Finance

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Finance

Outside Investor Willing to Take the Risk
FiberPaloAlto™ could be owned by an outside investor and operated by an experienced fiber network management company; both roles filled by the same party.

The City requested proposals from all comers for best ideas and practices that at least included:

An acceptable response came from a consortium of experienced companies. The 180 Connect Consortium was selected to work cooperatively with City staff to come up with a plan acceptable to Palo Alto. A proposal is expected to be made public by the City over the July 4th weekend. When more details are available, they will be published here on iPaloAlto.

Community Power
The success of the Palo Alto FTTP network is 100% up to us. Once agreements are negotiated in detail, we may better understand the financial power of community participation; suffice to say, it is big. iPaloAlto will have more on this subject when further details are known.

Community Benefits from FiberPaloAlto™
Mark Heyer, a Palo Alto citizen with substantial insight, authored a white paper outlining the many benefits the Palo Alto community would enjoy under the FiberPaloAlto™ Plan A scenario back on 2002. As noted on the Home page, we are now working to help FiberPaloAlto™ Plan B become a reality. The good news is, community benefits are essentially identical under Plan A and Plan B. Read Mark's Community Benefits white paper and note that the economic benefits are likely to total up to 20 times more per year than the savings from lower rates, which alone should total more than $6 million per year. Benefits like this year in and year out have added up to create the Palo Alto we know and love today; a special place to live, work, and raise our families.

Environmentally Enhance Every New Construction Project
FiberPaloAlto™ will enhance every new facility constructed, whether built by the City, by Stanford University or other non-profits, or with private capital. Consider the proposed Palo Alto Public Safety facility, the Stanford Medical Center/Shopping Center expansion, Better Libraries for Palo Alto which will contain elements of The Experience Library, or any other building constructed in the city, FiberPaloAlto™ integrated into each building will be the major environmentally-friendly way to get traffic...off our streets, on to fiber.

Off Our Streets, On to Fiber
Our community is threatened by traffic grid lock and carbon gases spewing from cars cruising through town. FiberPaloAlto is the most environmentally-friendly way to safely, securely, and reliably move massive brainpower off our streets, on to fiber. Where do you think massive brainpower works? Answer: The Stanford campus, the hospitals, the Research Park, Stanford Shopping Center, Palo Alto Medical Foundation, Hewlett-Packard, Varian Medical, Roche Palo Alto, VM Ware, Wilson Sonsini, Facebook, downtown Palo Alto, 525 University, California Avenue, Palo Alto Square, and hundreds of other businesses and professional offices in town. These are businesses where “the assets go home at night.” There is no off-switch on all that brain power except sleep; our brains keep thinking and planning. With a robust and secure fiber connection between your home office and your business office, almost nothing can stop your brain from being productive for your business during non-business hours, many times in the dead of night. There is no-stopping you, or your brain. Good things happen; deadlines are met, overseas clients receive real time communications, businesses benefit in so many ways. It is no wonder that many employers make it easy for their employees to handle at least some business email and phone calls from home. Time-shifting your commute away from busy hours saves resources, too. When employees come in early or later, company permitting, to avoid the heaviest commute traffic, all the better; they’ve been productive for the company and now they are saving time and burning less carbon fuel because they are not “stuck in traffic.”

Strong City Balance Sheet
Palo Alto has one of the strongest municipal balance sheets in America. Over $1 billion in written-down assets, $100 million in liabilities of which less than $60 million is bond debt, $400 million cash in the bank, conservative management of operating budgets to match income. While FiberPaloAlto will not be going on the City balance sheet right away, it is an asset that the City will have the option to acquire for $1 once it is a mature utility.

Palo Alto’s AAA Credit Rating
Palo Alto is one of only three California cities (of 950) with the highest AAA credit rating. Palo Alto’s bond debt could go to $300 million without threatening our AAA rating. Investors are very interested in Palo Alto investments. But in this case, there will be no City bonds to issue or investment required by the City of Palo Alto…zero. As noted above, an outside investor, who is also an experienced fiber network operator, is willing to make the required investment and take the risk. For its cooperative efforts, Palo Alto gets the citywide open FTTP active Ethernet network it has long dreamed about.

Strong Utility Reserves
If permitted under the law, Palo Alto could easily fund the proposed fiber network investment and all other current utility bond obligations from utility reserve funds, with plenty left over. But that is not needed now, Palo Alto is considering a better offer.

100-Year Trusted Utility - $340 million to General Fund
Since 1899, City of Palo Alto Utilities has delivered electric, gas, water and waste water services earning a strong trusted reputation for customer service, more than $100 million in reserves, and an annual transfer to the General Fund of about $14 million. Return on our original General Fund investments in utilities since 1899 total more than $340 million.

Palo Alto Community Savings from Utilities - Another $340 Million
Palo Alto utility rates combined have routinely been 15% less than the utility rates enjoyed by any of our neighboring communities. Our community savings have totaled almost exactly the same as the annual $14 million or so transferred from our utilities to the Palo Alto General Fund. Community savings from reduced Palo Alto utility rates has totaled over $340 million since 1899.

Utilities Have Delivered Nearly $700 million in Palo Alto Community Financial Benefits So Far 
$700 million is the total of just the financial benefits directly delivered to our community by Palo Alto Utilities since they were established over a century ago. Our utilities continue to deliver many more benefits to the community than just financial, as will FiberPaloAlto™, as noted in “Community Benefits” above.

Contact us for more information. Come back often to visit as the FiberPaloAlto™ story unfolds.

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