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CR 2000-018 Encroachment Agreement KMC Telecom G \ T Y 0 r:: - January 27, 2000 HOPKINS Council Report 2000-18 . ENCROACHMENT AGREEMENT KMC TELECOM Proposed Action Staff recommends adoption of the following motion: Move that Council authorize the mayor and city manaqer, on behalf of the City, to enter into an encroachment agreement with KMC Telecom II, Inc. This agreement sets in motion a permit process for the installation and maintenance of fiber optic telecommunications in public right-of-way by KMC Telecom. Overview The federal Telecommunications Deregulation Act of 1996 paved the way for all telecommunications providers to offer services that once fell essentially to one company, as in the case of US West in Minnesota. KMC Telecom is the latest company seeking to place installations in Hopkins. For the time being the City has found it more expedient to process such requests for e use of public rights-of-way by requiring providers to enter into encroachment agreements with the City. Primary Issues to Consider . KMC Telecom proposal . Terms of the agreement . Recommendation SupportinQ Information . Encroachment agreement d-~ ~ James Gessele Engineering Superintendent Financial Impact: $ unknown Budgeted: Y/N ~ Source: Related Documents (CIP, ERP, etc.): . Notes: Will qenerate funds from a permit fee based on current unknowns. Council Report 2000-18 January 27, 2000 Page 2 of 3 . Analysis . KMC Telecom proposal KMC Telecom, a corporation authorized to do business within Minnesota, proposes to install a fiber optic telecommunications system in the City of Hopkins. Although KMC's prime interest now is to improve telephone service at City Hall, it represents Itself as a provider of local and long distance service to all customers in the community. KMC Telecom proposes to install their facility in 1 yth Avenue North from T.H. 7 to 3rd Street North, in 3rd Street North, in alleys between 16th/1 yth Avenues North from 3rd Street to 1st Street North, in 1st Street North, and in 11th Avenues North and South to a termination at City Hall. The company has submitted drawings with their permit application that detail the above routes. Route selection has undergone considerable scrutiny by the City and the company in coordination with other utility companies to target the most feasible installation locations. KMC Telecom plans to directional bore (underground trenchless digging) in 17th Avenue North, 3rd Street North, and 11th Avenues North and South. It will install overhead on existing utility poles in the proposed alley corridor and in 1 sl Street North. In every case where KMC crosses an underground electrical, gas, or . telephone service line or main it is required by law to dig a "window" pothole. This is done to verify that existing utilities WIll not be adversely affected by the directional bore. This will require KMC to do boulevard and street restoration which includes turf replacement, new sidewalk panels and bituminous/concrete pavement replacement. . Terms of the agreement In the agreement KMC recognizes that its installation is subject to more formal regulations yet to be developed in a completely revised right-of-way ordinance currently being processed by staff. KMC also recognizes it may face upward adjusted permit fees once the new ordinance and construction standards are in place. The agreement grants KMC an eight-year term to operate in Hopkins with automatic renewal unless gO-day notice is given. A permit to work in the public corridor will be granted with the company subject to current City restoration and traffic management requirements. KMC is (and has already done so) required to post a $50,000.00 bond and maintain Worker's Compensation Insurance and general liability insurance in compliance with statutory requirements. KMC has submitted a list of equipment to be used, the name of its subcontractor and contact person, and a list of references where the company has done . installations in the past. - - -- Council Report 2000-18 January 27, 2000 Page 3 of 3 . . Recommendation Staff has reviewed credentials and references and finds them in order. Staff notes the extra hours spent in coordinating installation routes and the willingness of the company to provide information and accommodate City needs. Staff recommends approval of the encroachment agreement. . . . ENCROACHMENT AGREEMENT This Encroachment Agreement (this "Agreement") is made as of the day of , by and between the City of Hopkins, Minnesota ("City") and KMC Telecom II, Inc. ("KMC"), a Delaware corporation and having its principal office at 1545 Route 206, Suite 300, Bedminster, NJ 97921. RECITALS A. KMC represents that it is a corporation duly organized, and existing under the laws of the State of Delaware and authorized by the Federal Communications Commission to provide Telecommunications Services. B. KMC has voluntarily chosen to enter into this Agreement with the City and comply with the provisions contained herein with full knowledge of the provisions of Minn. Stat. Chapter . 