to recognize their use of water. He indicated the implementation of the new software system, Cayenta, will allow continuation of non-metering as well as the proposed system outlined in the Water Facility Plan (WFP) which can also monitor revenues versus expenditures. It is anticipated $8.4 million will be received in revenues. There is a proposed 5% water fee increase to be effective October 1, 2016. Director Fredericksen stated points to consider with this presentation-  This presentation only considers existing, non-metered customers.  Figures are current year values and do not include 5% rate increase recommended in WFP.  All new commercial construction is currently required to install water meters.  WFP dedicated $250,000 per year to install water meters, converting the largest non-metered, non- residential customers to a metered billing.  Not all commercial billing classifications are represented in this presentation. These classifications are either currently, or will soon be, completely metered (car washes, halls, laundry facilities, grocery stores, etc.).  Some values presented are averages; Wastewater rates are preliminary. Proposed changes, with general discussion throughout, are as follows: Account Type Existing Rate Structure Recommended Rate Structure Non-metered Residential Domestic $25.20 flat rate per dwelling or unit $17.70 flat rate per dwelling or unit billed monthly billed monthly Non-metered Residential Irrigation $20.95 flat rate per dwelling or unit $9.50 flat rate per dwelling or unit billed billed annually monthly Metered Water Minimum monthly charged based on Minimum monthly charge based on meter size plus $0.66 per 1,000 gallons meter size plus $0.66 per every 1,000 in excess of 12,000 gallons gallons Department of Environmental Quality $3.00 flat rate per dwelling, unit, or $0.25 flat rate per dwelling, unit, or (DEQ) fee business billed annually business billed monthly 2  MAY 23, 2016 Average residential examples include: Water Rates Wastewater Rates Current Proposed Current Proposed Single Family Detached Monthly Total $25.20 $27.45 $21.66 $21.81 Annual Total $326.35 $329.40 $259.92 $261.72 Duplexes Monthly Total $25.20 $22.70 $21.66 $21.81 Annual Total $326.35 $272.40 $259.92 $261.72 Four-plex or Apartment Monthly Total $18.94 $16.85 $16.27 $16.42 Annual Total $251.23 $202.20 $195.24 $197.04 Director Fredericksen stated approximately 90% of water users are Residential customers. Director Fredericksen reviewed commercial businesses by categories indicating amount of water use. He indicated large-landscape commercial properties generally use a higher amount of water with the City, churches, and school district being the largest irrigation consumers. Average commercial examples include: Water Rates Wastewater Rates Current Proposed Current Proposed Four-plex & Apartment Monthly Total $473.50 $394.55 $325.40 $329.15 Annual Total $5,874.11 $4,734.60 $3,904.80 $3,949.80 Auto Repair or Shop Monthly Total $26.05 $26.35 $21.66 $21.81 Annual Total $315.60 $316.20 $259.92 $261.72 Bar Monthly Total $25.20 $26.50 $21.66 $21.81 Annual Total $305.40 $318.00 $259.92 $261.72 Church Monthly Total $28.86 $79.45 $21.66 $21.81 Annual Total $466.43 $953.40 $259.92 $261.72 Office Space Monthly Total $30.20 $28.60 $25.96 $21.81 Annual Total $482.51 $343.20 $311.52 $261.72 Retail Sales Monthly Total $30.20 $26.95 $25.96 $21.81 Annual Total $365.40 $323.40 $311.52 $261.72 Salon or Parlor Monthly Total $29.89 $27.10 $24.22 $21.81 Annual Total $361.68 $325.20 $290.64 $261.72 Warehouse Monthly Total $25.20 $27.85 $21.66 $21.81 Annual Total $305.40 $334.20 $259.92 $261.72 Auto Sales or Auto Body Monthly Total $25.20 $35.95 $21.66 $35.06 Annual Total $422.51 $431.40 $259.92 $420.72 Big Box Store Monthly Total $264.25 $31.75 $227.15 $35.06 Annual Total $3,174.00 $381.00 $2,725.80 $420.72 3  MAY 23, 2016 Convenience Store Monthly Total $34.35 $35.20 $27.39 $35.06 Annual Total $532.31 $422.40 $328.68 $420.72 Day Care Monthly Total $36.89 $36.10 $31.50 $35.06 Annual Total $562.79 $433.20 $378.00 $420.72 Fast Food Monthly Total $66.96 $34.75 $57.56 $35.06 Annual Total $806.52 $417.00 $690.72 $420.72 Medical Office Monthly Total $37.75 $38.05 $32.45 $35.06 Annual Total $573.11 $456.60 $389.40 $420.72 Restaurant/Bakery Monthly Total $66.96 $87.45 $57.56 $92.47 Annual Total $923.63 $1,049.40 $690.72 $1,109.64 Small Hotel or Assisted Living Monthly Total $128.32 $132.25 $110.72 $132.15 Annual Total $1,659.95 $1,587.00 $1,328.64 $1,585.80 Large Hotel or Assisted Living Monthly Total $425.06 $240.75 $650.48 $221.81 Annual Total $9,166.67 $2,889.00 $7,805.76 $2,661.72 