Agenda packet — San Luis Obispo City Council, April 4, 2023 (part 10 of 10)

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requirements of the Act as included in the approved SRREs, HHWE, NDFE, Countywide or Regional Siting Element and Integrated Waste Management Plan in addition to compliance with all waste management related legislation.

SECTION 16. Amendments Including Termination.

This Agreement may only be amended or terminated by a written instrument executed by a majority of the Members and meeting the requirements imposed by the terms or conditions of all Revenue Bonds and related documentation including, without limitation, indentures, resolutions, and letter of credit agreements. Notwithstanding the foregoing, no amendment or termination shall require any Participating Agency to contribute any funds to the Authority or become directly or contingently liable for any debts, liabilities or obligations of the Authority without the consent of that agency evidenced in a written instrument signed by a duly authorized representative of that Participating Agency.

SECTION 17. Filing with the Secretary of State.

The Secretary shall file all required notices with the Secretary of State in accordance with California Government Code sections 6503.5 and 53051
SECTION 18. Notices.

All notices which any Participating Agency of the Authority may wish to give in connection with this Agreement shall be in writing and shall be served by personal delivery, by electronic mail, or by US mail addressed to the Participating Agency, or Participating Agencies, or the Authority at its principal office, or to such other address as the Authority or Participating Agency or Participating Agencies may designate from time to time by written notice given in the manner specified in this Section. Service of notice pursuant to this Section shall be deemed complete on the day of service by personal delivery (but 24 hours after such delivery in the case of notices of special meetings of the Board), two days after mailing if deposited in the United States mail, or in 24 hours if provided by electronic mail.

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SECTION 19. Successors and Assigns.

This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the Participating Agencies. However, no Participating Agency shall assign any of its rights under this Agreement except to a duly formed public entity organized and existing under the laws of the State of California approved by a majority of the voting Directors who do not represent the assigning Participating Agency. No assignment shall be effective unless and until the Authority, the Participating Agencies, and the proposed assignee comply with all then applicable requirements of law relating to changes in the composition of entities such as the Authority if and when they have Revenue Bonds outstanding and with the terms and conditions of all Revenue Bonds and related documentation including, without limitation, indentures, resolutions and letter of credit agreements.

SECTION 20. Severability
Should any part, term, sentence, or provision of this Agreement be decided by a final judgment of a court or arbitrator to be illegal or in conflict with any law of the State of California or otherwise be unenforceable or ineffectual, the validity of its remaining parts, terms, sentences, and provisions shall not be affected and the Participating Agencies represent that they would have adopted this Agreement even without the ineffectual or non-valid provision(s).

SECTION 21. Section Headings.

All section headings contained in this Agreement are for convenience and reference. They are not intended to define or limit the scope of any provision of this Agreement.

SECTION 22. Effective Date.

This Agreement shall take effect upon its execution by all Members, pursuant to resolutions of such governing bodies authorizing such execution and shall remain in full force and effect until dissolved pursuant to the provisions herein. This Agreement may be executed in counterparts which together shall constitute a single agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first hereinabove written.

CITY OF SAN LUIS OBISPO
By: ___________________________ Date: ________________________ Erica A. Stewart, Mayor
ATTEST
By: ___________________________ Resolution No. _________ (2022 Series) Teresa Purrington, City Clerk

APPROVED AS TO FOR AND LEGAL EFFECT
By: ___________________________ Date: __________________________ J. Christine Dietrick, City Attorney

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PARTICIPATING AGENCIES
CITIES
Arroyo Grande
Atascadero
El Paso de Robles
Grover Beach
Morro Bay
Pismo Beach
San Luis Obispo

AUTHORIZED DISTRICTS
Avila Beach CSD
California Valley CSD
Cambria CSD
Cayucos Sanitary District
Ground Squirrel Hollow CSD
Heritage Ranch CSD
Los Osos CSD
Nipomo CSD
Oceano CSD
San Miguel CSD
San Simeon CSD
Templeton CSD

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1 SECOND AMENDMENT TO THE

SAN LUIS OBISPO COUNTY INTEGRATED WASTE MANAGEMENT AUTHORITY IWMA") JOINT POWERS AGREEMENT
This Second Amendment to the Joint Powers Agreement (" Second Amendment") dated October 13, 2021, is made by and between the incorporated cities of Arroyo Grande, Atascadero, El Paso de Robles, Grover Beach, Morro Bay, Pismo Beach, and San Luis Obispo, hereinafter called " Cities," and the County of San Luis Obispo, hereinafter called " County."

RECITALS
WHEREAS, on May 10, 1994, an agreement was executed by and between the Cities and the County forming a joint powers authority pursuant to the provisions of the Joint Exercise of Powers Act (Government Code sections 6500 et seq.), for the purposes of facilitating the development of waste diversion programs and projects and of providing economies of scale on a regional basis ( hereinafter referred to as the " JPA Agreement"); and
WHEREAS, in or around 2001, a memorandum of agreement (" MOA") was executed by and between the Cities, the County, and certain special districts within the County (" Authorized Districts") ( collectively " parties") amending the JPA Agreement to include the Authorized Districts for representation on the IWMA Board ("First Amendment to the JPA Agreement"); and
WHEREAS, Section 7.2 (b) of the JPA Agreement provides that "[ r]epresentatives to the Authority shall consist of the five members of the Board of Supervisors of the County of San Luis Obispo and of one additional member from the governing body of each incorporated city within the boundaries of the County of San Luis Obispo which is a party to this Agreement . . ."; and
WHEREAS, Section 8.5 of the JPA Agreement provides that to establish a quorum of the IWMA Board, there must be present a majority of representatives, " including one COUNTY representative"; and
WHEREAS, on September 14, 2021, the County Board of Supervisors voted to withdraw from the IWMA with an effective date of November 15, 2021; and WHEREAS, to facilitate the continued operation of the IWMA Board of Directors without the County as a member jurisdiction, this Second Amendment to the JPA Agreement is necessary to (1) revise the representative members of the IWMA Board of Directors to eliminate the participation of the County Board of Supervisors; and ( 2) eliminate the requirement that a County representative is required to establish a quorum of the IWMA Board.

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2 NOW, THEREFORE, IT ISAGREED AS FOLLOWS:

1. Section 5.3 of the JPA Agreement is amended and restated as follows:

Such powers shall be exercised subject only to the limitations set forth in this Agreement, applicable law and such restrictions upon the manner of exercising such powers as are imposed by law upon the Members in the exercise of similar powers. In no event shall the Authority be authorized to exercise any power not expressly authorized. The Authority hereby designates the City of San Luis Obispo as the Member required to be designated by Section 6509 of the California Government Code.

2. Section 7.2 (b) of the JPA Agreement is amended and restated as follows:

Representatives of the CITIES shall be appointed to serve on the Board in accordance with procedures established by each of the governing bodies of the member agencies. Representatives to the Authority shall consist of one member from the governing body of each incorporated city, within the boundaries of the County of San Luis Obispo, which is a party to this Agreement, with each incorporated area being limited to one representative. Representatives shall serve so long as they hold office with their member agency or until they shall resign or be removed by a majority vote of their member agency. Vacancies among representatives shall be filled in the same manner as the first appointment.

3. Section 8.5 of the JPA Agreement is amended and restated as follows:

8.5 Quorum and voting. For purposes of conducting business, there shall be present a quorum consisting of a majority of representatives. Each representative shall have one vote. No action shall be effective without the affirmative votes of a majority of those present. The representatives to the Authority shall adopt such procedures as are consistent with this Agreement and necessary to conduct the business of the Authority in an orderly manner.

4. All other terms and conditions of the JPA Agreement will remain in full force and effect.

5. Effective Date. This Second Amendment shall become effective upon the adoption and execution of all member agencies and the formal exit of the County of San Luis Obispo from the IWMA.

