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HomeMy WebLinkAbout1999-004 Application - SPWFOREGON COMMUNITY DEVELOPMENT PROGRAMS Oregon Economic Development Department 775 Summer Street NE Salem, Oregon 97310 Phone: (503) 986-0122 PLEASE SUBMIT AN ORIGINAL AND 3 COPIES SECTION 1: APPLICANT Applicant: City of' Ashland Address: 20 E. Main Street Contact Person: Mike Freeman Phone: 541-552-2003 Fax: 541-488-5311 IRS Employer ID #: 93-6002117 FINAL APPLICATION SPECIAL PUBLIC WORKS FUND (SPWF) [] Capacity Building WI Firm Business Commitment SECTION 2: FIRM BUSINESS COMMITMENT Business: Address: Contact Person: Phone: Site Address: PROJECT TITLE: Ashland Fiber Network (AFN) Jobs to be created/retained: Number of family-wage jobs: __ SECTION 3: CAPACITY BUILDING Acreage to be benefited: Entire City Estimated job creation as result of project: Unknown SPWF Funds Requested*: Applicant: Benefited Properties: Other funds: Total Cost of Project: SECTION 4: FUNDS REQUESTED AND PROJECT COSTS $ 4,600,000 plus deferred interest $ 800,000 $-0- $ -0_:- $5,400,000 For Department Use Only: Referred to W/W Referred to CDBG Other: Grants will be awarded after a financial review of the economic need of the applicant and specific circumstances of the project. SECTION 5: BRIEF PROJECT SUMMARY (Answer only in space provided. Detailed description is to be provided on page 3. Please address the need for both the infrastructure and financial assistance.) BRIEF DESCRIPTION OF NEED: To ensure the long-term economic vitality of Ashland, it is essential that the City keep pace with the latest developments in the telecommunications industry. Ashland must provide a means for existing businesses to compete in the global economy risk losing those businesses to large metropolitan areas where advanced telecommunication infrastructure is available. BRIEF DESCRIPTION OF SOLUTION: The construction of an advanced telecommunications infrastructure will enable existing and future businesses to expand and compete by utilizing broadband services, which includes high-speed data transmission for business, high-speed Internet for residential use and other business data applications. The availability of these services allows the City to attract new businesses creating new employment opportunities. The City proposed to construct a fiber optic telecommunications infrastructure to provide a number of services to Ashland businesses, educational institutions and residences. Special Public Works Final Application Page I SECTION 6: PUBLIC WORKS EXPENDITURES: Infrastructure Activities Land acquisition and clearance (infrastructure only) Water system improvements Sanitary sewer improvements Storm sewer improvements Road and bridge improvements Public transportation Dock facilities Engineering and architectural Contingencies Project administration Other - Telecommunications Infrastructure Total Infrastructure Project *Specify Source 97-98 Electric Fund 97-98 Electric Fund Interfund Loan TOTAL PRIVATE FUNDS: Activities SOURCES SPWF Funds Requested 4,600,000 $4,600,000 Amount $508,000 $110,000 $182,000 $800,000 Other Public Funds* 457,000 61,000 282,000 $800,000 Paid in full Paid in full 5% Sources Properties Benefitted/ Private Inv. Terms Project Total 457,000 61,000 4,882,000 $5,400,O00 Total Public Infrastructure Private infrastructure (access roads, sewer collectors, etc.) Private improvements Other (specify) Total Private Investment $ $ $ $ $ -0- Special Public Works Final Application Page 2 SECTION 7: A. NEED FOR THE PROJECT: Explain in detail the need for the infrastructure and the need for financial assistance. Ashland is a small community of 19,000 located about 300 miles from the Portland metropolitan area. Ashland has prospered in the past because tourism and education have had a major impact on our economy. To ensure the long-term economic vitality of the community, it is essential that Ashland keep pace with the telecommunications industry expansion and acknowledge its influence on economic development. Ashland must provide a means for existing businesses to compete in the global market or risk losing those businesses to metropolitan areas where telecommunication infrastructure is currently being built or already available. Ashland's current economy is primarily based on tourism and higher education. These industries will always remain critical to Ashland however, they provide few new employment opportunities and tourism offers primarily lower wage jobs. The City is convinced that the construction of the Ashland Fiber Network will provide unparalleled opportunities for the varying sectors of the local economy that require advanced telecommunications services. The city's electric, water and sewer utility, which have similar needs for equipment monitoring and control, automated meter reading, automated user activation/deactivation, and billing automation. City government, which is already seeing considerable cost savings from running data and voice traffic over fiber provided by the electric department. Ashland residents, who are comparatively heavy telecommunications users. 