House File 2570
HOUSE FILE
BY COMMITTEE ON GOVERNMENT
OVERSIGHT
(SUCCESSOR TO HF 2536)
(SUCCESSOR TO HSB 645)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for the sale of Iowa communications network
2 assets, providing for related technical and substantive
3 changes, and providing an effective date.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 5450HZ 80
6 rn/pj/5
PAG LIN
1 1 Section 1. SALE OF IOWA COMMUNICATIONS NETWORK ASSETS ==
1 2 FINDINGS AND PURPOSE AND DEFINITIONS.
1 3 1. FINDINGS AND PURPOSE. The Iowa communications network
1 4 is a valuable state telecommunications asset and has provided
1 5 fair, reasonable, and predictable access to advanced
1 6 telecommunications technology for authorized users for the
1 7 past ten years. With over seven hundred seventy video
1 8 classrooms located statewide and three thousand one hundred
1 9 miles of owned fiber, the more than one thousand two hundred
1 10 authorized users are able to equally access state=of=the=art
1 11 voice, video, data, and internet services at comparable prices
1 12 statewide, regardless of location. At a time when budgets are
1 13 strained and there is a shortage in the availability of
1 14 educators, it is essential that the educational content
1 15 carried over the Iowa communications network be preserved and
1 16 enhanced. It is also vital that secure telecommunications
1 17 services provided by the Iowa communications network to
1 18 homeland security and public defense providers be retained.
1 19 The state desires to remain a credible business partner to all
1 20 current authorized network users. To ensure that the
1 21 utilization of the Iowa communications network resource is
1 22 maximized while minimizing further investment by the state to
1 23 maintain the infrastructure, it is in the best interest of the
1 24 citizens of this state to offer some of the assets of the Iowa
1 25 communications network for sale, while retaining ample
1 26 capacity to provide authorized users required
1 27 telecommunications services now and in the future. Through a
1 28 sale of most of the fiberoptic cable and optronics, or light=
1 29 passing equipment, and retaining capacity through long=term
1 30 indefeasible right=of=use agreements, or through a sale which
1 31 guarantees the continued provision of telecommunications
1 32 services by the purchaser, telecommunications services and
1 33 adequate capacity would continue to be provided into the
1 34 future. Selling the Iowa communications network assets using
1 35 an intermediary professional agent specializing in
2 1 telecommunications resources to market the assets will
2 2 strengthen the ability of the state to receive a fair price
2 3 for the assets while allowing an impartial third party using
2 4 predetermined sales criteria to determine the most qualified
2 5 buyer. By using the sales proceeds to prepay remaining
2 6 construction debt and provide revenue for an equipment
2 7 replacement fund, or by providing for the transition to
2 8 provision of telecommunications services by the purchaser if
2 9 the alternative purchase option pursuant to section 5 of this
2 10 Act is approved by the governor, state=provided funding for
2 11 network maintenance and upgrade will be minimized. Continued
2 12 provision of the full array of network services will appear
2 13 seamless to current authorized users when the sales process is
2 14 completed.
2 15 2. DEFINITIONS. As used in sections 1 through 6 of this
2 16 Act, unless the context otherwise requires:
2 17 a. "Advanced telecommunications services" means high=
2 18 quality voice, data, graphics, and video telecommunications
2 19 services using any technology with regard to transmission
2 20 media that utilizes high=speed, switched, broadband
2 21 telecommunications capability.
2 22 b. "Authority" means the Iowa communications network sales
2 23 authority established to oversee the sale of backbone assets
2 24 pursuant to this Act.
2 25 c. "Authorized user" means a private or public agency, as
2 26 defined in section 8D.2, except for a public or private agency
2 27 which was required pursuant to section 8D.9, subsection 1, to
2 28 certify to the commission not later than July 1, 1994, the
2 29 agency's intent to become a part of the network and which did
2 30 not provide such certification. Agencies that obtained
2 31 legislative approval to join the network after July 1, 1994,
2 32 will be treated as a public or private agency for purposes of
2 33 this definition and all provisions of chapter 8D.
2 34 d. "Backbone assets" means the backbone fiber comprising
2 35 the five fiber optic rings located outside of the Des Moines
3 1 metropolitan area and the optronic equipment associated with
3 2 those rings.
3 3 e. "Capacity" means the information=carrying ability of a
3 4 telecommunications facility. The measurement of capacity is
3 5 determined by the purpose of the facility.
3 6 f. "Certificates of participation" means the two issuances
3 7 of certificates of participation issued by the state in 1992
3 8 and 1993 to fund the construction of the owned fiber and
3 9 equipment for Parts I and II of the network as defined in
3 10 chapter 8D.
3 11 g. "Commission" means the Iowa telecommunications and
3 12 technology commission as defined in section 8D.2.
3 13 h. "Indefeasible right of use" means an indefeasible right
3 14 to use fiber, including an entire cable or a portion of the
3 15 capacity of a cable, or channels of a given bandwidth for a
3 16 defined period of time. The holder of an indefeasible right
3 17 of use has a property right to the specified wavelengths in
3 18 the fiber identified in the indefeasible right=of=use
3 19 agreement for the period of time defined in the indefeasible
3 20 right=of=use agreement.
3 21 i. "Iowa communications network hub" means the
3 22 telecommunications facility located in the joint forces
3 23 headquarters armory, Johnston, Iowa, where the main switching
3 24 and maintenance operations of the network take place.
3 25 j. "Network" means the Iowa communications network.
3 26 k. "Network operations center" means the maintenance and
3 27 network diagnostic equipment that manages the network
3 28 infrastructure.
3 29 l. "Optronics" means the fiberoptic equipment that
3 30 activates the fiber and allows light to traverse.
3 31 m. "Professional agent" means any person having
3 32 specialized expertise required in the process of selling the
3 33 Iowa communications network including but not limited to
3 34 expertise regarding brokerage, contracting, asset valuation,
3 35 sales, or negotiation services.
4 1 n. "Prospective purchaser" means an entity that the
4 2 professional agent has identified as a potential purchaser of
4 3 the network backbone assets.
4 4 o. "Qualified purchaser" means a prospective purchaser
4 5 that the professional agent has verified is able to adequately
4 6 operate and maintain the backbone network and recommended to
4 7 the authority to purchase the network assets as provided in
4 8 section 4 of this Act.
4 9 p. "Right=of=way accommodation agreement" means a twenty=
4 10 year agreement between the network and the department of
4 11 transportation that includes an option to extend the agreement
4 12 for an additional ten years, which is definitive with respect
4 13 to the use of interstate rights=of=way and gives the
4 14 department of transportation the sole right to approve or deny
4 15 other users of the sheath, trench, or any of the ducts.
4 16 q. "Telecommunications facility" means a collection of
4 17 fibers which originates at an access point and ends at the
4 18 fiberoptic termination connector attached to the electronic
4 19 and optronic equipment necessary to transmit voice, video, or
4 20 data transmissions across the fiberoptic network.
4 21 r. "Telecommunications services" means the provision of
4 22 any of the following services:
4 23 (1) Local exchange telephone services.