IN WITNESS WHEREOF, the parties have each caused this Second Amendment to the JPA to be executed by their duly authorized representative effective upon the execution by all member agencies.

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CITY OF SAN LUIS OBISPO
By: _________________________ Date: _______________________ Erica A. Stewart, Mayor
By: _________________________ Resolution No. 11283 (2021 Series) Teresa Purrington, City Clerk
APPROVED AS TO FORM AND LEGAL EFFECT:

By: __________________________ Date: ________________________ J. Christine Dietrick, City Attorney

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1 FIRST AMENDMENT TO THE

MEMORANDUM OF AGREEMENT BETWEEN THE MEMBER JURISDICTIONS OF THE

SAN LUIS OBISPO COUNTY INTEGRATED WASTE MANAGEMENT AUTHORITY

AND THE AUTHORIZED DISTRICTS
This First Amendment to the Memorandum of Agreement (" First Amendment to the MOA") is executed on the date below stated, by and between the Member Jurisdictions of the San Luis Obispo County Integrated Waste Management Authority ( the County of San Luis Obispo and the incorporated cities of Arroyo Grande, Atascadero, El Paso de Robles, Grover Beach, Morro Bay, Pismo Beach, and San Luis Obispo) and the special district parties to the Memorandum of Agreement (" MOA") ( Avila Beach Community Services District, California Valley Community Services District, Cambria Community Services District, Cayucos Sanitary District, Ground Squirrel Hollow Community Services District, Heritage Ranch Community Services District, Los Osos Community Services District, Nipomo Community Services District, Oceana Community Services District, San Miguel Community Services District, San Simeon Community Services District, and Templeton Community Services District ( hereinafter " Authorized Districts")).

RECITALS
WHEREAS, on May 10, 1994, an agreement was executed by and between the incorporated cities of San Luis Obispo County and the County of San Luis Obispo forming a joint powers authority pursuant to the provisions of the Joint Exercise of Powers Act Government Code sections 6500 et seq.), for the purpose of facilitating the development of waste diversion programs and projects that provide economies of scale without interfering with individual agencies' exercise of power within their own jurisdiction hereinafter referred to as the "JPA Agreement"); and
WHEREAS, pursuant to the JPA Agreement, the power to perform the responsibilities of the joint powers authority was vested in the San Luis Obispo County Integrated Waste Management Authority Board of Directors ("IWMA Board"); and WHEREAS, in or around 2001, an MOA was executed by and between the incorporated cities, the County of San Luis Obispo, and the Authorized Districts amending the JPA Agreement to include the Authorized Districts for representation on the IWMA Board ("First Amendment to the JPA Agreement"); and
WHEREAS, in or around October 13, 2021, the JPA Agreement was amended Second Amendment to the JPA Agreement") to reflect the County of San Luis Obispo's withdrawal from the IWMA ( a true and correct copy of the Second Amendment to the JPA Agreement is attached hereto as Exhibit A); and

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2 WHEREAS, by this First Amendment to the MOA, the parties hereto desire to acknowledge, accept, and agree to be bound by the terms and conditions of the Second Amendment to the JPA Agreement.

NOW, THEREFORE, IT ISAGREED AS FOLLOWS:

1. The parties hereto desire to acknowledge, accept, and agree to be bound by the terms and conditions of the Second Amendment to the JPA Agreement.

2. All other terms and conditions of the MOA will remain in full force and effect.

This First Amendment to the MOA may be executed in any number of counterparts, each of which when executed and delivered shall constitute a duplicate original, but all counterparts together shall constitute a single agreement.

IN WITNESS WHEREOF, the parties have each caused this First Amendment to the MOA to be executed by their duly authorized representative effective upon the execution by all member agencies.

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By: __________________________ Date: ________________________ J. Christine Dietrick, City Attorney

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1 SECOND AMENDMENT TO THE

KLELW

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2 NOW, THEREFORE, IT ISAGREED AS FOLLOWS:

1. Section 5.3 of the JPA Agreement is amended and restated as follows:

2. Section 7.2 (b) of the JPA Agreement is amended and restated as follows:

3. Section 8.5 of the JPA Agreement is amended and restated as follows:

4. All other terms and conditions of the JPA Agreement will remain in full force and effect.

5. Effective Date. This Second Amendment shall become effective upon the adoption and execution of all member agencies and the formal exit of the County of San Luis Obispo from the IWMA.

IN WITNESS WHEREOF, the parties have each caused this Second Amendment to the JPA to be executed by their duly authorized representative effective upon the execution by all member agencies.

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By: __________________________ Date: ________________________ J. Christine Dietrick, City Attorney

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COUNTY OF SAN LUIS OBISPO
Department of Public Works
John Diodati, Director
County of San Luis Obispo Department of Public Works
County Govt Center, Room 206 | San Luis Obispo, CA 93408 | (P) 805-781-5252 | (F) 805-781-1229 [email protected] | slocounty.ca.gov
March 23, 2023

EMAIL ONLY
San Luis Obispo County Integrated Waste Management Authority Attn: Peter Cron, Executive Director
[email protected]
Subject: Letter of Intent for the County of San Luis Obispo to Rejoin IWMA Dear Mr. Cron,
On March 21, 2023, the County of San Luis Obispo (County) Board of Supervisors directed and authorized County staff to initiate discussions on the prospect of the County rejoining the IWMA. and explore the steps and process needed for the County to become a member of the IWMA.

We would like to setup a meeting time at your earliest convenience.

I can be reached at (805) 788-2832 or via email at [email protected]. Sincerely,

JOHN DIODATI
Director of Public Works
c: Wade Horton, County Administrative Officer, email
Rebecca Campbell, Assistant County Administrative Officer, email File: 755.500.10.01
L:\Solid Waste\2023\March\Letter of Intent_IWMA.docx.MB.sb

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To: San Luis Obispo City Council
From: Jan Marx, President of the IWMA
Via: Jordan Lane, Deputy Director of the IWMA
Re: Item 6c, The County’s Request to Rejoin the IWMA
Date: April 4, 2023
IWMA staff is happy to offer the following status update on the County’s request to rejoin the IWMA.

BACKGROUND
On March 23, 2023 the County Department of Public Works sent a “Letter of Intent for the County to Rejoin the IWMA” (attached). This was in response to the County of San Luis Obispo Board of Supervisors directing and authorizing staff to initiate discussions on the prospect of the County joining the IWMA. There are certain benefits and areas of concern that will need to be addressed as we move forward with this request.

CONSIDERATIONS
The rejoining of the County to the IWMA may yield the following benefits:
• More efficient reporting and record keeping for compliance with CalRecycle requirements
• Reduced record keeping and staff time in managing MOUs with the County for the following services:
o HHW Services
o Retail Take-Back
o Electronic Waste Collection
o Curbside Used Motor Oil
• Continuity in messaging through public outreach and education • Potential savings to the rate payers through a scale of economics in providing services
The rejoining of the County to the IWMA may yield the following challenges:
• Configuration of the Board
• Assurances of stability of membership
While this is a relatively simplistic analysis of these items, the process will require our due diligence to ensure that the needs and interests of our member jurisdictions are well represented as we conduct this process. Our agency’s primary goal is that a rejoining of the County to the IWMA benefits all members.

Best regards,
Jordan Lane
Deputy Director

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City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: April 4, 2023
TO: Mayor and Council
FROM: Greg Hermann, Deputy City Manager
Josh Erquiaga, Network Services Supervisor
VIA: Derek Johnson, City Manager
SUBJECT: ITEM 7a – STUDY SESSION ON THE BROADBAND PLAN UPDATE The following memorandum provides City staff responses to questions received from a Council Member regarding the Broadband Plan Update. Staff determined that providing this memo to all Council Members and the public would be helpful, as the responses offer clarification regarding the update. Staff’s response is provided in italics.

