City leaders to consider fee waiver for project that will install $2.7M fiber internet network for school district

Lawrence City Hall, 6 E. Sixth St., Thursday, July 7, 2016

City leaders will soon consider waiving a fee that the city typically charges businesses to use public right-of-way for a company that will be building a fiber internet network for the Lawrence school district.

As part of its meeting Tuesday, the Lawrence City Commission will consider authorizing a memorandum of understanding with the Delaware-based fiber internet provider WANRack to waive the city’s right-of-way fees related to services provided to the school district. If approved, the city would forgo the collection of $3,900 in fees from WANRack annually.

The request to waive a portion of the city’s public right-of-way fees for the fiber project was originally on the commission’s consent agenda at its last meeting, but after pulling the item, commissioners decided that they had enough questions that they thought it should be on the regular agenda. A key question was whether the city’s waiver would benefit WANRack, a private company, or whether the purpose of the waiver was to pass along those savings to the Lawrence school district. Representatives from WANRack and the district told commissioners if the waiver was not approved the fee could be passed on to the school district.

The city staff memo about the request states that public rights-of-way are a valuable asset to the community and the city does not generally permit parties, including other governmental entities, to use the city’s right-of-way for free. The memo notes that other governmental entities charge the city for the use of their right-of-way. However, the memo notes that in the past the city has waived fees where a project provides a distinct public benefit, such as providing free or low-cost internet services to lower-income residents.

In January, the Lawrence school board approved a contract with WANRack to build and maintain a private fiber network for a total cost of $2.7 million, according to a district memo at the time. Currently, the district receives wide area network (WAN) and internet services from Midco. The district has since received federal funding to help pay the majority of the costs to install the fiber network, with the district’s costs for the install totaling $495,136, according to Technology Director David Vignery. He said the district would receive the reimbursement for the capital outlay fund at the end of construction.

The district must pay $2.48 million in upfront costs to build the new network, which will come from the district’s capital outlay fund, while the service fees of $78,000 per year will come out of the district’s general fund, according to the district memo. Though building its own private fiber network represented a significant cost, district staff recommended the change because those dollars would come from the district’s capital funds and eventually save the district money in its financially troubled general fund.

At the time, the district was paying Midco about $193,000 annually for network and internet service, and for the purposes of the upcoming switch is now in a month-to-month contract with Midco that costs $227,520 annually. It will take about two years to build the fiber network, which will serve the district’s 26 buildings, so the district would not see the savings in the general fund until 2024. The district agreed to an initial three-year contract, with the option to renew the contract for up to three five-year terms, or through 2041.

The district memo also stated that moving to a private fiber network would reduce the likelihood of the district exceeding its broadband capacity. Multiple school buildings were meeting the one-gigabyte threshold at the time, meaning that the district would need to pay Midco more to increase the gigabytes across the district, according to the memo.

The proposed agreement between the city and WANRack would give the company access to the city’s rights-of-way for the location of fiber optic cable with the goal of connecting all the district’s schools to the network, pursuant to the contract the district has with WANRack, according to the city memo. The memo states the agreement between the city and WANRack would also allow WANRack to provide fiber optic services to other customers in the city.

The city charges two types of right-of-way fees, a permit fee and a fee representing 5% of gross revenues derived from services provided as the result of a company’s use of the right-of-way. WANRack has requested a waiver of the 5% fee the city typically charges on revenue from the services it provides the district.

The Lawrence City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.


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