Resolution 13431 and Staff ReportCITY OF ALAMEDA RESOLUTION NO. 13431
APPROVING PUBLIC UTILITIES BOARD ACTION AND AUTHORIZING
NEGOTIATION, EXECUTION, SALE AND DELIVERY OF CERTAIN INSTALLMENT
SALE FINANCING DOCUMENTS TO BE DELIVERED IN CONNECTION WITH
AMENDMENTS AND AGREEMENTS RELATED TO THE CONTINUED DEVELOPMENT,
CONSTRUCTION, FINANCING AND OPERATION OF THE CITYWIDE HYBRID
FIBER OPTIC - COAXIAL BROADBAND TELECOM SYSTEM, AND AUTHORIZING AND
DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO
WHEREAS, Alameda Power & Telecom (being the City of Alameda (the "City "), acting by
and through its Bureau of Electricity, or "Alameda P &T "), has authorized the acquisition, con-
struction, development, financing and operation of a citywide hybrid fiber optic- coaxial
broadband telecom system (the "Telecom System ") pursuant to resolutions including, without
limitation, Resolution No. 4110 of the Public Utilities Board of the City of Alameda (the "Public
Utilities Board "), adopted December 13, 1999; and
WHEREAS, pursuant to said Resolution No. 4110, Alameda P &T arranged for the financing
Oof the Telecom System, in part through the sale and delivery of certificates of participation in an
ti installment sale agreement as set forth therein, as approved by the City under City of Alameda
Z Resolution No. 13175, adopted January 18, 2000; and
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0 WHEREAS, the City has heretofore granted Alameda P &T a franchise to build and operate
the Telecom System; and
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WHEREAS, in connection with the continued development, construction and operation of the
Telecom System and in consideration of proposed changes with respect to the Telecom System
and the contractual arrangements pertaining thereto which Alameda P &T may consider to afford
financial, operational and other advantages for the Telecom System and its customers,
Alameda P &T has authorized the negotiation, execution and delivery of certain amendments and
agreements related to such activities, including without limitation an installment sale agreement
in an initial aggregate principal amount of not to exceed $6.3 million (the "Installment Sale
Agreement "); and
WHEREAS, on this date the Public Utilities Board adopted its Resolution No. 4517 ap-
proving, authorizing and directing the negotiation, execution and delivery of certain financing
documents, including without limitation the Installment Sale Agreement; and
Now, THEREFORE, BE IT RESOLVED that the City Council of the City of Alameda hereby
ORDERS and DETERMINES that the actions taken by the Public Utilities Board, as evidenced in
Public Utilities Board Resolution No. 4517 , approving, authorizing and directing the ne-
gotiation, execution and delivery of the Installment Sale Agreement and certain related docu-
ments be, and they are hereby, ratified, confirmed and approved in all respects.
016.263456.1
This resolution shall become effective immediately upon its adoption by this City Council.
I, the undersigned, hereby certify that the foregoing Resolution was duly and regularly
adopted and passed by the Council of the City of Alameda in a special meeting assembled on the
22nd day of January, 2002, by the following vote to wit:
AYES: Councilmembers Daysog, DeWitt, Johnson, and Kerr - 4.
NOES: None.
ABSENT: Mayor Appezzato - 1.
ABSTENTIONS: None.
IN WITNESS, WHEREOF, I have hereunto set my hand and affixed the official seal of said City this
23rd day of January, 2002.
A Load
Lara Weisiger, City Cl
City of Alameda
City of Alameda
Memorandum
January 22, 2002
To: The Honorable Mayor
and Members of the City Council
The Honorable President
and Members of the Public Utilities Board
From: Junona A. Jonas
General Manager, Alameda Power & Telecom
Re: A Resolution Approving, Authorizing and Directing the Negotiations of Contract
Amendments
Background:
In June 1999, Alameda Power & Telecom (Alameda P &T) entered into a contract for construction
and operation of a Telecom System for Alameda with Vectren Communication Services, Inc. (VCS).
A Franchise was granted by the City Council in September of 1999. Authorization to issue up to
$20.5 million in Certificates of Participation was granted in January 2000. A private placement
financing with CitiBank Leasing Corp. was completed on December 4, 2000.
Construction began by early January 2001. Test customers began receiving service in May 2001.
The cable television system was officially launched on July 4, 2001. As of January 18, 2002, there
are 21 nodes in service and over 1,700 customers subscribed.
The cable modem Internet service is in test phase now. There are approximately 140 customers, both
cable t.v. and non -cable t.v. subscribers, currently participating in the test. The official launch will
be in February 2002.
Discussion /Analysis:
Both parties to the contract, VCS and Alameda P &T, have reached a tentative agreement that would
allow the original construction and operations contract to be terminated. Alameda P &T staff has
positively assessed its ability to construct and operate the cable t.v. and cable modem Internet
system.
To accomplish this termination, and pursuant to the direction of the Public Utilities Board, Alameda
P &T has agreed to provide VCS with an Installment Sales Agreement in the amount of $6.3 million.
This is the equivalent of the Net Present Value at a 5% discount of the estimated 10% management
Honorable Mayor and
Members of the City Council
Honorable President and
Members of the Public Utilities Board
January 22, 2002
Page 2
fee included in the original contract. Interest will accrue for three years but the 5 annual payments
of principal and interest will not begin until year 2005. VCS will assign the necessary operational
contracts (e.g., CSG, the subscriber management/billing system), and provide all equipment and
construction supplies already purchased. In addition, VCS will pay the balance of this year's
marketing budget.
Fiscal Impact:
Staff is working to assure the continued funding from the current lender in addition to funds on hand.
Operational costs can be met with current revenues and funds on hand.
Staff will continue to monitor progress for the appropriate time to refinance all existing debt.
Recommendation:
Adopt Resolution Approving Public Utilities Board Action and Authorizing Negotiation, Execution,
Sale and Delivery of Certain Installment Sale Financing Documents, Initial Aggregate Principal
Amount to be Delivered in Connection with Amendments and Agreements Related to the Continued
Development, Construction, Financing and Operation of the Citywide Hybrid Optic - Coaxial
Broadband Telecom System, and Authorizing and Directing Certain Actions with Respect Thereto.
Exhibit:
A. Resolution
Respectfully submitted,
By: Junona A. Jonas
General Manager