1. What exactly is the Embedded Speed Test and where were they conducted? Homes, businesses, different parts of the city? The embedded speed tests were a tool embedded in the online survey. The survey respondents could run the tool from the survey web page to test their internet upload and download speeds. The tool ran a speed test from the internet connection a respondent used to respond to the survey questions (e.g., a respondent using their home computer or cell phone connected to their home wireless would be running the speed test from their home). Respondents were asked at the beginning of the survey to identify if they were responding as a home or business and asked to provide their address for mapping upload and download speeds across the city. Initial results indicate that both homes and businesses from throughout the City completed the survey, but the final broadband plan will include a complete map and analysis. It should also be noted that additional surveys have been completed since the publication of the report and will be included in the final plan.

2. How is the Public Private Partnership Model recommended by Magellan different than the Open-Access Provider model?
The key difference between a Public Private Partnership Model and Open-Access Provider model is that in an Open-Access Provider model, the City would own and operate not only the backbone fiber-optic ring, but also last-mile fiber connections to each subscriber (i.e., a home or business) and the electronic equipment needed to provide that subscriber connection. The City would then connect those subscribers to retail Internet providers competing for subscribers’ business.

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Item 7A – Broadband Plan Update Page 2
In the Public Private Partnership Model, the City would own the backbone fiberoptic ring, and the private partner would be responsible for building the last mile fiber connections from the backbone fiber-optic ring to each subscriber and would be responsible for the electronics to provide the subscriber connection. A Public Private Partnership requires substantially less investment from the City for initial construction and ongoing maintenance and operation of the network.

3. Looking at the new proposed map, showing areas where the backbone should be extended, it looks like there are still areas where there is a pretty big distance between some parts of some neighborhoods and the closest fiber optic cable location (in particular, some areas around the Laguna Lake area and where Froom Ranch Specific Plan is located, some parts around Bullock Lane and Orcutt Area, and lastly, out toward Edna Road, past the airport). How would we ensure coverage in those areas?
The conceptual network design outlines the design for the fiber-optic backbone ring that the City would own. The private partner selected (if the City is to pursue the Public Private Partner model) would then be responsible for building out the last-mile connections to subscribers from the backbone ring. Staff has included an additional map (see Figure 1) that shows all address points that fall within a 750- foot buffer of the fiber-optic backbone ring conceptual network design. The 750- foot buffer is a generally accepted estimate of subscribers that could be connected by a private partner at a cost that is economically feasible for the private partner.

This does not mean that neighborhoods outside of the buffer would not be connected by a private partner, but they may be connected later as the private partner can grow their subscriber base.

Realistically, the City cannot ensure that every residence or business in the City can be connected to the network without pursuing a different model than a Public Private Partnership with significantly higher costs. The City can encourage an additional provider to enter the broadband market within the City and provide additional competition, which should have a downward impact on market rates for broadband within the City and encourage greater adoption and access for City residents as a whole.

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Item 7A – Broadband Plan Update Page 3
Figure 1: Address points within 750 feet of the fiber-optic backbone conceptual network design.

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Item 7a
Department: Information Technology
Cost Center: 1101
For Agenda of: 4/4/2023
Placement: Study Session
Estimated Time: 60 minutes
FROM: Greg Hermann, Deputy City Manager
Prepared By: Josh Erquiaga, Network Services Supervisor SUBJECT: STUDY SESSION: BROADBAND PLAN UPDATE

RECOMMENDATION
Receive an update on the Broadband Plan and provide input to inform the final plan.

REPORT IN BRIEF
The COVID-19 pandemic showed that access to high-speed internet service is a necessity for people to work, attend school, shop, and conduct commercial and government business. In recognition of this, the Federal and State government are in the process of updating the standards for what constitutes a baseline level of service. City IT completed an exercise to look at broadband accessibility based on publicly available information and presented it to an ad-hoc committee1 of the City Council tasked with developing funding recommendations for State and Local Fiscal Recovery Funds (SLFRF) through the American Rescue Plan Act (ARPA).

Based on staff findings, the ad-hoc committee recommended to the City Council that $100,000 be allocated to a study of broadband access in the community and an additional $500,000 be set aside to implement recommendations that might come from the study.

Staff became aware of the Local Agency Technical Assistance (LATA) grant, funded by the California Public Utilities Commission (CPUC), and successfully applied for the LATA grant. The CPUC awarded the City $100,300, which will cover the total cost of the Broadband Plan process. At the end of August 2022, the City awarded a contract to Magellan Broadband to produce a Broadband Plan for the City. Work began in December 2022 and is anticipated to be completed in May 2023.

The purpose of this study session is to provide an update on the work completed to date by City staff and the Magellan Broadband consulting team and to seek input from Council for direction in developing the final plan. This report includes Attachment A, a Broadband Plan Update Technical Memorandum provided by Magellan Broadband describing the work they have completed, as well as some early analysis and conclusions.

DEFINITIONS

1 Mayor Stewart and Council Member Shoresman

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Item 7a
In order to ensure a common understanding of the terms being used in the following discussion, definitions are offered below.

A. “Broadband” commonly refers to high-speed Internet access that is always on and faster than traditional dial-up access. The Federal Communications Commission currently classifies high-speed Internet access as anything that meets or exceeds 25 Megabits (Mbps) downstream and 3 Mbps upstream. The California Public Utilities Commission (CPUC) is working on updating that definition to 100 Mbps downstream and 100 Mbps upstream (for reference, 100 Mbps allows for approximately 4-6 people to run 7-10 devices for school, work, and other uses at an appropriate speed for those uses). The City will adopt the CPUC definition of broadband for the purposes of our plan, as grant funding will be tied to meeting that definition.

B. “Third-party fiber" is fiber-optic cable infrastructure owned by an entity other than the City.

C. A “backbone ring” commonly refers to a fiber-optic network that is built in a ring shape, such that a disruption at any one part of the network does not disrupt the entire network.

D. “Dark fiber" is a fiber-optic cable that is currently unused.

E. A “service drop” or “lateral” connects the backbone ring to an individual service location.

F. “Retail broadband” means any broadband service provided to the public at a charge.

G. An “Internet Service Provider (ISP)” is an entity that provides Internet service to end-user customers. Some common examples in the City are Charter, AT&T, and Astound Broadband.

H. “Conduit” is an empty pipe, generally buried underground, through which fiberoptic cables can be run.

UPDATE ON PLAN DEVELOPMENT
The City selected Magellan to develop the Broadband Plan through a competitive RFP.

Magellan was selected because they have both past and current experience developing and implementing plans for similar cities with positive results.

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Item 7a
Magellan is in the process of evaluating existing City, public, and private broadband infrastructure, including the City’s 35.5-mile network of conduit, fiber, and some copper cables. Magellan is also analyzing the current broadband market, surveying the major Internet Service Providers (ISPs), and evaluating the speeds, costs, and geographic reach for business and residential services. City staff has provided detailed information about the City’s assets which Magellan has compiled as part of its analysis. Magellan is also undertaking a detailed review of the City’s Capital Improvement Program (CIP) to determine specifically which projects involve significant excavation that provides the opportunity to jointly deploy broadband assets at a minimal cost.

Public Outreach
Having a detailed understanding of existing access from both technical data, but also end user experience is a key component in the development of a Broadband Plan. Using the City’s Public Engagement and Noticing Manual, public outreach activities are already underway, and the City and Magellan have hosted three stakeholder group meetings which included representatives from various industry and community groups. Attendance for the three stakeholder group meetings that have taken place is as follows (see Attachment B for a complete list of invitees and attendees):
- Real Estate and Land Use: 45 organizations were invited, and nine attended. - Business and Industry: 12 organizations were invited, and nine attended. - Community and Non-Profit Organizations: 49 organizations were invited, and six attended.