65% of households report having a computer and of those 78% report using the Internet -- another 16% anticipate starting service this year. 25% of households report hosting a home business, and 19% of households report a strong interest in telecommuting (note: it is likely that those interested in telecommuting do not have a home business, thus a total of 44% of households are strong prospects for business-oriented services). Also note the high percentage of university students and faculty living in Ashland - representing a large block of potential users. Ashland's schools, which have already installed local area networks (LANs) and servers in all schools, and are purchasing both inter-building data transmission services and Internet access. Current services operate at low speeds and limit the schools ability to make use of their computers and in-building networks - with the primary inhibitor being the prohibitive cost of high-speed connections. A fiber network could provide the schools with much higher performance for LAN-to-LAN data transfers, and access to distance learning resources at affordable costs. Similar benefits would be available to Ashland's private schools. Ashland's medical community: Hospitals across the country are beginning to provide physicians with 24-hour access to patient records. Smaller hospitals are using networks to allow consultations with specialists at regional medical centers - without patients having to drive long distances. A fiber network would allow Ashland's medical community to make use of such services, as well as to provide closer ties between medical facilities and school nurses, nursing homes, and the homes of patients with a need for ongoing monitoring. Special Public Works Final Application Page 3 The Oregon Shakespeare Festival, which could use the network to distribute video programming to area schools, hotels, and to audiences around the world. Southern Oregon University, which could provide high-speed Internet access to students and faculty living off-campus, could access and originate distance learning programs, and access advanced network services such as Internet II. Ashland's growing base of software and telecommunications companies, such as Starseed, Project A, Open Door Networks and numerous Interact Service Providers would greatly benefit from this project. A fiber network would allow aggregated purchase of high-speed access to Internet "backbone" networks - providing these firms with higher-speed service, at costs lower than they now pay individually for lower speed links. Implementation of cable-modem service would allow Ashland's ISPs to offer high-speed service to their end users (ISPs are likely to purchase cable modem service on behalf of their customers, in much the same way that they purchase ISDN service from the telephone company). Ashland's growing base of architects, graphic designers, photographers, printers, and publishers, all of whom face an increasing need to deliver work by wire. Graphic materials,, in particular, require high bandwidth network services well beyond what can be provided by dial-up Internet providers. Similar speeds are required by real estate agents, hotels, and tourist facilities that wish to reach potential customers (e.g. by providing on-line video tours of available houses). As noted above, smaller rural communities will receive advanced telecommunications services later than larger urban communities, if they receive them at all. Only through direct action, are smaller communities likely to receive these services in a timely fashion - and communities with public or cooperative power utilities are in the best position to take such action. With a public power utility already moving to deploy a high-reliability, high-capacity network, Ashland is in a particularly fortunate position. The City has selected and begun construction of a fiber optic infrastructure for its core "backbone" network. The selected fiber is 172-strand, single-mode fiber - a choice that both meets immediate needs, and provides capacity for expansion (including a capability to support the stringent requirements of a SONET ring). The selected route for the core network passes electric facilities, and the sites of the most likely large, early users (e.g. schools, hospital, Southern Oregon University (off-campus solutions), Oregon Shakespeare Festival, high-tech businesses, vacant industrial lands, municipal buildings, etc.). The City requests that the State of Oregon Economic Development assist the City in the financing of this project. This is an important project for the City of Ashland and the Southern Oregon economy. In addition, the City believes that the State