Rancho Santa Fe Association board approves funding for consultants, outreach on Hotwire project

The Rancho Santa Fe Association continues to move forward on its broadband project after the RSF Association board signed a letter of intent with Hotwire Communications.

“The tech committee and the board and many members of the community are very excited about the opportunity to build a high-speed, high-capacity fiber to the home infrastructure for the Ranch offering up to 10 gigabit speed thereby, we believe, creating one of the most well- connected communities in the United States,” said Philip Wilkinson, a member of the tech committee speaking at his last meeting June 2 on the RSF Association board.

The RSF Association board said it will not give final approval to the $13.5 million infrastructure project until the results of a community vote are in. The vote is expected to take place by Oct. 31.

Wilkinson said there is a lot of work to do prior to the vote. Hotwire has already began community outreach education and, at the June 2 board meeting, the RSF Association board approved legal and consulting costs of $20,000 a month with Peace & Shea, and $20,000 a month with its technology consultants, Magellan Advisors, an amount not to exceed $120,000.

The two consultant firms will help with legal work negotiating the documents that will go into the agreement with Hotwire, such as the construction contract, service level agreement, financing, maintenance agreement and a lot of regulatory work.

Wilkinson said that the firms help in negotiating with Hotwire and making sure the Association is protected every step of the way.

Wilkinson said they negotiated a discount for the month of April which saved the Association $20,000.

One resident asked why the Association board would spend all that money before it asks the community if the community wants Hotwire.

“We cannot get to a community vote without doing all of the due diligence that goes into building an infrastructure like this,” Wilkinson said. “You have to have the research, the knowledge, the information so you can inform your membership to make a decision about a $13.5 million expenditure.”

Another resident asked how firms like Peace & Shea were vetted.

Breton Peace of Peace & Shea said they are a specialty boutique firm that deals with a lot of highly regulated projects. Peace said he feels well suited to the Association’s project as he has done a lot of work in the utility space and energy sector with satellite companies, and spent the last few years working in highly regulated industries such as nuclear power.

Peace said his partner Pat Shea used to be managing partner of Pillsbury Winthrop’s local office and has experience in highly complex municipal deals — he was the lead counsel for Orange County’s bankruptcy.

Peace said his firm has been working closely with Magellan to make sure all of the technical and legal aspects of the Hotwire project go hand in hand.

“Before they put this to a vote, the Association would like to have a chance for the community to actually see the definitive documentation as opposed to making a vote based on the LOI (letter of intent),” Peace said.

Peace said while it is a very strong LOI that has received a lot of positive feedback from the telecom and legal space, “It’s probably the prudent approach that the Association has taken for the membership to see the full detail before it goes to a vote.”

At the June 2 meeting, the board also approved $250,000 (part of the $13.5 million) for community education and marketing to obtain early sign-ups. The goal is to get 1,200 subscribers, both Rancho Santa Fe homes and businesses.

The funds will go toward advertising, marketing materials, public relations and a “demo room”.

The outreach momentum has already begun, Wilkinson said, noting after he signed an early agreement Hotwire was out at his home doing a site survey and determining where the fiber would go.

The outreach process will take about four months and the amount won’t be paid until the project is approved, Wilkinson said. He said the Association could stop or slow the process at any point if it doesn’t have the kind of uptake it expects. Wilkinson said he hopes the Association will be halfway there on the uptake of 1,200 customers in the next 45 to 60 days.

“There are a lot of wheels in motion here and we absolutely need to continue this to get the uptake,” Wilkinson said. “Many people are knocking on our doors and are very excited about getting 10 gigabits which will be absolutely unequivocally needed in the future.”

The Association has spent a total of $658,000 since July 2014 on the broadband project to date.