Two more focus groups are planned in the coming weeks to engage directly with educators, health providers, and social services. City staff has worked to identify appropriate stakeholders for these focused meetings based on input from numerous City departments including the Office of Diversity, Equity and Inclusion to ensure outreach to underserved and underrepresented groups.

Magellan and the City have also released a broadband survey open to all community members that has received more than 190 responses. Survey responses were primarily received online, though City staff distributed paper copies to the Community and NonProfit stakeholder meeting attendees after those stakeholders provided feedback that they would like to distribute them to their clients.

Early findings from the stakeholder meetings and the survey results suggest that while most residents and businesses in the City can obtain broadband service, pricing and speed vary. Survey responses and embedded speed tests suggest that City residents and businesses are only receiving about half the speeds that they pay for. Moreover, a price point of $0.62 per megabit (MB) is higher than the national average, particularly for urban/metro areas where competitive rates should be in the $0.15-0.25 per megabit range. These preliminary findings suggest there is room in San Luis Obispo for competition and alternatives in the broadband marketplace.

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Item 7a
In advance of completing a Broadband Plan, staff are also sharing information with community members through City communication channels about existing programs through ISP’s that provide for reduced cost internet services for qualifying individuals.

Details about these programs can be found at the City’s Broadband Plan website.

Conceptual Network Design
The best way for the City to expand residential and business access to affordable, highspeed broadband access is to have a carrier-grade, redundant backbone ring throughout the City. A private partner, through a public-private partnership (described in greater detail in the Policy Options section of this report), can then build service laterals from that backbone ring to service business and residential customers which lowers the upfront cost of providing service to those customers and makes it more financially viable for the private partner.

The current conceptual network design provides an ancillary benefit to the City in ensuring that its facilities are on a redundant ring network, including some sites (e.g., sewer lift stations and water distribution facilities) that currently use radio communications that are less reliable than fiber.

The conceptual design requires approximately 17.5 miles of new backbone fiber and five miles of laterals for service drops to be added to the City’s existing 35.5-mile communications network.

It is important to note that the conceptual network design focuses primarily on expanding fiber-optic infrastructure. While many technologies can provide broadband services to an end user (e.g., copper cable, fiber-optic cable, cellular technologies, point-to-point wireless), backbone networks rely on fiber-optic cabling for its high density and high bandwidth ability to serve large areas. Other technologies have a place in serving the last-mile connection to individual subscribers but are generally not used in a backbone ring.

Staff would also note that the conceptual network design focuses on underground fiber as it is preferred for aesthetic reasons and for greater longevity and reliability of the asset.

Should the City adopt the Broadband Plan and move forward with implementing, designing, and engineering the new backbone segments, aerial fiber would also be considered. Portions of the City with significant aerial infrastructure for other utilities may be a good fit for this approach. Aerial fiber can be deployed at a lower cost than underground fiber and could lower the total cost of the backbone ring build-out. The final plan will also provide recommendations to the Council on any policy changes necessary to allow aerial fiber, should the Council desire.

More detail on the conceptual network design is available in Attachment A, beginning on page 3.

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Item 7a
Grant Funding Opportunities
There are two grant opportunities that City staff and Magellan have identified that could fund the build-out of a backbone ring. Given conversations at the State and Federal level about broadband infrastructure, more grant opportunities are expected, and City staff and Magellan continue to look for these opportunities. The final plan will highlight any additional opportunities that become available and will provide at the time of plan production a listing of available funding sources, and priorities and strategies to leverage the funding to fill the unmet service needs.

California SB 156 - Last Mile Funding
The 2021 California Budget Package included $2 billion in funding created by Senate Bill 156 to construct last-mile fiber networks to serve un- and under-served households. The funding was allocated by county, with San Luis Obispo County receiving an earmark of $22.3 million based on un/under-served households within the County. The California Public Utility Commission (CPUC) recently evaluated different socioeconomic factors to determine where un/under-served households are located and is expected to release an updated eligibility map and guidelines by the end of March 2023. Additional analysis of updated eligibility guidelines will be distributed as agenda correspondence after the information is released. The CPUC also changed the timing to open grant applications from late 2023 to early June 2023. Based on work completed by the City and Magellan, staff believe the City will be eligible for SB 156 grants.

The grant application is anticipated to have two main requirements: 1) the applicant (city, county, tribal organization, etc.) must demonstrate experience and capacity to operate and maintain a retail internet service network or have an experienced private ISP partner, and 2) local match funding, up to 20% of the total project cost which could be provided by a partner.

U.S. Department of Commerce Economic Development Administration (EDA) The EDA periodically offers grant assistance for cities seeking to develop or redevelop key commercial areas or corridors. Publicly owned fiber optic networks are an eligible expense for these funds. EDA grants typically tie eligibility and competitive scoring criteria to specific job creation or retention, making key development sites or zones prime candidates for EDA funding where high-speed broadband could help attract or retain key employers.

EDA applications are relatively complex and time-consuming to submit and process, and a local match is required, ranging from 20-40% of the project total. The City should consider future EDA grants as a possibility, particularly where it aligns with its key economic development areas and major development projects. There is currently no funding for broadband activities available from the EDA.

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Item 7a
Economic Analysis of New Entrant Feasibility
Early analysis and projections suggest that building out this network will be highly attractive to a private partner. Build out of Phase 1 and Phase 2 of the backbone ring would place 24,859 residential units and 1,795 businesses within 750 feet of the backbone ring. Typically, a residence or business that is within 750 feet of the backbone ring can be connected by a last-mile service drop from a private partner ISP at a financially viable cost. The final plan will contain a detailed analysis of the estimated usage and financial outlook for a private partner that would work with the City on the build-out of the backbone ring. Once completed, the private partner would then build out service laterals or use other technology to reach residents and businesses within the 750-foot buffer around the backbone ring. Even at a conservative estimate of a 30% subscription rate, there is sufficient projected revenue to make serving those areas an attractive option for a private partner.

POLICY OPTIONS
There are various business models that local governments can pursue that range from a laissez-faire, public policy-only approach to city ownership and operation of a full retail internet business. Brief descriptions of five options or approaches are outlined below:

1. Public Policy: The municipality utilizes its public policy tools to shape and streamline the private sector’s efforts to design, construct, and manage broadband infrastructure. Focus areas include right-of-way access, permitting processes and costs, construction practices and placement methods, franchise agreements, and utility fee assessments.

2. Public Services Provider: Municipalities utilize publicly owned fiber and broadband resources to interconnect multiple public organizations with fiber or wireless connectivity. These organizations are generally limited to the community anchors within their jurisdiction. Santa Monica, California, and Scott County, Minnesota, utilize the Public Services Provider model.

3. Infrastructure Provider: Municipalities provide conduit and dark fiber services to local organizations, businesses, and even ISPs and broadband providers. These organizations use public fiber to connect to one another and to data centers to reach the Internet, cloud services, and other content networks. Huntsville, Alabama, and Lincoln, Nebraska, are two municipalities that utilize the Infrastructure Provider model.

4. Open-Access Provider: Municipalities that own substantial fiber-optic networks in their communities will equip the network with the electronics necessary to establish a transport circuit to interconnect ISPs with the local network. The concept of open access enables competition among ISPs across a network that the local government owns. Utopia, Utah, and Ammon, Idaho, are two examples of an Open Access Provider model.

5. Municipal Retail Provider: Municipalities construct significant fiber networks, including service drops to individual businesses and residences, and offer competitively priced Internet by providing services directly – i.e., the municipality is providing broadband as a utility. Chattanooga, Tennessee and Sandy, Oregon are two cities that utilize the full broadband utility model.