should assist with this project because it meets the intent of the State's strategic plan and Senate Bill 994. The proposed Ashland Fiber Network meets the intent of the State's strategic plan, Oregon Shines II Oregon Shines II recognizes the benefit to the State of having high technology jobs and a technology based economy. Subsequently, the following goals were created: 1. "Oregon will be one of the top ten states in America to start and grow a technology company. Special Public Works Final Application Page 4 2. More Oregon companies will export higher-valued products. "1 The provision of advanced telecommunications infrastructure is one of the most pressing needs facing the United States. Telecommunications infrastructure has been described as one of the defining elements that will determine the future economic success of our nation. This has not gone unnoticed in Oregon. In 1995, the State Legislature passed Senate Bill 994 creating the Oregon Telecommunications Forum Council. The mandate of the Oregon Telecommunications Forum is: "To improve the quality of life and economic development in Oregon communities by enhancing the delivery of education, health care, government services, and supporting the further development of business through: · Affordable telecommunications solutions for every Oregon community; · Training and support necessary to effectively utilize telecommunications." The Oregon Telecommunications Forum Council was appointed in 1996 by Governor Kitzhaber to ensure that all Oregonians share in the potential benefits of telecommunications technology. Participants in the Council work to ensure affordable access to telecommunications solutioas for all Oregon communities and the utilization of telecommunications in the service of economic development, education, healthcare, government services and civic involvement." (emphasis added). The goals of the Telecommunications Council are: · "Ensure that all Oregonians have affordable access to telecommunications solutions that provide voice, data and image information services. · Ensure that all Oregonians have adequate support to make effective use of voice, data, and image services. · Expand access to lifelong education and training opportunities so that Oregon's citizens and workforce can function in the emerging information society. · Increase the quality of local healthcare available in all areas of the state through telecommunications. · Enhance governmental efficiency and expand citizen access to government services and information through telecommunications. · Enhance the private sector's ability to compete in a global economy through telecommunications. · Enhance community building and civic life through telecommunications." Summary of Economic Development Benefits: · Provides existing businesses unparalleled access to high-speed data services. · Initial fiber ring is designed to pass the City's largest organizations, vacant industrial/commercial properties, the University, schools, Oregon Shakespeare Festival, etc. · The City met with many businesses that may wish to take advantage of the fiber ring and all have expressed interest in being served. This project is of significant benefit to local businesses and theu ability to continue growing their business. · Two new businesses recently decided to relocate in Ashland to have access to the City's fiber plant. · Greatly enhances the ability of the Crowman Mill site and the Railroad District of Ashland to 1 Oregon Shines Ih Updating Oregon's Strategic Plan, January, 21, 1997 Special Public Works Final Application Page 5 redevelopment their property. B. SOLUTION: Explain in detail the solution, including a summary of the requested infrastructure and financial assistance. Ashland can meet the employment, education, government and healthcare needs necessary to move the community into the 21st century with the construction of an advanced telecommunications infrastructure, known as the Ashland Fiber Network (AFN). AFN will provide connectivity capability including broadband data, video, Intemet, and video conferencing. This high-speed network will interconnect with other government, municipal, educational and health-care institutions and businesses and enable the City to provide numerous new products and services to the citizens of Ashland. These services will stimulate economic development, improve educational systems and public services and safety. AFN will enable existing businesses to expand and compete by utilizing these services. These same services will also serve to attract new businesses to our area and thus create new employment opportunities. Telecommunication services are traditionally available only in metropolitan areas and are provided by private companies. Because AFN will be offered to citizens, businesses, and institutions as a city service, it can be priced affordably and thus be more accessible