Director Fredericksen stated meters are anticipated to be installed on the higher education facilities in the near future. He indicated with the above proposed rate changes, revenues will be reduced by approximately $250,000.00, inclusive of the higher education facility changes, estimated at $125,000.00. He stated the next steps would be as follows:  With Council approval, implement proposed billing structure through FY2016-17 budgeting process with new rates effective October 1, 2016  Public notification and education to businesses that have dramatic rate impacts  Negative responses to new rates could opt to install a water meter o City could donate materials (meter and pit) and have owner/tenant pay for installation  Modify existing ordinance and fee resolution to address water and wastewater billing recommendations  Continue required installation of water meters on all new commercial development  Install $250,000 worth of new meters annually as approved in WFP o Goal: School District 91, Eastern Idaho Technical College (EITC), Idaho State University (ISU), and hotels to be metered this year o All existing car washes and laundry facilities are currently metered  Most impacted customers: o Negatively: Those with large landscaped areas (schools, churches, Home Owners Associations (HOA’s); restaurants o Positively: Four-plexes and apartments; large office and retail spaces; big box stores; large hotels; fast food General discussion followed. It was determined water rates should reflect the appropriate usage. Mr. Richards stated all expenses for the cost of service is currently included in the water rates. Director Fredericksen prefers water conservation be recognized by all consumers. After brief discussion, it was decided to proceed with the proposed water billing rate structure to be effective October 1, 2016. Idaho Falls Power (IFP) presented the following item: 4  MAY 23, 2016 Fiber Presentation and Discussion: Mayor Casper stated the Circa Network, the City’s fiber optic utility, is operated and managed by Idaho Falls Power. She indicated the City of Idaho Falls has been involved in the fiber business for approximately 14 years and the time has come regarding decisions to move forward with the next steps for the benefit of the community. Director Flowers introduced Mr. Reed, Doug Dawson, President of CCG Consulting, and Mark Mrla, Business Unit Manager with Finley Engineering. She also recognized those service providers in attendance, and stated the service providers are the reason behind the success of the dark fiber network. Director Flowers briefly reviewed the history of Circa Network beginning in 1999 with a joint City/County project. She refers to the fiber network as the utility central nervous system, stating IFP could not function without the fiber network as it is a critical element for managing and maintaining the system. Director Flowers presented the following information with general discussion throughout: Original Objectives:  Preserve Right of Way (ROW)  Reduce demand for pole space  Cost savings to the City (a significant factor)  Value added “service”  Economic Development tool (connectivity between businesses)  More/better broadband service potential in an emerging global economy  Foster competition among providers Current Fiber Network: Service limited to Idaho Falls City limits  ~ 30 miles of backbone fiber  ~ 140 miles of distribution fiber  ~ 16 miles of traffic fiber Redundant ring configuration - 96 strand backbone, 96 percent overhead Nearly 100 city facilities connected Public Private Partnership: The City of Idaho Falls has enjoyed a successful public/private partnership in our fiber optic network for more than a decade:  Now Eight Service Providers  Eleven Private Businesses connecting multiple locations  Nearly 400 business locations are connected to the fiber optic network  Enterprise fund – users pay for network and operational costs Planning for the Future:  2015 issued Request for Qualifications to o Consider future of existing dark fiber network o Identify potential alternatives for extending high speed broadband connectivity to the home  Finley Engineering Company/CCG Consulting were selected  Contract negotiated for $56,904  Draft report issued  High level review of options today The Team:  Finley Engineering Company/CCG Consulting o Together nearly 50 years’ experience in telcom/broadband industry o Past 6 years, Broadband Properties Magazine named Finley in its Top 100 Broadband Companies in America 5  MAY 23, 2016 o CCG has been named by Broadband Communities Magazine for the last two years as a Fiber- To-The-Home