The Rancho Santa Fe Association board reached an important milestone for its Rancho Santa Fe Connect project at a special board meeting held July 30, selecting a contractor to build its fiber-optic network and planning to break ground in August.
At the meeting, the board also finalized the budget and financing, approving a $15 million contract with contractor HP Communications, bringing the total cost of the project to $19 million. The cost is $5 million more than the preliminary estimate of $14 million that was voted on in last year’s advisory vote.
The Association will pay for the construction and own the fiber-optic backbone while individual homeowners will be responsible for connecting their homes to the network. The internet service provider, Race Communications, will own and operate the electronics in the central office located on the RSF Golf Club property, install modems and provide service for customers.
“The real success of this project is the community buy-in,” said RSF Association Manager Christy Whalen, noting that it will be up to members to work with Race to connect to the fiber backbone and to indicate early that they will subscribe to the network. “I look forward to the groundbreaking in the next couple of weeks.”
According to RSF Association Director Rick Sapp, Race will offer service at proposed monthly prices of $135 for 1 gigabit internet service, $98 for television, and telephone for $10 a line. Of the $135 monthly fee, $65 will go back to the RSF Association as a cost recovery fee.
The $19 million total project cost includes the $400,000 construction cost of the central office, engineering and legal costs, and $1.9 million in contingencies. Sapp said the $5 million difference in cost from last year’s vote reflects the increased network length which included 13 miles of additional fiber on private roads not identified in the preliminary design, as well as increased construction costs and an increase in contingencies.
The RSF Association will cover the cost of RSF Connect with $8 million from the Fiber Optic Fund, formerly known as the Covenant Enhancement Fund and Open Space Fund. The remaining $11 million will be financed with a 10-year fully amortizing loan at a fixed interest rate of 4.05 percent.
According to RSF Association Treasurer Janet Danola, the Association will repay the loan and cover operating costs with the Fiber Optic Fund part of Association assessments (2.5 cents of the 14 cent per $100 in assessed valuation goes into the fund) and the $65 per month recovery fee. Danola said there is no anticipated change to the current assessment rates.
HP has estimated a 12-month construction timeline, work that will be coordinated with the county’s repaving of several Covenant streets, including El Mirlo, El Montevideo, El Camino Del Norte, Via de Fortuna, Via de la Valle and El Aspecto.
Homeowners can choose to work with Race or another contractor to install or extend their conduit from the underground “flower pot” on their property line to their homes. If a homeowner subscribes to RSF Connect prior to Dec. 31, 2019, Race has priced the cost of the “flower pot” to home connection at $6.25 per linear foot.
Over the last few months, the Association has been in the process of asking the some 400 members who live on the 13 miles of private roads to sign liscensing agreements to allow HP to run the fiber on the private roads. All residents who live on the private roads need to give consent.
“The Association will work hard to see that no one is excluded,” Director Mike Gallagher said. “This is an inclusive process.”
RSF Association Assistant Manager Arnold Keene said the response has been “overwhelmingly positive” and they have received agreements from close to 300 of the 400 residents. At the July 30 meeting, the board voted to extend the deadline for signing the licensing agreements to Dec. 31, 2018. If agreements are finalized after that date, homeowners will be responsible for the entire costs of construction on their roads.
Sapp said HP was selected to build the network for a number of reasons—they came in with the lowest bid and they have experience in less dense and more rural communities as well as experience in Rancho Santa Fe as they have trenched for other utilities in the village.The $15 million construction budget is an industry standard unit-cost arrangement, meaning the cost will be based on the actual length of the network. If there is any way to save distance, the price will be lower, Sapp said.
At the July 30 meeting, the board discussed whether they should hold another advisory vote for RSF Connect as the cost had increased by $5 million. The board agreed that it was not necessary to put the project to a second vote due to the potential cost ramifications as well as project delays. In last year’s vote, which was not required, 83 percent of the community voted in favor.
Sapp said they have “scrubbed the numbers to the best of their ability” and gone through a competitive bid process for all contracts—he said he doesn’t think there is any way to lower the cost.
“I feel confident and comfortable moving forward with this project,” RSF Association President Ken Markstein said, complimenting the years of work by the board, committee members and staff.