to everyone. Telecommunications infrastructure has been described as one of the defining elements that will determine the future economic success of our nation. Telecommunications innovations and infi'astructure will be very important in the future. It is essential that these services be available as soon as possible to keep Ashland and Southern Oregon's economies healthy. The City is fully committed to constructing this project having already invested $800,000 in the construction of the initial fiber optic ring that is approximately 11 miles in length. The City is seeking financing for the construction of the distribution system that is approximately 110 miles and for the head-end equipment. SECTION 8: ECONOMIC DEVELOPMENT BENEFITS Attach additional pages as needed to provide complete answers to all questions. A. Capacity Building Projects: 1. Describe how the lack of the proposed infrastructure prevents industrial or eligible commercial development. Without an advanced telecommunications infrastructure, the City of Ashland will continue to be reliant on a tourist based economy. It will become increasingly difficult for Ashland's growing high- tech community to remain competitive with urban areas like Eugene, Portland, Seattle and San Francisco. 2. Describe existing advantages to the area that will promote future industrial/commercial developmeni and the creation of family-wage jobs. Special Public Work~ Final Application Page The defunct Crowman Mill site is a perfect example of this. This mill closed in 1995 and has remained closed since then. The property owners are in the process of putting together a redevelopment plan for the 75 acre site that calls for commercial/high-tech development. The City purposefully installed the main fiber optics trunk adjacent to this property to help spur the redevelopment process and to help ensure that this critical type of commercial development would remain viable in the City. 2. Document recent interest in the area through letters of interest in benefited properties. Numerous businesses, individuals and institutions have spoken in favor of this project, including: (please see attached official City Council meeting minutes for more detail) March 17, 1998 Public Hearing on AFN Charley Lanusse, CEO Starseed, Inc. George Stephan, General Manager Infostructure Allan Oppenheimer, President Open Door Networks Suzanne Stevens Stevens Design & Starsees, Inc. Steven Belsky Project A September 1, 1998 Public Hearing on AFN Steve Smickland OMNI A non-profit organization, which encourages multimedia, projects in Southern Oregon. Megan Mitchell Ashland Stock trader Jim Watson, Executive Director Ashland Community Hospital John Daggett, Superintendent Ashland School District Special Public Works Final Application Page 7 Loren Luman Ashland School district David Fine Ashland Attorney Tom Garland Citizen Ashland Relocated to the area in anticipation of the AFN John Husky, Director of Communications Southern Oregon University Students Association Mike Stallcop, VP of Interactive Media Project A Jim Teece, President and CEO Project A Bud Kaufman, Owner Croman Corporation 3. Describe ongoing efforts to market the area. Ongoing efforts to market Ashland. The Ashland Chamber of Commerce assists and encourages a diversified economic development that creates jobs and stimulates local economy by: Promoting Ashland to prospective businesses by providing economic demographics and the rules and regulations affecting business development in Ashland. Producing and distributes the Living & Doing Business Guide, a comprehensive guide about Ashland and its residents. · Coordinating the Rapid Response Team, a group of experts from the community who has expertise in their chosen field or profession. The team provides information to business owners that are interested in expanding or modifying their businesses and to individuals or companies interested in establishing a new or relocating an existing business in Ashland. · Acting in partnership with other promotional organizations including Southern Oregon Regional Strategies, Southern Oregon Visitors Association, the Oregon Shakespeare Festival. Southern Oregon University, and the Oregon Tourism Commission. · Coordinating the Regional Marketing Committee to promote Ashland through a variety of media, including print, television, radio and more. B. Firm Business Commitment Projects: 1. Describe the benefited business(es) and how the Special Public Works Fund assistance allows the business(es) to expand or locate in the community. Special Public Works Final Application Page g 2. Attach comnfitment letter(s) from the business(es). The letter(s) must identify the number, classification and wage levels of all new jobs to be created. SECTION 9: ENGINEERING FEASIBILITY A. Attach an Engineering Feasibility analysis prepared and stamped by a registered professional engineer. At a