ADMINISTRATIVE REPORT

Date: November 16, 1998
Author/Local: T.Hammel/7370
RTS No. 327

CC File No.1203

TO:	Vancouver City Council
FROM:	General Manager of Engineering Services
SUBJECT:	Railway Crossing Agreement with Ledcor Industries Ltd.

RECOMMENDATION

A. THAT the General Manager of Engineering Services and Director of Legal Services be authorized to conclude negotiations, and execute and deliver, a legal agreement with Ledcor Industries Ltd. incorporating the general terms and conditions outlined in this report and such other terms and conditions satisfactory to the General Manager of Engineering Services and the Director of Legal Services.

B. THAT Ledcor Industries Ltd. be permitted to install and operate a fibre optics network at railway crossings in the City of Vancouver once it has executed a legal agreement with the City of Vancouver and performed any preconditions to such installation and operation as are set out in such legal agreement.

GENERAL MANAGER’S COMMENTS

The General Manager of Engineering Services RECOMMENDS approval of A and B.

COUNCIL POLICY

Execution of legal agreements by the Director of Legal Services requires Council approval.

On July 30, 1996, when dealing with a report on Telecommunications Policies, Council approved a number of goals including one to ensure that the City maintains its authority to regulate equitable access to rights-of-way, secure valuable compensation for their use, minimize negative impacts associated with their use, and utilize them in a manner that furthers other telecommunications policy objectives.

PURPOSE

This report seeks Council approval to permit Ledcor Industries Ltd. to install a fibre optic network crossing street right-of-way along the CP rail corridor on the south shore of Burrard Inlet. This permission will be subject to the execution of a Railway Crossing Agreement with the General Manager of Engineering Services and the Director of Legal Services containing general terms and conditions which are described in this report.

BACKGROUND

In adopting the Telecommunications Policy in July 1996, the City formally recognized the increasingly important role that telecommunications plays in the economy of Vancouver. The City further committed to maintain its authority to regulate equitable access to rights-of-way, secure valuable compensation for their use, and minimize negative impacts associated with their use.

Consistent with this Telecommunications Policy, Municipal Access Agreements were executed in 1997 with MetroNet and Group Telecom. Bringing more competition to Vancouver has the potential to improve the affordability and accessibility of advanced telecommunications services for all sectors of the economy. It will further help position Vancouver as a world class business environment.

The General Manager of Engineering Services will be reporting to Council early in 1999 on the overall progress with respect to agreements with telecommunications companies and the City’s involvement in the actions of the Federation of Canadian Municipalities toward obtaining more favourable arrangements for municipal governments.

Ledcor Industries Ltd. is a North American construction contractor that is building a fibre-optic system across North America that will link major Canadian cities and extend into the US. In Canada, this system is being built along Canadian Pacific and Canadian National Railway corridors. Ledcor is selling/leasing fibre strands to various long distance carriers that will use the system to carry voice, data and image transmissions. Strands have already been sold to Sprint Canada, Bell Canada, and most recently, Metronet. Ledcor intends to install a line into Downtown Vancouver using the Canadian Pacific Railway line along the south shore of Burrard Inlet. This will allow the long distance carriers to access switching equipment that collects and distributes local data traffic.

DISCUSSION

Ledcor requires the City’s permission to install their fibre optic system in the City as the rail line crosses street right-of-way at various points into the downtown. Staff have been involved in negotiations with Ledcor over the past few months, and anticipate entering into an agreement with Ledcor with the following general terms:

· An annual license fee of $30/m of street crossing subject to a minimum annual fee of $30,000. Fee to be renewed at five-year intervals.
· Ledcor responsible for the cost of relocating or removing their plant where required by the City.
· The City would not assume liability for loss or damage to the cable or to Ledcor’s operations, except as set out in the agreement.
· Ledcor to pay all municipal taxes and all other City-imposed fees as applicable, such as those for parking clearance, temporary special zone and other permits.
· Term of 20 years with 10-year renewal options.

The annual license fee is based on a per metre charge which is different than the percentage of revenue basis negotiated in agreements with Metronet and Group Telecom. The difference in Ledcor’s situation is that the business is derived from long distance transmission of data rather than from local customers. Only a small percentage of their network is located on City streets, unlike the local carriers that have an extensive on-street network. As a result, license fees negotiated with Ledcor in other Canadian cities are based on a lineal rate per foot.

CONCLUSION

Staff recommend that Council allow installation of Ledcor’s fibre optic network to proceed subject to the execution of a Municipal Access Agreement to the satisfaction of the General Manager of Engineering Services and the Director of Legal Services.

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(c) 1998 City of Vancouver