City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: June 18, 2024
Staff Report: 2403-2714
TITLE
Approval of Amendment Number 5 to Contract Number C20176363 With Magellan in the Amount of $1,122,121 to Incorporate Additional Design and Technical Services for the Fiber-to- the-Premises (FTTP) Pilot Project for a Revised Total Not-to-Exceed of $6,807,412 Over a Five- and-a-Half-Year Term; CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 5 to contract No. C20176363 with Magellan (Attachment A) for make-ready power engineering work, advanced permitting services, and network operations and technical support for FTTP, in an amount not to exceed $1,122,121 through December 31, 2025. This amendment results in a revised total contract not-to-exceed amount of $6,807,412 over the five-and-a-half-year term.
EXECUTIVE SUMMARY
On June 19, 2023, the City Council approved the FY 2024 CIP Budget with the new Grid Modernization for Electrification Project (EL-24000, $250 million) and FTTP project (FO-24000, $20 million). Staff is deploying a pilot to determine how to align the grid modernization with FTTP to help minimize utility engineering pole make-ready work, pole replacements, noise disruption, and construction activity in neighborhoods. With hundreds of miles of overhead and underground construction activity between electric grid modernization and FTTP, the purpose of the pilot is to determine the feasibility of engineering designs and construction methods and implement best practices to facilitate the most cost-effective deployment of resources.
On June 10, 2024, staff recommended the City Council approve a series of contract amendments (Staff Report 2312-23181) to leverage existing on-call construction and engineering contracts to perform the engineering design, overhead and underground construction, and installation for 1 Staff Report 2312-2318 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2024/06-10-24-sr-2312-2318.pdf
the pilot area (approximately 409 poles and 1,224 homes) and reduce the construction timeline by 6 – 9 months, which would otherwise undergo the prolonged process of issuing multiple invitation for bids (IFBs) to perform the work for grid modernization and overlapping FTTP work.
The pilot area will be treated as a testbed to design and construct both projects in parallel to minimize community disruption and reduce shared construction costs. Magellan specializes in fiber and broadband networks and their partners have experience in power engineering which creates added synergy in engineering design for the FTTP and grid modernization pilot.
BACKGROUND
On December 19, 2022, City Council considered three courses of action for a City-owned FTTP service and directed staff to proceed with the phased build approach. Under this approach, FTTP will be built out in selected areas of the city using $20 million from the Fiber Fund and the project will expand gradually from there as Council approves, with the goal to eliminate the need for debt financing (Staff Report #148002).
On May 1, 2023, City Council approved Amendment Number 4 to Contract Number C20176363 with Magellan for Fiber program management, organizational change management, network operations and technical support, and utility pole electric make-ready engineering ( Staff Report 2303-12153). Although the phased build approach to FTTP will decrease the City’s financial risk and increase Council’s control over the velocity of the buildout, the City does not have the in- house staffing to fully pursue the Fiber Expansion Plan and efforts to coordinate with Electrification Grid Modernization. The new Palo Alto Fiber broadband business will require significant staffing and specialized skill sets over the next few years. While it is economically prudent to utilize available staffing resources, the City must also strategically invest in external resources for a successful roll-out.
On December 11, 2023, City Council was informed of the effort to align the Grid Modernization Project for Electrification with the FTTP project to help minimize impact to the community and potentially reduce construction timelines and costs. The pilot will inform the City how well these projects may be aligned, and which construction phasing options worked best to minimize disruption, construction activity, and construction costs. Given the overlapping construction and make-ready work for both projects, staff may mitigate internal resource constraints by covering shared work for both projects in parallel and leveraging existing contracts. This contract amendment will provide additional civil engineering construction design, utility pole make-ready work, and technical customer support to implement the FTTP pilot.
2 Staff Report 14800 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2022/12-19-2022-id-14800.pdf 3 Staff Report 2303-1215 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2023/05-01-2023-id-2303-1215.pdf
ANALYSIS
The design of the pilot area strategically covers initial test area plans for grid modernization, and a core portion of the Phase 1 FTTP area. The pilot area is bounded by West Bayshore, Embarcadero Road, Louis Road, and Colorado Ave). The fiber hut required for FTTP will be located near the Colorado power station, with predominantly aerial construction in the grid modernization pilot area. FTTP build out must be constructed in a manner that provides a pathway from the fiber hut to the areas of higher interest. Magellan will provide consulting on the engineering design and will review as-built construction maps of the FTTP pilot. They will also assist with civil engineering permit applications for underground construction.
Staff recommends amending the final year of the contract with Magellan to provide expanded services for the pilot.
