PUD board OKs purchase of fiber lines
Instead of sharing five fiber-optic conduits in joint ownership with the Town of Truckee, the Truckee-Donner Public Utility District will own two 2-inch conduits and one 6-inch electrical conduit, based on a revised agreement between the PUD and Fiber Communications, Inc., a cross-country telecommunications company.
At a special board meeting Monday night, PUD boardmembers authorized staff to purchase the conduits from Fiber Communications for $123,408.04 in a 4-1 vote – the exact dollar amount of the encroachment fee issued to the company by the Town of Truckee.
In a staff report to the board of directors, TDPUD Director of Telecommunications Services Alan Harry wrote: “… This district and Fiber Communications, Inc., have completed preparation of an agreement which will provide the district with sole ownership of two 2-inch conduits installed within the Williams Communications cross-country fiber-optic project … and the installation of a district electrical conduit, where appropriate, in the same trench.”
The district will acquire 16 miles of the 2-inch conduits and approximately 6 miles of the electrical conduit, Harry said.
According to Harry and other TDPUD staff, the agreement is an excellent deal.
“The point is the district is exceeding well in value of the cost of the encroachment process,” said Martin Skeer, managing executive consultant with Navigant Consulting out of Rancho Cordova.
Skeer said that construction of conduit trench can cost up to $100 a foot because of the heavy granite throughout the Sierra. He said the conduits are actually worth up to $7 million due to construction avoidance.
“Just from an electric utility standpoint, an electrical conduit costs hundreds of thousands of dollars to install,” Harry said. “Now, it is virtually at no charge. If you run the numbers, we just got an awesome deal.”
As part of the agreement, the district will facilitate conduit construction planning and routing advice for Fiber Communications as well as assistance in obtaining construction permits. With the help of the PUD, Fiber Communications will save in construction costs, permit fees and construction time in their cross country fiber-optic installation project.
The district will have the option of using the two 2-inch conduits for their own purposes, or to lease and sell to other companies coming through town. They would be an attractive deal for other businesses coming through town who would have the option of avoiding construction, Harry said.
“The route that travels through Truckee is the chosen route for anyone to go across the Sierra,” he said. “It is the path of least resistance from east to west.”
Plans for empty conduits will be detailed as a business plan is prepared, Harry said.
Initially, the PUD board voted to enter into an agreement with the Town of Truckee for the co-ownership of five conduits as part of the cross-country fiber-optic project. At the Sept. 15 meeting, the board approved the expenditure of up to $250,000 for the project.
When the town council rejected staff’s recommendation to approve the joint agreement, the PUD had to revise their agreement with Fiber Communications.
“Yes, we are spending $123,000,” Harry said. “But for that we are getting 6 miles of electrical conduit constructed at a great price. In addition to that, we’re getting 16 miles of two 2-inch conduits and that’s the cream that’s coming from this.”
While directors Joe Aguera, Ron Hemig, Bob Jones and Jim Maass voted in favor of the new agreement, director Pat Sutton had the dissenting opinion that the district does not have the right to enter into dealings with Fiber Communications.
“It doesn’t seem proper for us to be part of this type of dealing,” Sutton said. “This board has the responsibility to the community to not put the assets of this district at risk.”
As she has said before, she is concerned the district is moving ahead without going through proper LAFCo. (Local Agency Formation Commission) process. Sutton, who is on the LAFCo. board of commissioners, said the board should know up front about Fiber Communications before they enter into business with the company.
LAFCo. chair and town council member Don McCormack was also at the meeting to advise the board and PUD staff on the LAFCo. issue.
“I don’t always agree with Pat (Sutton), but this time she is absolutely right,” McCormack told staff and boardmembers after they voted. “You’re flying in the face of something you don’t have permission for. You are putting assets in the ground for something I don’t think you have the authority to do.”
According to PUD staff and McCormack, the district needs LAFCo. approval to get involved in the telecommunications business.
“Thus far we have LAFCo. approval to provide water and power,” Harry said. “In order to provide another service, we need LAFCo. approval.”
The application for this approval will come before the board at the Oct. 6 meeting. If approved by the board, the application will then be submitted to LAFCo. and Harry hopes the commission will review the application in October.
McCormack said the PUD board should have approved the agreement with Fiber Communications with a contingency of LAFCo. approval.
“When they put hardware into the ground, they are making an investment in an activity,” he said. “They don’t yet have permission for this activity.”
He also said that jumping ahead of the game most likely will not cause any problems and he expects the PUD will get LAFCo. approval to enter into the telecommunications business.
“For the main part, they’re in the right process,” McCormack said. “They only jumped ahead in committing money for the conduits.”
McCormick met with Harry and TDPUD General Manager Peter Holzmeister Tuesday morning to clarify some questions he had concerning the PUD’s position.
When the commission considers an application for latent power they will look at it from the standpoint of how it will affect the community and other agencies as well as consider the legal issues.
“Telecommunication is a topic many people are afraid to get into,” said Harry. “Telecommunication is like a puzzle made up of a number of pieces. When each piece is discussed one at a time, people are not afraid of them.”
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