4 24 (2) Long distance telephone services.
4 25 (3) Internet access services.
4 26 (4) Cable television services.
4 27 (5) Video services.
4 28 Sec. 2. IOWA COMMUNICATIONS NETWORK SALES AUTHORITY
4 29 ESTABLISHED.
4 30 1. AUTHORITY ESTABLISHED == PURPOSE == POWERS. An Iowa
4 31 communications network sales authority is established with the
4 32 sole authority to oversee the sales process regarding transfer
4 33 of ownership of the network's backbone assets to a qualified
4 34 purchaser pursuant to this Act. Subject to final approval of
4 35 the selection of the qualified purchaser and terms of sale by
5 1 the governor, the authority's operation shall not be subject
5 2 to the jurisdiction or control of any other state agency, and
5 3 the authority shall possess full and sole authority over the
5 4 Iowa communications network backbone asset sales process.
5 5 However, the authority is subject to the general operations
5 6 practices and procedures which are generally applicable to
5 7 other state agencies during the period of its operation. The
5 8 authority shall be in existence from the effective date of
5 9 this Act until a qualified purchaser has been approved by the
5 10 governor, and all sales agreements necessary to complete the
5 11 sale have been negotiated and entered into.
5 12 2. MEMBERSHIP. Membership of the authority shall consist
5 13 of the treasurer of state, the auditor of state, two members
5 14 of the Iowa telecommunications and technology commission, and
5 15 one member of the Iowa utilities board. Three members of the
5 16 authority shall constitute a quorum, and the members shall
5 17 elect a chairperson, vice chairperson, secretary, and other
5 18 officers as determined necessary. Meetings of the authority
5 19 shall be held at the call of the chairperson or when a
5 20 majority of the members so requests. The members of the
5 21 authority shall not receive compensation by reason of their
5 22 membership.
5 23 Sec. 3. PROFESSIONAL AGENT RETENTION. The authority shall
5 24 issue a request for proposals to retain a professional agent
5 25 with telecommunications asset sales experience to market and
5 26 coordinate the sales process of the backbone assets.
5 27 The governor, in consultation with the treasurer of state
5 28 and the department of management, shall be authorized to
5 29 negotiate fair and equitable terms of compensation for the
5 30 professional agent. The described backbone assets shall only
5 31 be available for a single private purchaser, or a consortium
5 32 acting as a single private purchaser, to purchase and the
5 33 state, unless the alternative purchase option pursuant to
5 34 section 5 of this Act is proposed and approved, shall retain
5 35 an indefeasible right of use with respect to certain amounts
6 1 of backbone capacity in optical wavelengths for a negotiated
6 2 period of seven to twenty=five years, and two optional renewal
6 3 periods of ten years each. As part of the sale, unless the
6 4 alternative purchase option pursuant to section 5 of this Act
6 5 is proposed and approved, the purchaser shall enter into
6 6 indefeasible right=of=use agreements with the state in which
6 7 the purchaser shall grant the state an indefeasible right of
6 8 use with respect to backbone capacity and optical wavelengths
6 9 and Part II facilities and the dark fiber connecting various
6 10 Part III aggregation points to network backbone=switching
6 11 points. During the term of an indefeasible right=of=use
6 12 agreement, the state as holder of the indefeasible right of
6 13 use will have complete and total ownership of the fiber or
6 14 channels identified in the indefeasible right=of=use
6 15 agreement, may use the fiber or channels as if they were a
6 16 physically owned asset of the state, and the state's interest
6 17 in the fiber or channels cannot be annulled or made void by
6 18 the grantor of the indefeasible right of use or any other
6 19 party. At the end of the term of an indefeasible right=of=use
6 20 agreement and any renewal periods, title to the equipment and
6 21 fiber assets and optical wavelength capacities covered by the
6 22 agreement shall pass completely to the purchaser. The terms
6 23 of the sale of the assets shall also include provisions
6 24 committing the commission to purchase field services,
6 25 including maintenance, provisioning, and build out, from the
6 26 purchaser and committing the commission to pay a monthly fee
6 27 for fiber maintenance and field services for the assets that
6 28 are sold. The request for proposals shall be issued no later
6 29 than six months from the date of enactment of this Act. The
6 30 request for proposals may include:
6 31 1. A detailed list of the network assets for sale.
6 32 2. A detailed description of the unfettered and
6 33 unrestricted use of specified capacities of optical
6 34 wavelengths occupying a portion of the backbone assets.
6 35 3. A procedure to determine the compensation for the
7 1 successful professional agent.
7 2 4. Parameters surrounding the sale, to be determined by
7 3 the governor, which shall include but not be limited to the
7 4 following:
7 5 a. The amount of time the state would allow the
7 6 professional agent to market the assets.
7 7 b. A provision that the governor or the governor's
7 8 designee shall have the ultimate discretion to accept or
7 9 reject an offer from a qualified purchaser.
7 10 c. A detailed framework for the indefeasible right=of=use
7 11 agreement between the state and the successful purchaser as
7 12 well as indefeasible right=of=use agreements for Part II
7 13 facilities, unless the alternative purchase option pursuant to
7 14 section 5 of this Act is proposed and approved. The
7 15 indefeasible right=of=use agreements and any other agreements
7 16 necessary to complete the sale shall clearly provide that the
7 17 network and the state shall be held harmless in the event the
7 18 purchaser suffers a loss of revenue due to a failure of any
7 19 assets sold to the purchaser or to a failure of any portion of
7 20 the network being shared by the network.
7 21 d. A detailed process and procedures for routing capacity
7 22 from the backbone termination points in public buildings to
7 23 sites owned by the purchaser and sharing of alternating
7 24 current power, direct current power, and high=voltage
7 25 alternating current power needed to operate the purchaser's
7 26 equipment and related expenses in the public buildings.
7 27 e. A detailed framework for the standards required
7 28 regarding network maintenance.
7 29 f. A requirement that the purchaser offer advanced
7 30 telecommunications services equitably across the state,
7 31 specifically serving areas where those types of services are
7 32 not yet available.
7 33 g. A requirement that the purchaser grant the network the
7 34 right to participate in future upgrades of the backbone
7 35 electronics statewide in the fiberoptic network outside the
8 1 Des Moines metropolitan area.
8 2 h. The criteria to be used as a basis for determining the
8 3 successful purchaser.
8 4 i. An analysis of a prospective purchaser's financial
8 5 stability with particular attention to assessing the
8 6 prospective purchaser's potential vulnerability to bankruptcy.
8 7 j. A requirement that during the negotiations process, the
8 8 prospective purchaser shall offer the state reasonable surety
8 9 of long=term economic viability. Such surety may include a
8 10 requirement of posting bond or some other financial
8 11 compensation to guard against the purchaser's inability to
8 12 meet the financial terms of the agreement. The purchaser
8 13 shall guarantee that the state's indefeasible right=of=use
8 14 agreements shall be protected in the case of the bankruptcy of
8 15 the purchaser.
