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Tellus CSA and OSIsoft ENRA 3 June 6, 2011 OSIsoft, Inc., a San Leandro -based software company, has approached the City with a proposal, called "Lit San Leandro," to run fiber optic cable through an existing City conduit loop. As shown in Attachment A, the loop runs through Downtown San Leandro, west along Davis Street, through the City's industrial areas, and back to Downtown along East 14 Street. The loop currently houses fiber optic cable that is used for data communications between City facilities, transferring of police and law enforcement data, and for the operation of a traffic signal system. Under the OSlsoft proposal, the company or a newly formed entity would enter into a license agreement with the City for use of excess conduit capacity to run new fiber that is independent of the City's existing system. This new fiber would then be connected to the outside world (the intemet and data centers) via leased fiber on a regional line owned by BART. OSlsoft is also considering constructing a data center, or "server farm," in San Leandro although that possibility would not be covered by the ENRA. The purpose of the proposed fiber loop is to provide adequate capacity for data - intensive businesses in San Leandro. Most immediately, the loop would provide additional broadband capacity for OSlsoft as the company plans an expansion. The loop would also enhance business development efforts, because it would provide a mechanism for any business within reasonable proximity of the loop to tap into a high- capacity system. OSlsoft has indicated to the City that their intent would be to minimize connection costs: emphasizing the system's ability to attract businesses over its potential to generate profits. Access to this loop would be most attractive to businesses with extremely high data needs, such as those involved in any form of "cloud" storage. At present the City's ability to attract these types of businesses is limited. After an initial review, staff believes that the OSlsoft proposal holds great potential to allow OSlsoft to continue growing in San Leandro and to attract new businesses with high data needs that cannot be met in most traditional markets. However, numerous details would need to be worked out prior to execution of a full license agreement for use of the City's conduit. The recommended approval of an ENRA would grant OSlsoft the exclusive right to negotiate for the use of the conduit for a period of twelve months. This approach allows the City to be responsive to the Lit San Leandro proposal while still providing adequate time to negotiate a licensing agreement that provides maximum benefits while protecting the City's interests. Details to be negotiated include, but are not limited to: • Procedures for ensuring the security of City data on the existing fiber lines. • Term of the agreement. • Price paid to the City, if any, for licensing of the conduit. • The nature of the business entity that will construct and operate the loop. So far, OSIsoft and the City have begun to review models such as a private corporation, a non - profit, or a public private partnership. • Potential for the City to reserve some share of the new fiber for City data needs. • Potential for the operating entity or the City to reserve some share of the new fiber for use by internet service providers to offer services to smaller customers in areas not immediately adjacent to the loop. G: \OBD \Files EDA\Broadband and Fiber Connectivity \Staff Report ENRA and CSA 6- 6- 11.doc