Thursday, March 20, 2014

FirstNet -- LA-RICS Funding Plan....may be a little weak.

Below is my review of the LA-RICS funding plan for their Public Safety Broadband Network. These are just my own thoughts of the posted plan and how they relate to an earlier article I wrote entitled "This is how LA-RICS will fail...". The point of the earlier article was about the contract terms having an impact of funding the solution, which will ultimately delay, or stop, the planned Motorola contract. For this analysis I am only commenting on the Executive Summary section of the LA-RICS Funding Plan. I could add comments to the whole plan, but being that the main topics are covered in the Exec Summary, why waste the time. 

Here are my points of concern, and they should be yours as well, you should note this plan is to be delivered to the “Cities” within the County and is accompanied by their written funding plan. You can find this letter and attachment through the link above. In short, to justify their funding plan they intend on getting the money from the Cities, within LA County. My interpretation is that this may not align with the law as it was written. In fact defining a City as a “Public Safety Services Organization” is weak and believing that the City has the funding resources to pay for such deployments may be a tremendous risk. 

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Highlight, Mar 18, 2014:

'The Funding Plan must identify “funding sources and mechanisms” (Art. V, Sec. 5.01.). In particular, specification of a “means or formula for determining the timing and sequencing of construction” (Art. II, Sec. 2.05 (b) (1)), and an “allocation of costs among the Members, subscribers and other funding sources” (Art. II, Sec. 2.05 (b) (2).) is required. Further, the Funding Plan must provide a “development schedule and phasing plan, which will permit the maximum feasible participation by Members.” (Art. V, Sec. 5.01). This latter requirement in the Agreement recognizes the great diversity among Members in the caliber of their LMR and existing broadband systems, as well as in their ability to internally support capital improvements and maintenance.'

When the construct of "funding sources and mechanisms" was added to the Jobs Creation Act it was not intended for cities -- you need to reach further into the Act where it stresses "Public Safety Service Organizations". Although cities are considered viable entities to be a part of an emergency they are not the leading organizations, nor are they First Responders. The fact of the matter this plan only focus' on the weakest contributor to the model and not the actual entities it should be focusing on. What City do you know of, especially in California, that has the money to pay for such things? I can bet all the gold in the world that no City will just jump out and say, "hey, we would love to pay for your boondoggle, thats what we're here for!" The fact is that the only reason the Authority (LA-RICS) is looking at the cities is because they are tied to the tax base, which relates to another item I will comment on shortly, first lets just go with the flow.

As I have illustrated in the past, such a business model gets its cash from the taxpayers. Now it may be just me, but isn't the title of the legislation called "The Middle Class Tax Relief and Jobs Creation Act of 2012?" I mean if it is, shouldn't we at least make an attempt to not tax the middle class? Then again if we are actually taxing the upper class and the lower class then I guess we’re ok. 

Highlight, Mar 18, 2014:

"The Funding Plan relies on grant monies for the initial construction of the LMR and LTE Systems. Member Fees are to be the revenue source for the operations and maintenance (O&M) as well as all other capital costs."

How many handsets do you think a City needs? If you push a 100 I would be surprised. Some cities, like LA, will have more, but who are the ones that really need the handsets -- City Board Members or Public Safety? Why put the decision for applying any "membership fee's" to a City Board? Well because they are the taxing authority. Why not focus on the actual Public Safety organizations? I'm not aware of too many Police, Fire and EMS programs within the City that are willing to rely on an elected board to be the ones driving the user fees. The boards may approve budgets for their local First Responders, but typically such decisions are up to the Chief’s when it comes to administering that budget. As a matter of fact, and being that I am a citizen within a City, I would feel uncomfortable if the Board were making administration decisions, especially as it relates to Public Safety Communications.  Even if LA-RICS were to be successful in implementing a City based user fee system, do we actually think we will have enough users? 

In the legislation it also states "self-sustainment", such user fees, as illustrated in this plan, even state that they will fall short if they lack participation. To me this would be a big risk and will ultimately fail to meet the law advocating “self-sustainment”. Plus, how many city boards believe they are First Responders? Isn't the network for "Public Safety Services Organizations?" Last I checked I never came across a city board as being someone who would respond to any type of emergency, unless you believe that it is an emergency when the board has to address the ascetics of the streets, or zoning of a new shopping mall. Then again, I sit on a school board that chose to build a $60 million high-school football stadium, when it should have been focused on rebuilding its freshman campus. I guess in Texas we just have differing opinions on what a real emergency means. 

Highlight, Mar 18, 2014:

"Voter assessments are not practical given the high cost of a ballot campaign coupled with high voter requirements to pass a special revenue measure."