8 16 The authority shall select the professional agent
8 17 submitting the proposal that provides the best overall value
8 18 to the state. The public interest requires that the
8 19 authority's ability to enter into a contract with a
8 20 professional agent not be delayed; therefore, the decision of
8 21 the authority shall be final. Notwithstanding the provisions
8 22 of chapter 17A a professional agent not selected by the
8 23 authority shall not be entitled to a contested case hearing or
8 24 to otherwise challenge the decision of the authority.
8 25 Sec. 4. MARKETING OF THE NETWORK ASSETS. Using the
8 26 parameters included in the request for proposals, the selected
8 27 professional agent shall develop a process to market and sell
8 28 the assets designed to maximize the state's proceeds from the
8 29 sale. During the marketing period, using the predetermined
8 30 parameters, including meeting financial qualifications, the
8 31 professional agent shall identify a prospective purchaser and
8 32 submit the prospective purchaser to a qualification process
8 33 designed to verify the purchaser's ability to adequately
8 34 operate and maintain the backbone network. This verification
8 35 process shall include the following:
9 1 1. Verifying that the purchaser has proven experience
9 2 operating a telecommunications network.
9 3 2. Verifying that the purchaser has the ability to
9 4 purchase the backbone assets outright or has the collateral to
9 5 secure financing of a loan to purchase the backbone assets.
9 6 3. Verifying that the purchaser is aware of its
9 7 obligations pursuant to chapter 476. In any complaint
9 8 proceeding initiated by the Iowa utilities board, upon receipt
9 9 of a written complaint by the purchaser, the board shall
9 10 render a decision within ninety days of the filing of the
9 11 complaint. The board, for good cause shown, may extend the
9 12 deadline for decision. Such extensions may not exceed an
9 13 additional ninety days unless the parties agree to a longer
9 14 extension.
9 15 Upon verification by the professional agent of the
9 16 purchaser's ability to adequately operate and maintain the
9 17 backbone network, the authority shall make a recommendation
9 18 regarding a purchaser and the terms of sale to the governor.
9 19 The governor shall have the right of final approval of the
9 20 purchaser and the terms of sale, with the concurrence of the
9 21 legislative council.
9 22 If the professional agent is unable to identify a qualified
9 23 purchaser able to adequately operate and maintain the backbone
9 24 network, the professional agent shall submit a report to the
9 25 authority explaining the reasons supporting this conclusion.
9 26 Sec. 5. TERMS OF SALE == ALTERNATIVE PURCHASE OPTION.
9 27 1. As an alternative to the sale of backbone assets with
9 28 the retention by the state of an indefeasible right=of=use, a
9 29 prospective purchaser may submit an offer to purchase which
9 30 includes the provision by the purchaser of all
9 31 telecommunications services to authorized users, except for
9 32 authorized users based in Polk county. An offer to purchase
9 33 pursuant to this option shall be subject to the following
9 34 terms and conditions:
9 35 a. Telecommunications services shall be provided by the
10 1 purchaser to all existing authorized users served by the
10 2 purchaser, and the transition from the provision of such
10 3 services by the state to provision by the purchaser shall
10 4 appear seamless to authorized users. Existing authorized
10 5 users shall not be required to continue purchasing
10 6 telecommunications services after a sale pursuant to this
10 7 section.
10 8 b. The purchaser may increase or decrease the price of the
10 9 telecommunications services offered to authorized users only
10 10 to the extent that any annual increase in any price does not
10 11 exceed the most recent annual change in the gross domestic
10 12 product price index as published by the federal government.
10 13 c. The purchaser shall agree to provide telecommunications
10 14 services to the authorized users that the purchaser serves for
10 15 a minimum of seven years following the date of purchase, and
10 16 may submit an offer which provides for such services for
10 17 fifteen or twenty=five years.
10 18 d. The purchaser shall guarantee that telecommunications
10 19 services shall continue to be provided at a level of
10 20 technological advancement and reliability at least equivalent
10 21 to that provided by the state prior to the date of purchase,
10 22 and shall accommodate the needs of authorized users regarding
10 23 upgrades, changes, and network maintenance to the same extent
10 24 as provided by the state prior to the date of purchase. The
10 25 Iowa utilities board shall possess service regulation
10 26 authority regarding telecommunications services provided by
10 27 the purchaser.
10 28 e. A purchaser submitting an offer pursuant to this
10 29 section shall be subject to qualification and verification
10 30 pursuant to section 4 of this Act. An offer may be submitted
10 31 by a prospective purchaser which would provide for the
10 32 retention of an indefeasible right=of=use by the state as
10 33 provided in this Act, for the purchase of backbone assets with
10 34 provision of telecommunications services by the purchaser
10 35 pursuant to this section, or which offers both purchasing
11 1 options with alternative purchase prices for the options.
11 2 2. In the event that the governor approves a purchase
11 3 offer incorporating an alternative purchase option pursuant to
11 4 this section, with the concurrence of the legislative council,
11 5 the department of management, in consultation with the
11 6 authority and the executive director of the commission, shall
11 7 propose rules and submit a recommendation to the general
11 8 assembly specifying all procedures necessary for the
11 9 transition of responsibility for the provision of
11 10 telecommunications services to the purchaser and a proposed
11 11 timeline for the transition.
11 12 3. Proceeds from a sale of the backbone assets pursuant to
11 13 the alternative purchase option as provided in this section
11 14 shall be deposited in the general fund of the state.
11 15 Sec. 6. POSTSELECTION PROCEDURES.
11 16 1. Once the governor has approved a purchaser and the
11 17 terms of sale, the authority shall enter into a contract with
11 18 the purchaser for sale of the assets. The authority shall
11 19 enter into a memorandum of understanding regarding procedures
11 20 for operation of the network until the sale is finalized with
11 21 the proposed purchaser. The memorandum shall indicate that
11 22 the purchaser, in good faith, intends to finalize the purchase
11 23 and shall pay a termination penalty if the purchaser does not
11 24 finalize the purchase.
11 25 2. Any outstanding debt or liens upon the network assets,
11 26 including the certificates of participation, shall be
11 27 discharged out of the state's proceeds of closing, so that the
11 28 purchaser receives marketable title to the assets. Prepayment
11 29 of the certificates of participation shall be made prior to
11 30 closing the sale of assets or as part of closing the sale, and
11 31 shall be accomplished in a way that does not jeopardize the
11 32 tax=exempt status of the certificates of participation.
11 33 3. The state and the purchaser shall also negotiate their
11 34 relevant interest in right=of=way accommodation agreements and
11 35 leases and easements for uses of rights=of=way. The right=of=
12 1 way fee charged by the department of transportation shall be
12 2 no more favorable than provided for the use of the rights=of=
12 3 way by any other telecommunications utility.