minimum, the report must include: · An explanation of the basis for the size and/or capacity of the proposed facility (see Business Plan) · Project alternatives considered and a demonstration that the proposal is the most cost-effective (see Revised Financial Projections) · Detailed cost estimate including all items necessary to achieve the project (see Revised Financial Projections) · Preliminary design drawing of the project (see Business Plan) · Maps showing the general location of the project, tax lots or parcels in the project area, and the specific location of the project, including, if applicable, line sizes, road widths, etc. (see Business Plan) · Environmental concerns None · Needed permits and/or licenses to construct the infrastructure (PUC Permit expected in January, City of Ashland Telecommunications Permit (attached)). B. What jurisdiction(s) will own, operate and/or maintain the proposed infrastructure? City of Ashland C. Anticipated projected schedule: Start date Final engineering/design 10/15/97 Construction 1/1/98 1. Drawdown schedule: SOURCE ITEM MONTH/YEAR Final Engineering 1. 2. Construction 1. Jan 98-Jun 98 2. Jul 98-Dec 98 3. Jan 99- Jun 99 4. Jul 99- Jun 00 5. Jul 00- Jun 01 6. Electric Fund Interfund Loan SPW $ $ $ $618,000 $0 $0 0 160,000 0 0 0 2,640.000 0 0 1,855,000 0 22,000 105~000 Special Public Works Final Application Page 9 E. Consulting Professionals contributing to the project: Kevin Harper (Engineering and Financial Modeling) R.W. Beck 2101 4tb Ave. Suite 600 Seattle, WA. 98121-2375 (206) 695-4436 R.H. Jake Jacobstein (Implementation, Services) The Network Address 2003C Commerce Park Drive Annapolis, MD 21401 (410) 841-9100 Miles Fidelman (Feasibility) President Center for Civic Networking 53 N. Mead Street, C-5 Chariestown, MA 02129 (617) 241-9205 SECTION 10: FINANCIAL INFORMATION In order to make the Applicant's job easier, an assortment of financial information will be collected by the Department from available resources, mainly the Applicant's Comprehensive Annual Financial Report. This information includes municipal taxes and levies, tax collection rates, general fund revenues, expenditures and balances, municipal debt position, and demographic information. All this information will be included in the financial feasibility analysis. Information that only the Applicant can provide is included in the next five pages. Full Market Valuation for the three most current fiscal years: Fiscal year ending 1996 $1,204,700,940 Fiscal year ending 1997 $1,035,683,650 Fiscal year ending 1998 $1,089,540,390 B. Has there been an operating deficit in the last 5 years? If so, what actions were taken? No. C. Specify the funds pledged as loan repayment. "Telecommunications Fund" and "General Fund". Do Does the project involve the formation of a local improvement district (LID)'? If so, provide the status of negotiations with benefited property owners, an engineer's report on the LID formation and assessments, and any resolutions creating the district. No. Special Public Works Final Application Page I0 Fo Are the benefited property owners participating in the cost of construction of the publicly owned infrastructure? If yes, list the benefiting property owners and corresponding participation. If no, explain why. Benefited property owners will pay for the infrastructure development and services received through monthly user fees. Would the payment of this loan be superior, on a parity basis, or subordinate to other debt that is serviced by the revenues pledged to this loan? Parity. Has the applicant ever defaulted on a debt? relative to the default. No. If so, provide a complete summary of all circumstances mo Jo ro How will the ongoing maintenance, operation and replacement of the requested infrastructure be financed? Provide a copy of the facility plan documenting the ongoing operations, maintenance and replacement efforts. This infrastructure will be self-funding through use fees. The Business Plan_shows that rates are more than adequate to pay for operations and maintenance costs and capital. Summarize any pending litigation that may affect the ability of the applicant to repay a loan. None. What is the current employment level, by full-time equivalent, of the applicant? 