237, as amended by laws of Minnesota 1997, Chapter 123. C. The City has authority to grant encroachment within its rights-of-way only as expressly specified in applicable law, however, the City makes no representation, guaranty or warranty with respect to its title or interest in said rights-of-way. NOW, THEREFORE, in consideration of the foregoing Recitals A-C, other valuable consideration and the mutual undertakings and agreements contained herein, the City and KMC agree as foHows: 1. Incorporation of Recitals. Recital Paragraphs A-C, above, are incorporated in and made a part of this Agreement in their entirety. 2. Definitions. When used in this Agreement, unless the context clearly indicates a . contrary intent, the following words and phrases shall have the meanings stated below: hopci v i I\encroach. TMC I . "City" means the City of Hopkins, Minnesota, "Fiber Optic Network Facilities" or "Facilities" means fiber optic cables, conduits, converters, splice boxes, cabinets, handholds, manholes, vaults, equipment, drains, surface location markers, appurtenances and related facilities located or installed by KMC or to be located or installed by KMe in Public Right-of-Way and used or useful for the transmission of Telecommunications Services. "Law" means any local, state or federal act, statute, ordinance, rule, regulation, code, license, certificate, franchise, permit, vmt, ruling, award, executive order, directive, requirement, injunction, judgment, decree or other order issued, executed, entered or deemed applicable by any governmental authority . "Management Costs" shall have the meaning stated in Minn. Stat. 237.162, Subd. 9. . "Public Right-of-Way" shall have the meaning stated in Minn. Stat. 237.162, Subd. 3, but shall be limited to public rights-of-way within the City. "Telecommunications Services" shall be defined consistently with the definition found in the Communications Act of 1934, as amended. CONSTRUCTION, MAINTENANCE AND OPERATION OF THE SYSTEM 3. License and Encroachment. Subject to the provisions ofthis Agreement, and all applicable Law, the City hereby grants a nonexclusive license to KMC to construct, maintain and operate Facilities in, under, over, across and along Public Right-of-Way for the purpose of providing Telecommunications Services. Said license is not assignable without the express written permission of the City, which consent shall not be unreasonably withheld, but may be conditioned upon the Assignee consenting, in writing, to be bound by the terms and conditions of this Agreement. . hopclvl!\cncroach.TMC 2 . This Agreement and KMC's rights hereunder shall not be sold, transferred, leased, assigned or disposed of, in whole or in part, including but not limited to, by force or voluntary sale, merger, voluntary or involuntary bankruptcy, consolidation, receivership or other means without the prior written consent of the City, which consent shall not be unreasonably withheld but may be conditioned upon the Assignee consenting, in writing, to be bound by the terms and conditions of this Agreement. Notwithstanding any other provision in this Agreement, no consent from the City shall be required for a mortgage, collateral assignment or other instrument of hypothecation, in whole or in part, to secure an indebtedness. 4. Term. The term ofthis Agreement shall be eight (8) years commencing on the date stated in the first paragraph of this Agreement and ending on the eighth anniversary date of said commencement date. The parties agree that this Agreement shall automatically renew for additional . consecutive five (5) year periods, unless either party gives a minimum of ninety (90) days advance written notice to the other of intent to terminate prior to the end of the initial eight (8) year term of this Agreement or any renewal term. 5. No Interference. Except as permitted by applicable Law and this Agreement, in the performance and exercise of its rights and obligations under this Agreement, KMC shall not damage or interfere in any manner with the existence, condition or operation of any Public Right-of-Way or any public or private roads, streets, curbs, sidewalks, sanitary sewers, water mains, storm drains, gas mains, poles, overhead and underground electric and telephone wires, electroilers, cable television wires and other telecommunications, utility, municipal or other public property without the approval of the owner(s) of the affected property or facilities. 