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Item 7a
These options are a range, and the City currently operates as both a Public Services and Infrastructure Provider, however, there is an opportunity to expand services available to the community in these roles through a more robust public-private partnership (P3).

A P3 is the currently preferred approach for most municipalities and can exist across several options above. This approach requires minimal upfront investment and allows the City to competitively seek an experienced ISP to seek grant funds to complete the backbone ring. Cities recently adopting this approach include Grover Beach and Santa Cruz.

Significant time and costs are involved with both the Open-Access and Municipal Retail Providers approaches and, as such, are not recommended to be pursued at this time.

Public-Private Partnerships (P3)
P3s are an emerging business model that provides an innovative solution to broadband expansion. The key factors that define a public-private partnership, as opposed to simply a customer-vendor relationship, are that: (a) all parties contribute, (b) each party’s benefits are shared based on their contributions, and (c) either one partner does not pay another or there are few or limited transactions between partners.

1. Who has rights to access the network – is it exclusive or non-exclusive?

2. What are the public and private partners’ goals and how are they incentivized?

3. What roles and responsibilities does each partner have?

4. What assets are financed through the public?

5. What revenue model is used to recoup the investment?

6. What requirements must the private partner meet regarding service availability, speed, price, build locations, and performance schedules?

7. How will the partners determine future buildouts and who pays for them?

8. What happens if the private assets are sold or acquired? Staff and Magellan recommend that the City consider a public-private partnership model to implement the Broadband Plan in which the City would publicly solicit and select a private ISP to operate, manage, and sell retail internet services over publicly owned fiber in exchange for lease payments, revenue share, new City network construction, or a combination thereof. This P3 approach is particularly suitable to the City given capital resource constraints, existing conduit- and fiber-sharing arrangements that could multiply subscriber reach, and the relatively limited amount of new construction required as identified in the Conceptual Network Design.

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Additionally, an experienced private ISP partner will be required if the City applies for SB 156 Last Mile grant funding, as the City cannot currently demonstrate experience and capacity to operate and maintain a retail internet service network. Leveraging a publicprivate partnership could also help secure the local match funds required for the SB 156 Last Mile and EDA grants.

Staff recommends that the final plan focuses on implementation of a P3 model but seeks City Council input and direction.

Should the Council provide direction to focus on a P3 model, staff will seek Council authorization to release an RFP for a partner with the final adoption of the Broadband Plan on June 20, 2023.

Estimated Costs Using the Public-Private Partnership Model (P3) The estimated capital construction cost of the Conceptual Network Design is $12,765,152, which includes design and engineering for the entire build, required upgrades to 120,198 feet of existing City conduit and fiber cables, as well 113,213 feet of new construction. These costs are based on Magellan’s analysis of comparable cities, recent construction bids, equipment and material costs, and a regional assessment of the labor and construction market. The conceptual network design can be broken into two phases (See Attachment A, page 7, Table 2). Phase 1 prioritizes the backbone ring architecture which allows for greater community member and business access in the areas of the City bordering Phase 1. Phase 2 extends the network to City water tanks, lift stations, and City parks, allowing further expansion into the neighborhoods adjacent to those facilities.

In a Public-Private Partnership model, Magellan expects that the City may be able to offset all of the capital cost of building the network through grant funds and the private partner covering the match needed. The private partner would gain use of a portion of the constructed backbone for a period of time to be determined by the City through negotiation. Using the backbone ring then reduces the capital cost needed by the private partner to expand into business and residential service and makes it financially feasible for the provider to serve residential and business customers.

State and Local Fiscal Recovery Funds (SLFRF)/American Rescue Plan Act (ARPA) Funding
Council previously authorized the allocation of $600,000 in SLFRF/ARPA to fund the creation of a Broadband Plan and subsequent implementation of the plan. Staff recommends that funding remain allocated until the completion of the plan and implementation of initial proposed actions.

Upon the adoption of the final plan, the City will have additional information on the proposed approach to complete the backbone ring as well as final selection criteria for the Last Mile funding to inform any investment needed by the City, along with recommendations for implementation. Staff will then return to Council for any potential reallocation of remaining SLFRF funds that would not be used for implementation as a part of the Mid-year Budget Update or Supplemental Budget. This will still allow for sufficient time for the City to obligate those funds by the statutory deadline of Dec. 21, 2024, and expend those funds by the statutory deadline of Dec. 31, 2026.

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Item 7a
Previous Council or Advisory Body Action
An ad-hoc committee of the City Council recommended $600,000 in State and Local Fiscal Recovery Funds (SLFRF) be allocated toward a broadband study and subsequent implementation of recommended actions. Council authorized this allocation on June 7, 2022 (Resolution No. 11333 (2022 Series)). On September 6, 2022, Council authorized staff to apply for a Local Agency Technology Assistance (LATA) grant to fund preparation of the Broadband Plan.

Implementing a Broadband Plan was discussed as a part of the development for the 2023- 25 Financial Plan Major City Goals and will be included as a work task.

Public Engagement
This item is on the agenda for the April 4, 2023, City Council meeting and will follow all the required posting and notification. Public comment on the item can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting. Attachment A contains more detail on public engagement performed by City Staff and Magellan Broadband in the Scope of Work and Needs Assessment sections, beginning on page 1.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because the action does not constitute a “Project” under State CEQA Guidelines Section 15378.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2022-23
Funding Identified: Yes
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
Information
Technology
Replacement
Fund
$600,0002 $ $600,000 $
State
Federal
Fees
Other: Grant $100,300 $67,057
Total $700,300 $ $667,057 $

2 This is the balance of SLFRF funding allocated by the Council for Broadband work with Resolution No. 11333 (2022 Series) at the June 7, 2022 Council Meeting.

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Item 7a
The City was awarded a $100,300 LATA grant from the CPUC to complete a Broadband Strategic Plan. There is $67,057 remaining in the grant to complete the Strategic Plan.

ALTERNATIVES

1. Due to recent changes to the expected release date of the SB 156 grant application, if the Council supports the P3 model and wishes to best position the City for potential funding, Council can authorize staff to release an RFP at this time for a partner. The Broadband Plan would be completed in parallel, and staff would return to Council for approval of a partner agreement.

2. The City Council could provide direction to discontinue efforts to complete a Broadband Plan at this time.

ATTACHMENTS
A - Broadband Update Technical Memorandum
B - Focus Group Invitee List

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Broadband Plan Update

TECHNICAL MEMORANDUM

CITY OF SAN LUIS OBISPO
To: City of San Luis Obispo
Josh Erquiaga, Network Services Supervisor and Team Lead From: Magellan Broadband, LLC
Will Morat, Senior Broadband Consultant and Project Manager Preston Young, Senior Broadband Consultant
Jory Wolf, Project Executive and VP Digital Innovation
Date: March 10, 2023
Magellan was contracted by the City to undertake a Broadband Plan to help improve access and affordability to high-speed internet service for City services, community members, and businesses. Work began in December 2022 and is anticipated to be completed in June 2023. The City requested a project update memo for the City Council to align with the City’s biennial budget process. This Memo provides that update by focusing on an initial assessment of broadband service in the community, and recommends a Conceptual Network Design needed to facilitate greater access.

Feedback and direction from the City Council will be incorporated into the final Broadband Plan to completed in June 2023 and presented to the City Council on July 18, 2023.

SCOPE OF WORK
Magellan is in the process of evaluating existing City, public, and private broadband infrastructure, including the City’s 35.5-mile communications network of conduit, fiber, and some copper cables. This forms the City’s fiber optic backbone and is a critical component in ensuring connectivity between City facilities to provide services, but also can be used to support broadband access to community members and businesses.