12 4 4. The purchaser shall immediately establish points of
12 5 presence near the existing network switching centers and
12 6 establish fiber extensions and connectivity between them. The
12 7 purchaser shall physically locate in the vicinity of the joint
12 8 forces headquarters armory in Johnston, Iowa, and establish
12 9 fiber connectivity between the network hub and the purchaser's
12 10 location. Duplicate racks of backbone core equipment shall be
12 11 provided by the purchaser and installed by the network to
12 12 carry traffic while the network backbone is transferred to the
12 13 purchaser. The purchaser shall purchase the equipment
12 14 required in this process for the network and pay any and all
12 15 related expenses associated with this conversion effort.
12 16 5. The authority shall enter into indefeasible right=of=
12 17 use agreements with the purchaser, unless the alternative
12 18 purchase option pursuant to section 5 of this Act is approved,
12 19 in which the purchaser shall grant the state an indefeasible
12 20 right of use with respect to the backbone optical wavelengths
12 21 and Part II facilities and the dark fiber connecting various
12 22 Part III aggregation points to network backbone=switching
12 23 points. The indefeasible right=of=use agreements and any
12 24 other agreements necessary to complete the sale shall clearly
12 25 provide that the network and the state shall not be held
12 26 liable in any manner in the event the purchaser suffers a loss
12 27 of revenue due to a failure of any portion of the network
12 28 being shared by the network.
12 29 6. The authority shall enter into any other agreements
12 30 necessary to complete the sale. Unless the alternative
12 31 purchase option pursuant to section 5 of this Act is approved,
12 32 these agreements shall include agreements committing the
12 33 commission to purchase field services, including maintenance
12 34 provisioning, and build out, from the purchaser and committing
12 35 the commission to pay a monthly fee for fiber maintenance and
13 1 field services for the assets that are sold.
13 2 Sec. 7. PROGRESS REPORTS. The authority, in consultation
13 3 with the governor, shall submit to the general assembly
13 4 periodic progress reports at three=month intervals from the
13 5 effective date of this Act. The reports shall indicate the
13 6 extent of progress, during the reporting period, in issuing
13 7 the request for proposals; retaining a professional agent;
13 8 marketing efforts by the professional agent; identification,
13 9 qualification, and selection of a purchaser; and the
13 10 postselection process of finalizing the sale, entering into
13 11 indefeasible right=of=use agreements and maintaining the
13 12 network, or providing for the transition of the provision of
13 13 telecommunications services provided by the purchaser if the
13 14 alternative purchase option pursuant to section 5 of this Act
13 15 is approved.
13 16 Sec. 8. Section 8D.2, Code Supplement 2003, is amended by
13 17 adding the following new subsection:
13 18 NEW SUBSECTION. 2A. "Indefeasible right of use" means an
13 19 indefeasible right to use fiber, including an entire cable or
13 20 a portion of the capacity of a cable, or channels of a given
13 21 bandwidth for a defined period of time.
13 22 Sec. 9. Section 8D.3, subsection 3, paragraph i, Code
13 23 Supplement 2003, is amended to read as follows:
13 24 i. Evaluate existing and projected rates for use of the
13 25 system and ensure that rates are sufficient to pay for the
13 26 operation and required equipment upgrade and replacement of
13 27 the system excluding the cost of construction and lease costs
13 28 for Parts I, II, and III. The commission shall establish all
13 29 hourly rates to be charged to all authorized users for the use
13 30 of the network. A fee established by the commission to be
13 31 charged to a hospital licensed pursuant to chapter 135B, a
13 32 physician clinic, or the federal government shall be at an
13 33 appropriate rate so that, at a minimum, there is no state
13 34 subsidy related to the costs of the connection or use of the
13 35 network related to such user.
14 1 Sec. 10. Section 8D.9, subsection 2, Code Supplement 2003,
14 2 is amended by striking the subsection.
14 3 Sec. 11. Section 8D.11, subsection 1, Code 2003, is
14 4 amended to read as follows:
14 5 1. The commission may purchase, lease, and improve
14 6 property, equipment, and services for telecommunications for
14 7 public and private agencies and may dispose of property and
14 8 equipment when not necessary for its purposes. However, the
14 9 commission shall not enter into a contract for the purchase,
14 10 lease, or improvement of property, equipment, or services for
14 11 telecommunications pursuant to this subsection in an amount
14 12 greater than one million dollars without prior authorization
14 13 by a constitutional majority of each house of the general
14 14 assembly, or approval by the legislative council if the
14 15 general assembly is not in session. The commission may use
14 16 indefeasible right=of=use agreements to acquire and dispose of
14 17 property, equipment, and services. The commission shall not
14 18 issue any bonding or other long=term financing arrangements as
14 19 defined in section 12.30, subsection 1, paragraph "b". Real
14 20 or personal property to be purchased by the commission through
14 21 the use of a financing agreement shall be done in accordance
14 22 with the provisions of section 12.28, provided, however, that
14 23 the commission shall not purchase property, equipment, or
14 24 services for telecommunications pursuant to this subsection in
14 25 an amount greater than one million dollars without prior
14 26 authorization by a constitutional majority of each house of
14 27 the general assembly, or approval by the legislative council
14 28 if the general assembly is not in session.
14 29 Sec. 12. Section 8D.13, subsection 2, Code Supplement
14 30 2003, is amended to read as follows:
14 31 2. For purposes of this section, unless the context
14 32 otherwise requires:
14 33 a. "Part I" means the communications connections between
14 34 to central switching and institutions under the control of the
14 35 board of regents, nonprofit institutions of higher education
15 1 eligible for tuition grants, and the regional switching
15 2 centers for the remainder of the network.
15 3 b. "Part II" means the communications connections between
15 4 to the regional switching centers and the secondary switching
15 5 centers.
15 6 c. "Part III" means the communications connection between
15 7 to the secondary switching centers and the agencies defined in
15 8 section 8D.2, subsections 4 and 5, excluding state agencies,
15 9 institutions under the control of the board of regents,
15 10 nonprofit institutions of higher education eligible for
15 11 tuition grants, and the judicial branch, judicial district
15 12 departments of correctional services, hospitals and physician
15 13 clinics, agencies of the federal government, and post offices.
15 14 Sec. 13. Section 8D.13, subsection 3, Code Supplement
15 15 2003, is amended to read as follows:
15 16 3. The financing for the procurement costs for the
15 17 entirety of Part I except for the communications connections
15 18 between to central switching and institutions under the
15 19 control of the board of regents, and nonprofit institutions of
15 20 higher education eligible for tuition grants, and for the
15 21 video, data, and voice capacity for state agencies and for
15 22 Part II and Part III, shall be provided by the state. The
15 23 financing for the procurement and maintenance costs for Part
15 24 III shall be provided by the state. A local school board,
15 25 governing authority of a nonpublic school, or an area
15 26 education agency board may elect to provide one hundred
15 27 percent of the financing for the procurement and maintenance
15 28 costs for Part III to become part of the network. The basis
15 29 for the amount of state financing is one hundred percent of a
15 30 single interactive audio and interactive video connection for
15 31 Part III, and such data and voice capacity as is necessary.