6. No Property Interest. This Agreement is not intended to grant to KMC any property . interest in any Public Right-of-Way and is made subject and subordinate to the prior, superior and hopcivil\encroach.TMC .., .J . continuing right of the City to use any Public Right-of-Way as a street and for any other public use and for the purpose oflaying, installing, maintaining, repairing, protecting, replacing and removing sanitary sewers, water mains, storm drains, gas mains, poles and utility improvements, and for other municipal uses and with right of ingress and egress, along, over, across, under and in said Public Right-of-Way. 7. Application for Permits. KMC shall apply for a permit for all work and each job within any Public Right-of-Way. KMC shall furnish detailed plans of the work prepared by a registered professional engineer, and other such information as required by the City and by Law, and shall pay all Management Costs incurred by the City including, but not limited to, processing, field marking, engineering, inspection, security and any other fees in accordance with the rates in effect at the time of payment subject to Section 18 hereof. KMC agrees to place its Facilities underground . in all locations where the City requires other telecommunications providers to do the same. In those areas of the City where KMC's Facilities are located on above-ground transmission or distribution facilities of a public utility or telecommunications provider, KlvfC agrees to relocate or install its Facilities underground at its own cost and within 120 days of the City's request when: a, The utility, on whose poles KMC has attached its Facilities, is required to relocate its facilities underground; or b. The City requires all telecommunications providers to relocate their above-ground facilities underground within the Right-of-Way, subject to the permit. Said improvements shall be constructed and installed in according with the Law and this Agreement. 8. Issuance of Permits. Upon execution of this Agreement and perfonnance of the obligations contained in this Agreement by KMC and compliance by KMC with all permitting . requirements, the City will issue all permits necessary to the installation ofKMC's telecommunica- hopcivil\encroach.TMC 4 . tions system, in accordance with the City's permitting procedures as may from time-to-time be amended in accordance with applicable law. 9. Manner of Construction. The construction, installation, operation, maintenance and removal of all Fiber Optic Network Facilities shall be accomplished without cost or expense to the City and in such manner so as not to endanger persons or property, or unreasonably obstruct travel on any street, road, walk or other access thereon within any Public Right-of-Way. KMC shall proceed with all due diligence to complete construction of its Fiber Optic Network Facilities as prompHy as possible, without undue interruption or delay. KMC shall not excavate or disturb public streets, roads or sidewalks that have been constructed by the City within five (5) years prior to installation ofthe Facilities but shall, instead, use installation and construction techniques, such as directional boring, that require the least possible excavation or disturbance of . public streets, roads or sidewalks. In the event excavation or disturbance of said public streets, roads or sidewalks is unavoidable, KMC shall notify the City Engineer or City Engineering Supervisor and shall not proceed with such excavation or disturbance until written approval therefore has been obtained from the City Engineer or City Engineering Supervisor. which approval may be conditioned upon employing construction techniques that will minimize excavation or disturbance of public streets, roads or sidewalks. KMC shall also use reasonable efforts to coordinate its construction schedule with the City's schedule of public improvements to minimize disruption and damage to City streets and other public improvements. The City shall keep KMe reasonably apprised of its schedule of public improvements at all times during the construction of the Facilities. Prior to performing any construction, installation, maintenance, repair or relocation work. KMC shall contact all utility companies to obtain the location of utility lines and improvements that . may be affected by work performed by KMC, if requested to do so by the City. hupcjYiI\encroach. TMC 5 . 10. Maps. Within sixty (60) days of completion of construction, KMe shall provide the City with an accurate as built maps or drawings certifying the location of all Facilities within Public Right-of-Way in a paper format and in a format compatible and consistent with the City's electronic mapping system and/or including all data reasonably necessary to allow the City to develop a Right-of-Way mapping system. All such maps or drawings shall be certified to the City by a registered professional engineer. 