Let me get this straight...the entire funding plan is based on taking money from the City and their resident taxpaying voters, who in fact, this same taxing authority was elected by the same taxpaying voters that we’re now trying to avoid? It may be just me, but is that considered larceny, insider trading, or something? So if I'm a teenager and I get an allowance from my Dad, I can approach my Dad and do a deal with him to take money from my 5 brothers and sisters without them knowing? Man I can get my own iPad after all!  

The fact of the matter is that once an elected official is asked to take money from his/her constituents, without their knowledge, could mean a short time in office and a long-extended stay in prison. Having a lawsuit directed at a City Board is one thing, but having a lawsuit directed personally is a whole other avenue of avoidance. 

The City Boards fall under the laws of elected officials, that process can be unforgiving when it comes to administering taxpayer money. I would find it interesting for any Board Member to step out on the limb for such an exercise, even if they go to a majority vote. But then again, I have seen worse happen. Just the Open Meetings Act alone will drive enough pain for the elected officials to avoid such an offer.

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Highlight, Mar 18, 2014:

"The Funding Plan is predicated on the assumption of full participation of every member of the Authority."

That's a stretch wouldn't you think? What happens if half the Cities want to think about it for a few months, and the Board is driven by State law to advertise through their Board Agenda process, what happens to the project schedule? Better yet, what Board is willing to break State law and risk another lawsuit that introduces even more time delays? I mean don't we have a 15 month schedule that has to be met? The fact that we also have to go through leasing and zoning Boards, as well as City Boards, could introduce some unavoidable time delays. Wouldn't that impact the grant funding process as well? Do we still think 15 months will be met? 

Let's make it even simpler: at 231 sites, all over LA County, just to cure the concrete takes a week (5 days), thats 1155 days, thats 231 * 5 days, not including weekends, we are in California after all. At 15 months we have 300 days, thats 15 * 20 days per month, yes, does not represent weekends or holidays, that means I have to be curing concrete at a rate of 4 (3.85) sites a day in order to meet schedule, that's 1155 days / 300 days = 3.85, or 4. You have to remember, that's if we start on day one following contract NTP (Notice to Proceed). If we introduce the leasing, zoning and City Board approvals, do we still think we will meet a 15 month timeframe? In actuality such a tight schedule would mean that 21 simultaneous sites would have to be commissioned a day -- not just cured — to meet a 14 month timeline. Nothing better than a little salt with that coffee. 

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Highlight (yellow), Mar 18, 2014, 11:45 AM:
Alternatively, early participating members will be absorbing the costs of non-participants resulting in a higher cost for the early members. 

Each year an agency does not become a member or join LA-RICS, its allocated but unpaid cost share of the LTE hard match and both LMR and LTE capital replacement will accumulate.

Authority or a member agency incurs carrying cost of loans or funds for advanced funding to pay the LMR and LTE agreements, the buy-in charges would contribute toward repaying these carrying costs and other advanced payments made by early adopters in absorbing costs of non-participants. 

The funding plan makes a projection of cash flow for project expenses based on construction milestones and system operability, and the impact on members' fees. 

First, holding a gun to someone's head will always turn out bad. 

Second, and I may be wrong, but the plan doesn't address anything about agencies, it was talking about cities. We may have a bit of confusion in that the LA-RICS board may be thinking they will have agency support, but instead the plan only addresses the City contributions. 

Third, haven't we heard a lot about this in the last few years? Those that can afford to pay help pay for those who can't. In this case though, if a financially strapped City finds out that they actually need the service, but don’t have the tax base to fund it, plus they aren't even considered a viable Public Safety Service Organization, why should they be forced to pay for something they already can’t afford? Heck why not just force the carriers to pay for it being that they get revenue off the same City residents in the same coverage area? That was a joke. Don’t try that at home. The fact of the matter is such a reliance on participating Cities will be disastrous. What happens if the board tries eminent domain over its cities? How many cities are going to really like that? The NEPA requirements that were waived still do not outweigh a cities board structure of approvals, do we just force them to capitulate? 

I think focusing on actual emergency support “agencies” would be better suited for this effort and should be the focus of the potential contributors, not the cities. Better yet, if the Authority reconsiders, they could always use the Myers Model™ to bring in Private Investment to completely fund it. Regardless, the Authority needs to create an attraction as to why anyone should be a part of their plan. Just because the Authority thinks it will get the money from the agencies, doesn't mean they will actually be interested. We need to address their needs, not just try and force their hand. Doing so will put the timeline at risk. Which agency would they target - FBI, INS, DHS, EMS, or all of the above? These agencies already have support from the taxpaying base, and they already pay for broadband services form the commercial carriers, we need to make it more attractive for this user base. I’m afraid the Cities may not be the wisest of choices when seeking a funding source for LA-RICS.

Doing the Myers Model™ (Public Private Partnership) can help in this case by eliminating the time crunch of delivery and can help focus the Authorities needs onto a more attractive user base.

But then again I’m….

Just some guy and a blog….

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