15 32 If a school board, governing authority of a nonpublic school,
15 33 or area education agency board elects to provide one hundred
15 34 percent of the financing for the leasing costs for Part III,
15 35 the school district or area education agency may become part
16 1 of the network as soon as the network can reasonably connect
16 2 the district or agency. A local school board, governing
16 3 authority of a nonpublic school, or an area education agency
16 4 board may also elect not to become part of the network.
16 5 Construction of Part III, related to a school board, governing
16 6 authority of a nonpublic school, or area education agency
16 7 board which provides one hundred percent of the financing for
16 8 the leasing costs for Part III, may proceed as determined by
16 9 the commission and consistent with the purpose of this
16 10 chapter.
16 11 Sec. 14. Section 8D.13, Code Supplement 2003, is amended
16 12 by adding the following new subsection:
16 13 NEW SUBSECTION. 3A. If the state sells assets of the
16 14 network pursuant to sections 1 through 5 of this Act, and
16 15 retains backbone capacity from another telecommunications
16 16 provider, publicly owned facilities that house primary and
16 17 secondary switching facilities shall provide access to that
16 18 provider in the geographical area to the primary and secondary
16 19 switching facilities housing the fiberoptics termination
16 20 equipment by means of established fiber entry ducts, and to
16 21 the building grounding system. The provider's access to the
16 22 primary and secondary switching facilities shall be
16 23 coordinated through the network's staff.
16 24 Sec. 15. Section 8D.13, subsection 4, Code Supplement
16 25 2003, is amended to read as follows:
16 26 4. The commission shall develop the requests for proposals
16 27 may enter into contracts and indefeasible right=of=use
16 28 agreements that are needed for the Iowa communications network
16 29 to function with sufficient capacity to serve the video, data,
16 30 and voice requirements of state agencies and for educational
16 31 telecommunications applications. The commission shall develop
16 32 a request for proposals for each of the systems that will make
16 33 up the network. The commission may develop a request for
16 34 proposals for each definitive component of the network or the
16 35 commission may provide in the request for proposals for each
17 1 such system that separate contracts may be entered into for
17 2 each definitive component covered by the request for
17 3 proposals. The requests for proposals contracts entered into
17 4 by the commission may be for the purchase, lease=purchase, or
17 5 lease of the component parts of the network consistent with
17 6 the provisions of this chapter, may require maintenance costs
17 7 to be identified, and the resulting contract may provide for
17 8 maintenance for parts of the network. The master contract may
17 9 provide for electronic classrooms, satellite equipment,
17 10 receiving equipment, studio and production equipment, and
17 11 other associated equipment as required. The indefeasible
17 12 right=of=use agreements entered into by the commission may be
17 13 long=term agreements and may retain the right to use portions
17 14 of capacity of any fiberoptic cable that the commission sells
17 15 to a third party. The indefeasible right=of=use agreements
17 16 may include provisions requiring the commission to contribute
17 17 to the cost of maintenance and upgrades of the network.
17 18 During the term of an indefeasible right=of=use agreement, the
17 19 state as a party to the indefeasible right=of=use agreement
17 20 shall have complete and total ownership of the fiber or
17 21 channels identified in the indefeasible right=of=use
17 22 agreement, may use the fiber or channels as if they were a
17 23 physically owned asset of the state, and the state's interest
17 24 in the fiber or channels cannot be annulled or made void by
17 25 the grantor of the indefeasible right of use or any other
17 26 party. At the end of the term of an indefeasible right=of=use
17 27 agreement and any renewal periods, title to the equipment and
17 28 fiber assets and optical wavelength capacities covered by the
17 29 agreement shall pass completely to the purchaser.
17 30 Sec. 16. Section 8D.13, subsection 5, unnumbered paragraph
17 31 1, Code Supplement 2003, is amended to read as follows:
17 32 The state shall lease all fiberoptic cable facilities or
17 33 facilities with DS=3 capacity for Part III connections for
17 34 which state funding is provided. The state shall lease all
17 35 fiberoptic cable facilities or facilities with DS=3 or DS=1
18 1 capacity for the judicial branch, judicial district department
18 2 of correctional services, and state agency connections for
18 3 which state funding is provided. Such facilities shall be
18 4 leased from qualified providers. The state shall not own such
18 5 facilities, except for those facilities owned by the state as
18 6 of January 1, 1994. Notwithstanding any other provision of
18 7 this section, the state may negotiate the acquisition of a
18 8 Part III connection following the termination of a lease with
18 9 a qualified provider if offered by the vendor for such a Part
18 10 III connection, if the commission determines it to be in the
18 11 best interest of the network.
18 12 Sec. 17. Section 8D.13, subsection 6, Code Supplement
18 13 2003, is amended by striking the subsection.
18 14 Sec. 18. Section 8D.13, subsection 11, Code Supplement
18 15 2003, is amended to read as follows:
18 16 11. The fees charged for use of the network and state
18 17 communications shall be based on the ongoing operational and
18 18 depreciation costs of the network and of providing state
18 19 communications only. For the services rendered to state
18 20 agencies by the commission, the commission shall prepare a
18 21 statement of services rendered and the agencies shall pay in a
18 22 manner consistent with procedures established by the
18 23 department of administrative services.
18 24 Sec. 19. Section 8D.13, subsection 12, Code Supplement
18 25 2003, is amended to read as follows:
18 26 12. The commission, on its own or as recommended by an
18 27 advisory committee of the commission and approved by the
18 28 commission, shall permit a fee to be charged by a receiving
18 29 site to the originator of the communication provided on the
18 30 network. The fee charged shall be for the purpose of
18 31 recovering the operating costs of a receiving site. The fee
18 32 charged shall be reduced by an amount received by the
18 33 receiving site pursuant to a state appropriation for such
18 34 costs, or federal assistance received for such costs. Fees
18 35 established under this subsection shall be paid by the
19 1 originator of the communication directly to the receiving
19 2 site. In the event that an entity requests a receiving site
19 3 location in a video classroom facility which is authorized by,
19 4 but not funded by, the originator of the communication, the
19 5 requesting entity shall be directly billed by the video
19 6 classroom facility for operating costs relating to the
19 7 communication. For purposes of this section, "operating
19 8 costs" include the costs associated with the management or
19 9 coordination, operations, utilities, classroom, equipment,
19 10 maintenance, and other costs directly related to providing the
19 11 receiving site.
19 12 Sec. 20. Section 8D.14, Code 2003, is amended to read as
19 13 follows:
19 14 8D.14 IOWA COMMUNICATIONS NETWORK FUND.
19 15 There An Iowa communications network fund is created in the
19 16 office of the treasurer of state a fund to be known as the
19 17 Iowa communications network fund under the control of the Iowa
19 18 telecommunications and technology commission. There shall be
19 19 deposited into the The fund shall be comprised of Iowa
19 20 communications network fund proceeds from bonds issued for
19 21 purposes of projects authorized pursuant to section 8D.13,
19 22 funds received from leases pursuant to section 8D.11, and
19 23 other moneys by law credited to or designated by a person for
19 24 deposit into the fund. Interest received by the state as a
19 25 result of investing the contents of the fund shall be credited
19 26 to the fund for use by the commission.