11. Condition of Facilities. KMC agrees to keep and maintain said Fiber Optic Network Facilities in good and safe condition and free from any nuisance. 12. Bond. Prior to issuance of any permit, KMC shall deliver and maintain a performance bond in favor of the City in an amount sufficent, as determined by the City Engineer or City Engineering Supervisor, to cover all costs of restoration of streets, roads, sidewalks, utilities . and other public improvements that may be damaged as a result ofKMC's activities. In no event shall the required performance bond be in an amount of less than Fifty Thousand and nollOOths Dollars ($50,000.00). The required performance bond shall remain in force until sixty (60) days after full completion of KMC's construction, as reasonably determined by the City, including restoration of Public Right-of-Way and other property affected by the construction. The bond shall be issued in a form and by a bonding company approved by the City, which approval shall not be unreasonably withheld. 13, Required Authorizations. Prior to issuance of any permit, KMe shall provide the City with sufficient information to establish that it has obtained all required government approvals and permits to construct and operate the Facilities and to offer and provide Teleconununications Services including any certification or other documentation required by the Public Utilities . Commission of the State of Minnesota or any other regulatory entity. At all times during the term hopcivil\encrnach. TMC 6 . of this Agreement, KMe shall maintain membership in Gopher State One Call and shall furnish the City, upon request, proof that it is maintaining such membership. 14. Relocation for City Purposes. KMC shall relocate, in cooperation with, and at no charge to the City, any Fiber Optic Network Facility installed, used and maintained under this Agreement if and when made necessary by any lawful change of grade, alignment or width of any street or road within any Public Right-of- Way or the construction, maintenance or operation of any underground subway or viaduct by City and/or the construction, maintenance, repair, replacement or operation of any other City underground or above-ground facilities or utility improvements. KMC agrees to relocate or install its Facilities underground at its own costs and within sixty (60) days of the City's request, if such request is made between April 1 and October 1, and within 120 days of the City's request, if such request is made between October 1 and April 1. . 15. Removal and Abandonment. If any portions of the Fiber Optic Network Facilities covered under this Agreement are no longer used by KMC, or are abandoned for a period in excess of twelve (12) months, KMC shall notify the City and the City shall determine whether KMe shall either promptly vacate and remove the Facilities at KMC's expense or abandon some or all of the Facilities in place to the extent permitted by Law. 16. Restoration of Public Ri~ht-of-Way. \Vhenever construction, installation, maintenance, repair, removal or relocation of Facilities occurs within any Public Right-of-Way, KMC shall, after the construction, installation, maintenance, removal or relocation of the Facilities, at its own cost, repair, restore and return the Public Right-of-Way on which the Facilities were located and any highway, road, sidewalk, utility or other improvements to the same or better condition existing before such construction, installation, maintenance, repair, removal or relocation. . The work must be completed as promptly as the weather permits. Any repair or restoration work hapelY i I\encroach. TMC 7 . performed by KMC between November 15 and April 30 will incorporate such measures as are required, due to weather conditions or unavailability of paving materials, to assure proper permanent restoration, including temporary repair or restoration measures which KMC shall replace by means of permanent restoration methods at such time as weather conditions and availability of materials permit. If KMC does not properly perform and complete the work, remove all dirt, rubbish, equipment and material, and restore the Public Right-of-Way to the same or better condition, the City may restore the Public Right-of-Way and any highway, road, sidewalk, utility or other improvements to the same condition at the expense ofK.MC. KMC shall, upon demand, pay to the City the direct and indirect cost of the work done for or performed by the City, including but not limited to, the City's administrative costs. 17. Damage KMC shall be responsible for damage to city street pavements, existing . utilities, curbs, gutters and sidewalks due to KMe's installation, maintenance, repair or removal of its Fiber Optic Network Facilities in Public Right-of-Way, and shall repair, replace and restore the damaged Public Right-of-Way and such improvements at its sole expense and subject to approval by the City, which approval shall not be unreasonably withheld or delayed. 