There are currently 15 City-owned buildings and 4 communications towers connected on the City network; however, four (4) of these facilities require a second, redundant connection to ensure uninterrupted support of services to the community. Additionally, there are additional public assets (10 water tanks, 13 lift stations, 30 parks, and 3 remaining unconnected traffic signals) that are currently not on the City backbone which would benefit from direct connectivity.

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Figure 1 - Existing City Facilities & Broadband Assets
Magellan is also analyzing the current broadband market, surveying the major Internet Service Providers (ISPs) and evaluating the speeds, costs, and geographic reach for business and residential service.

The scope of work also includes a detailed review of the City’s Capital Improvement Program (CIP) to determine specifically which projects involve significant excavation that provide the opportunity to jointly deploy broadband assets at minimal cost.

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The final plan will also include an assessment of the different operational, governance, and business models that the City could pursue, including public-private partnerships, and define the opportunities and risks for each.

NEEDS ASSESSMENT
A needs assessment study is already underway; the City and Magellan have hosted three stakeholder group meetings which included representatives from business, Cal Poly, housing, realtors, community-based organizations, and residents. Two more focus groups are planned in the coming weeks to engage directly with educators, health providers, and social services. The City also released a broadband survey and has received more than 190 responses. Early findings from the stakeholder meetings and the survey results suggest that while most residents and businesses in the City can obtain broadband service, pricing and speed varies.

Figure 2 - Median Speeds & Costs based on Survey Results Survey responses and embedded speed tests suggest that City residents and businesses are only receiving about half the speeds that they pay for. Moreover, a price point of $0.62 per megabit (MB) is higher than the national average, particularly for urban/metro areas where competitive rates should be in the $0.15-0.25 per megabit range. These preliminary findings suggest there is room in San Luis Obispo for competition and alternatives in the broadband marketplace.

CONCEPTUAL NETWORK DESIGN
The conceptual network design to connect all City facilities, buildings, parks, parking structures, traffic signals, and water assets into a City-wide ring network would require approximately 17.5 miles of new backbone fiber and 5 miles of laterals for service drops.

A city-wide backbone ring network means that the broadband signal can come from two separate directions; if a backbone cable gets cut, the signal can be routed through an alternate path to continue to provide end line service.

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Creating a backbone loop is critical for not only uninterrupted City services, but also if the City (or its private partner) were to utilize this backbone to provide competitive retail internet services to the community and businesses. Retail internet services must be able to ensure loop redundancy to eliminate or minimize service outages.

Figure 3 - Conceptual Network Design
The existing City-owned/controlled fiber network in Figure 3 is depicted in blue and varies from 96 to 288 strand cable (available strands within those cables need to be

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verified with field engineering)1. Proposed new backbone construction is depicted in red and would be comprised of two 2” conduits deployed underground at 36 inches below the surface, filled with a 288-count fiber-optic cable, capable of meeting future demand. New laterals and service drops are a single 2” conduit with a 24-count fiber cable. A completed design and engineering process will likely identify some areas where overhead poles exist and aerial cables can be used instead of undergrounding new conduit, which can cut deployment costs by as much as 50%.

Some City sites are currently connected via third party fiber (e.g., private ISPs, County of SLO, etc.), which means the City must rely on external parties to ensure continued service to critical City facilities. The conceptual network design includes construction of new routes to replace these leased lines, which would enable the City to connect all facilities solely through City-owned, City-controlled fiber. However, the City could retain these third-party fiber paths and reduce the total construction costs (see Table 3).

Table 1 - New Sites Added to City Backbone
City Assets Connected to City Backbone
in Conceptual Design
Traffic Signals (3)
City Parks (30)
City Water Tanks (10)
Lift Stations (13)
There are 82 traffic signals in the City; 76 of these are already connected through the City’s signal interconnect network. Three more are proposed to be connected in the Conceptual Design generated in this project. However, there are three remaining traffic signals that are too remote to justify the cost for constructing a lateral fiber path; the City should consider interconnecting these signals using wireless or radio technology in the interim.

Lift stations and water tanks are currently connected via different technologies, primarily through wireless radio equipment. However, wireless connections are not as reliable as fixed fiber, and are subject to weather, maintenance, and other events that can interrupt connectivity. Moreover, building fiber paths to these assets extends the City’s backbone into new neighborhoods that could be leveraged through a public private partnership to

1 Magellan is continuing its assessment; some of the data was retained on an aging software system that is no longer compatible with City systems and could not be accessed. It’s anticipated that as the assessment is completed, more information will come to light – including additional fiber cables with different strand counts, and/or some fiber connections to existing assets that are not currently showing up in records or maps.

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provide more community members and businesses with improved internet options and services.

Notably, the Conceptual Design (including existing City backbone) passes more than 24,000 households and 1,700 businesses that will have greater access to broadband services (e.g., potential internet subscribers).

ESTIMATED CONSTRUCTION COSTS
Because the City already has a significant fiber backbone established, there is relatively less new infrastructure to construct as compared to other jurisdictions without existing assets. The estimated capital construction cost of the Conceptual Network Design is $12,765,152, which includes design and engineering for the entire build, required upgrades to 120,198 feet of existing City conduit and fiber cables, as well 113,213 feet of new construction (see Table 2).
2 Once a competitive bid is selected and contract
completed, construction should be able to be completed within an 8-10 month period.

The Conceptual Network Design can be implemented in a phased approach (see Figure 4) that prioritizes the loop architecture necessary for greater community member and business access and critical City site connectivity in Phase 1; the second phase adds in City water tanks, lift stations, and City parks, which allows the City to not only connect these sites into its backbone network, but also to expand community and business access and leverage these locations for smart city devices and wireless distribution infrastructure.

Water tanks (typically at a higher elevation with better line-of-sight) and parks (geographically dispersed throughout residential neighborhoods) can enhance community connectivity by passing more residences and businesses that could subscribe to services, or through Wi-Fi or other wireless internet access points.

Table 2 - Estimated Construction Costs of Conceptual Network Design Length
(feet)
Price per
Foot
Estimated
Cost
Phase 1 – City Backbone Loop & Critical City Sites
Design & Engineering
Design & Engineering (New Construction) 57,739 $ 1.75 $ 101,044 As-Builts (Existing City Network Upgrades) 120,198 $ 0.20 $ 24,040 Fielding Survey -- -- $ 50,000

2 Construction costs are based on Magellan’s analysis of comparable cities, recent construction bids, equipment and material costs, and a regional assessment of the labor and construction market. An inflation factor has been included to address future cost increases.

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Public Engineering Stamps -- -- $ 50,000
Phase 1 Design & Engineering Subtotal $ 225,084
Construction
Existing City Network Upgrades 120,198 $ 5.00 $ 600,990 New Backbone Construction 52,348 $ 110.00 $ 5,758,280
New Lateral Construction (City Assets) 5,391 $ 80.00 $ 431,280 Phase 1 Total 177,937 -- $ 7,015,634
Phase 2 – Water Assets & Parks
Design & Engineering
Design & Engineering (New Construction) 55,474 $ 1.75 $ 97,080 As-Builts (Existing City Network Upgrades) -- $ 0.20 -- Fielding Survey -- -- $ 25,000
Public Engineering Stamps -- -- $ 35,000
Phase 2 Design & Engineering Subtotal $ 157,080
Construction
Existing City Network Upgrades -- $ 5.00 --
New Backbone Construction 38,484 $ 110.00 $ 4,233,240
New Lateral Construction (City Assets) 16,990 $ 80.00 $ 1,359,200 Phase 2 Total 55,474 $ 5,749,520
TOTAL 233,411 $ 12,765,152
The construction estimates in Table 2 are based on the assumption that if the City does not have maps or data indicating fiber exists, it would need to be constructed. However, there does appear to be some fiber routes that were installed on an ad-hoc basis over time, and may not be recorded in the City’s maps, or may simply be retained only as institutional knowledge by some City departments. The design engineering and field surveying process would verify and record all existing assets, likely uncovering

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additional fiber that would eliminate the need for some of the new construction, thereby lowering the total overall construction costs.