19 27 Sec. 21. NEW SECTION. 8D.15 IOWA COMMUNICATIONS NETWORK
19 28 EQUIPMENT UPGRADE AND REPLACEMENT TRUST FUND.
19 29 An Iowa communications network equipment upgrade and
19 30 replacement trust fund is established, separate and apart from
19 31 all other public moneys or funds of the state, under the
19 32 control of the treasurer of state and the department of
19 33 management. The fund shall be comprised of the proceeds from
19 34 the sale of Iowa communications network assets, including
19 35 certain state=owned fiberoptic cable and related equipment
20 1 located outside the Des Moines metropolitan area, and the
20 2 portion of the fees charged to authorized users for
20 3 depreciation. Contents of this fund shall only be used to
20 4 replace failed or obsolete network equipment owned by the
20 5 state, equipment included in indefeasible right=of=use
20 6 agreements in which the network obtains statewide transport
20 7 capacity, and failed or obsolete endpoint equipment, and shall
20 8 not be used for any other purpose. The treasurer of state and
20 9 the department of management shall jointly verify an annual
20 10 estimate by the commission of the amount needed for equipment
20 11 replacement pursuant to this section, and releases of moneys
20 12 pursuant thereto, except funds to replace failed equipment,
20 13 shall require an annual appropriation by the general assembly
20 14 to the commission. The commission may solicit or accept
20 15 gifts, including donations and bequests, to be deposited into
20 16 the fund for use in accordance with the purposes of the fund.
20 17 Interest received by the state as a result of investing the
20 18 contents of the fund shall be credited to the fund for use by
20 19 the commission. If the alternative purchase option pursuant
20 20 to section 5 of this Act is utilized, the Iowa communications
20 21 network equipment upgrade and replacement trust fund shall not
20 22 be established and the proceeds from the sale shall be
20 23 deposited as provided in section 5 of this Act.
20 24 Sec. 22. Section 21.5, subsection 1, paragraph j, Code
20 25 2003, is amended to read as follows:
20 26 j. To discuss the purchase or sale of particular real
20 27 estate or other state=owned assets only where premature
20 28 disclosure could be reasonably expected to increase the price
20 29 the governmental body would have to pay for that the property
20 30 or decrease the proceeds the governmental body may receive for
20 31 sale of the property. The minutes and the tape recording of a
20 32 session closed under this paragraph shall be available for
20 33 public examination when the transaction discussed is
20 34 completed.
20 35 Sec. 23. EFFECTIVE DATE. This Act, being deemed of
21 1 immediate importance, takes effect upon enactment.
21 2 EXPLANATION
21 3 This bill provides a mechanism for the sale of Iowa
21 4 communications network (ICN) assets with specified retained
21 5 rights by the state, and provides for related technical and
21 6 substantive changes to the provisions of Code chapter 8D.
21 7 FINDINGS AND PURPOSE. The bill contains a statement of
21 8 findings and purpose section relating to legislative intent
21 9 regarding the sale, noting that the ICN is a valuable state
21 10 telecommunications asset, that it provides equal access to
21 11 users of state=of=the=art voice, video, data, and internet
21 12 services at comparable prices statewide, and that it is
21 13 essential that the educational content it carries, and the
21 14 public defense functions it serves, be retained. The bill
21 15 provides that in order to ensure that ICN utilization is
21 16 maximized while minimizing further investment by the state to
21 17 maintain infrastructure, it is in the best interest of the
21 18 citizens of the state to offer some ICN assets for sale, while
21 19 retaining the capacity to provide services to users. The bill
21 20 provides that this would be accomplished through the sale of
21 21 most of the fiberoptic cable and optronics, or light=passing
21 22 equipment, while retaining capacity through long=term
21 23 indefeasible right=of=use agreements, thereby continuing to
21 24 provide telecommunications services and adequate capacity into
21 25 the future.
21 26 The bill also provides an alternative process involving a
21 27 sale to a purchaser which guarantees the continued provision
21 28 of telecommunications services by the purchaser.
21 29 DEFINITIONS. The bill provides a definitions section.
21 30 Included among the defined terms are definitions of
21 31 "authority" as referring to an Iowa communications network
21 32 sales authority established to oversee the sale of the
21 33 backbone assets; "indefeasible right of use" (IRU) as an
21 34 indefeasible right to use fiber, including an entire cable or
21 35 a portion of the capacity of a cable, or channels of a given
22 1 bandwidth for a defined period of time; a "professional agent"
22 2 as a person having specialized expertise required in the
22 3 process of selling the Iowa communications network including
22 4 but not limited to expertise regarding brokerage, contracting,
22 5 asset valuation, sales, or negotiation services; a
22 6 "prospective purchaser" as an entity that the professional
22 7 agent has identified as a potential purchaser of the network
22 8 backbone assets; and a "qualified purchaser" as a prospective
22 9 purchaser that the professional agent has verified is able to
22 10 adequately operate and maintain the backbone network and
22 11 recommended to the authority to purchase the network assets.
22 12 AUTHORITY ESTABLISHED. The bill provides that the Iowa
22 13 communications network sales authority is the sole authority
22 14 to oversee the sales process regarding transfer of ownership
22 15 of the network's backbone assets to a qualified purchaser.
22 16 The bill provides that subject to final approval of the
22 17 selection of the qualified purchaser and the terms of sale by
22 18 the governor, the authority's operation shall not be subject
22 19 to the jurisdiction or control of any other state agency. The
22 20 bill provides, however, that the authority is subject to the
22 21 general operations practices applicable to other state
22 22 agencies during the period of its operation, and that this
22 23 period of operation shall be from the effective date of the
22 24 bill until a qualified purchaser has been approved by the
22 25 governor, and all sales agreements necessary to complete the
22 26 sale have been negotiated and entered into. The bill provides
22 27 that membership of the authority shall consist of the
22 28 treasurer of state, the auditor of state, two members of the
22 29 Iowa telecommunications and technology commission, and one
22 30 member of the Iowa utilities board.
22 31 PROFESSIONAL AGENT RETENTION. The bill provides that the
22 32 authority shall issue a request for proposals to retain a
22 33 professional agent with telecommunications asset sales
22 34 experience to market and coordinate the sales process of the
22 35 backbone assets. The bill provides that the governor, in
23 1 consultation with the treasurer of state and the department of
23 2 management, shall be authorized to negotiate fair and
23 3 equitable terms of compensation for the professional agent.