18. Other City Reauirements. KMC shall pay all permit and user fees or any other fees to the City in accordance with applicable law. KMC expressly acknowledges and agrees that the City shall have the right to impose upon KMC additional fees and/or damages for KMe's occupation of the Public Right-of-Way to the extent not inconsistent with applicable law. It is intended that, subsequent to the execution of this Agreement, the City will adopt an ordinance imposing comprehensive requirements on telecommunication Right-of-Way users such as KMC pursuant to recently enacted state legislation (Laws of Minnesota 1997, Chapter 123). KMC further . acknowledges and agrees to be bound by any subsequent ordinance or regulation adopted by the City hopciv il\eneroach. TMC 8 . with respect to the City's lawful control over its Public Right-of-Way and hereby agrees and acknowledges that such ordinance or regulation, including any permit and fee requirements, will be retroactively applied to K1v1C, provided that such ordinance orregulation is also retroactively applied to all telecommunications providers who are granted permits from the City to install a new Fiber Optic Network on Public Right-of-Way after the effective date of this Agreement. Any permit or user fees paid by KMC prior to the adoption of a subsequent ordinance shall be credited against those fees required by a subsequent ordinance. Ifthere are any inconsistencies between the terms of this Agreement and those of any subsequent ordinance or regulation, the terms of any subsequent ordinance or regulation shall take precedence. KMC voluntarily agrees to reimburse the City in an amount not to exceed $750.00 for the City's out-of-pocket legal and other consultant costs and expenses incurred to process KMC's request . and the preparation of this Agreement. The City shall provide KMC with copies of all invoices relating to said costs and expenses and KMC shall only provide reimbursement for costs and expenses actually incurred by the City. Any amount paid by KMC to reimburse the City hereunder shall not be credited against other amounts payable to the City by KMC hereunder. 19. Nondiscriminatory Fees. With respect to the City's imposition of any fees or charges not specifically required in this Agreement, KMC shall only be required to pay any fee or charge to the extent permitted by law and which is imposed in a competitively neutral and nondiscriminatory manner with respect to other similarly situated telecommunications providers. GENERAL TERMS 20. Indemnification. KMC, jointly and severally, for itself, its successors, agents. contractors and employees, agrees to indemnity, defend (with counsel acceptable to City) and hold . harmless City, its officials, representatives, employees and agents from and against any and all hopcivil\cncroach_ TMC 9 . claims, demands, losses, damages, liabilities, fines and penalties and all costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys' fees and costs of defense arising directly or indirectly, in whole or in part out of the construction, installation, maintenance, repair, removal or relocation of Facilities within any Public Right-of-Way or any breach by KMC of its obligations described in this Agreement, except to the extent arising solely from the City's willful action or negligent acts or omissions. 21. Insurance. KMC and/or any of its subcontractors or agents under the Agreement shall maintain throughout the term of this Agreement, Workers' Compensation Insurance complying with all statutory requirements and comprehensive general liability insurance, which latter insurance shall provide the following coverages and minimum limits: a. General Liability - public liability, including premises, products and complete operations. . (i) Bodily injury liability: $1,000,000.00 each person $3,000,000.00 each occurrence (ii) Property damage liability $3,000,000.00 each occurrence or (iii) Bodily injury and property damage combined $3,000,000.00 single limit b. Comprehensive - automobile liability insurance, including owned, non-owned and hired vehicles. (i) Bodily injury liability $1,000,000.00 each person $3,000,000.00 each occurrence (ii) Property damage liability $3,000,000.00 each occurrence (iii) In lieu of (i) and (ii) Bodily injury and property .' damage combined $3,000,000.00 single limit hopcivil\cncroach.TMC 10 . c. KMC agrees that with respect to the above-required insurance, contracts will contain the following required provisions: (i) The City and its officers, agents, employees, board members and elected officials shall be named as additional insured (as the interests of each may appear) as