Title
[Grant Agreement] Budget Adjustments and Asset Swap Agreement with Fidium Enterprises for the Last Mile Connectivity Project
End
FileID
File ID: 2026-01163
End
Location
Location: Citywide
End
Recommendation
Recommendation: Adopt a Resolution: 1) authorizing the City Manager or designee to enter into a partnership agreement with Fidium Fiber for conduit space; and 2) adjust the revenue and expenditure budget of the Last Mile Connectivity Project (A07001800), Fund 3703 (Federal Capital Grant), Fund 3704 (Other Capital grants). to $19,216,942.07.
End
Contact
Contact: Mollie Chacon, IT Manager, (916) 808-7909, mchacon@cityofsacramento.org; Cassy Vaioleti, Program Specialist, (916) 808-804, cvaioleti@cityofsacramento.org; Darin Arcolino, Chief Information Officer, (916) 808-0403, darcolino@cityofsacramento.org; Department of Information Technology
End
Presenter
Presenter: None
End
Attachments
Attachments:
1-Description/Analysis
2-Resolution
3-Swap Agreement
End
Description/Analysis
IssueDetail
Issue Detail: On September 29, 2023, staff applied for grant funding through the California Public Utilities Commission (CPUC) Last Mile Federal Funding Account (FFA) to implement the Sacramento Last Mile Connectivity Project. The project is intended to expand broadband infrastructure in underserved Sacramento communities and improve access to affordable, high-speed internet.
The underserved locations were selected based on Federal Communications Commission (FCC) census-block-level data. The grant defines broadband as internet capable of delivering symmetrical speeds of 100 Mbps. The original project proposed to expand broadband infrastructure to 4,620 underserved units.
On September 13, 2024, the City received a $38,696,843 award after the CPUC approved the grant through Resolution T-17835. On October 15, 2024, the City Council adopted Resolution 2024-0309 authorizing staff to accept the Last Mile Connectivity Project grant.
On January 14, 2025, the City of Sacramento and Consolidated Communications, doing business as Fidium Enterprises (Fidium), entered into a Public-Private Partnership Agreement (2025-0073). Under the agreement, Fidium will provide internet service and operate and maintain the Sacramento Last Mile Network at no cost to the City after the network is transferred to Fidium. The related Asset Swap Agreement allows the City to exchange certain City-owned conduit space and/or fiber for additional fiber infrastructure, expanding the City's broadband network without requiring additional City funding.
Project Scope and Grant Adjustment
As staff advanced the project from planning to implementation, additional property-level coordination was required to construct infrastructure serving individual properties. Many of the locations identified in the original grant application are within multi-tenant properties. Construction on private property requires property-owner approval as well as agreements providing the City and/or its partners with the necessary access for construction, operation, and maintenance.
Staff conducted outreach and coordinated with property owners to obtain the necessary approvals. During this process, staff determined that many proposed locations already had recent agreements between property owners and existing Internet Service Providers (ISPs). These arrangements limited the City’s ability to obtain property access and the agreements needed to construct the proposed Last Mile infrastructure. Other property owners declined to participate or did not provide the required authorization within the CPUC's project timeframe.
To protect the grant investment and focus resources on locations that can be constructed within the CPUC requirements, the City submitted amendments to the CPUC to remove locations where the required property approvals could not reasonably be obtained within the grant timeline. The CPUC has approved the amendments. As a result, the approved project scope has been reduced from 4,620 to 1,495 locations, and the CPUC grant has been reduced from $38,696,843 to $19,216,942.07.
The grant reduction corresponds to the reduction in project locations. The City is not returning $19.5 million in unrestricted funding or choosing to forego $19.5 million that could otherwise be spent on the project. Rather, the CPUC reduced the grant award to align with the revised, approved project scope.
The reduction in service locations does not represent a proportional reduction in the City's planned backbone infrastructure. The expansion of the City broadband backbone remains largely unchanged and will provide long-term value by expanding the City's fiber network and creating additional opportunities to serve underserved areas in the future.
The revised project therefore focuses the remaining CPUC grant on infrastructure that can be constructed within the approved project requirements and timeframe, while avoiding spending grant funds on locations where construction cannot proceed without property-owner approvals.
Fidium Partnership and Asset Swap
The City's partnership with Fidium provides a mechanism to put the new network infrastructure into service without creating an ongoing operational or maintenance responsibility for the City. Following transfer of the network, Fidium will provide internet service and operate and maintain the network at no cost to the City.
The Asset Swap Agreement provides an additional opportunity to expand the City's fiber network. Under the agreement, the City may exchange available City conduit space and/or fiber for additional fiber infrastructure from Fidium. The agreement may be amended as specific conduit space and fiber availability are identified.
The asset swap is structured as an infrastructure exchange rather than a purchase by the City and will be completed at no cost to the City. This allows the City to leverage existing infrastructure to expand its fiber network without requiring additional City funding.
End
PolicyConsiderations
Policy Considerations: This initiative aligns with the Information Technology Department’s Digital Strategy Update 2024-2025 document that includes expanded broadband to underserved communities as a key initiative goal. Investment in infrastructure will strategically position the City for the next economy.
End
EconomicImpacts
Economic Impacts: The City will utilize CPUC grant funds to expand City infrastructure and implement the Sacramento Last Mile Connectivity Project, which will connect unserved communities to affordable broadband services.
End
EnvironmentalConsiderations
Environmental Considerations: The project is consistent with the 2040 General Plan and certified Master EIR (Resolution No. 2024-0065) and is categorically exempt. The future infrastructure installation project(s) that would be funded by the fiscal activities authorized herein would involve the conversion of existing small structures and minor alterations to land, including minor trenching and backfilling where the surface is restored as described in sections 15301, 15303, and 15304 (f) of the CEQA Guidelines (14 C.C.R. §§ 15000, et seq.).
End
Sustainability
Sustainability: Not applicable.
End
Commission/Committee Action
Commission/Committee Action: Not applicable.
End
RationaleforRecommendation
Rationale for Recommendation: Since the grant award amount has been reduced, from $38,696,843 to $19,216,942.07 and the amendments were approved by the CPUC reflecting this grant reduction, the acceptance and budgeted funding needs to be updated. The Asset Swap Agreement enables the City to expand its fiber network presence at no cost by leveraging existing city infrastructure.
End
FinancialConsiderations
Financial Considerations: No City funding will be required. Fund 3703 (Federal Capital Fund) and Fund 3704 (Other Capital Grants) will be adjusted to reflect the updated scope of the Last Mile Connectivity Project (A07001800).
End
LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
End