23 4 The bill provides that the backbone assets shall only be
23 5 available for a single private purchaser, or a consortium
23 6 acting as a single private purchaser, to purchase and that the
23 7 state shall retain an indefeasible right of use with respect
23 8 to certain amounts of backbone capacity in optical wavelengths
23 9 for a negotiated period of seven to 25 years, and two optional
23 10 renewal periods of 10 years each unless the alternative
23 11 purchase option is approved. The bill provides that as a part
23 12 of the sale, unless the alternative purchase option is
23 13 approved, the purchaser shall enter into indefeasible right=
23 14 of=use agreements with the state in which the purchaser shall
23 15 grant the state an indefeasible right of use with respect to
23 16 backbone capacity and optical wavelengths and Part II
23 17 facilities and the dark fiber connecting various Part III
23 18 aggregation points to network backbone=switching points. The
23 19 bill provides that during the term of an indefeasible right=
23 20 of=use agreement, the state as the holder will have complete
23 21 and total ownership of the fiber or channels identified in the
23 22 indefeasible right=of=use agreement, may use the fiber or
23 23 channels as if they were a physically owned asset of the
23 24 state, and that the state's interest in the fiber or channels
23 25 cannot be annulled or made void by the grantor of the
23 26 indefeasible right of use or any other party. The bill
23 27 provides that at the end of the indefeasible right=of=use
23 28 agreement and any renewal periods, title to the equipment and
23 29 fiber assets and optical wavelength capacities covered by the
23 30 agreement shall pass completely to the purchaser. The bill
23 31 provides that the terms of sale shall include provisions
23 32 committing the commission to purchase field services,
23 33 including maintenance, provisioning, and build out, from the
23 34 purchaser and committing the commission to pay a monthly fee
23 35 for fiber maintenance and field services for the assets that
24 1 are sold, unless the alternative purchase option is proposed
24 2 and approved. The bill provides that the request for
24 3 proposals shall be issued no later than six months from the
24 4 bill's date of enactment.
24 5 The bill provides a list of potential subject areas for
24 6 incorporation into the request for proposals, including, among
24 7 others, a procedure to determine the compensation for the
24 8 successful professional agent. The bill provides that the
24 9 parameters surrounding the sale, to be determined by the
24 10 governor, shall include, but not be limited to, the amount of
24 11 time the state would allow the professional agent to market
24 12 the assets, a provision that the governor or the governor's
24 13 designee shall have ultimate discretion to accept or reject an
24 14 offer, and a detailed framework for IRU agreements between the
24 15 state and a qualified purchaser, including the provision that
24 16 the state shall be held harmless in the event the purchaser
24 17 suffers a loss of revenue due to a failure of any assets or
24 18 any portion of the network being shared by the network. The
24 19 bill provides that the framework shall also include a process
24 20 and procedures for routing capacity and sharing of power
24 21 currents needed to operate the purchaser's equipment and
24 22 related expenses, a framework for the standards required
24 23 regarding network maintenance, a requirement that the
24 24 purchaser offer advanced telecommunications services equitably
24 25 across the state and specifically serving areas where those
24 26 types of services are not yet available, a requirement that
24 27 the purchaser grant the network the right to participate in
24 28 future upgrades, purchaser selection criteria, an analysis of
24 29 a prospective purchaser's financial stability, and a
24 30 requirement that during the negotiations process, the
24 31 prospective purchaser shall offer the state specified
24 32 reasonable surety of long=term economic viability and shall
24 33 guarantee that the state's IRUs shall be protected in the case
24 34 of the bankruptcy of the purchaser.
24 35 SELECTION PROCESS FOR QUALIFIED PURCHASER. The bill
25 1 provides that the authority shall select the professional
25 2 agent submitting the proposal that provides the best overall
25 3 value to the state, and that using the parameters included in
25 4 the request for proposals, the selected professional agent
25 5 shall develop a process to market and sell the assets designed
25 6 to maximize the state's proceeds from the sale. The bill
25 7 provides that during the marketing period, using the
25 8 predetermined parameters, the professional agent shall
25 9 identify a prospective purchaser and submit the prospective
25 10 purchaser to a qualification process designed to verify the
25 11 purchaser's ability to adequately operate and maintain the
25 12 backbone network. The bill provides that the verification
25 13 process shall include verifying that the purchaser has proven
25 14 experience operating a telecommunications network, and has the
25 15 ability to purchase the backbone assets outright or has the
25 16 collateral to secure financing. The bill also provides that
25 17 there shall be verification that the purchaser is aware of its
25 18 obligations pursuant to chapter 476, and specifies time frames
25 19 for decisions by the Iowa utilities board in response to
25 20 written complaints by purchasers.
25 21 The bill provides that after verification by the
25 22 professional agent of the purchaser's ability to adequately
25 23 operate and maintain the backbone network is given, the
25 24 authority shall make a recommendation regarding a purchaser
25 25 and the terms of sale to the governor, and that the governor
25 26 has the right of final approval of the purchaser and the terms
25 27 of sale, with the concurrence of the legislative council. The
25 28 bill provides that if the professional agent is unable to
25 29 identify a qualified purchaser able to adequately operate and
25 30 maintain the backbone network, the professional agent shall
25 31 submit a report to the authority explaining the reasons
25 32 supporting this conclusion.
25 33 The bill provides that as an alternative to the sale of
25 34 backbone assets with the retention by the state of an IRU
25 35 agreement, a prospective purchaser may submit an offer to
26 1 purchase which includes the provision of all
26 2 telecommunications services to authorized users, except
26 3 authorized users based in Polk county, by the purchaser. The
26 4 bill provides that existing authorized users shall not be
26 5 required to continue purchasing telecommunications services
26 6 from the purchaser, and that the purchaser may change the
26 7 price of services offered only to the extent that any annual
26 8 increase in price does not exceed the most recent annual
26 9 change in the gross domestic product price index as published
26 10 by the federal government. The bill provides that the
26 11 purchaser shall provide telecommunications services pursuant
26 12 to this alternative for a minimum of seven years, and may
26 13 submit an offer which provides for such services for 15 or 25
26 14 years. The bill provides that the Iowa utilities board shall
26 15 possess services regulation authority regarding
26 16 telecommunications services provided by the purchaser, and
26 17 that the qualification and verification process shall apply.
26 18 The bill provides that a purchaser may submit an offer
26 19 providing for retention by the state of an IRU, or based upon
26 20 this alternative purchase option, or may submit offers
26 21 involving both purchase options. The bill provides that if
26 22 the governor approves a purchase offer incorporating the
26 23 alternative purchase option, with the concurrence of the
26 24 legislative council, the department of management, in
26 25 consultation with the authority and the executive director of
26 26 the Iowa telecommunications and technology commission, shall
26 27 propose rules and submit a recommendation to the general
26 28 assembly specifying procedures and a time line necessary for
26 29 the transition of responsibility for the provision of
26 30 telecommunications services to the purchaser. The bill
26 31 provides that proceeds from the sale pursuant to the
26 32 alternative purchase option would be deposited into the
26 33 general fund of the state.
26 34 NETWORK OPERATION PENDING SALE. The bill provides that the
26 35 authority shall enter into a memorandum of understanding
27 1 regarding procedures for operation of the network until the
27 2 sale is finalized with the prospective purchaser, which shall
27 3 include a provision that the purchaser in good faith intends
27 4 to finalize the purchase and shall pay a termination penalty
27 5 if the purchase is not finalized.