•Civil engineering style permit documents required by the City of Palo Alto for street crossing and underground utilities. Design of the cross section or profile showing the proposed vertical alignment for the fiber conduits and the crossing of existing underground utilities.
•Power make-ready engineering design including load calculation for both power and telecom of 409 poles situated in the pilot area. Engineering design for 4/12kV conversion on overhead distribution lines.
• Tier 1 and 2 customer support includes deployment support, troubleshooting of access equipment, service restoration, and trouble tickets.
The expanded services will be billed based on unit cost and labor hours. This amendment will provide the City with an external vendor option for these critical tasks. It will also enable staff to evaluate whether these services should be performed internally, or via contract service provider.
The FTTP pilot will inform the City the best mix of insource (internal staff) and outsource (contractors) to operate the new municipal Palo Alto fiber internet business.
FISCAL/RESOURCE IMPACT
Budget for Amendment #5 is available in the FY 2024 Capital Improvement Fiber-to-the- Premise CIP (FO-24000). As of May 21, 2024, there is a remaining balance of $2,069,807 under the Magellan contract which will either be used to support the FTTP pilot or returned to the fiber reserves at the end of the contract term December 2025.
The contractual arrangement with Magellan resulted from a formal RFP conducted in 2019.
The “Fiber Network Expansion” RFP sought proposals from qualified consulting firms to develop a multi-phase fiber optic expansion plan including an integrated cross-utility strategy to combine FTTP with electric or gas planning. Multiple phases of the expansion project were included however, each individual phase was to be completed and approved by City Council before the decision was made to proceed with the next phase. Magellan was the recommended provider for all phases and the summary of contract amendments below reflect this administrative strategy for this project.
Magellan Term Basic
Services
Additional
Services
Total Council Report #
and Date
Original Jun 2020 -
Sep 2020
193,192 19,319 212,511 # 11368 on Jun 1
20204
Amendment #1 Oct 2020 -
Apr 2021
259,150 25,915 285,065 # 11580 on Oct 5
20205
Amendment #2 Jun 2021 -
Sep 2022
2,197,050 219,705 2,416,755 # 12305 on Jun 21
20216
Amendment #3 Oct 2022 -
Mar 2023
- - - Term extension
only
Amendment #4 May 2023 -
Dec 2025
2,523,600 247,360 2,770,960 #2303-1215 on
May 1 20237
Amendment #5 June 2024 -
Dec 2025
1,122,121 - 1,122,121
Grand Total 6,295,113 512,299 6,807,412
STAKEHOLDER ENGAGEMENT
Staff continues to engage with the community on these two efforts primarily through the City’s Finance Committee and Utilities Advisory Commission discussions which are open to the public to participate and share feedback.
On November 7, 2023, the Finance Committee was updated on the Fiber Master Plan, which includes a pilot to align FTTP with the Electric grid modernization project. The Finance Committee provided feedback on timeline, costs, and alignment of FTTP to grid modernization (Staff Report #2309-20828).
4 #11369 on Jun 1, 2020 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/year-archive/2020/id-11368-mini-packet.pdf?t=64318.92 5 #11580 on Oct 5, 2020 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/year-archive/2020-2/id-11580.pdf?t=59010.48 6 12305 on Jun 21, 2021 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/year-archive/2021/id-12305.pdf
7 #2303-1215 on May 1, 2023
https://cityofpaloalto.primegov.com/meeting/document/1960.pdf?name=Item%208%20Staff%20Report 8 Finance Committee staff report 2309-2082, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/2023/11-7-2023_2309-2082-mini-packet.pdf In addition, staff continues to share updates through the Palo Alto Fiber project webpage9, City communications channels such as social media10, Medium.com blog11 and interactive Palo Alto Fiber Hub12.
ENVIRONMENTAL REVIEW
Council action on this item is exempt from CEQA review because it can be seen with certainty that there is no possibility that the scope of work covered by this contract amendment, for additional technical and design services, may have a significant effect on the environment (CEQA Guidelines, 14 CCR section 15061(b)(3)).
ATTACHMENTS
Attachment A: Contract with Magellan; Contract No. C20176363, Amendment No. 5 APPROVED BY:
Dean Batchelor, Director of Utilities
Staff: Dave Yuan, Strategic Business Manager
9 Palo Alto Fiber Webpage, https://www.cityofpaloalto.org/paloaltofiber 10 City Social Media Channels, https://www.cityofpaloalto.org/connect 11 Palo Alto Connect, https://medium.com/@paloaltoconnect 12 Palo Alto Fiber Hub, https://fiber-palo-alto.hub.arcgis.com/