to all applicable coverage; and (ii) Contracts shall provide for thirty (30) days notices to the City prior to cancellation, revocation, nonrenewal or material change. d. The amount and conditions of liability and comprehensive insurance may be increased upon sixty (60) days' written notice by the City should the protection afforded by this insurance be reasonably deemed by the City to be insufficient for the risk created by this Agreement. At no time, however, will the amount of required liability and comprehensive insurance exceed that which is customarily required of others for similar situations of risk. e. Prior to issuance of any permit, KMC shall furnish a Certificate of Insurance to the City confirming the above-noted coverages and naming the City as an additional msurance. 22. Default. If KMC is in default of any obligations contained in this Agreement or in . the performance of the work or occupancy authorized by this Agreement or any permit granted pursuant to this Agreement, including, but not limited to, restoration requirements or fee payments for more than thirty (30) days after receiving written notice from the City of the default, the City may terminate and revoke the rights ofKMC under this Agreement and any permit granted hereunder, provided KMC shall not be entitled to prior notice in emergencies or in circumstances in which the City has the absolute right to terminate or revoke this Agreement and any permits granted to KMC in the exercise of the City's police powers. IfKMC is in default of any obligation contained in this Agreement, in the performance of the work or occupancy authorized by this Agreement or any permit granted hereunder, the City may, after the above notice to KMC, if required, and failure ofKMC to cure the default, take such action . as may be reasonably necessary to abate or remedy the condition caused by the default. KMC shall hopciv j I\encroach. TMC 11 . reimburse the City for the City's reasonable costs, including costs of collection and attorneys' fees, incurred as a result ofKMC's default. 23. Notices. All notices or other communications required or permitted to be given under this Agreement shall be in writing and shall be hand delivered or sent by certified mail, return receipt requested, to the following addresses: If to KMC: KMC Telecom II, Inc. 1545 Route 206, Suite 300 Bedminster, NJ 07921 Atten: President with a copy to: KMC Telecom II, Inc. 3025 Breckenridge Blvd., Suite 170 Duluth, GA 30096 Atten: EVP, Development If to City: City of Hopkins Attention: Engineering Supervisor . 1010 First Street South Hopkins, Minnesota 55343 If notice is given by certified mail, such notice shall be deemed to have been given on the next business day following the date of mailing. 24. Emer~encv Work. In the event of any emergency in which any ofIeMC's Facilities located in, above or under any Public Right-of-Way are or may be damaged, or if KMe's construction area or Facilities are otherwise in such a condition as to immediately endanger the property, life, health or safety of any individual, .K.i\1C shall immediately take the proper emergency measures to repair its Facilities, to cure or remedy the dangerous conditions for the protection of property, life, health or safety of individuals, and the requirements of this Agreement or any City ordinance for first obtaining a pern1it may be waived in appropriate emergency circumstances. . hopclvil\encroach. TMC 12 . However, this shall not relieve KMC from the requirement of notifying the City of the emergency work and obtaining any permit necessary for this purpose upon completion of the repairs. 25. Miscellaneous. a. This Agreement is made and executed in the State of Minnesota, and shall be construed and enforced according to the laws of Minnesota. b. The invalidity or unenforceability of any provision of this Agreement shall not affect or impair the validity of any other provisions, all of which shall remain in full force I and eff eet. c. The section titles and captions in this Agreement are for convenience of reference only and do not define, limit or construe the contents of the sections and paragraphs of this Agreement. d. This Agreement shall be binding upon and inure to the benefit of the parties hereto and, subject to the restrictions and limitations herein contained, their respective successors and assigns. e. Any modification to this Agreement shall only be effective if in writing and signed . by all of the parties to this Agreement. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. City of Hopkins, Minnesota Dated: By , Its Mayor Dated: By Steven C. Mielke, Its Manager . hopciv i l\encroach. TMC 13 . Reviewed and approved by the City Attorney. City Attorney KMC Telecom II, Inc. , - \ \-OD Dated: Michael Sternberg President . . hopcivil\encroach.TMC 14