Figure 4 – City Connectivity through Phases 1 & 2 of Conceptual Design The main reason some areas within a community remain underserved3is typically because private companies, in the context of a corporate financial plan, weigh the project’s capital costs against the market and timeline for a return on their investment;

3 “Underserved” is defined by the State of California Public Utilities Commission as services offerings below the minimum of 100 Mbps downstream and 20 Mbps upstream.

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capital investment can’t be justified in areas that are costly to build and that don’t have adequate anticipated revenues. Often, these underserved areas coincide with neighborhoods and/or census tracts with other socioeconomic challenges, which further exacerbates the Digital Divide and quality of life.

However, public investment or access to public infrastructure can offset the private capital required, and encourages market entry. These Phase 2 water assets and park sites can expand the reach of the City’s fiber backbone to allow for greater community and business access. The new fiber routes will provide more cables into more neighborhoods that can be leased to private Internet Service Providers (ISPs), thereby reducing the private investment required for new entrants, encouraging more market competition, and enhancing retail data services for residents and businesses.

The construction costs can be reduced – significantly for Phase 1 – if the City were to retain and even expand its use of third-party fiber. There is more than 24,530 feet of available third-party fiber (County or privately-owned) that could be utilized in Phase 1 of the Conceptual Network Design, and 2,407 feet in Phase 2. Utilizing this fiber would reduce the total construction costs by almost $3 million.

Table 3 - Estimated Construction Costs if Utilizing Third Party Fiber Third Party Fiber Option
New
Construction/Upgrade
Length (feet)
Third Party Fiber
Length (feet)
Revised
Estimated
Cost
Phase 1 153,407 24,530 $ 4,274,405
Phase 2 53,067 2,407 $ 5,473,217
TOTAL 212,013 26,937 $ 9,747,623
However, some third-party fiber leased by the City may explicitly be for City services use – and lease agreements may prohibit providing any internet services to the community or business.

Construction costs can be even further reduced through effective utility coordination, implementing a dig once/joint trench program, and aligning broadband expansion projects with other major CIP projects, particularly those with excavation in the City right-of-way. The labor required for excavation can account for 40-60% of total construction costs. When work is coordinated between utilities and public agencies, all parties can expand their fiber footprint at a fraction of the typical cost by taking advantage of synergies with other projects.

GRANT FUNDING OPPORTUNITIES

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California SB 156 - Last Mile Funding
The 2021 California Budget Package included $2 billion in funding (partially from federal ARPA funds) created by Senate Bill 156 for the construction of last mile fiber networks to serve un- and under-served households ($1 billion for rural areas and $1 billion for urban areas)4. The funding was allocated by county, with San Luis Obispo County receiving an earmark of $22.3 million based on un/under-served households within the County. The California Public Utility Commission (CPUC) is still determining eligibility rules and guidelines. Applications are anticipated to be released as early as June 2023.

However, the CPUC is continually refining and updating its maps, aligning with recently compiled FCC maps, and evaluating the different socioeconomic indicators that would factor into SB 156 grant eligibility including un/underserved households and existing broadband service need. The CPUC is expected to release an updated eligibility map and guidelines by the end of March 2023.

In addition to forthcoming eligibility guidelines, SB 156 grant funding is anticipated to have two main requirements for any application: 1) the applicant (city, county, tribal organization, etc.) must demonstrate experience and capacity to operate and maintain a retail internet service network or have an experienced private ISP partner, and 2) local match funding is required, up to 20% of the total project cost which could be provided partially or in full by a private partner.

As the Last Mile grant program gets closer to the anticipated June 2023 application release, more information will be available to fully determine eligibility, funding limits, and eligible projects.

U.S. Department of Commerce Economic Development Administration (EDA)
The EDA periodically offers grant assistance for cities seeking to develop or redevelop key commercial areas or corridors, and publicly owned fiber optic networks are an eligible expense for these funds. EDA grants typically tie eligibility and competitive scoring criteria to specific job creation or retention, making key development sites or zones prime candidates for EDA funding where high-speed broadband could help attract or retain key employers.

With the emphasis on COVID-19 recovery through ARPA, and the federal infrastructure bill, there has recently been very limited funding available through the EDA. Applications

4 California Public Utilities Commission Last Mile Federal Funding Account, https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/broadband-implementation-forcalifornia/last-mile-federal-funding-account

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are relatively complex and time-consuming to submit and process, and a local match is required, ranging from 20-40% of the project total.

The City should consider future EDA grants as a possibility, particularly where it aligns with its key economic development areas and major development projects.

BUSINESS MODELS
The various business models involve different levels of investment and control that come with varying risks and rewards. The City of San Luis Obispo has numerous options – from a laissez-faire, public policy-only approach all the way across the spectrum to the City owning and operating a full retail internet business.

Figure 5 - Broadband Business Models Spectrum
Public Policy Only
The municipality utilizes its public policy tools to shape and streamline the private sector’s efforts to design, construct, and manage broadband infrastructure. Focus areas include right-of-way access, permitting processes and costs, construction practices and placement methods, franchise agreements, and utility fee assessments. Examples of broadband policies and standards include joint trenching and “dig once” policies, utility relocations, road moratoriums, and funding mechanisms for design, labor, and materials.

A public policy approach is not a model per se; however, it can be combined with other models for municipalities to take a more active, direct role and maximize impacts.

Public Services Provider

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Municipalities utilize publicly-owned fiber and broadband resources to interconnect multiple public organizations with fiber or wireless connectivity. These organizations are generally limited to the community anchors within their jurisdiction, including local governments, school districts, higher educational organizations, public safety organizations, utilities, and healthcare providers. Santa Monica, California and Scott County, Minnesota utilize the Public Services Provider model.

Infrastructure Provider
Municipalities provide conduit and dark fiber services to local organizations businesses, and even ISPs and broadband providers. These organizations use public fiber to connect to one another and to data centers to reach the Internet, cloud services, and other content networks. Dark fiber5is the core product of most infrastructure providers and is generally utilized by larger businesses and institutions in order to reduce their telecommunication expenses and achieve higher bandwidth speeds. Huntsville, Alabama and Lincoln, Nebraska are two municipalities that utilize the Infrastructure Provider model.

Open-Access Provider
Municipalities that own substantial fiber-optic networks in their communities will equip the network with the electronics necessary to establish a transport circuit to interconnect ISPs with the local network. The concept of open access enables competition among ISPs across a network that is owned by the local government. The municipality remains neutral and non-discriminatory, and is open equally to any providers that seek to deliver services over the network. Typically, this model works best in large cities with substantial demand – both residential and commercial. Utopia in Utah and Ammon, Idaho are two examples of an Open Access Provider model.

Municipal Retail Provider
Municipalities construct significant fiber networks, including service drops to individual businesses and residences, and offer competitively priced Internet by providing services directly – i.e., the municipality is providing broadband as a utility. In order to compete with the incumbent providers, municipalities will offer triple-play services consisting of phone, television, and Internet, along with providing the required customer service center, billing services, technical, installation, and field maintenance crews, and

5 “Dark Fiber” is simply the fiber optic pathway – the user (or lessee) must provide their own equipment and connections on either end of the fiber to function and transmit data. “Lit Fiber” is the full suite of data services, where the subscriber just needs to “plug in” in order to access the internet; the owner of Lit Fiber provides the end line equipment and connectivity to the world wide web.

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supporting administrative staff to operate an ISP. Chattanooga, Tennessee and Sandy, Oregon are two cities that utilize the full broadband utility model.

