Michael Kashiwagi, City Consultant, provided and overview of the proposed SiFi Networks FiberCity License Agreement. The following points were presented:
Background
Basic Terms of License Agreement
Potential Risk and Liability
Benefits to the City
Next Steps
City Attorney Eric Vail indicated that after reviewing the draft agreement there are areas that warrant review by City Staff and SiFi.
1. There is a confidentiality clause that imposes an obligation upon the City to have a process in place to protect SiFi’s trade secrets information, and if violated the City is potentially liable. There is a provision in the agreement that caps SiFi’s liability at 5 million dollars, however, there is no cap for the City and expressly exempts any type of cap for release of trade secret information. This provision also allows SiFi to sue the City for consequential damages. Furthermore, this provision is also not clear that SiFi has to identify when they are proving trade secret information so we can know what to protect. This can create a conflict in relation to the City releasing public records requests and feels this provision needs to be redefined.
2. There is an indemnity provision that has a fairly good standard, however, there is a defense obligation which means the City may be required to hire or pay for attorney fees to defend SiFi in the event of a claim or lawsuit. He feels the threshold for this provision is not good for the City and needs to be changed as it exposes the City to significant potential costs.
3. There is a termination clause that allows SiFi the ability to terminate the agreement at any time, which leaves potential for the City to retain costs and not be compensated for if SiFi terminates the agreement.
4. The proposed insurance rates should be increased.
Councilmember Nancy Ross expressed concern with the required time and deadlines to process SiFi related work and how it could affect services to residents and local businesses. She also questioned how the City intends to keep trade secrets protected relating to the distribution of public records requests.
Assistant City Manager Katherine Fuentes explained the process of SiFi covering the cost for a project manager to dedicate the time to the SiFi related work, which should mitigate that concern. She further explained the process of redacting confidential information on public records requests and asked that Scott Bradshaw, President SiFi Networks, provide further details of what has been the case this far with other agencies they have dealt with.
Scott Bradshaw, President SiFi Networks, provided a brief overview of the process with other agencies. He indicated that the City Attorney made some very valid points and they will adjust the draft document accordingly prior to bringing it back to the City Council on May 11, 2022.
Councilmember Raymond Gregory requested clarification on non-inclusive.
Scott Bradshaw, President SiFi Networks, provided clarification.
City Attorney Eric Vail provided his clarification and indicated that the language can be clarified in the agreement.
Councilmember Raymond Gregory expressed concern with the language that relates to SiFi servicing the primary premises and feels the entire City should be covered as well as future development. He would like to know the cost to cover all of the existing areas.
Scott Bradshaw, President SiFi Networks, explained that it is SiFi’s intention to cover 100% of the City and they want to ensure that 95% is covered. They will also be looking at a 20-year view to see what the City may be developing in the future. They intend to address these concerns on the draft agreement.
This item was for information and direction only, there was no formal action taken by the City Council.