Top 100 list of leaders and innovators Director Flowers then turned the presentation to Mr. Dawson and Mr. Mrla for the following presentation with general discussion throughout: Broadband in the City Today-  Two primary residential broadband providers today – CableOne and CenturyLink, numerous business providers  Speed Test Results – approximately 400 responses were received o Only a few customers (approximately 2/3) get the speeds they are paying for Why Broadband Matters-  Home Broadband Usage is Doubling every 3 Years o This is exponential growth – not straight line growth  Economic Benefits o Higher Property Values o Education o Working at Home/Telecommuting o Economic Development Business Plans We Considered-  Build Fiber Everywhere in the City o If the City was the ISP (Internet Service Provider) o If a new ISP comes to the market o If an existing ISP comes to the market o Partnering between City and ISPs o Open Access o Cherry Picking o Numerous funding scenarios o Breakeven Analysis o Sensitivity Analysis Potential Customers-  Single Family Residential 17,272  Apartments / Condos 6,228  Standalone Businesses 3,700  Businesses in MTUs 500  Large Business 460  Total 28,160 Network Design-  220 miles of existing underground electric plant and 230 miles of aerial electric plant. We used 450 miles of fiber needed for network.  Used Sampling Technique to Estimate Costs o Sampled 3 neighborhoods that contained different mixes of aerial and underground fiber  Network foundation is a fiber ring with 7 building sites  Priced as a PON (Passive Optical Network) Fiber Network from buildings to each subscriber Asset Costs – Partner with existing ISP (including a 10% contingency, based on approximately 40% of the population using some form of fiber) Existing ISP New ISP Fiber $46.5 M $46.5 M Fiber Electronics $5.2 M $5.2 M Settop Boxes $2.7 M $2.7 M Triple Play Headend $0.0 M $2.2 M 6  MAY 23, 2016 Huts and electronics $1.4 M $1.7 M Operational Assets $0.8 M $0.9 M Spares $0.4 M $0.4 M Software $0.6 M $1.5 M Total $57.6 M $61.1 M Products Offered-  High-speed data from 50 Mbps to 1 Gbps speeds  Cable TV at market prices  Basic telephone lines  Anticipates future products like security, home automation, medical monitoring, etc.  Both cable TV and telephone anticipated to lose penetration over time Breakeven Penetration Required-  City as ISP, G.O Bonds 29%  City as ISP, Revenue Bonds 35%  New ISP 40% (40% not uncommon)  Existing ISP 40%  Public Private Partnership 40%  Open Access N/A Sensitivity Analysis-  All models very sensitive to price.  All models sensitive to loan-term. The longer the financing term, the easier it is to make work.  Models sensitive to interest rates, but more importantly are very sensitive to early-year cash flows needed to make debt payments.  Commercial models all perform much better with some financing from the City. Financial Findings-  There are financial scenarios that look to be realistically financeable, but ISP financing is always hard.  Early year cash flows are definitely an issue.  Existing ISPs have more of a chance to get financed than new ISPs.  Understanding customer demand is key before investing in broadband.  Some funding from the City can make a big difference in getting financing.  Open access does not look feasible.  A cherry picking ISP can make a high return by only building the most lucrative neighborhoods in the City.  There are always risks – technological risks, competitive risks, economic risks. Next Steps-  Consider a residential market survey  Define the City’s goals  Potentially put in roadblocks to cherry pickers (possibly by Resolution)  Define how the City is willing to help a partner ISP  Review City processes that apply to fiber construction (expedite ROW)  Talk to the incumbents one more time  What are your alternatives if you don’t find a partner? Solution should be able to pay for itself. Engage the Community!  Strategic focusing  Survey citizens  Fiber Focus Group of interested citizens  Involve providers  Deeper review of the options o Finance and legal considerations 7  MAY 23, 2016  Hold meetings this fall o Neighborhood (present pro’s and con’s, risks and strengths) o Community Events – IFP Open House General discussion followed including financial possibilities, the fiber infrastructure, and lobby groups for State legislature. It was decided the report will be moved from ‘draft’ version to ‘final’ report. There being no further business, it was moved by Councilmember Marohn, seconded by Councilmember Hally, to adjourn at 4:52 p.m. which motion passed followed a unanimous vote. CITY CLERK MAYOR 8