Public-Private Partnerships
Public-private partnerships (P3s) are an emerging business model that provides an innovative solution to broadband expansion. The key factors that define a public-private partnership, as opposed to simply a customer-vendor relationship, are that: (a) all parties contribute, (b) each party’s benefits are shared based on their contributions, and (c) one partner does not pay another; there are few or limited transactions between partners. Many municipalities are utilizing the P3 model in various forms, including Westminster, Maryland, as well as California jurisdictions including Santa Cruz, Rancho Cucamonga, and the 9 South Bay Cities Council of Governments in the Los Angeles area.

Generally, P3s create a cooperative platform for a local government and one or more private organizations to plan, fund, build, and maintain a broadband network within the municipality’s jurisdiction. To make a P3 successful, each organization should align on key negotiating points, such as:
 Who has rights to access the network – is it exclusive or non-exclusive?  What are the public and private partners’ goals and how are they incentivized?  What roles and responsibilities does each partner have?  What assets are financed through the public?
 What revenue model is used to recoup the investment?
 What requirements must the private partner meet in terms of service availability, speed, price, build locations, and performance schedules?  How will the partners determine future buildouts and who pays for them?  What happens if the private assets are sold or acquired? Magellan recommends San Luis Obispo consider a public-private partnership model to implement the Broadband Plan in which the City could publicly solicit and select a private ISP to operate, manage, and sell retail internet services over publicly-owned fiber in exchange for lease payments, revenue share, new City network construction, or a combination thereof. This P3 approach is particularly suitable to the City given capital resource constraints, existing conduit- and fiber-sharing arrangements that could multiply subscriber reach, and the relatively limited amount of new construction required as identified in the Conceptual Network Design.

Additionally, an experienced private ISP partner will be required if the City were to apply for SB 156 Last Mile grant funding, as the City cannot currently demonstrate experience and capacity to operate and maintain a retail internet service network. Leveraging a public-private partnership could also help secure the local match funds required for both the SB 156 Last Mile and EDA grants.

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Initial revenue and expenses projections suggest that expanding the City backbone by constructing the Conceptual Design would achieve positive cash flows and generate a return on investment, which will be attractive to a qualified private partner. Completing Phases 1 and 2 would pass more than 24,000 residences and nearly 1,800 businesses, providing them with greater access to internet services. The final plan report will contain a detailed financial analysis that will assist the City in soliciting and negotiating any potential future public-private partnership.

KEY RECOMMENDATIONS & NEXT STEPS
1) Expand the City’s Fiber Backbone to Provide Greater Access for the Community and Businesses.

The City can complete a backbone loop necessary for a qualified operator to provide competitive, reliable retail internet services to the community and business at an estimated cost of $12.7 million. The backbone loop design would also connect remaining City facilities and assets – including parks, water tanks, and lift stations. Construction costs can be further reduced to $9.7 million through lease or use of third-party fiber, or broken into two phases, depending on project funding availability.
2) Pursue Competitive Grant Opportunities – SB 156
The State of California and the California Public Utilities Commission have designated more than $22 million in broadband construction grant funding for San Luis Obispo County, and applications are anticipated to be released as early as June 2023. The City is eligible for this funding, and should pursue these grants to cover the backbone loop design construction costs of $12.7 million. However, the grant has two main requirements the City must meet: 1) possess experience operating a fiber network – or have selected a qualified private ISP to do so, and 2) provide a 20% funding match. Additionally, other municipalities – and the County itself – will be competing for these grant funds, which will require the City to demonstrate commitment, completed planning, and construction readiness in order to secure a grant award.
3) Solicit & Negotiate a Public Private Partnership.

The City is in a favorable position to leverage an expanded, looped backbone network through a public-private partnership, which could secure: (a) the qualified network operator needed for grant eligibility, (b) the required match funding for SB 156 Last Mile grant funds, (c) a partner willing to construct all or a portion of Phases 1 & 2 in exchange for rights to sell retail internet services utilizing City fiber, or a combination thereof. The City should publicly solicit ISPs

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BROADBAND UPDATE MEMO – MARCH 10, 2023 Page 15
www.magellanbroadband.com City of San Luis Obispo, CA
for a partnership through an RFP process and select a qualified partner prior to the SB 156 Grant Application release in early Summer 2023. 4) Retain State and Local Fiscal Recovery Funds (SLFRF).

Preliminary analysis indicates that there are opportunities to fully utilize the SLFRF funds that the City Council has designated for implementing the Broadband Plan.

The City will be able to use these funds to complete implementation work within the required SLFRF deadlines.

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Focus Group Invitee Lists
City staff has worked to identify appropriate stakeholders for these focused meetings based on input from numerous City departments, including the Office of Diversity, Equity and Inclusion, to ensure outreach to underserved and underrepresented groups.

Real Estate and Land Use
City of San Luis Obispo MIG
Stone Park Capital Hodge Company
MFI Design People's Self-Help Housing
Stalwork Construction MW Architects
In Balance Green Consulting Hubbard Development Consulting Wallace Group NKT Commercial
Oasis Associates Covelop Collaborative Development
Richardson Properties Rademaker Design
J.W. Design & Construction Kovesdi Consulting
Madonna Properties Dettmer Architecture
CRSA Architecture Rossi Enterprises
Ambient Communities Above Grade Engineering
RRM Design Southpaw Sign Company
CCB Montage Development
Garcia Architechture and Design Peck Planning
AuzCo Developments Paragon Architects
Transitions Mental Health Association Astound Broadband Ten Over Studio Trust Automation
Cannon Corporation Vivian Hanover Ventures
Copeland Properties Jamestown
The Law Office of Marshall E. Ochylski Peak WiFi
Quaglino Enterprises Pacific Coast Broadband Consortium Housing Authority San Luis Obispo

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Community and Non-Profit Organizations
AAPI SLO COunty Literacy for Life Organization
Central Coast Coalition for Undocumented
Student Success
Long Term Care Ombudsman Services of San
Luis Obispo County
Diversity Coalition SLO County Lumina Alliance
GALA Pride and Diversity Center Meals That Connect
Independent Living Resource Center, INC One Cool Earth
Jewish Community Center Federation Peace Academy of the Science and Arts Latino Outreach Council People's Self-Help Housing Corporation Promotoras Restorative Partners
RACE Matters SLO San Luis Obispo Children's Museum
Undocu Support San Luis Obispo Climate Coalition
United Way of San Luis Obispo County
San Luis Obispo Committee for Education on
Alcoholism, dba "MiddleHouse"
Cal Poly Student Diversity and Belonging San Luis Obispo Legal Assistance Foundation 5Cities Homeless Coalition Senior Volunteer Services
Access Support Network Shower the People
Big Brothers Big Sisters of San Luis Obispo
County SLO International Film Festival
CAPSLO - Child Care Resource Connection
(CCRC) SLO Noor Foundation
City Farm SLO SLO Partners
Community Action Partnership of San Luis
Obispo County, Inc SLO Rep. Theater
Community Counseling Center (CCC) of San Luis
Obispo Smart Share Housing Solutions, Inc
Court Appointed Special Advocates of San Luis
Obispo County, Inc
The San Luis Obispo Child Development
Resource Center
Cuesta College Foundation Tolosa Children's Dental Center Festival Mozaic Transitions Mental Health Association
Food Bank Coalition of San Luis Obispo County The Link Family Resource Center Hospice of San Luis Obispo County Center for Family Strengthening (CFS) Jack's Helping Hand, Inc Housing Authority San Luis Obispo (HASLO)

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Business and Industry
SLO Chamber of Commerce
RACE Matters SLO
Tourism BID
Promotional Coordination Committee
REACH
Downtown SLO Business Association
SLO Economic Development Dept.

SOFTEC
Trust Automation
Cal Poly CIE
Cal Poly Business Park

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San Luis Obispo City CouncilApril 4, 2023

San Luis Obispo City Council
April 4, 2023