222. Is the applicant experiencing any financial complications as a result of Ballot Measure 5? No. Ashland was able to combine older continuing levies with General Fund tax base and Rained usable taxin~ authority. SECTION 11: ECONOMIC DATA A. Five Largest Employers of the applicant's jurisdiction: (ten or more employees) Employer Southern Oregon University Ashland School District Oregon Shakespeare Festival Ashland Community Hospital City of Ashland Estimated total employment in jurisdiction Data source: City of Ashland Number of Type of Business Employees Higher education 765 Education 395 Entertainment 350 Health Care 245 Government 222 5,700 Year: 1998 Special Public Works Final Application Page ! I B. Ten Largest Taxpayers of the applicant's jurisdiction: Taxpayer US West Communications, Inc. Windmills Inns of America, Inc. Washington Water Power Mountain Meadows LLC Michael D. & Beverly Rydbom Lloyd M. Haines Ashlander, Inc. Brodeur & Brodeur, Inc. Warren Family Limited Partnership Summit Investment Current Type of Business Total Taxes Assessed Value Utility $143,376 $10,035,220 Motel 116,845 8,178,240 Utility 74,739 5,231,120 Housing Development 73,956 5,176,330 Retail 63,984 4,478,400 Housing 60,032 4,201,750 Apartments 59,991 4,198,890 Motels 47,993 3,359,140 Motels 47,304 3,310,920 Retail d4,707 3,129,150 Total $732,927 $51,299,160 Year: 1998 Data source: Jackson County Assessor Go Building Permit History of the applicant's jurisdiction for the current year and the past four years: (Not applicable for ports and special districts.) Year Residential Valumion 1993-94 $10,978,551 1994-95 $15,449,240 1995-96 $9,787,069 1996-97 $25,559,489 1997-98 $24,364,300 Data Source: City of Ashland - Building Division Number of Number of Permits Non-Residential Valuation Permits 107 $3,998,590 16 91 $3,667,162 14 91 $10,176,287 28 140 $7,531,135 11 154 $18,453,404 14 Year: 1998 Special Public Works Final Application Page 12 SECTION 12: UTILITY/REVENUE ISSUES (Complete this section only when a specific fund is pledged for loan repayment.) A. Specify the Fund: "Telecommunications Fund" and "General Fund" B. Expected Connections End of First Year: Proposed in the Business Plan 2,631 2,436 344 $115,000 Yr. C. Projections: Provide financial projections of fund activity as available. FYE: 98-99 FYE: 99-00 Residential CATV Residential h~ternet Business Internet Business Data Services Connections 1. Residential CATV 2. Residential Internet 3. Commercial & Other Self-Supporting Debt Outstanding Debt per capita Total Revenues Operating Expenses Accounts Receivable Top Ten Rate Payers as a Percent of Revenues ! Utility Service Rate Increase (Decrease) NC if No Change Consumption (as a percentage of total consumption) Commercial/Industrial Residential Other 5,300,000 275 0 442,170 % -2,631 2,436 344 5,300,000 271 1,650,000 1,444,620 % FYE: 00-01 2,631 2,884 378 5,300,000 267 2,489,000 1,953,422 % unknown % % Inflation % Inflation % D. Specify any enterprise or utility funds that are not available to service this loan. Water Fund Sewer Fund Electric Fund - Electric Division Ambulance Fund % % Special Public Works Final Application Page ~ 3 Rates: ~1 Telecommunications 1. What are the rates for: Residential CATV Residential High-Speed Internet Business Data Services 2. When were the rates last changed? Will be adopted in February, 1999. 3. Who sets the rates? City Council 4. What approval is required to change rates? City Council 5. Is a rate increase expected for this project? New rate schedule for new service is planned. Ten largest potential customers The City has done a tremendous amount of research on this project and anticipate that the following organizations will participate in the Ashland Fiber Network. Name Southern Oregon University (off-campus solution) Ashland Community Hospital Oregon Shakespeare Festival City of Ashland Ashland School District Starseed Open Door Networks Project A Data Source: City of Ashland Special Public Works Final Application Page 14 Attach the following items with the application: 1. Public hearing notice, minutes of the public hearing and minutes of the meeting at which submission of this application was approved. 2. Engineering feasibility (see Section 8). 3. One copy of each of the applicant's last three annual audit reports and one copy of the current budget. 4. Copies of any documents creating any enterprise fund which may be pledged for repayment of the loan. 5. Copies of any ordinances which established any debt which is supported by the enterprise fund referred to in item 4 above. 6. Capital Improvement Plan (if available) and water or wastewater facilities plans as appropriate. 7. Appropriate portions of local comprehensive plan and zoning ordinances. 8. One copy of the applicant's enabling charter as amended. SECTION 13: CERTIFICATION I certify that: We have the authority to request and incur the debt described in this application and upon award, will enter into a contract for the repayment of any Special Public Works Fund loans and/or bonds. We have held the required public hearing and will comply with all applicable state and federal regulations and requirements. To the best of my knowledge, all information contained in this application is valid and accurate and the submission of this application has been authorized by the governing body of the undersigned jurisdiction. (highest elected official) Name Catherine M. Shaw (type or print) Mayor Title City of Jurisdiction 1/6/99 Date Ashland Special Public Works Final Application Page 15