27 6 ADDITIONAL CONDITIONS OF SALE. The bill provides than any
27 7 outstanding debt or liens upon the network assets shall be
27 8 discharged out of the state's proceeds so that the purchaser
27 9 receives marketable title to the assets, and that prepayment
27 10 of certificates of participation, defined in the bill, shall
27 11 be made prior to closing the sale of assets or as part of
27 12 closing the sale, and accomplished in a manner not
27 13 jeopardizing the certificate's tax=exempt status. The bill
27 14 provides that the state and the purchaser shall negotiate
27 15 their relevant interest in rights=of=way and leases and
27 16 easements for uses of rights=of=way, that the right=of=way fee
27 17 charged by the department of transportation shall be no more
27 18 favorable than provided for the use of the rights=of=way by
27 19 any other telecommunications utility, and that the purchaser
27 20 shall immediately establish points of presence near the
27 21 existing network switching centers and establish fiber
27 22 extensions and connectivity between them. The bill provides
27 23 that the purchaser shall physically locate in the vicinity of
27 24 the joint forces headquarters armory in Johnston, Iowa, and
27 25 establish fiber connectivity between the ICN hub and the
27 26 purchaser's location, and that duplicate racks of backbone
27 27 core equipment shall be provided by the purchaser and
27 28 installed by the network to carry traffic while the network
27 29 backbone is transferred to the purchaser. The bill provides
27 30 that the purchaser shall purchase the equipment required in
27 31 this process for the network and pay any and all related
27 32 expenses associated with the conversion effort. The bill
27 33 provides that the authority, in consultation with the
27 34 treasurer of state and the governor, shall submit to the
27 35 general assembly periodic progress reports at three=month
28 1 intervals from the effective date of the bill indicating
28 2 progress in issuing the request for proposals; retaining a
28 3 professional agent; marketing efforts by the professional
28 4 agent; identification, qualification, and selection of a
28 5 purchaser; and the postselection process of finalizing the
28 6 sale, entering into indefeasible right=of=use agreements and
28 7 maintaining the network, or providing for the transition of
28 8 the provision of telecommunications services provided by the
28 9 purchaser if the alternative purchase option is approved.
28 10 CODE CHAPTER 8D AMENDMENTS. The bill provides for a
28 11 conforming definition and references to IRUs in Code chapter
28 12 8D and conforming terminology changes and provisions regarding
28 13 changes in ownership of the network. The bill also provides
28 14 for the deletion of Code section 8D.9, subsection 2, which
28 15 requires a private or public agency which had certified to the
28 16 Iowa telecommunications and technology commission that the
28 17 agency is a part of or intended to become a part of the
28 18 network to use the network for all video, data, and voice
28 19 requirements of the agency unless a waiver was obtained.
28 20 LEGISLATIVE AUTHORIZATION ELIMINATED. The bill deletes a
28 21 provision that prohibited the commission from entering into a
28 22 contract for the purchase, lease, or improvement of property,
28 23 equipment, or services for telecommunications in an amount
28 24 greater than $1 million without prior authorization by a
28 25 constitutional majority of each house of the general assembly,
28 26 or approval by the legislative council if the general assembly
28 27 is not in session. The bill also deletes outdated language
28 28 regarding a local school board, governing authority of a
28 29 nonpublic school, or area education agency board elections to
28 30 provide financing costs for Part III of the network.
28 31 NETWORK ACQUISITIONS, DISPOSAL, AND ACCESS. The bill adds
28 32 a provision that the commission may use IRU agreements to
28 33 acquire and dispose of property, equipment, and services. The
28 34 bill provides that if the state sells assets of the network
28 35 pursuant to the procedure specified in the bill and retains
29 1 backbone capacity from another telecommunications provider,
29 2 publicly owned facilities that house primary and secondary
29 3 switching facilities shall provide access to that provider in
29 4 the geographic area to the primary and secondary switching
29 5 facilities housing the fiberoptics termination equipment in
29 6 established fiber entry ducts, and to the building grounding
29 7 system. The bill provides that the provider's access to the
29 8 primary and secondary switching facilities will be coordinated
29 9 through the network's staff. The bill provides that the state
29 10 may negotiate the acquisition of a Part III connection
29 11 following the termination of a lease with a qualified provider
29 12 if offered by the vendor for such a Part III connection if the
29 13 commission determines it to be in the best interest of the
29 14 network.
29 15 NETWORK COSTS AND BILLINGS. The bill provides that in
29 16 situations where an entity requests a receiving site location
29 17 in a video classroom facility which is authorized by, but not
29 18 funded by, the originator of the communication, the requesting
29 19 entity shall be directly billed by the video classroom
29 20 facility for operating costs relating to the communication.
29 21 The bill also provides for the inclusion of depreciation costs
29 22 in the determination of rates for use of the system. The bill
29 23 deletes outdated language which had required reports relating
29 24 to the impact of changing technology on potential costs and
29 25 capabilities of the system, and relating to a department of
29 26 education study of new techniques in distant teaching.
29 27 IOWA COMMUNICATIONS NETWORK FUND INTEREST AND UPGRADE AND
29 28 REPLACEMENT TRUST FUND. The bill further provides for the
29 29 retention of interest received by the state from the Iowa
29 30 communications network fund established in Code section 8D.14,
29 31 and for the establishment of an Iowa communications network
29 32 equipment upgrade and replacement trust fund. The bill
29 33 provides that the new trust fund shall be separate and apart
29 34 from all other public moneys or funds of the state, and shall
29 35 be under the control of the treasurer of state and the
30 1 department of management. The bill provides that the trust
30 2 fund will be comprised of the proceeds from the sale of ICN
30 3 assets, including certain state=owned fiberoptic cable and
30 4 related equipment located outside the Des Moines metropolitan
30 5 area, and the portion of the fees charged to authorized users
30 6 for depreciation. The bill provides that contents of the fund
30 7 shall only be used to replace failed or obsolete network
30 8 equipment owned by the state, equipment included in IRU
30 9 agreements in which the network obtains statewide transport
30 10 capacity, and failed or obsolete endpoint equipment. The bill
30 11 provides that the treasurer of state and the department of
30 12 management shall jointly verify an annual estimate by the
30 13 commission of the amount needed for equipment replacement
30 14 pursuant to new Code section 8D.15, and that releases of
30 15 moneys pursuant to the estimate, except funds to replace
30 16 failed equipment, shall require an annual appropriation by the
30 17 general assembly to the commission. The bill provides that
30 18 the commission may solicit or accept gifts, including
30 19 donations and bequests, to be deposited into the fund for use
30 20 in accordance with the purposes of the fund, and that interest
30 21 received by the state as a result of investing the contents of
30 22 the fund shall be credited to the fund for use by the
30 23 commission. The bill provides that the fund shall not be
30 24 established in the event that the alternative purchase option
30 25 is approved.
30 26 The bill modifies provisions providing for closed sessions
30 27 in Code section 21.5 to include discussions involving the sale
30 28 of real estate or other state=owned assets where premature
30 29 disclosure could decrease the proceeds a governmental body may
30 30 receive for the sale of the property.
30 31 The bill takes effect upon enactment.
30 32 LSB 5450HZ 80
30 33 rn/pj/5